Companies (Amendment) Act, 2017

Companies (Amendment) Act, 2017
PRESENTED AT THE CPE SESSION OF KOTTAYAM BRANCH OF ICAI ON 08TH JUNE 2018 Suri & Co; Quality Control Wing

Suri & Co, Quality Control Wing
The Journey Introduced in the LOK SABHA on March 16, 2016 Referred to the Standing Committee on finance on April 12, 2016 Standing Committee adopted its report on November 30, 2016 The Companies (Amendment) Bill, 2017 was passed by the LOK SABHA on July 27, 2017 The Companies (Amendment) Bill, 2017 was passed by the RAJYA SABHA on December 19, 2017 Obtained the Assent of the President of India & notified in Official Gazette on Suri & Co, Quality Control Wing

Applicability of the Sections
Notifications to remember S O 351(E) Dated S O 630(E) Dated S O 1833 (E) Dated Other Sections Yet to be notified Suri & Co, Quality Control Wing

Amendment Act 2017 Associate Company (Section 2(6)) : Significant influence is amended to mean control of at least 20% of the voting power or control or participation in business decision under an agreement. Financial Year (Section 2(41)) : The companies which are associates or joint ventures of a company incorporated outside India can now approach Tribunal for adoption of a different financial year. Holding Company (Section 2(46)) : Companies include Body Corporate Subsidiary Company (Section 2(87)) : 50% of the total voting power will determine the control and not the Capital. Suri & Co, Quality Control Wing

Amendment Act 2017 Small Company (Section 2(85)) : Threshold Limits increased & Clarification inserted to mean last P&L means immediately preceding year P&L Interested Director (Section 2(49)) – Deleted KMP (Section 2(51)) : Whole time employees, one level below Directors if designated as KMP Net worth (Section 2(57)) : Surplus / Deficit of P&L to be considered Related Party (Section 2(76)) : Investing Company / Venturer are also RP Turnover (Section 2(91)) : Linked to what is shown in P&L Suri & Co, Quality Control Wing

Amendment Act 2017 All members severally liable if no of members fall below the limit – New Sec 3A Time for reservation of Name of a new co shortened to 20 Days. Existing Co still get 60 days if there a name change – (Section 4) For company registration, instead of affidavits, declarations will be required; (Section 7 – Incorporation of a company) Time Limit Increased to 30 days from 15 days in section 12 – Registered Office of the company Suri & Co, Quality Control Wing

Amendment Act 2017 In addition to Directors & Key Managerial Personnel, any employee can also authenticate documents; (Section 21- Authentication of documents, proceedings and contracts ) Issue of Shares on Private Placement Section 42 replaced Voting Rights section enhanced to include sec 188 also (Section 47 (1)) Sweat Equity Shares can be issued at any time. Currently it can be issued after one year from commencement of business; (Section 54- Issue of Sweat Equity Shares) Suri & Co, Quality Control Wing

Amendment Act 2017 Further issue of shares – Valuation of shares subject to provisions of Chapter III - Courier or any other mode proof of delivery of is an accepted method of dispatch – (Section 62) Suri & Co, Quality Control Wing

Amendment Act 2017 Deposits (Section 73) - Deposit amount raised to 20% from 15 % - An amount being not less than 20% of the amount of deposits, maturing during the following financial year be deposited on or before the 30th April. Requirement of providing deposit insurance is omitted; Companies which had defaulted in repayment of deposits, can also accept deposits after a period of 5 years from the date of making good the default. Time Limit of repayment of deposits accepted before the commencement of Companies Act 2013 enhanced to 3yrs from I yr- (Section 74) Suri & Co, Quality Control Wing

Amendment Act 2017 Section 76A- Punishment for Contravention under Deposits : Reduction in penalty: It is amended to change the penalty from a fine not less than rupees one crore to rupees one crore or twice the amount of deposits accepted by the company, whichever is lower. Further it is amended that an officer of the company who is in default shall be punishable with imprisonment and fine Suri & Co, Quality Control Wing

Amendment Act 2017 Registration of Charge (Section 77) : RBI given powers to exempt certain registration Application of registration of Charge to be made within 30 Days (Section 78) Sec 77 Delinked from Section 82 – Reporting on satisfaction of charge & max time limit of 300 days to file satisfaction of charge Suri & Co, Quality Control Wing

Amendment Act 2017 Certain sub section omitted from Annual return – (Section 92) Abridged form of annual return for One Person Company (‘OPC’), Small Company and such other class or classes of companies to be prescribed. It is amended to omit the requirement of MGT-9 i.e. extract of annual return, which forms part of the Board’s Report. Instead, the copy of annual return shall be uploaded on the website of the company, if any, and its link shall be disclosed in the Board’s report; Suri & Co, Quality Control Wing

Amendment Act 2017 No separate return for change in promoter holding required for Listed Companies – Section 93 Omitted Copy of spl resolution need not be submitted to ROC in case of different place of keeping the registers and returns Annual General Meeting (‘AGM’) of unlisted company may be held at any place in India if consent is given is writing or by electronic mode by all the members in advance. – Section 96 Suri & Co, Quality Control Wing

