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Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
HIGHLIGHTS OF KEYAMENDMENTS OF
COMPANIES (AMENDMENT) BILL 2017
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 Sr
.
N
o.
Sectio
n/Rule
No.
Companies Act, 2013
(1)
Companies Amendment Bill,
2017
(2)
Difference
between (1) and
(2)
Impact
1. 3A If at any time the number of
members of a company is
reduced, in the case of a public
company, below seven, in the
case of a private company,
below two, and the company
carries on business for more
than six months while the
number of members is so
reduced, every person who is a
member of the company during
the time that it so carries on
business after those six months
and is cognisant of the fact that
it is carrying on business with
less than seven members or two
members, as the case may be,
shall be severally liable for the
payment of the whole debts of
the company contracted
during that time, and may be
severally sued therefor
This section is
inserted for the
very first time
New provision is same as section 45
of the Companies Act 1956, which
was not part of new Companies Act
2013.
It makes members knowing that
number of members of a company is
below minimum required and the
company carries on business for
more than six months, then such
members are personally liable for the
debt contracted during such period.
2. 4(5) ii) Upon receipts of
application, the registrar
may on the basis of
information and documents
furnished along with the
application reserve the name
for a period of 60 days from
the date of the application.
Upon receipts of application, the
registrar may on the basis of
information and documents
furnished along with the
application reserve the name for
a period of 20 days from the date
of the approval or such other
period as may be prescribed.
Under Section 4(5)
the words "sixty
days from the date
of the
application" are
substituted
"twenty days from
the date of
approval or such
other period as
may be
prescribed".
Before the proposed amendment the
name is reserved by the Registrar for
the period of 60 days from the date
of application. But due to the
amendment the name shall be
reserved for 20 days from the date of
approval.
3. 12(1) A company shall on and
from the fifteenth day of
its incorporation and all
times thereafter have a
registered office capable of
receiving and
acknowledging all
communications and notices
as may be addressed to it.
A Company shall within thirty
days of its incorporation and
all times thereafter have a
registered office capable of
receiving and acknowledging all
communications and notices as
may be addressed to it
Under section 12(1)
the words “on and
from the fifteenth
day of its
incorporation" are
substituted by
“within thirty
days of its
incorporation"
Before commencement of this
amendment every company shall
have a registered office within a
period of 15 days from the date of its
incorporation. But due to these
amendments every company shall
have a registered office within a
period of 30days from the date of its
incorporation. Now Company has 15
days extra time “to have a registered
office” from the date of its
incorporation
4. 12(4) Notice of every change of
the situation of the
registered office, verified in
a manner prescribed, after
the date of incorporation of
the company, shall be given
to the Registrar within
fifteen days of the change,
who shall record the same
Notice of every change of the
situation of the registered office,
verified in a manner prescribed,
after the date of incorporation of
the company, shall be given to
the Registrar within thirty
days of the change, who shall
record the same
Under section 12(4)
the words "within
fifteen days", are
substituted "within
thirty days"
After the Commencements of these
amendments now every Company
shall give notice of any changes in
the situation of the registered office
to the register within period of
30days from the date of such
changes.
Due to such Amendment now
Company has extra time of 15 days
to give a notice and prepare relevant
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 documents in relation to changes of
situation of the registered office of
the company to the Register.
5 42 42. (1) A company may, subject
to the provisions of this section,
make a private placement of
securities.
(2) A private placement shall be
made only to a select group of
persons who have been
identified by the Board
(herein referred to as
"identified persons"), whose
number shall not exceed fifty
or such higher number as may
be prescribed [excluding
the qualified institutional buyers
and employees of the company
being offered securities
under a scheme of employees
stock option in terms of
provisions of clause (b) of
subsection (1) of section 62], in
a financial year subject to such
conditions as may be
Prescribed.
(3) A company making private
placement shall issue private
placement offer
and application in such form and
manner as may be prescribed to
identified persons,
whose names and addresses are
recorded by the company in
such manner as may be
prescribed:
Provided that the private
placement offer and
application shall not carry any
right of renunciation.
Explanation I.—"private
placement" means any offer or
invitation to subscribe
or issue of securities to a select
group of persons by a company
(other than by way of
public offer) through private
placement offer-cum-
application, which satisfies the
conditions specified in this
section. Explanation II.—
"qualified institutional buyer"
means the qualified institutional
buyer as defined in the
Securities and Exchange Board
of India (Issue of Capital and
Section 42 is
substituted by the
new section as
mention in the
second column.
The changes brought about in
the provisions relating to private
placement are as follows and every
company required to follow such
condition for issue of securities
throught private placement:-
The board of directors are to
identify the select group of persons
to whom the private placement is
to be made.
The format of application form
shall be prescribed.
The private placement offer letter
and application form shall not
carry any right of renunciation.
The company is not to utilise the
money raised through private
placement unless allotment has
been made and return of
allotment has been filed with the
Registrar.
The return of allotment is required
to be filed within 15 days of
allotment.
In case the company defaults in
filing the return of allotment
within the time
period prescribed
above, the company, its promoters,
and directors shall be liable to
a penalty for each default of
one
thousand rupees for each day
during which such default
continues but not exceeding
twenty five lakh rupees.
The requirement of filing the
record of private placement with
the Registrar within a period of
thirty days of circulation of private
placement offer letter has been
omitted.
Further, if the company makes an
offer or accepts monies in
contravention of this section, the
company, its promoters and
directors shall be liable for a
penalty which may extend to the
amount raised through private
placement or two crore rupees
whichever is lower (earlier it was
whichever is higher), and the
company shall also refund the
monies that with interest specified
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 Disclosure Requirements)
Regulations, 2009, as amended
from time to time, made
under the Securities and
Exchange Board of India Act,
1992.
Explanation III.—If a company,
listed or unlisted, makes an offer
to allot or
invites subscription, or allots, or
enters into an agreement to allot,
securities to more
than the prescribed number of
persons, whether the payment
for the securities has
been received or not or whether
the company intends to list its
securities or not on any
recognised stock exchange in or
outside India, the same shall be
deemed to be an offer
to the public and shall
accordingly be governed by the
provisions of Part I of this
Chapter.
(4) Every identified person
willing to subscribe to the
private placement issue
shall apply in the private
placement and application
issued to such person alongwith
subscription money paid either
by cheque or demand draft or
other banking channel
and not by cash:
Provided that a company shall
not utilise monies raised
through private placement
unless allotment is made and
the return of allotment is filed
with the Registrar in
accordance with sub-section (8).
(5) No fresh offer or invitation
under this section shall be made
unless the
allotments with respect to any
offer or invitation made earlier
have been completed or
that offer or invitation has been
withdrawn or abandoned by the
company:
Provided that, subject to the
maximum number of identified
persons under subsection
(2), a company may, at any time,
make more than one issue of
securities to such
in sub-section (6) to subscribers
within a period of thirty days of
the order imposing penalty.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 class of identified persons as
may be prescribed.
(6) A company making an offer
or invitation under this section
shall allot its
securities within sixty days
from the date of receipt of the
application money for such securities and if the company is
not able to allot the securities
within that period, it
shall repay the application
money to the subscribers within
fifteen days from the
expiry of sixty days and if the
company fails to repay the
application money within the
aforesaid period, it shall be
liable to repay that money with
interest at the rate of twelve
per cent. per annum from the
expiry of the sixtieth day:
Provided that monies received
on application under this section
shall be kept in
a separate bank account in a
scheduled bank and shall not
be utilised for any purpose
other than—
(a) for adjustment against
allotment of securities; or
(b) for the repayment of monies
where the company is unable to
allot securities.
(7) No company issuing
securities under this section
shall release any public
advertisement or utilize any
media, marketing or distribution
channels or agents to inform the
public at large about such an
issue.
(8) A company making any
allotment of securities under this
section, shall file
with the Registrar a return of
allotment within fifteen days
from the date of the allotment in such manner as may be
prescribed, including a complete
list of all allottees, with
their full names, addresses,
number of securities allotted and
such other relevant
information as may be
prescribed.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 (9) If a company defaults in
filing the return of allotment
within the period
prescribed under sub-section
(8), the company, its promoters
and directors shall be
liable to a penalty for each
default of one thousand rupees
for each day during which
such default continues but not
exceeding twenty-five lakh
rupees.
(10) Subject to sub-section (11),
if a company makes an offer or
accepts monies in contravention
of this section, the company, its
promoters and directors shall be
liable for a penalty which may
extend to the amount raised
through the private placement
or two crore rupees, whichever
is lower, and the company shall
also refund all
monies with interest as specified
in sub-section (6) to subscribers
within a period of
thirty days of the order imposing
the penalty.
(11) Notwithstanding anything
contained in sub-section (9) and
sub-section (10), any private
placement issue not made in
compliance of the provisions of
the subsection (2) shall be
deemed to be a public offer and
all the provisions of this Act and
the Securities Contracts
(Regulation) Act, 1956 and
Securities and Exchange Board
of
India Act, 1992 shall be
applicable.
6 53 Any share issued by a
Company at a discounted
price shall be void.
Any share issued by a Company
at a discount price shall be void
Under section 53(2)
the word
“discounted price
are substituted by
“discount price”.
As proposed amendment clear the
ambiguity in relation to
interpretation of word discounted
price.
However, the interpretation of word
discounted price may mean a price
lower than the market value of shares
and not lower than its nominal
value.so the proposed amendment
replace the discounted price to
discount price as to remove
ambiguity.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 7 62(2) The notice referred to in
sub-clause (i) of clause (a)
of sub-section(1) shall be
dispatched through
registered post or speed post
or through electronic mode
to all the existing
shareholders at least three
days before the opening of
the issue.".
The notice referred to in sub-
clause (i) of clause (a) of sub-
section
(1) shall be dispatched through
registered post or speed post or
through electronic
mode or courier or any other
mode having proof of delivery to all the existing
Shareholders at least three days
before the opening of the issue".
Under Section
62(2), the following
words are inserted
“or courier or any
other mode having
proof of delivery”.
Before proposed amendment every
Company who issued share under
section 62 as right issue shall give a
notice to the shareholder through
registered post or speed post or
through electronic mode only. But
due to Companies amendment bill
company can dispatched a notice
through registered post or speed post
or through electronic mode or
courier or any other mode having
proof of delivery to the existing
shareholder. Hence, now company
has many option to dispatch a notice
to shareholder
8. 73(2)(c
)
depositing such sum which
shall not be less than fifteen
per cent of the amount of its
deposits maturing during a
financial year and the
financial year next
following, and kept in a
scheduled bank in a separate
bank account to be called as
deposit repayment reserve
account
Depositing, on or before the
30th day of April each year,
such sum which shall not be less
than twenty per cent. of the
amount of its deposits
maturing during the following
financial year and kept in a
scheduled bank in a
separate bank account to be
called deposit repayment
reserve account;"
Under section
73(2), for clause (c)
are substituted.
As company were depositing a sum
of 15% of the amount of its deposits
maturing during the financial year or
next financial year in the schedule
bank.
And there was no time limit for
deposit of such sum in the bank
account.
Even though the act gives a time
limit i.e. before the 30th day of
April each year for depositing a
such sum in the scheduled bank and
there is one relaxation given by the
companies amendment bill through
which company shall deposit 20% of
the amount of its deposits maturing
during a financial year only not for a
next financial year.
Now every company who accept
deposit under Chapter V, the
Companies ( Acceptances of
deposit) Rules, 2014 shall deposit
20% of amount of deposit maturing
during the financial year rather to
calculate and deposit 15% of amount
of deposit maturing during a
financial year and the next financial
year.
9. 73(2)(e
)
certifying that the company
has not committed any
default in the repayment of
deposits accepted either
before or after the
commencement of this Act
or payment of interest on
such deposits
certifying that the company has
not committed any default in the
repayment of deposits accepted
either before or after the
commencement of this Act or
payment of interest on such
deposits and where a default
had occurred, the company
made good the
default and a period of five
years had lapsed since the date
of making good the default;
Under section
73(2)(e) the
following words
“on such deposit”
are substituted by
“on such deposits
and where a
default had
occurred, the
company made
good the
Default and a
period of five
years had lapsed
since the date of
making good the
default”.
