Sections not yet enforced of Companies (Amendment) Act, 2017

CS Nitin Bohara

corplaw@vinodkothari.com

 

Sr. No Companies (Amendment) Act, 2017 Corresponding section of Companies Act, 2013 Brief of Amendment
1. Section-23 (except clauses (iii) & (iv) ) Section 92-Annual return

 

 

 

 

 

 

 

· Disclosure of indebtedness need not be made in annual return;

 

· No need to specify additional details of shares held by FIIs;

 

· CG may prescribe abridged form of annual return for OPC, Small companies and certain other classes of companies;

 

· Doing away with MGT-9. Placing of annual return on the website and disclosing its link in Board’s report;

2. Section-37 Section 135 (1)  “Corporate Social Responsibility”

 

 

· Clarification already existed under CSR Rules relating to no appointment of independent director in CSR committee in case appointment of ID u/s 149(4) not applicable to company;

· Rectification relating to areas/ subject specified in Schedule VII;

· To substitute ‘average net profit with ‘net profit’.

 

3. Section-66 Section-196 (4)- “Appointment of managing director, whole-time director or manager”

 

· Appoint or continue the appointment of MD/WTD/ manager of age of seventy years in case no special resolution has been passed, but an ordinary resolution has been passed and the Central Government is satisfied on an application that such appointment is beneficial to the company
4. Section-67 Section-197(1)-“Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits”

 

· Replaces the approval of the Central Government for managerial remuneration above the prescribed thresholds with approval by shareholders in the general meeting by way of a special resolution.

 

· Approval of banks/ FIs etc. only in case of default.

 

Section 197(3) · Omission of CG approval in case of inadequacy of profits

 

Section 197(9) · 2 years period has been prescribed

 

Section 197(10) · No CG approval for waiver of excess remuneration paid.

· SR will be required within 2 years

 

Section 197(11)

 

· Does away with the requirement of obtaining approval of the Central govt.
Section 197(16) and (17) · New insertion as in auditors will be required to report on remuneration being in compliance of the Act.

 

5. Section-68 Section 198 (3) (a)-“Calculation of profits”

 

· For an investment company premium on shares/ debentures issued/ sold shall form part of the normal profits generated from its ordinary business and not of capital nature;

 

· In calculation of section 198 profit & free reserves credit shall not be given to unrealized gains, notional gains or revaluation of assets;

 

· It shall allow the adjustment of b/f losses incurred prior to the Act,2013

  Section-68 Section 198 (4) (l)

 

· Provide for the deduction of brought forward losses of the years prior to the commencement of the Act, 2013.

 

6. Section-69 Section 200- “Central Government or company to fix limit with regard to remuneration”

 

 

 

· Approval of CG not required in case of payment of remuneration to managerial personnel;

 

· The title of the section to be amended as ‘COMPANY TO FIX LIMIT WITH REGARD TO REMUNERATION’

7. Section-70 Section 201 (1)- “Forms of, and procedure in relation to, certain applications”

 

 

· As requirement of obtaining CG approval has been done away with reference of section 96 shall be inserted;

 

8. Section-77 Section-379 (1)- “Application of Act to foreign companies”

 

 

· Sections 380-386, 392, 393 shall apply to all foreign companies provided Central Government may exempt certain class of foreign companies

· Applicability of the provisions of the Act to foreign companies has been segregated to two parts applicability to all foreign companies and companies covered under this chapter.

9. Section-78 Section 384 (2)- “Debentures, annual return, registration of charges, books of account and their inspection”

 

· It covers a foreign company within the purview of section 135 (clarification)
10. Section-79 Section 391(2)-

“Application of sections 34 to 36 and Chapter XX”

 

· This section is only applicable to a foreign company having pending repayment/redemption of money raised through issue of securities o’wise such foreign companies are required to follow sections 355, 376 & 377 in case of no such pendency.

 

11. Section-80(except first proviso to clause (i) & clause (ii) ) Section 403-“Fee for filing, etc.”

 

 

 

 

 

 

 

· Any document/fact/information other than referred to in first proviso be submitted/filed/registered/recorded on payment of additional fee;

 

· In case of default for two or more occasions the document/fact/information be submitted/filed/registered/recorded on payment of higher additional fee which shall not be less than twice the additional fee;

12. Section-81 Section 406 (1)-

“Power to modify Act in its application to Nidhis”

 

· A company will be treated as Nidhi or a Mutual Benefit Society only on declaration made by CG by notification in Official Gazette;

 

· A copy of every notification proposed to be issued under sub-section (2), shall be laid in draft before each House of Parliament, while it is in session as specified;

 

· The copies of every notification issued under this section shall, as soon as may be after it has been issued, be laid before each House of Parliament.

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