| Hi Folks |
| Yet other major changes to the Companies Act, 2013 !! |
| Lok Sabha has passed the Companies Amendment Bill, 2016 which aims at ease of doing business, strengthening corporate governance standards and imposing strict action against defaulting companies. |
| In order to draw your focused attention to some of these major changes and few other important updates, I choose to keep the editorial short this time☺. |
| Should you wish to refer to any of our older issues of LexSpeak, do visit our Resource Centre at sharadasc.com
Warm Regards
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| Companies Amendment Bill, 2016 (the Bill) was introduced in Lok Sabha on 16th March, 2016 and Lok Sabha passed the bill on July 27, 2017. Most of the amendments proposed in the bill are broadly aimed at addressing difficulties in implementation of provisions of Companies Act, 2013. |
| Highlights |
- Name reservation valid for 20 days from the date of approval of name. Earlier it was valid for 60 days from date of application. In case of change of name, validity is for 60 days from the date of approval.
- Simplification of Private Placement process.
- Independent directors to have pecuniary interest up to 10% of their income. The amount may be modified by the Central Government.
- Issue of Sweat equity shares to be allowed at any time after registration of the Company.
- MGT -9 (Annual Return extract) need not be attached to the Board’s Report.
- AGM of unlisted company may be held at any place in India provided all the members give their consent.
- EGM of wholly owned subsidiary of foreign company can be held outside India.
- Consolidation of the accounts of a joint venture no longer required.
- Annual ratification of auditors to be done away with. This means auditors have to secure 5 year tenure instead of year on year ratification.
- CEO must sign financial statement though he is not in the Board.
- In case a director incurs any of the disqualifications, he shall cease to vacate office in all other companies other than the defaulting company.
- Rationalisation of provisions related to loan to directors.
- The requirement related to restriction on voting by relatives in the general meeting shall not apply to a company in which 90% or more members in numbers are relatives of promoters or related parties. Non- ratification shall be voidable at the option of the Board or shareholders, as the case may be.
- Approval of the Central Government shall not be required at the time of the payment of remuneration exceeding 11% of the net profits of the company. Shareholder approval will be sufficient.
- No approval required from the Central Government, if managerial remuneration exceeds the prescribed limits.
- Concept of forward dealing and insider trading omitted.
- Disclosure requirements in the prospectus to be aligned with the regulations to be made by SEBI.
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| MCA notification dt. 13th June, 2017 exempted certain private companies from reporting the adequacy of financial controls systems in place and its operative effectiveness in its Auditors’ report. |
| Clarification has been given now that such exemption shall be applicable for those audit reports in respect of financial years commencing on or after 1st April, 2016, made on or after the date of the said notification. |
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- Within the same State
- Newspaper publication is no longer required.
- Serving individual notice to debenture holders, depositors, and creditors have been dispensed with.
- Additional documents, resolutions & declarations required
- From one State or Union Territory to another State
- Filing Notice of Extra Ordinary General Meeting, copy of Special Resolution and NOC received from the RBI (in case of a registered NBFC) has been done away with.
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| Detailed Procedural changes have been given in the Notification. |
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