In case company made default in the
repayment of deposit or interest
thereof on such companies were
ineligible to accept deposit from its
members under chapter V of the
companies( Acceptance and deposit
) Rules 2014 But after
Commencement of companies
amendment bill Companies can
accept the deposit from the member
even in case of default made by the
company provided that company
shall comply below mention
condition:
a)the company had made the default
good and
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 b) period of 5 year had been lapsed
from the date of making good the
default.
so there is relaxation for those
company who had made default in
the repayment of deposit or interest
thereof by complying two condition
as mentioned above.
10
.
78 Where a company fails to
register the charge within
the period specified in
section 77, without
prejudice to its liability in
respect of any offence under
this Chapter, the person in
whose favour the charge is
created may apply to the
Registrar for registration of
the charge along with the
instrument created for the
charge, within such time
and in such form and
manner as may be
prescribed and the Registrar
may, on such application,
within a period of fourteen
days after giving notice to
the company, unless the
company itself registers the
charge or shows sufficient
cause why such charge
should not be registered,
allow such registration on
payment of such fees, as
may be prescribed
Where a company fails to
register the charge within the
period of thirty
days referred to in sub-section
(1) of section 77, without
prejudice to its liability in
respect of any offence under this
Chapter, the person in whose
favour the charge is created may
apply to the Registrar for
registration of the charge along
with the instrument created for
the charge, within such time and
in such form and manner as may
be prescribed and the Registrar
may, on such application, within
a period of fourteen days after
giving notice to the company,
unless the company itself
registers the charge or shows
sufficient cause why such
charge should not be registered,
allow such registration on
payment of such fees, as may be
prescribed
Under section 78
the following
words “register the
charge within the
period specified in
section 77” are
substituted by
“register the
charge within the
period of thirty
days referred to in
sub-section (1) of
section 77”.
In the companies act. 2013, there is
ambiguity in the provisions of
section 78 w.r.t. filling of application
for registration of charge by charge
holder i.e. “and the provision sub-
section (1) of section 77 shall, as far
as may be, apply to an intimation
given under this section”
As proposed amendment make it
clear the interpretation of “register
the charge within the period
specified in section 77” and
substituted them by “register the
charge within the period of thirty
days referred to in sub-section (1)
of section 77”.
11
.
82(1) A company shall give
intimation to the Registrar
in the prescribed form, of
the payment or satisfaction
in full of any charge
registered under this
Chapter within a period of
thirty days from the date of
such payment or satisfaction
and the provisions of sub-
section (1) of section 77
shall, as far as may be,
apply to an intimation
given under this section.
A company shall give intimation
to the Registrar in the prescribed
form, of the payment or
satisfaction in full of any charge
registered under this Chapter
within a period of thirty days
from the date of such payment
or satisfaction.
"Provided that the Registrar
may, on an application by the
company or the
charge holder, allow such
intimation of payment or
satisfaction to be made
within a period of three
hundred days of such payment
or satisfaction on payment of
Under section 82
the following
words “and the
provisions of sub-
section (1) of
section 77 shall, as
far as may be,
apply to an
intimation given
under this section”
are totally omitted.
This proviso is
insert for the very
first time
In the Companies Act, 2013, there is
ambiguity in the provisions of
section 82(1) i.e. “and the provision
sub-section (1) of section 77 shall, as
far as may be, apply to an intimation
given under this section”
But proposed amendment clear the
interpretation of section 82(1) and
omitted following words ”and the
provisions of sub-section (1) of
section 77 shall, as far as may be,
apply to an intimation given under
this section”
And laid down the interpretation by
inserting a proviso under section
82(1) and make it clear that in case
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 such additional fees as may be
prescribed.".
application by the company or the
charge holder, allow such intimation
of payment or satisfaction within a
period of 300 days of such payment
or satisfaction on payment of such
additional fees as may be prescribed.
Now Every company shall initimate
to the Registrar within 30 days from
the date of such payment or
satisfaction or if any application
made by the company then within
300 days.
12
.
89 "(10) For the purposes of this
section and section 90,
beneficial interest in a
share includes, directly or
indirectly, through any contract,
arrangement or otherwise, the
right or entitlement of a person
alone or together with any other
person to—
(i) exercise or cause to be
exercised any or all of the
rights attached to such
share; or
(ii) receive or participate in any
dividend or other distribution in
respect of such share.
This sub-section
has been inserted
after subsection (9).
Earlier there was no definition of
Beneficial interest under the
Companies Act, 2013 but now a new
sub section has been inserted after
sub section (9) which has widen the
scope of beneficial interest which
includes right and entitlement of a
person alone or together with any
other person to exercise rights
attached to such share or receive or
participate in any dividend or
distribution in respect of such share.
90 Register of significant
Beneficial owners in a
company
Existing sec 90, which gives
powers to central government
to investigate the actual
beneficial ownerships in the
company is being proposed to
be replaced by Bill 2017
The committee recommended that
companies and individuals may be
obligated to obtain information on
beneficial ownership from each
shareholder holding more then 25%
shares or as prescribed.
So companies are empowered to
seek information form its members
and in case of failure to supply
information, apply sanctions in the
form of suspension of rights against
beneficial interest, approach to
Tribunal to seek appropriate orders.
The companies are also mandated to
maintain register of beneficial
owners and provide requisite
information to MCA.
13 92(3) An extract of the annual
return in such form as may
be prescribed shall form part
of the Board‘s report
Every company shall place a
copy of the annual return on the
website of the company, if any,
and the web-link of such annual
return shall be disclosed in the
Board's report
Sub – Section (3)
totally substituted
MGT 9 i.e. extract of annual return
will no longer form part of board
report which will help in reducing
duplication of information.
Instead, company which have their
functional website have to upload
annual return on their website and
web-link of the same has to be
specified in the board report
14 93 Return to be Filed with
Registrar in Case Promoters'
Stake Changes
Omitted Omitted Relaxation for listed companies.
Section 93 requires filing of a return
by a listed company with the
Registrar, in a prescribed form with
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 respect to changes in the number of
shares held by promoters, and top ten
shareholders.
As the information was also required
to be filed with Stock
Exchanges/SEBI, it would lead to
duplication of reporting.
Moreover, the present scenario
required filings on changes in
individual holding, This has led to an
increase in the amount of filings
being made under the Act.
Therefore the same has been omitted
from the Act.
15 Provis
o to
96(2)
Provided that the Central
Government may exempt
any company from the
provisions of this sub-
section subject to such
conditions as it may impose
"Provided that annual general
meeting of an unlisted company
may be held at any place in
India if consent is given in
writing or by electronic mode by
all the members in advance:
Provided further that"
In the Proviso of
section 96(2) the
words ‘Provided
that’ substituted by
‘Provided that
annual general
meeting of an
unlisted company
may be held at any
place in India if
consent is given in
writing or by
electronic mode by
all the members in
advance:
Provided further
that
By obtaining 100% of approval of
shareholders in advance, private
unlisted companies, public unlisted
companies and wholly owned
subsidiaries of unlisted company can
convey their AGM at any place in
India.
Now only listed companies are
restricted w.r.t place of AGM i.e.
they still have to hold their AGM
either at the registered office of the
company or at some other place
within the city, town or village in
which the registered office of the
company is situated.
16 Inserti
on of
Provis
o to
100(1)
The Board may, whenever it
deems fit, call an
extraordinary general
meeting of the company
"Provided that an
extraordinary general
meeting of the company,
other than of the wholly
owned subsidiary of a
company incorporated
outside India, shall be held at
a place within India
Proviso inserted in
sub-section 1 of
Section 100
Companies can hold their EGM at
any place in India only.
However wholly owned subsidiary
of a company incorporated outside
India are exempted from this
requirement and they can hold their
EGM outside India also with a view
to ease of doing business
17 101 The text of first proviso to
Section 101 (1) is:
Provided that a general
meeting may be called after
giving a shorter notice if
consent is given in writing
or by electronic mode by not
less than ninety-five per cent
of the members entitled to
vote at such meeting.
The text of first proviso to
section 101 (1) after substitution
will be:
Provided that a general
meeting may be called after
giving shorter notice than that
specified in this sub-section if
consent, in writing or by
electronic mode, is accorded
thereto-
(i) in the case of an annual
general meeting, by not less
than ninty-five per cent. of the
members entitled to vote
thereat; and
The proviso to
section 101 (1) has
been substituted
with two provisos
and now there are
two provisos to
section 101 (1)
Earlier any General Meeting can be
called by way of shorter notice
provided the company has taken the
consent of 95% of its members who
are entitled to vote at such meeting.
But, with the substitution of first
proviso to Section 101 (1) with the
two new provisos the provisions for
obtaining shorter notice are different
in case of Annual General Meeting
& in case of Extra-Ordinary General
Meeting.
Annual General Meeting can be
convened after giving shorter
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 (ii) in the case of any other
general meeting, by members
of the company—
a) holding, if the
company has a share
capital, majority in
number of members
entitled to vote and
who represent not
less than ninety-five
per cent. of such part
of the paid-up share
capital of the
company as gives a
right to vote at the
meeting; or
b) having, if the
company has no
share capital, not less
than ninety-five per
cent. of the total
voting power
exercisable at that
meeting
Provided further that where
any member of a company is
entitled to vote only on some
resolution or resolutions to be
moved at a meeting and not on
the others, those members
shall be taken into account for
the purposes of this sub-
section in respect of the former
resolution or resolutions and
not in respect of the latter.
consent of 95% of members ( in
Number) entitled to vote thereat.
In case of Company having share
capital Extra- ordinary General
Meeting can be called after taking
consent from members holding:
a. Majority in Number and;
b. 95% of value of paidup
capital
18 110(1) Notwithstanding anything
contained in this Act, a
company—
(a) shall, in respect of such
items of business as the
Central Government may,
by notification, declare to be
transacted only by means of
postal ballot; and
(b) may, in respect of any
item of business, other than
ordinary business and any
business in respect of which
directors or auditors have a
right to be heard at any
meeting, transact by means
of postal ballot,
in such manner as may be
prescribed, instead of
transacting such business at
a general meeting.
"Provided that any item of
business required to be
transacted by means of postal
ballot under clause (a), may be
transacted at a general meeting
by a company which is required
to provide the facility to
members to vote by electronic
means under section 108, in the
manner provided in that
section.".
Proviso inserted in
sub-section 1 of
Section 110
With the proposed amendment
Public Listed Companies and
companies having more than 1000
members ( who are required to
provide e voting facility to its
members) does no longer
mandatorily required to transact
certain items through postal ballot.
Now these companies can transact
these business in general meeting in
which they are providing e-voting
facility.
These companies does not
mandatorily required to specifically
follow postal ballot process
specified under the Act.
19 117 (2) If a company fails to file
the resolution or the
agreement under sub-section
In sub-section (1), the words
and figures “ within the time
In sub section 2 of
section 117
minimum penalty
In case company fails to file
resolution under section117 within
the specified time limit, then
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 (1) before the expiry of the
period specified under
section 403 with additional
fees, the company shall be
punishable with fine which
shall not be less than five
lakh rupees but which may
extend to twenty-five lakh
rupees and every officer of
the company who is in
default, including liquidator
of the company, if any, shall
be punishable with fine
which shall not be less than
one lakh rupees but which
may extend to five lakh
rupees.
(3) The provisions of this
section shall apply to— (e)
resolutions passed by a
company according consent
to the exercise by its Board
of Directors of any of the
powers under clause (a) and
clause (c) of sub-section (1)
of section 180
(g) resolutions passed in
pursuance of sub-section (3)
of section 179 Provided that
no person shall be entitled
under section 399 to inspect
or obtain copies of such
resolutions; and
specified under section 403”
shall be omitted;
in sub-section (2),—
(a) for the words "not be less
than five lakh rupees", the
words "not be less than one
lakh rupees" shall be
substituted;
(b) for the words "one lakh
rupees", the words "fifty
thousand rupees" shall be
substituted;
(ii) in sub-section (3),—
(a) clause (e) shall be omitted;
(b) in clause (g), in the proviso,
the word “and” shall be omitted
and the following proviso shall
be inserted, namely:—
"Provided further that nothing
contained in this clause shall
apply
to a banking company in
respect of a resolution passed to
grant loans, or give guarantee
or provide security in respect of
loans under clause (f) of sub-
section (3) of section 179 in the
ordinary course of its business;
and.".
imposed on the
company and
officers of the
company including
liquidator has been
substituted.
Clause (e) of sub
section 3 of section
117 i.e. resolutions
passed by a
company according
consent to the
exercise by its
Board of Directors
of any of the
powers under
clause (a) and
clause (c) of sub-
section (1) of
section 180 has
been omitted.
In proviso in clause
(g) of sub section 3
of section 117, the
word ‘and’ has
been omitted and
A new proviso
inserted after
proviso in clause
(g) of sub section 3
of section 117
minimum penalty that has to paid by
the company is Rs. 1 lakh instead of
5 lakh and for officers it is Rs.
50,000/- instead of Rs. 1 lakh.
Omission of Clause (e) from Sub
section 3 of section 117 does not
impact the companies because it is
repetitive in nature. Under Section
180(1) special resolution has to be
passed by the shareholders of the
company and filing of special
resolution is triggered by section
117(3)(a) itself and clause(e) just
repetition of the same, therefore the
same was deleted.
Banking companies has been
exempted from filing resolutions
under clause (f) of sub-section (3) of
section 179 i.e. grant loans, or give
guarantee or provide security.
20 129(3) Where a company has one or
more subsidiaries, it shall, in
addition to financial
statements provided under
sub-section (2), prepare a
consolidated financial
statement of the company
and of all the subsidiaries in
the same form and manner as
that of its own which shall
also be laid before the annual
general meeting of the
company along with the
laying of its financial
statement under sub-section
(2):
Provided that the company
shall also attach along with
its financial statement, a
separate statement
containing the salient
features of the financial
statement of its subsidiary
or subsidiaries in such form
as may be prescribed.
Where a company has one or
more subsidiaries or associate
companies, it shall, in addition
to financial statements provided
under sub-section (2), prepare a
consolidated financial statement
of the company and of all the
subsidiaries and associate
companies in the same form and
manner as that of its own and in
accordance with applicable
accounting standards, which
shall also be laid before the
annual general meeting of the
company along with the laying
of its financial statement under
Sub-section (2).
Under section
129(3) the
following words
“associate
company” and “in
accordance of
applicable
standards” are
inserted.
Now due to proposed amendment,
every Company who has one or more
subsidiaries or associate companies
shall prepare a consolidated financial
statement of their subsidiaries
Companies and associate companies
in accordance with applicable
accounting standards.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 21
.
134 a)Text of Section 134 (1):
The financial statement,
including consolidated
financial statement, if any,
shall be approved by the
Board of Directors before
they are signed on behalf of
the Board at least by the
chairperson of the company
where he is authorised by the
Board or by two directors
out of which one shall be
managing director and the
Chief Executive Officer, if he
is a director in the company,
the Chief Financial Officer
and the company secretary
of the company, wherever
they are appointed, or in the
case of a One Person
Company, only by one
director, for submission to
the auditor for his report
thereon.
b) Text of section 134 (3)
(a):
the extract of the annual
return as provided under
sub-section (3) of section 92;
c)Text of clause (p) of sub-
section (3) of Section 134:
in case of a listed company
and every other public
company having such paid-
up share capital as may be
prescribed, a statement
indicating the manner in
which formal annual
a)The text of Section 134 (1)
after substitution:
The financial statement,
including consolidated
financial statement, if any,
shall be approved by the Board
of Directors before they are
signed on behalf of the Board
by the chairperson of the
company where he is
authorised by the Board or by
two directors out of which one
shall be managing director, if
any, and the Chief Executive
Officer, the Chief Financial
Officer and the company
secretary of the company,
wherever they are appointed, or
in the case of One Person
Company, only by one director,
for submission to the auditor
for his report thereon.
b) Text of Section 134 (3)(a )
after substitution:
the web address, if any, where
annual return referred to in
sub-section (3) of section 92
has been placed
c) Text of clause (p) of sub-
section (3) of Section 134 after
substitution:
in case of a listed company and
every other public company
having such paid-up share
Sub-Section (1)
of Section 134 has
totally been
substituted
The text of
clause (a) of sub-
section (3) of
Section 134 of
Companies Act,
2013 has totally
been substituted
In clause (p) of
sub-section (3) of
Section 134 of
Companies Act,
2013, the words
annual evaluation
has been made by
the Board of its
own performance
and that of its
committees and
The Impact would be:
Now the financial statement
including consolidated financial
statement, if any of the company
shall be signed by:
a. by the Chairperson of the
Company only if authorised
by the Board or;
b. by two directors out of
which one shall be
Managing Director, if any viz. where the company has
Managing Director in the
company, otherwise by any
other two directors of the
Company; and
c. by the:
Chief Executive Officer, Chief
Financial Officer and Company
Secretary, if appointed
Now for the purpose of Signing of
financial statement of a Company the
major changes will be:
a) if the Company does not have
Managing Director, then the,
financial statements , including
consolidated financial statements
can even be signed by two other
directors of the company;
b) If the Chief Executive officer of
the Company is not a director in the
same company then also such Chief
Executive Officer of the Company is
eligible for signing the Financial
statements including consolidated
financial statements of the Company
Now a Company is not required to
provide Extract of Annual Return in
its Board Report & merely placing
the website address where the annual
return referred to in to in sub-section
(3) of section 92, will do the needful.
Now only the manner specified for
formal annual evaluation of the
performance of the Board, its
Committees and of individual
directors in form of a statement shall
be specified in the Board Report of a
listed and public listed company.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 evaluation has been made
by the Board of its own
performance and that of its
committees and individual
directors
d) There is not even a single
proviso to clause (q) of sub-
section (3) of Section 134 of
the Companies Act, 2013
capital as may be prescribed, a
statement indicating the
manner in which formal
annual evaluation of the
performance of the Board, its
Committees
and of individual directors has
been made
d) The following provisos are
inserted to clause (q) of sub-
section (3) of Section 134 of
Companies Act, 2013:
Provided that where
disclosures referred to in this
sub-section
have been included in the
financial statements, such
disclosures shall be
referred to instead of being
repeated in the Board's report
Provided further that where the
policy referred to in clause (e)
or clause (o) is made available
on company's website, if any, it
shall be sufficient compliance
of the requirements under such
clauses if the salient features of
the policy and any change
therein are specified in brief in
the Board's report and the web-
address is indicated therein at
which the complete policy is
available.
individual
directors shall
stand substituted by
the words annual
evaluation of the
performance of the
Board, its
Committees
and of individual
directors has been
made
There is
insertion of two
new provisos to
clause (q) of sub-
section (3) of
Section 134 of
Companies Act,
2013
Earlier the Companies are required
to give proper disclosures of the
items as specified in sub-section (3)
of Section 134 of the Companies
Act, 2013 in the Board Report, even
if they are already Covered in the
financial statements of the Company
. However, with the insertion of first
proviso to clause (q) of Sub-section
(3) of Section 134 merely reference
of the items which are given under
Section 134(3) but the same are
specified in detail in the financial
statements, will do the needful.
This will eradicate duplication of
items in the financial statements &
the Board Report.
With the insertion of second
proviso to clause (q) of sub-section
(3) of Section 134, it has become
optional to place the following on the
website of the Company:
a)Policy on Directors’ appointment
and remuneration including criteria
for determining qualifications,
positive attributes, independence of
director and other matters as
provided under sub-section (3) of
Section 178 and
b)details about the Policy
developed and implemented by the
company on Corporate Social
Responsibility initiatives taken
during the year.
Further disclosure of salient features
of the abovementioned policies and
details of their implementation, in
the Board Report of a Company will
be sufficient for compliance of
Section 134 (3).
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
d) Text of sub-section (4) of
Section 134 is:
The report of the Board of
Directors to be attached to
the financial statement under
this section shall, in case of
a One Person Company,
mean a report containing
explanations or comments by
the Board on every
qualification, reservation or
adverse remark or
disclaimer made by the
auditor in his report
d)Text of Section newly inserted
sub-section (3A) after sub-
section (3) and before sub-
section (4) of Section 134:
The Central Government may
prescribe an abridged Board's
report, for the purpose of
compliance with this section by
a One Person Company or
small company
There is insertion
of new sub-section
viz. sub-section
(3A) after sub-
section (3) and
before Sub-section
(4) of section 134
With the insertion sub-section
(3A) in Section 134, a one person
company can make its Board
Report in a very precise and
shortened manner provide it is
prescribed by the Central
Government.
22 135(1)
Every company having net
worth of rupees five hundred
crore or more, or turnover of
rupees one thousand crore or
more or a net profit of rupees
five crore or more during any
financial year shall
constitute a Corporate Social
Responsibility Committee of
the Board consisting of three
or more directors, out of
which at least one director
shall be an independent
director.
Every company having net
worth of rupees five hundred
crore or more, or turnover of
rupees one thousand crore or
more or a net profit of rupees
five crore or more during the
immediately preceding
financial year shall constitute a
Corporate Social Responsibility
Committee of the Board
consisting of three or more
directors, out of which at least
one director shall be an
independent director.
"Provided that where a company
is not required to appoint an
independent director under sub-
section (4) of section 149, it
shall have in
its Corporate Social
Responsibility Committee two
or more directors.";
It is
proposed that the
words “any
financial year” be
replaced by the
words ‘preceding
financial year
This proviso is
inserting for the
first time under
section 135(1)
As per the MCA General Circular
No. 21/2014 dated 18.06.2014, “any
financial Year” implies “any of the 3
financial year “
However due to the proposed
amendment the eligibility criteria
has been changed which inter-alia
states that for the purpose of
constituting CSR committee and
incurring exp. towards CSR
activities the said financial year
means the immediately preceding
Financial Year.
Earlier it has been mentioned in the
rule 5 of the companies (Corporate
social responsibility Policy) Rules,
2014, now it has become the part of
the section 135 in proposed
amendment.
Whereof as per the proposed
amendment states that in case of
unlisted companies and private
companies where they are not
required to appoint Independent
Directors pursuant to the provisions
of Sec 149(4) shall have its CSR
Committee with minimum two
directors only.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
135(3)
(a)
formulate and recommend to
the Board, a Corporate
Social Responsibility Policy
which shall indicate the
activities to be undertaken
by the company as specified
in Schedule VII
Formulate and recommend to
the Board, a Corporate Social
Responsibility Policy which
shall indicate the activities to be
undertaken by the company in
areas or subject, specified in
Schedule VII
Under section
135(3)(a), the
following words
“as specified in
Schedule VII
Is substituted by
“in areas or
subject, specified
in Schedule VII”
Schedule VII indicates the broad
areas of activities for spending as
CSR. Accordingly, for liberal
interpretation and to bring more
clarity, it is proposed that instead of
providing that CSR policy has to
indicate the activities to be
undertaken by the company as
specified in Schedule VII, it should
indicate the activities to be
undertaken in areas or
subjects specified in Schedule VII.
22 137(1) Fourth Proviso
Provided also that a
company shall, along with
its financial statements to be
filed with the Registrar,
attach the accounts of its
subsidiary or subsidiaries
which have been
incorporated outside India
and which have not
established their place of
business in India.
'Provided also that in the case
of a subsidiary which has
been incorporated outside India (herein referred to as
"foreign subsidiary"), which is
not required to get its financial
statement audited under any
law of the country of its
incorporation and which does
not get such financial statement
audited, the requirements of the
fourth proviso shall be met if
the holding Indian company
files such unaudited financial
statement along with a
declaration to this effect and
where such financial statement
is in a language other than
English, along with a translated
copy of the financial statement
in English
Fifth proviso
inserted in sub
section 1 of section
137
Now, Holding Indian Company can
attach unaudited financial statement
of its foreign subsidiary while filing
its financial statement with ROC.
Further, a declaration has to be
submitted by the holding company
that its foreign subsidiary does not
required to get its accounts audited
as per law of the country in which it
is incorporated and therefore the
foreign subsidiary does not get such
accounts audited.
Further, financial statement of
Foreign subsidiary has to be
translated into English language, if
the same is in any other language and
translated copy has to be attached in
the form.
23 139(1) Provided that the company
shall place the matter
relating to such appointment
for ratification by members
at every annual general
meeting:
Omitted First Proviso of
Section 139(1) will
be omitted
Now, Companies once appointed
statutory auditors for five years in
Annual General Meeting doesn’t
require to place their ratification
at subsequent annual general
meetings.
24
.
141(3)
(i) any person whose
subsidiary or associate
company or any other form
of entity, is engaged as on
the date of appointment in
consulting and specialised
services as provided in
section 144.
‘(i) a person who, directly or
indirectly, renders any service
referred to in section 144 to the
company or its holding
company or its subsidiary
company.
Explanation.—For the purposes
of this clause, the term "directly
or indirectly" shall have the
meaning assigned to it in the
Explanation to section 144.’.
Clause (i)
substituted and
explanation
inserted in clause
(i)
By substituting clause (i), it is
clarified that restriction under this
clause will be applicable, only if the
services were rendered to the
company in which it is proposed to
appoint the auditor or its holding
company or its subsidiary company
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 25
.
143(1) Provided that the auditor of
a company which is a
holding company shall also
have the right of access to
the records of all its
subsidiaries in so far as it
relates to the consolidation
of its financial statements
with that of its subsidiaries.
Provided that the auditor of a
company which is a holding
company shall also have the
right of access to the records of
all its subsidiaries and
associate companies in so far
as it relates to the consolidation
of its financial statements with
that of its subsidiaries and
associate companies.
Under section
143(1) in the
proviso, the
following words”
its subsidiaries
and associate
companies” is
inserted.
Such changes provide for auditors of
holding company to have right to
access records of subsidiaries as well
as associate company.
26 143(3)
(i)
whether the company has
adequate internal financial
controls system in place
and the operating
effectiveness of such
controls
whether the company has
adequate internal financial
controls with reference to
financial statements in place
and the operating effectiveness
of such controls
Under section
143(3)(i) the
following words,
Internal financial
control system”
are substituted by
internal financial
controls with
reference to
financial
statements
Earlier the statement Internal
Financial Control was wide in
nature and auditor has to
comment thereon, now the
proposed amendment give
relaxation to the auditor to
comment on the internal financial
control with reference to financial
statement only.
27
.
143(14
)
The provisions of this
section shall mutatis
mutandis apply to— (a) the
cost accountant in practice conducting cost audit under
section 148; or
(b) the company secretary in
practice conducting
secretarial audit under
section 204
The provisions of this section
shall mutatis mutandis apply
to—
(a) the cost accountant
conducting cost audit under
section 148; or
(b) the company secretary in
practice conducting secretarial
audit under section 204
Under section
143(14) the
following words “
cost accountant in
practice” are
substituted by “cost
accountant’
It is just to remove the ambiguity..
28
.
149 [(3) Every company shall
have at least one director
who has stayed in India for
a total period of not less
than one hundred and
eighty-two days in the
previous calendar year
(6) An independent director
in relation to a company,
means a director other than
a managing director or a
whole-time director or a
nominee director,-
[(c) who has or had no
pecuniary relationship with
the company, its holding,
subsidiary or associate
company, or their
promoters, or directors,
during the two immediately
preceding financial years or
during the current financial
year
"(3) Every company shall have
at least one director who stays
in India for a total period of not
less than one hundred and
eighty-two days during the
financial year:
Provided that in case of a newly
incorporated company the
requirement under this sub-
section shall apply
proportionately at the end of the
financial year in which it is
incorporated.";
(ii) "pecuniary relationship,
other than remuneration as such
director or having transaction
not exceeding ten per cent. of
his total income or such amount
as may be prescribed"
Sub-section 3
substituted. Words
‘previous calendar
year’ replaced by
‘during the
financial year’ and
Proviso inserted in
sub-section 3
In Section 149(6)(c
) the words
‘pecuniary
relationship’
replaced by
“pecuniary
relationship, other
than remuneration
as such director or
having transaction
not exceeding ten
For checking the resident status of
director total period of 182 days of
current financial year shall be
considered. Further, For a newly
incorporated company the
requirement of ascertaining
residential status of a director will be
applicable in proportion to the date
of incorporation of the company
Independency of a director will not
be affected even if he received
remuneration from the company or
have transaction with the company
up to 10% of his total income
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
(d) none of whose relatives
has or had pecuniary
relationship or transaction
with the company, its
holding, subsidiary or
associate company, or their
promoters, or directors,
amounting to two per cent.
or more of its gross turnover
or total income or fifty lakh
rupees or such higher
amount as may be
prescribed, whichever is
lower, during the two
immediately preceding
financial years or during the
current financial year;
(iii)"(d) none of whose
relatives—
(i) is holding any security of or
interest in the company, its
holding, subsidiary or associate
company during the two
immediately preceding
financial years or during the
current financial year:
Provided that the relative may
hold security or interest in the
company of face value not
exceeding fifty lakh rupees or
two per cent. of the paid-up
capital of the company, its
holding, subsidiary or associate
company or such higher sum as
may be prescribed;
(ii) is indebted to the company,
its holding, subsidiary or
associate company or their
promoters, or directors, in
excess of such amount as may
be prescribed during the two
immediately preceding
financial years or during the
current financial year;
(iii) has given a guarantee or
provided any security in
connection with the
indebtedness of any third
person to the company, its
holding, subsidiary or associate
company or their promoters, or
directors of such holding
company, for such amount as
may be prescribed during the
two immediately preceding
financial years or during the
current financial year; or
(iv) has any other pecuniary
transaction or relationship with
the company, or its subsidiary,
or its holding or associate
company amounting to two per
cent. or more of its gross
turnover or total income singly
or in combination with the
transactions referred to in sub-
clause (i), (ii) or (iii);";
per cent. of his
total income or
such amount as
may be prescribed"
Clause (d) totally
substituted
Further, pecuniary relationship
entered into by the relative of
Independent Director has been
categorized by providing types of
transaction in Clause (d) of Section
149(6) i.e. shareholding in the
company, indebtedness, giving
guarantee or providing security in
connection with indebtedness of any
third person to the company. While
ascertaining Independence of a
director these additional criteria is
required to be checked by the
companies.
Further, independence of a director
is not affected even if its relative is
an employee of the company during
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 e) who, neither himself nor
any of his relatives—
(i) holds or has held the
position of a key managerial
personnel or is or has been
employee of the company
or its holding, subsidiary
or associate company in
any of the three financial
years immediately
preceding the financial year
in which he is proposed to
be appointed
(iv) "Provided that in case of a
relative who is an employee,
the restriction under this
clause shall not apply for his employment during preceding
three financial years."
Proviso inserted in
clause (e), in sub-
clause (i)
preceding three financial years in
which he is proposed to be appointed
29
.
152(3) No person shall be
appointed as a director of a
company unless he has been
allotted the Director
Identification Number under
section 154
No person shall be appointed as
a director of a company unless
he has been allotted the
Director Identification Number
under section 154 or any other
number as may be prescribed
under section 153.
Under section
152(3) the
following words
“or any other
number as may be
prescribed under
section 153” are
inserted.
The change provides that be
appointed as a director, a person
should have a DIN or such other
number as prescribed under section
153.In other words the proposed
amendment provides Changes in the
section 153 i.e. Application for
allotment of DIN, Which provides
that the Central Government may
prescribe such number that shall be
treated as DIN for the purpose of this
Act, and in any case any individual
holds or acquires such identification
number ( May be Aadhar), the
requirement to apply for DIN shall
not apply or shall apply in the
prescribed manner.
Now every person wants to
appointment as director in the
company shall hold DIN or such
identification number as prescribed
by the central govt.
30
.
152(4) Every person proposed to be
appointed as a director by
the company in general
meeting or otherwise, shall
furnish his Director
Identification Number and a
declaration that he is not
disqualified to become a
director under this Act
Every person proposed to be
appointed as a director by the
company in general meeting or
otherwise, shall furnish his
Director Identification Number
or such other number as may
be prescribed under section
153 and a declaration that he is
not disqualified to become a
director under this Act
Under section
152(4) the
following words
“or such other
number as may be
prescribed under
section 153” are
inserted.
The change provides that be
appointed as a director, a person
should have a DIN or such other
number as prescribed under section
153.In other words the proposed
amendment provides Changes in the
section 153 i.e. Application for
allotment of DIN, Which provides
that the Central Government may
prescribe such number that shall be
treated as DIN for the purpose of this
Act, and in any case any individual
holds or acquires such identification
number, the requirement to apply
for DIN shall not apply or shall
apply in the prescribed manner.
Now every person wants to
appointment as director in the
company shall furnish DIN or such
identification number as prescribed
by the central govt.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 31
.
160(1) A person who is not a
retiring director in terms of
section 152 shall, subject to
the provisions of this Act, be
eligible for appointment to
the office of a director at any
general meeting, if he, or
some member intending to
propose him as a director,
has, not less than fourteen
days before the meeting, left
at the registered office of the
company, a notice in writing
under his hand signifying his
candidature as a director or,
as the case may be, the
intention of such member to
propose him as a candidate
for that office, along with the
deposit of one lakh rupees or
such higher amount as may
be prescribed which shall be
refunded to such person or,
as the case may be, to the
member, if the person
proposed gets elected as a
director or gets more than
twenty-five per cent. of total
valid votes cast either on
show of hands or on poll on
such resolution
Provided that requirements
of deposit of amount shall not
apply in case of appointment
of an independent director or
a director recommended by
the Nomination and
Remuneration Committee, if
any, constituted under sub-
section (1) of section 178.
Proviso inserted in
Sub-Section 1 of
Section 160
Deposit of Rs. 1 Lakh is not required
in case of appointment of
Independent director in the
company. Only Candidature notice
will be required for the appointment
of Independent Director in general
meeting.
Further, when Nomination and
Remuneration committee
recommend appointment of a
director in that case also deposit of
Rs. 1 lakh is not required.
32 161 (2) The Board of Directors
of a company may, if so
authorised by its articles or
by a resolution passed by
the company in general
meeting, appoint a person,
not being a person holding
any alternate directorship
for any other director in the
company, to act as an
alternate director for a
director during his absence
for a period of not less than
three months from India
(4) In the case of a public
company, if the office of
any director appointed by
the company in general
meeting is vacated before
his term of office expires in
the normal course, the
resulting casual vacancy
may, in default of and
subject to any regulations in
the articles of the company,
be filled by the Board of
a) Or holding
directorship in the
same company
b) In the case of a public
company
c) which shall be
subsequently approved
by members in the
immediate next
general meeting
In Section 164(2)
words ‘holding
directorship in the
same company’
inserted after the
words ‘alternate
directorship for any
other director in the
company’
In Section 164(4)
words ‘In the case
of a public
company’ omitted
In Section 164(4)
words ‘which shall
be subsequently
approved by
members in the
immediate next
general meeting’
inserted after the
words ‘meeting of
the Board’
Clarification - Board of a company
cannot appoint any of its director as
alternate director for any other
director in the same company.
Now, private companies can also fill
the casual vacancy created due to
vacation of the office of a director, in
its board meeting.
Casual vacancy filed by the board of
a company has to be approved by the
shareholders in the subsequent
general meeting.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 Directors at a meeting of the
Board:
33 164 2) No person who is or has
been a director of a
company which—
(a) has not filed financial
statements or annual returns
for any continuous period of
three financial years; or
(b) has failed to repay the
deposits accepted by it or
pay interest thereon or to
redeem any debentures on
the due date or pay interest
due thereon or pay any
dividend declared and such
failure to pay or redeem
continues for one year or
more, shall be eligible to be
re-appointed as a director of
that company or appointed
in other company for a
period of five years from the
date on which the said
company fails to do so.]
Provided that where a person is
appointed as a director of a
company which is in default of
clause (a) or clause (b), he shall
not incur the disqualification
for a period of six months from
the date of his appointment.";
Proviso inserted in
Section 164(2)
New Director in a company which
has made default under section
162(2) given six months’ time to
make the company compliant and if
new director did not make the
compliance under section 164(2)
within the aforementioned period
then he will also be disqualified.
34 165 Explanation.— For
reckoning the limit of public
companies in which a
person can be appointed as
director, directorship in
private companies that are
either holding or subsidiary
company of a public
company shall be included
Explanation II.—For
reckoning the limit of
directorships of twenty
companies, the directorship
in a dormant company shall
not be included
Explanation II
inserted in Section
165(1)
Now, Dormant Companies shall also
be excluded while checking the limit
of directorship of twenty companies
for a director
35
.
167(1)
(a)
Under section 167(1)(a) the
following proviso inserted.
"Provided that where he
incurs disqualification under
sub-section (2) of section 164,
the office of the director shall
become vacant in all the
companies, other than the
company which is in default
under that sub-section.";
Under section
167(1)(a) the
following proviso
inserted.
The change provides Section 164(2)
lists out disqualifications related to
the company such as non-
compliance of annual filing
requirements, etc. It was observed
that the existing provision of section
167(1)(a) created a paradoxical
situation, as the office of all the
directors in a Board would become
vacant where they are disqualified
under Section 164(2), and a new
person could not be appointed as a
director as they would also attract
such a disqualification, thus in this
regard vacancy in the office of a
director is to be triggered when
disqualification is incurred in
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 personal capacity and in case of
disqualification under section
164(2) the office of the director shall
become vacant in all companies,
other than the company which is in
default under that sub-section.
36
.
167(1)
(f)
he is convicted by a court of
any offence, whether
involving moral turpitude or
otherwise and sentenced in
respect thereof to
imprisonment for not less
than six months:
Provided that the office
shall be vacated by the
director even if he has
filed an appeal against the
order of such court;
The Proviso under section
167(1)(f) is substituted as
follows:
Provided that the office shall
not be vacated by the director
in case of
orders referred to in clauses
(e) and (f)—
(i) for thirty days from the
date of conviction or order of
disqualification;
(ii) where an appeal or
petition is preferred within
thirty days as
aforesaid against the
conviction resulting in
sentence or order, until expiry
of seven days from the date on
which such appeal or petition
is disposed
of; or
(iii) where any further appeal
or petition is preferred against order or
sentence within seven days,
until such further appeal or
petition is disposed
of.".
The Proviso under
section 167(1)(f) is
substituted.
The change has been provided to
remove the inconsistent situation
when read with the proviso to section
164(3), as these provided for a
person to be appointed as a
director if he has been convicted/
disqualified by a court and
an appeal is pending, though
such consideration is not allowed in
case the director has to vacate his
office and an appeal has been
preferred against such conviction
and sentence, thus in case of
requirement for vacation of
office should not take place till the
appeal has been disposed off.
37
.
168 Provided that a director
shall also forward a copy of
his resignation along with
detailed reasons for the
resignation to the Registrar
within thirty days of
resignation in such manner
as may be prescribed
director may also forward In the proviso of
Section 168(1),
words ‘director
shall also forward’
replaced by
‘director may also
forward’
The mandatory filing of resignation
by the director to ROC has been
given away.
Now, director has option to choose
whether they want to file their
resignation with ROC or not.
38 Sec.
173
There was only one proviso
to Section 173 (2) viz.
‘Provided that the Central
Government may, by
notification, specify such
matters which shall not be
dealt with in a meeting
through video conferencing
or other audio visual means.
There is an insertion of second
proviso to Section 173(1) viz.
"Provided further that where
there is quorum in a meeting
through physical presence of
directors, any other director
may participate through video
conferencing or other audio
visual means in such meeting on
any matter specified under the
first
Proviso."
After 1st Proviso to
Section 173 (2) the
following Proviso
has been inserted as
2nd Proviso to
Section 173(2):
"Provided further
that where there is
quorum in a
meeting through
physical presence
of directors, any
other director may
As per first proviso certain matters
such as approval of financial
statement, approval of board report
etc. cannot be dealt through video
conferencing.
But now, if requisite quorum is
present physically in the meeting
in which the above mentioned
matters are going to be discussed
then other directors can
participate in the meeting through
video conferencing
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 participate through
video conferencing
or other audio
visual means in
such meeting on
any matter
specified under the
first
Proviso."
39 Sec.
177
a) Text of Section 177(1):
The Board of Directors of
every listed company and
such other class or classes of
companies, as may be
prescribed, shall constitute
an Audit Committee.
b) There was only one
Proviso to Section 177(4)
(iv) viz.
Provided that the Audit
Committee may make
omnibus approval for
related party transactions
proposed to be entered into
by the company subject to
such conditions as may be
prescribed
a) Text of Section 177(1) after
substitution:
The Board of Directors of every
listed public company and such
other class or classes of
companies, as may be
prescribed, shall constitute an
Audit Committee.
b) There will insertions of
second, third & fourth Proviso
to Section 177 (4) (iv) viz.
Provided further that in case of
transaction, other than
transactions referred
to in section 188, and where
Audit Committee does not
approve the transaction,
it shall make its
recommendations to the Board
{as second proviso to Section
177(4)(iv)}
Provided also that in case any
transaction involving any
amount not exceeding one crore
rupees is entered into by a
director or officer of the
company without obtaining the
approval of the Audit Committee
and it is not ratified by the Audit
Committee within three months
from the date of the transaction,
such transaction shall be
voidable at the option of the
Audit Committee and if the
transaction is with the related
party to any director or is
authorised by any other
Under Section
177(1) the words
every listed
company are
substituted by
words every listed
public company
There is insertion
of three more
provisos to
Section 177 (4)
(iv)
Impact would be :
Only public companies whose
securities are listed on a recognized
stock exchange are liable to constitute
Audit Committee and those private
companies who are listed are no
longer required to constitute Audit
Committee and therefore any
provision of Companies Act, 2013
which are applicable on Audit
Committee will not be applicable to
private companies.
As per second proviso to Section
179(4) (iv), all transaction with
related parties (other than transactions
as specified in Section 188) required
approval of audit committee.
Further, if transactions as specified
above is not approved by the Audit
Committee then the Audit Committee
shall recommend the same to the
Board.
Secondly, with the insertion of third
Proviso to Section 174(4) (iv) : Every
transaction exceeding Rs. 1 crore
require prior approval of audit
committee.
However, transaction which is entered
by a director or officer of the
Company up to the limit of Rs. 1
Crore and for which prior approval
of audit committee has not been taken
then it is mandatory to get the same
ratified by the Audit Committee
within 3 months from the date of
transaction, otherwise Audit
Committee has option to annul the
transactions
Further if such transaction is entered
with any related person to any director
or authorized by any other director
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 director, the director concerned
shall indemnify the company
against any loss incurred by it
{as third proviso to Section
177(4)(iv)}
Provided also that the provisions
of this clause shall not apply to
a transaction, other than a
transaction referred to in section
188, between a holding
company and its wholly owned
subsidiary company {as fourth
proviso to Section 177(4)(iv)}
then, the director concerned will be
liable to compensate the company
against any losses incurred by it.
Now, Whenever a holding company
entered into transaction (other than
transactions as specified in Section
188) with its wholly owned subsidiary
then in that case approval of audit
committee is not required to be taken
40
.
178 a) Text of Section 178 (1)
The Board of Directors of
every listed company or
such other class or classes
of companies, as may be
prescribed shall constitute
the Nomination and
Remuneration Committee
consisting of three or more
non-executive directors out
of which not less than one-
half shall be independent
directors
b) Text of Section 178 (2)
The Nomination and
Remuneration Committee
shall identify persons who
are qualified to become
directors and who may be
appointed in senior
management in accordance
with the criteria laid down,
recommend to the Board
their appointment and
removal and shall carry out
evaluation of every
director’s performance.
a) Text of Section 178 (1) after
substitution:
The Board of Directors of every
listed public company or such
other class or classes of
companies, as may be
prescribed shall constitute the
Nomination and Remuneration
Committee consisting of three or
more non-executive directors
out of which not less than one-
half shall be independent
directors
b) Text of Section 178 (2) after
substitution:
The Nomination and
Remuneration Committee shall
identify persons who are
qualified to become directors
and who may be appointed in
senior management in
accordance with the criteria
laid down, recommend to the
Board their appointment and
removal and shall specify the
manner for effective evaluation
of performance of Board, its
committees and individual
directors to be carried out
either by the Board, by the
Nomination and Remuneration
Committee or by an
independent
external agency and review its
implementation and
compliance
Under Section
178(1) the words
every listed
company are
substituted by
words every listed
public company
Under Section
178(2) the words
shall carry out
evaluation of
every director’s
performance are
substituted by
words shall
specify the
manner for
effective
evaluation of
performance of
Board, its
committees and
individual
directors to be
carried out either
by the Board, by
the Nomination
and
Remuneration
Committee or by
an independent
external agency
and review its
Only public companies whose
securities are listed on a recognized
stock exchange are liable to constitute
Nomination and Remuneration
Committee and those private
companies who are listed are not
required to constitute Nomination and
Remuneration Committee and
therefore any provision of Companies
Act, 2013 which are applicable on
nomination and Remuneration
Committee will also not be applicable
to private company.
Now, the Nomination and
Remuneration Committee has to
specify the manner for evaluation of
performance of board (for instance
by framing policies or
questionnaires etc), every committee
of the Board and every director of the
Company.
Nomination and Remuneration
Committee of the Company is not
mandatorily required to do the
performance evaluation of Every
Director of the Company itself. Now,
board or any independent external
agency can also carry out the
performance evaluation of board, its
committee and every individual
director and NRC committee has to
keep a check on the same.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
c) The text of proviso to
Section 178(4) (c ):
Provided that such policy
shall be disclosed in the
Board's report.
d) The text of Proviso to
Section 178 (8) is:
Provided that non-
consideration of resolution
of any grievance by the
Stakeholders Relationship
Committee in good faith
shall not constitute a
contravention of this section
c)The first proviso to Section
178 (4) (C) is substituted by
following proviso:
Provided that such policy shall
be placed on the website of the
company, if any, and the salient
features of the policy and
changes therein, if any, along
with the web address of the
policy, if any, shall be disclosed
in the Board's
Report
d)The text of Proviso to Section
178 (8) after substitution:
Provided that inability to
resolve or consider any
grievance by the Stakeholders
Relationship Committee in good
faith shall not constitute a
contravention of this section
implementation
and compliance
c)the whole
proviso to section
178 (4) (c) has
been substituted
with the new
proviso namely:
Provided that such
policy shall be
placed on the
website of the
company, if any,
and the salient
features of the
policy and
changes therein, if
any, along with
the web address of
the policy, if any,
shall be disclosed
in the Board's
Report
Under Proviso to
Section 178 (8) the
words non-
consideration of
resolution of any
grievance shall be
substituted with
inability to resolve
or consider any
grievance
Companies are not required to
disclose the whole Policy for
remuneration to directors, key
managerial personnel and senior
management in its Board Report
rather it will be sufficient to disclose
only the salient features of the said
policy and any changes made therein
along with the web address of the
Policy in the Board Report. Further
the Company shall mandatorily place
the whole Policy on the website of the
Company, if any.
Now, stakeholder Relationship
committee has to consider each and
every grievance and try to resolve the
same , so that it won’t be considered
as contravention of Section 178
whereas post amendment the situation
would be:
Further, if stakeholder Relationship
committee is unable to resolve any
grievance then Committee shall be
liable to prove its inability for the
same otherwise it will be treated as
contravention of Section 178 by the
Company.
41 180 The Text of Section 180 (1)
(c):
to borrow money, where the
money to be borrowed,
together with the money
already borrowed by the
company will exceed
The text of Section 180 (1) (c)
after substitution:
to borrow money, where the
money to be borrowed, together
with the money already
borrowed by the company will
Under Section 180
(1) (c ) the words
paid-up share
capital
and free reserves
will stand
substituted with
Impact would be:
Where the existing borrowings along
with the proposed borrowing of the
Company exceeds paid up share
capital of and free reserves and
securities premium of the Company
then the company is required to take
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 aggregate of its paid-up
share capital
and free reserves, apart
from temporary loans
obtained from the company’s
bankers in the ordinary
course of business
exceed aggregate of its paid-up
share capital
and free reserves and securities
premium, apart from temporary
loans obtained from the
company’s bankers in the
ordinary course of business
words its paid-up
share capital
and free reserves
and securities
premium.
approval of Shareholders by way of
passing a special resolution. Earlier
the securities Premium account of the
Company was not considered while
calculating the limit of borrowings
under Section 180 (1) (c ) and the
insertion of such will broaden the
monetary limit of borrowing for any
company without taking the approval
of shareholders by way of passing
Special Resolution.
42 184 The text of Section 184 (4)
is:
If a director of the company
contravenes the provisions
of sub-section (1) or
subsection (2), such director
shall be punishable with
imprisonment for a term
which may extend to one
year or with fine which shall
not be less than fifty
thousand rupees but which may extend to one lakh
rupees, or with both.
The text of Section 184 (4) after
omission will be:
If a director of the company
contravenes the provisions of
sub-section (1) or subsection
(2), such director shall be
punishable with imprisonment
for a term which may extend to
one year or with fine which may
extend to one lakh rupees, or
with both.
The words “shall
not be less than
fifty thousand
rupees but which”
are omitted from
the text of Section
184 (4)
The Impact would be:
In case of Contravention of Section
184 of Companies Act, 2013 the by
director of a company, such director
can be fined up to maximum of Rs. 1
Lakh only and there is no minimum
limit on imposition of fine on the
director, which was earlier Rs.
50,000.
Therefore in case of contravention of
this section by any director of the
Company the fine can even be Rs. 1.
43 185 Text of Section185 (1) of
companies act 2013 as
under:
Save as otherwise provided
in this Act, no company
shall, directly or indirectly,
advance any loan, including
any loan represented by a
book debt, to any of its
directors or to any other
person in whom the director
is interested or give any
guarantee or provide any
security in connection with
any loan taken by him or
such other person
Text of Section 185(1) under
companies bill substituted as
under:
No company shall, directly or
indirectly, advance any loan,
including any loan represented
by a book debt to, or give any
guarantee or provide any
security in connection with any
loan taken by - (a) any director
of company, or of a company
which is its holding company or
any partner or relative of any
such director; or (b) any firm in
which any such director or
relative is a partner.
Text of Section 185(2) as
inserted under companies
amendment bill:
(2) A company may advance
any loan including any loan
represented by a book debt, or
give any guarantee or provide
any security in connection with
any loan taken by any person in
whom any of the director of the
company is interested, subject
to the condition that— (a) a
special resolution is passed by
Completely
substituted with
new Sub
section(1) of
section 185
A new Sub
Section (2) to
section 185 has
been inserted.
The impact of this new substitution
would be as under :
Companies are now completely
prohibited i.e. companies cannot
directly or indirectly advance any
loan, give any guarantee or provide
any security to directors of the
holding company;
the partner or relative of director of
such holding companies and to the
firm in which such director or
director of the holding company or
relative of any such directors is a
partner.
Companies were previously
restricted to advance loan or give
any guarantee or provide any
security to any person in whom any
of its director is interested, which
now has been allowed subject to
fulfilment of conditions as follows:
Special resolution in this regard has to
be passed by the company in its
general meeting.
Also the explanatory statement to the
notice of such general meeting shall
contain full particulars of such loan,
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Amendment Bill, 2017
Text of Explanation to
Section 185
For the purposes of this
section, the expression “to
any other person in whom
director is interested”
means—
(a) any director of the
lending company, or of a
company which is its holding
company or any partner or
relative of any such director;
(b) any firm in which any
such director or relative is a
partner;
5&6[(c) any private
company of which any such
director is a director or
member;]
(d) any body corporate at a
general meeting of which not
less than twenty five per cent.
of the total voting power may
be exercised or controlled by
any such director, or by two
or more such directors,
together; or
(e) any body corporate, the
Board of directors,
managing director or
manager, whereof is
accustomed to act in
accordance with the
directions or instructions of
the Board, or of any director
or directors, of the lending
company.
the company in general
meeting: Provided that the
explanatory statement to the
notice for the relevant general
meeting shall disclose the full
particulars of the loans given,
or guarantee given or security
provided and the purpose for
which the loan or guarantee or
security is proposed to be
utilised by the recipient of the
loan or guarantee or security
and any other relevant fact;
and (b) the loans are utilised by
the borrowing company for its
principal business activities.
Explanation.—For the purposes
of this sub-section, the
expression "any person in whom
any of the director of the
company is interested" means—
(a) any private company of
which any such director is a
director or member; (b) any
body corporate at a general
meeting of which not less than
twenty-five per cent. of the total
voting power may be exercised
or controlled by any such
director, or by two or more such
directors, together; or (c) any
body corporate, the Board of
directors, managing director or
manager, whereof is
accustomed to act in
accordance with the directions
or instructions of the Board, or
of any director or directors, of
the lending company
Text of Section 185(3) as
inserted under Companies bill:
Nothing contained in sub-
sections (1) and (2) shall apply
to—
(a) the giving of any loan to a
managing or whole-time
Explanation to
section 185 has
been substituted
guarantee given and security
provided & the purpose for which it
will be utilised.
Also such loan can only be utilised
by borrowing company for its
principal business activities and not
for any other purposes.
The definition of the expression “to
any other person in whom director is
interested has been changed. The
impact of which would we as under:
Now the companies are allowed to
advance loan or give any guarantee or
provide any security to:
(1)Private companies in which any
such director is director or member
and
(2)To any body corporate in which
such director or two or more such
director can exercise or controls
25% of total voting power at its
general meeting or
(3) To any body corporate where
board of director, managing
director or manager acts in
accordance with the directions
given by the director of such
lending company subject to
fulfilment of conditions as
prescribed above.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Amendment Bill, 2017
Text of Section 185 as under
Companies act, 2013 :
Provided that nothing
contained in this sub-section
shall apply to—
(a) the giving of any loan to
a managing or whole-time
director
(i) as a part of the conditions
of service extended by the
company to all its
employees; or
(ii) pursuant to any scheme
approved by the members by
a special resolution; or
(b) a company which in the
ordinary course of its
business provides loans or
gives guarantees or
securities for the due
repayment of any loan and in
respect of such loans an
interest is charged at a rate
not less than the bank rate
declared by the Reserve
Bank of India.
(c) any loan made by a
holding company to its
wholly owned subsidiary
company or any guarantee
given or security provided by
a holding company in
respect of any loan made to
its wholly owned subsidiary
company; or
(d) any guarantee given or
security provided by a
holding company in respect
of loan made by any bank or
financial institution to its
subsidiary company:
Provided that the loans
made under clauses (c) and
(d) are utilised by the
subsidiary company for its
principal business
activities.]
If any loan is advanced or a
guarantee or security is
given or provided in
contravention of the
provisions of sub-section (1),
the company shall be
punishable with fine which
shall not be less than five
director— (i) as a part of the
conditions of service extended
by the company to all its
employees; or (ii) pursuant to
any scheme approved by the
members by a special
resolution; or (b) a company
which in the ordinary course of
its business provides loans or
gives guarantees or securities
for the due repayment of any
loan and in respect of such loans
an interest is charged at a rate
not less than the rate of
prevailing yield of one year,
three year, five year or ten year
Government security closest to
the tenor of the loan; or (c) any
loan made by a holding
company to its wholly owned
subsidiary company or any
guarantee given or security
provided by a holding company
in respect of any loan made to its
wholly owned subsidiary
company; or (d) any guarantee
given or security provided by a
holding company in respect of
loan made by any bank or
financial institution to its
subsidiary company: Provided
that the loans made under
clauses (c) and (d) are utilised
by the subsidiary company for
its principal business activities.
.
If any loan is advanced or a
guarantee or security is given or
provided or utilised in
contravention of the provisions
of this section:-
(1) the company shall be
punishable with fine
which shall not be less
than five lakh rupees
but which may extend
to twenty-five lakh
rupees,
(2) Every officer of the
company who is in
default shall be
punishable with
imprisonment for a
term which may extend
A new sub section
(3) to section 185
has been inserted.
The new insertion has been made as
sub section(3) to section 185 order to
provide more clarity on the interest
rate and which inter-alia provides the
following:
Now, the interest rate to be charged
cannot be lower than the rate of
prevailing yield of one year, three
year, five year or ten year
government security closest to the
tenor of the loan. Further, inserted
sub section consolidates the
exemptions which were earlier also
provided.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Companies (Amendment) Bill, 2017
Amendment Bill, 2017 lakh rupees but which may
extend to twenty-five lakh
rupees, and the director or
the other person to whom
any loan is advanced or
guarantee or security is
given or provided in
connection with any loan
taken by him or the other
person, shall be punishable
with imprisonment which
may extend to six months or
with fine which shall not be
less than five lakh rupees but
which may extend to twenty-
five lakh rupees, or with
both.]
to six months or with
fine which shall not be
less than five lakh
rupees but which may
extend to twenty-five
lakh rupees
(3) The director or the
other person to whom
any loan is advanced
or guarantee or
security is given or
provided in connection
with any loan taken by
him or the other
person, shall be
punishable with
imprisonment which
may extend to six
months or with fine
which shall not be less
than five lakh rupees
but which may extend
to twenty-five lakh
rupees, or with both.'.
A new sub section
(4) to section 185
has been inserted.
With the inserted new sub section ( 4)
Any loan advanced or a guarantee or
security is given utilised in
contravention of the provisions of this
section then penalty prescribed for
officer of the company who is in
default also.
44 186 –
Loan
and
Invest
ment
by
Comp
any
No company shall directly or
indirectly —
(a) give any loan to any
person or other body
corporate;
(b) give any guarantee or
provide security in
connection with a loan to
any other body corporate or
person; and
(c) acquire by way of
subscription, purchase or
otherwise, the securities of
any other body corporate,
exceeding sixty per cent of its
paid-up share capital, free
reserves and securities
premium account or one
hundred per cent of its free
reserves and securities
premium account, whichever
is more.
Where the giving of any loan
or guarantee or providing
any security or the
acquisition under sub-
section (2) exceeds the limits
specified in that sub-section,
prior approval by means of
a special resolution
passed at a general meeting
shall be necessary.
'Explanation.—For the
purposes of this sub-section, the
word "person" does not include
any individual who is in the
employment of the company.’
Where the aggregate of the
loans and investment so far
made, the amount for which
guarantee or security so far
provided to or in all other
bodies corporate along with the
investment, loan, guarantee or
security proposed to be made
or given by the Board, exceed
the limits specified under sub-
section (2), no investment or
loan shall be made or
A new
Explanation to sub
section (2) of
section 186 has
been inserted
Sub section (3) to
section 186 is
substituted.
The purpose of inserting this
explanation was to exclude the
employees from the ambit of this
section i.e. employees who are
provided loan as a part of condition of
service or pursuant to any approved
scheme will not be covered under this
section.
With the substitution of new sub
section (3) to section 186
shareholder approval will now not
be required in case:
(1) The loan or guarantee has been
provided or security is given by the
company to its wholly owned
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Amendment Bill, 2017
Nothing contained in this
section, except sub-section
(1), shall apply—
(a) to a loan made, guarantee
given or security provided
by a banking company or an
insurance company or a
housing finance company in
the ordinary course of its
business or a company
engaged in the business of
financing of companies or of
providing infrastructural
facilities;
(b) to any acquisition—
(i) made by a non-banking
financial company registered
under Chapter IIIB of the
Reserve Bank of India Act,
1934 and whose principal
business is acquisition of
securities:
Provided that exemption to
non-banking financial
company shall be in respect
of its investment and lending
activities;
(ii) made by a company
whose principal business is
the acquisition of securities;
(iii) of shares allotted in
pursuance of clause (a) of
sub-section (1) of section 62.
guarantee shall be given or
security shall be provided
unless previously authorised by
a special resolution passed in a
general meeting:
Provided that where a loan or
guarantee is given or where a
security has been provided by a
company to its wholly owned
subsidiary company or a joint
venture company, or acquisition
is made by a holding company,
by way of subscription,
purchase or otherwise of, the
securities of its wholly owned
subsidiary company, the
requirement of this sub-section
shall not apply: Provided
further that the company shall
disclose the details of such loans
or guarantee or security or
acquisition in the financial
statement as provided under
sub-section (4).
Nothing contained in this
section shall apply— (a) to any
loan made, any guarantee given
or any security provided or any
investment made by a banking
company, or an insurance
company, or a housing finance
company in the ordinary course
of its business, or a company
established with the object of
and engaged in the business of
financing industrial enterprises,
or of providing infrastructural
facilities; (b) to any
investment— (i) made by an
investment company; (ii) made
in shares allotted in pursuance
of clause (a) of sub-section (1)
of section 62 or in shares
allotted in pursuance of rights
issues made by a body
corporate; (iii) made ,in respect
of investment or lending
activities, by a non-banking
financial company registered
under Chapter III-B of the
Reserve Bank of India Act, 1934
and whose principal business is
acquisition of securities."
Sub section (11) to
section 186 is
substituted
subsidiary company or its joint
venture or
(2) Where a holding company
acquires the securities of its wholly
owned subsidiary company.
Also it is specified that now it is
mandatory on the part of the
company to disclose the details of
such loan or guarantee provided or
security given in the financial
statements.
The substituted sub section (11) to
section 186 inter alia provides
exemption to:
Banking company, insurance
company, or a housing finance
company and a company
established with the object of and
engaged in the business of financing
industrial enterprises, or of
providing infrastructural facilities with respect to loan made, any
guarantee given or any security
provided or any investment made.
(b) investment made by investing
company or allotment pursuant to
right issue or made ,in respect of
investment or lending activities, by a
non-banking financial company
registered under Chapter III-B of the
Reserve Bank of India Act.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Companies (Amendment) Bill, 2017
Amendment Bill, 2017 "(iv) made by a banking
company or an insurance
company or a housing
finance company, making
acquisition of securities in
the ordinary course of its
business."
For the purposes of this
section,—
(a) the expression
“investment company”
means a company whose
principal business is the
acquisition of shares,
debentures or other
securities;
(b) the expression
“infrastructure facilities”
means the facilities specified
in Schedule VI.]
The following text has been
inserted in the Explanation:
in clause (a), after the words
"other securities" the following
shall be inserted, namely:—
"and a company will be deemed
to be principally engaged in the
business of acquisition of
shares, debentures or other
securities, if its assets in the
form of investment in shares,
debentures or other securities
constitute not less than fifty per
cent of its total assets, or if its
income derived from investment
business constitutes not less
than fifty per cent as a
proportion of its gross income.".
Text has been
inserted in the
Explanation in
clause (a) to
Section 186
Now with the inserted explanation the
deemed investment company has also
been included in the definition of
investment company.
45 188 The text of Provisos to
Section 188 (1) are:
Provided that no contract or
arrangement, in the case of a
company having a paid-up
share capital of not less than
such amount, or transactions
not exceeding such sums, as
may be prescribed, shall be
entered into except with the
The following proviso is
inserted as third proviso to
Section 188 (1):
Provided also that nothing
contained in the second proviso
shall apply to a company in
which ninety per cent. or more
members, in number, are
relatives of promoters or are
related parties
With the Insertion
of new proviso
after second
proviso to Section
188 (1) the
existing provisos
to section 188 (1)
are renumbered
as:
A Company where the ninety per cent.
or more members, in number, are
relatives of promoters or are related
parties then in that case such member
instead of being a related party to any
contract or arrangement which is
proposed to be entered by the
company, can vote on the resolution
to approve such contract or
arrangement.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Companies (Amendment) Bill, 2017
Amendment Bill, 2017 prior approval of the
company by a resolution
Provided further that no
member of the company
shall vote on such resolution,
to approve any contract or
arrangement which may be
entered into by the company,
if such member is a related
party
Provided also that nothing in
this sub-section shall apply
to any transactions entered
into by the company in its
ordinary course of business
other than transactions
which are not on an arm’s
length basis.
Provided also that the
requirement of passing the
resolution under first
proviso shall not be
applicable for transactions
entered into between a
holding company and its
wholly owned subsidiary
whose accounts are
consolidated with such
holding company and placed
before the shareholders at
the general meeting for
approval.
The third proviso
will become the
fourth proviso and
the fourth proviso
will become the
fifth proviso.
46 196(4) Subject to the provisions of
section 197 and Schedule V,
a managing director, whole-
time director or manager
shall be appointed and the
terms and conditions of such
appointment and
remuneration payable be
approved by the Board of
Directors at a meeting which
shall be subject to approval
by a resolution at the next
general meeting of the
company and by the Central
Government in case such
appointment is at variance to
the conditions specified in
that Schedule:
Subject to the provisions of
section 197 and Schedule V, a
managing director, whole-time
director or manager shall be
appointed and the terms and
conditions of such appointment
and remuneration payable be
approved by the Board of
Directors at a meeting which
shall be subject to approval by a
resolution at the next general
meeting of the company and by
the Central Government in case
such appointment is at variance
to the conditions specified in
Part I of that Schedule".
Under section
196(4) the
following words
“specified in that
Schedule” is
substituted by
“specified in Part
I of that
Schedule”
Such change is kind of clarification in
nature.
47 197(1) Provided that the company
in general meeting may,
with the approval of the
Central Government,
authorise the payment of
remuneration exceeding
eleven per cent. of the net
Provided that the company in
general meeting may, authorise
the payment of remuneration
exceeding eleven per cent. of the
net profits of the company,
subject to the provisions of
Schedule V
Under section
197(1) the
following words
“with the
approval of the
Central
The change 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.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Amendment Bill, 2017 profits of the company,
subject to the provisions of
Schedule V
Provided further that, except
with the approval of the
company in general
meeting,— (i) the
remuneration payable to any
one managing director; or
whole-time director or
manager shall not exceed
five per cent. of the net
profits of the company and if
there is more than one such
123 director remuneration
shall not exceed ten per cent.
of the net profits to all such
directors and manager taken
together;
(ii) the remuneration payable
to directors who are neither
managing directors nor
whole-time directors shall
not exceed,—
(A) one per cent. of the net
profits of the company, if
there is a managing or
whole-time director or
manager;
(B) three per cent. of the net
profits in any other case
Provided further that, except
with the approval of the
company in general meeting by
a special resolution,—
(i) The remuneration payable to
any one managing director; or
whole-time director or manager
shall not exceed five per cent. Of
the net profits of the company
and if there is more than one
such 123 director remuneration
shall not exceed ten per cent. of
the net profits to all such
directors and manager taken
together;
(ii) the remuneration payable to
directors who are neither
managing directors nor whole-
time directors shall not
exceed,—
(A) one per cent. of the net
profits of the company, if there
is a managing or whole-time
director or manager;
(B) three per cent. of the net
profits in any other case
Provided also that, where any
term loan of any bank or public
financial institution is subsisting
or the company has defaulted in
payment of dues to non-
convertible debenture holders or
any other secured creditor, the
prior approval of the bank or
public financial institution
concerned or
the non-convertible debenture
holders or other secured
creditor, as the
case may be, shall be obtained
by the company before
obtaining the approval in the
general meeting.
Government” are
totally omitted
Under section
197(1)(a) 2nd
proviso the “after
the words "general
meeting,", the
words "by a
special
resolution," are
inserted;
Now the Company can make payment
of remuneration exceeding 11% of the
net profits of the company by passing
SR in the GM and now there is not
required to take the approval of the
central govt.
Such change is clarificatory in nature.
Approval of banks/public
financial institutions/non
-convertible debenture
holders/secured creditors is
required to be obtained in case of
default made by the company, before
obtaining the approval of members in
the general meeting.
Proposed amendment increase the
compliances required for those
company who has made default under
3rd proviso of section197 as
mentioned in the second column.
Following Compliances are required :
a) required to take the approval of
banks/public financial
institutions/non-convertible
debenture holders/secured creditors
before taking the approval of the
shareholder in the general meeting.
b)Approval of shareholder in the
general meeting( if Company is paid
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Amendment Bill, 2017 remuneration to Director or WTD or
Manager in any financial year
increasing 11% of the net profit of that
financial year)
197(3) Notwithstanding anything
contained in sub-sections (1)
and (2), but subject to the
provisions of Schedule V, if,
in any financial year, a
company has no profits or its
profits are inadequate, the
company shall not pay to its
directors, including any
managing or whole-time
director or manager, by way
of remuneration any sum
exclusive of any fees
payable to directors under
sub-section (5) hereunder
except in accordance with
the provisions of Schedule V
and if it is not able to
comply with such
provisions, with the
previous approval of the
Central Government
Notwithstanding anything
contained in sub-sections (1)
and (2), but subject to the
provisions of Schedule V, if, in
any financial year, a company
has no profits or its profits are
inadequate, the company shall
not pay to its directors,
including any managing or
whole-time director or manager,
by way of remuneration any
sum exclusive of any fees
payable to directors under sub-
section (5) hereunder except in
accordance with the provisions
of Schedule V.
Under section
197(3) the
following words
“and if it is not
able to comply
with such
provisions, with
the previous
approval of the
Central
Government” are
omitted.
The change does away with the
restrictive regime of obtaining the
approval of the Central Government
for payment of managerial
remuneration by companies having
no/inadequate profits.
Proposed amendment give relaxation
to the those company who has
no/inadequate profit in any financial
year and wants to give a remuneration
to their director or WTD or Manager
provided that such company required
to comply the provision of schedule
V.
197(9) If any director draws or
receives, directly or
indirectly, by way of
remuneration any such sums
in excess of the limit
prescribed by this section or
without the prior sanction
of the Central
Government, where it is
required, he shall refund
such sums to the company
and until such sum is
refunded, hold it in trust for
the company.
If any director draws or
receives, directly or indirectly,
by way of remuneration any
such sums in excess of the limit
prescribed by this section or
without approval required
under this section, he shall
refund such sums to the
Company, within two years of
such lesser period as may be
allowed by the company, and
until such sum is refunded, hold
it in trust for the company.
Under section
197(9) the
following clause is
substituted.
As proposed amendment required is
clarificatory in nature, in light of the
approval of the Central Government
being done away with.
“without approval required under
this section” significances that Approval required under section
197(1) & (3) i.e. Approval of
shareholder in the general meeting or
approval of banks/public financial
institutions/non-convertible
debenture holders/secured creditors.
And Now every director who draws or
receives remuneration in excess of
limit prescribed or without the
approval required as mentioned above
shall refund to the company within 2
year of such lesser period as specified
by the company.
197(10
)
The company shall not
waive the recovery of any
sum refundable to it under
sub-section (9) unless
permitted by the Central
Government.
The company shall not waive
the recovery of any sum
refundable to it under sub-
section (9) unless approved by
the company by special
resolution within two years
from the date the sum
becomes refundable.
Under section 197
(10) the following
words “permitted
by the Central
Government” is
substituted by
“approved by the
company by
special resolution
within two years
from the date the
The change 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.
Now every company is required
taking the approval of shareholder in
the general meeting by passing the SR
for waive of such sum as specified in
the section 197(9).
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
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Amendment Bill, 2017
Provided that where any term
loan of any bank or public
financial institution is subsisting
or the company has defaulted in
payment of dues
to non-convertible debenture
holders or any other secured
creditor, the prior approval of
the bank or public financial
institution concerned or the
Non-convertible debenture
holders or other secured
creditor, as the case may be,
shall be obtained by the
company before obtaining
approval of such waiver.
sum becomes
refundable’.
This proviso insert
under section
197(10).
Further approval of banks/public
financial institutions/non-
convertible
debenture holders/secured creditors
is required to be obtained in case
of
Default before obtaining the approval
of members in the general meeting.
197(11
)
In cases where Schedule V is
applicable on grounds of no
profits or inadequate profits,
any provision relating to the
remuneration of any director
which purports to increase or
has the effect of increasing
the amount thereof, whether
the provision be contained in
the company’s
memorandum or articles, or
in an agreement entered into
by it, or in any resolution
passed by the company in
general meeting or its Board,
shall not have any effect
unless such increase is in
accordance with the
conditions specified in that
Schedule and if such
conditions are not being
complied, the approval of
the Central Government
had been obtained.
In cases where Schedule V is
applicable on grounds of no
profits or inadequate profits, any
provision relating to the
remuneration of any director
which purports to increase or
has the effect of increasing the
amount thereof, whether the
provision be contained in the
company’s memorandum or
articles, or in an agreement
entered into by it, or in any
resolution passed by the
company in general meeting or
its Board, shall not have any
effect unless such increase is in
accordance with the conditions
specified in that Schedule.
Under section
197(10) the
following words”
and if such
conditions are
not being
complied, the
approval of the
Central
Government had
been obtained”
are omitted.
The change does away with the
requirement of obtaining approval of
the Central Government.
197 (16) The auditor of the company
shall, in his report under section
143,
make a statement as to whether
the remuneration paid by the
company to its
directors is in accordance with
the provisions of this section,
whether remuneration paid to
any director is in excess of the
limit laid down under this
Section and give such other
details as may be prescribed.
After sub-section
(15), the sub-
sections 16 & 17
shall be inserted.
The change relates to information
to be stated in the auditor‘s report
under section 143 with respect to
remuneration paid by the
company to its directors.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 (17) On and from the
commencement of the
Companies (Amendment) Act,
2017, any application made to
the Central Government under
the provisions of
this section [as it stood before
such commencement], which is
pending with that
Government shall abate, and the
company shall, within one year
of such commencement, obtain
the approval in accordance with
the provisions of this
Section, as so amended."
Further, any application made to
the Central Government prior
to the Companies (Amendment)
Act, 2016
shall stand abated and the
company shall, within one year
of such commencement, obtain
the approval in accordance with
the provisions of this
Section, as so amended.
198(3)
(a)
profits, by way of premium
on shares or debentures of
the company, which are
issued or sold by the
company;
profits, by way of premium on
shares or debentures of the
company, which are issued or
sold by the company unless the
company is an investment
company as referred to in the
Explanation to section 186
Under section
198(3)(a) the
following words
“unless the
company is an
investment
company as
referred to in the
Explanation to
section 186” are
inserted.
The change provides that
for calculating net profit under this
section, profits on sale of
investments credit shall be given in
case of Investment Companies,
whose principal business was sale
and purchase of investments.
48 198(4)
(L)
the excess of expenditure
over income, which had
arisen in computing the net
profits in accordance with
this section in any year
which begins at or after the
commencement of this Act, in so far as such excess has
not been deducted in any
subsequent year preceding
the year in respect of which
the net profits have to be
ascertained;
the excess of expenditure over
income, which had arisen in
computing the net profits in
accordance with this section in
any year, in so far as such excess
has not been deducted in any
subsequent year preceding the
year in respect of which the net
profits have to be ascertained
Under section
197(4)(L) the
following words
“which begins at
or after the
commencement
of this Act, is
omitted
The change has been made to
provide for the deduction of brought
forward losses of the years prior to
the commencement of the Act, 2013.
49 403(1) Provided that any document,
fact or information may be
submitted, filed, registered
or recorded, after the time
specified in relevant
provision for such
submission, filing,
registering or recording,
within a period of two
hundred and seventy days
from the date by which it
should have been submitted,
filed, registered or recorded,
as the case may be, on
payment of such additional
fee as may be prescribed.
Provided that where any
document, fact or information
required to be submitted, filed,
registered or recorded, as the
case may be, under section 92
or 137 is not submitted, filed,
registered or recorded, as the
case may be, within the period
provided in those sections, it
may be submitted, filed,
registered or recorded, as the
case may be, after expiry of
period so provided in those
sections, on payment of such
additional fees as may be
prescribed , which shall not be
less than one hundred rupees per
day and different amounts may
be prescribed for different class
of companies:
The proviso 1&2
of section 403(1)
are substituted.
A big change in additional fees for
delay in filling documents as follows:
a. Delay in filling financial
statement and annual return
will lead to minimum Rs.
100 per day additional filling
fees;
b. Any other document will
lead to additional fees as
may be prescribed;
c. Default of two or more
occasions, the additional
fees shall be double the
actual additional fees.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
Provided further that any
such document, fact or
information may, without
prejudice to any other legal
action or liability under the
Act, be also submitted, filed,
registered or recorded, after
the first time specified in
first proviso on payment of
fee and additional fee
specified under this section.
Provided further that where the
document, fact or information,
as the case may be, in cases
other than refered to in the first
proviso, is not submitted , filed,
registered or recorded, as the
case may be, within the period
provided in the relevant section
, it may, without prejudice to
any other legal action or liability
under this Act, be submitted,
filed, registered or recorded, as
the case may be, on payment of
such additional fee ,as may be
prescribed and different
amounts may be prescribed for
different class of companies::.
Provided also that where there is
default on two or more
occasions
in submitting, filing, registering
or recording of the document,
fact or information, it may,
without prejudice to any legal
action or liability under
this Act, be submitted, filed ,
registered or recorded , as the
case may be , on payment of a
higher additional fees, as may be
prescribed and which shall not
lesser than twice the additional
fees provided under the first or
second proviso as applicable.
403(2) Where a company fails or
commits any default to
submit, file, register or
record any document, fact or
information under sub-
section (1)before the expiry
of the period specified in the
first proviso to that sub-
section with additional fee,
the company and the officers
of the company who are in
default, shall, without
prejudice to the liability for
payment of fee and
additional fee, be liable for
the penalty or punishment
provided under this Act for
such failure or default
Where a company fails or
commits any default to submit,
file, register or record any
document, fact or information
under sub-section (1)before the
expiry of the period specified in
the relevant section with
additional fee, the company and
the officers of the company who
are in default, shall, without
prejudice to the liability for
payment of fee and additional
fee, be liable for the penalty or
punishment provided under this
Act for such failure or default
Under section
403(2) the
following words “
first proviso to
that sub-section”
is substituted by
“relevant
section”.
Before commencement of proposed
amendment there was ambiguity in
relation to interpretation of “first
proviso to that sub-section”.
As proposed amendment give a clear
picture of relevant section.
As per the proposed amendment
relevant section means: 92, 137
which is mention in the section
403(1).
50 441 Notwithstanding anything
contained in the Code of
Criminal Procedure, 19 Sub-
section (1) (a) and (b) 73,
any offence punishable
under this Act (whether
committed by a company or
any officer thereof) with
Notwithstanding anything
contained in the Code of
Criminal Procedure, 19 Sub-
section (1) (a) and (b) 73, any
offence punishable under this
Act (whether committed by a
company or any officer thereof)
not being an offence
Under section
441(1) the
following words
“with fine only”
is substituted by
“not being an
offence
punishable with
Before the proposed amendment, if
any offence punishable under the act
with fine only is compoundable by the
tribunal. Other offences punishable
with imprisonment or fine or both are
compoundable with the approval of
special court.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 fine only, may, either before
or after the institution of any
prosecution, be compounded
by—
(a) the Tribunal; or
(b) where the maximum
amount of fine which may be
imposed for such
offence does not exceed five
lakh rupees, by the Regional
Director or any officer
authorised by the Central
Government,
on payment or credit, by the
company or, as the case may
be, the officer, to the Central
Government of such sum as
that Tribunal or the Regional
Director or any officer
authorised by the Central
Government, as the case may
be, may specify:
Provided that the sum so
specified shall not, in any
case, exceed the maximum
amount of the fine which
may be imposed for the
offence so compounded:
Provided further that in
specifying the sum required
to be paid or credited for the
compounding of an offence
under this sub-section, the
sum, if any, paid by way of
additional fee under sub-
section (2) of section
403 shall be taken into
account:
Provided also that any
offence covered under this
sub-section by any company
or its officer shall not be
compounded if the
investigation against such
company has been initiated
or is pending under this Act.
punishable with
imprisonment only, or
punishable
with imprisonment and also
with fine, may, either before or
after the institution of any
prosecution, be compounded
by—
(a) the Tribunal; or
(b) where the maximum amount
of fine which may be imposed
for such offence does not exceed
five lakh rupees, by the
Regional Director or any officer
authorised by the Central
Government,
on payment or credit, by the
company or, as the case may be,
the officer, to the Central
Government of such sum as that
Tribunal or the Regional
Director or any officer
authorised by the Central
Government, as the case may
be, may specify:
Provided that the sum so
specified shall not, in any case,
exceed the maximum amount of
the fine which may be imposed
for the offence so compounded:
Provided further that in
specifying the sum required to
be paid or credited for the
compounding of an offence
under this sub-section, the sum,
if any, paid by way of additional
fee under sub-section (2)
of section 403 shall be taken into
account:
Provided also that any offence
covered under this sub-section
by any company or its officer
shall not be compounded if the
investigation against such
company has been initiated or is
pending under this Act.
imprisonment
only, or
punishable
with
imprisonment
and also with
fine”.
As it is observed that as per scheme of
the act most of the offences which are
punishable with fine or imprisonment
or both are technical/ procedural in
nature and thus for the ease in
administration of the act, the old
provision relating to compounding
may be re-instated. Therefore, under
sub-section (1) the tribunal / Regional
director shall have the power to
compound offences punishable with
fine as well as offences punishable
with imprisonment or fine or both.
So non- compoundable offence shall
be:
a. Imprisonment only;
b. Punishable with
Imprisonment and also with
fine.
51 447 Without prejudice to any
liability including repayment
of any debt under this Act or
any other law for the time
being in force, any person
who is found to be guilty of
fraud, shall be punishable
with imprisonment for a
term which shall not be less
than six months but which
Without prejudice to any
liability including repayment of
any debt under this Act or any
other law for the time being in
force, any person who is found
to be guilty of fraud involving
an amount of at least
ten lakh rupees or one
percent. of the turnover of the
company, whichever is lower,
Under section 447
the following
words “guilty of
fraud” is
substituted by
“involving an
amount of at least
ten lakh rupees
or one percent. of
the turnover of
The change provides those frauds
involving less than 10 lac rupees to be
compoundable offences.
Now any company is punishable for a
fraud involving an amount of ten lakh
rupees or one percent of the
turnover of the company,
whichever is lower shall be
punishable with imprisonment for a
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017 may extend to ten years and
shall also be liable to fine
which shall not be less than
the amount involved in the
fraud, but which may extend
to three times the amount
involved in the fraud:
Provided that where the
fraud in question involves
public interest, the term of
imprisonment shall not be
less than three years.
shall be punishable with
imprisonment for a term which
shall not be less than six months
but which may extend to ten
years and shall also be liable to
fine which shall not be less than
the amount involved in the
fraud, but which may extend to
three times the amount involved
in the fraud:
Provided that where the fraud in
question involves public
interest, the term of
imprisonment shall not be less
than three years.
the company,
whichever is
lower”.
term of 6 month. Therefore such
offence shall not be eligible for
compounding of offence under
section 441.
Passed By Lok Sabha : 27th July, 2017 President Assent Pending Passed By Rajya Sabha : 19th December, 2017 Notification by Central Government Pending
Highlights of Key Amendments of
Companies (Amendment) Bill, 2017
Amendment Bill, 2017
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