Amendment Act 2017 Extraordinary General Meeting (‘EGM’) of wholly owned subsidiary of a company incorporated outside India can be held outside India. A company other than wholly owned subsidiary of a company incorporated outside India must hold EGM at a place within India. Suri & Co, Quality Control Wing

Amendment Act 2017 Proviso to Section 101 replaced – Shorter Notice for meetings Proviso added to sec 110 – Postal Ballot to give option to companies to transact the same by e voting at general meetings – refer Companies Management and Administration Rules 2014 Suri & Co, Quality Control Wing

Amendment Act 2017 Section 117 – Resolutions and agreements to be filed with ROC gets revamped – Penalty reduced, Time limit linked to sec removed and certain details need not be filed. Section 121 – Report on AGM – Time limit linked to sec removed Suri & Co, Quality Control Wing

Amendment Act 2017 Consolidated Financial statements mandatory with subsidiaries and associates. Rewording of Section 129 (3). Signing of Financial Statements – CEO to sign even if he is not a director. Boards report to disclose web link of changes in policies instead of mentioning them in the report it is amended to omit the responsibility of the Board for carrying the performance evaluation of Board, Directors and committee. Suri & Co, Quality Control Wing

Amendment Act 2017 Corporate Social Responsibility - Eligibility for doing CSR to be determined based on preceding “Financial Year” instead of “three preceding Financial Years”; Where a company is not required to appoint an independent director, it shall have in its Corporate Social Responsibility Committee, two or more directors. No obligation on companies to make good the deficiency in CSR spend of one year in subsequent years. the Central Government to prescribe sums which shall not be included for calculating 'net profit' of a company under section 135 Suri & Co, Quality Control Wing

Amendment Act 2017 Annual rectification of appointment of auditors by members is omitted; (Section – 139) Restriction on Auditors to provide services mentioned under section to group companies Associate companies along with subsidiary companies covered with respect to right of auditors to have access to accounts and records. (Section – 143) The auditor’s report is to include whether internal financial controls with reference to financial statement are in place and not in respect of internal financial control system Suri & Co, Quality Control Wing

Amendment Act 2017 Penalty for non filing of ADT 3 reduced to fifty thousand rupees or the remuneration of auditor whichever is less. Criminal liability in case of fraud amended to be limited to partner(s) will not include firm (Section – 147) Suri & Co, Quality Control Wing

Amendment Act 2017 Board of Directors – Section 149 subsection 3 & 6 Substituted Proviso inserted to section 153 to allow CG to prescribe any identification number instead of DIN – Consequential amendments made in Sec 152 & 154 Requirement of Deposit of Rs. 1 Lakh removed for ID, Directors recommended by other committee/BOD - Section 161 All companies including a private company (previously public company only) may fill up the causal vacancy by the board and casual vacancy filled by the Board shall be subsequently approved in the immediate next general meeting. Section 161(4) Suri & Co, Quality Control Wing

Amendment Act 2017 Remedies for mass disqualification – 6 Months time limit to rectify the mistakes – Section 164 Dormant Companies not to be included for computing the number of directorships – Section 165 Vacancy of Directorship in all companies other than the defaulting Company – Section 167 Physical Quorum important criteria – If available others can participate through Video Conferencing – Section 173 Suri & Co, Quality Control Wing

Amendment Act 2017 Audit Committee (Section 177) : Approval of audit committee with respect to transactions between a holding company and its wholly owned subsidiary company will only be required, if the transactions falls under section 188 . 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 Suri & Co, Quality Control Wing

Amendment Act 2017 Powers of the board widened to include securities premium along with Capital + Free Reserves – Section 180 Section 185 has now laid down three categories in grant of loan; Category I :Persons to whom loan cannot be given Category II :Persons to whom loan can be given subject to passing of special resolution Category III : Certain persons to whom loans can be given Suri & Co, Quality Control Wing

Amendment Act 2017 Category I :Persons to whom loan cannot be given Director of the company or director of the holding company or any partner or relative of such director. Any firm in which such director or relative is a partner. Category II :Persons to whom loan can be given subject to passing of special resolution any private company of which any such director is a director or member; 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 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. Suri & Co, Quality Control Wing

Amendment Act 2017 Category III : Certain persons to whom loans can be given MD or WTD as a part of employment in general or as per a scheme approved by members by way of special resolution. A company in its ordinary course of business provides loans or gives guarantees or securities for repayment of loan and subject such interest rates charged at par with Govt securities. Any loan/guarantee or security provided by holding company to wholly owned subsidiary (WOS) provided it is utilised by the subsidiary for its principal business activities Penalises defaulting officer in the company along with the company and director or the other person to whom any loan is advanced or guarantee or security is given. Suri & Co, Quality Control Wing

Amendment Act 2017 Related Party Transactions (Section 188) : Restriction on voting by relatives in the general meeting shall not apply to a company in which ninety per cent or more members in numbers are relatives of promoters or related parties. Non-ratification of transaction shall be voidable at the option of the Board or shareholders, as the case may be Suri & Co, Quality Control Wing

Amendment Act 2017 Prohibition on forward dealings in securities of company by director or key managerial personnel – Section 194 has been omitted Prohibition on insider trading of securities – Section 195 has been omitted It is amended that in respect of appointment of managing director, whole time director or manager, approval of Central Government shall only be required in case the appointment is not in accordance with the matters specified in Part I of Schedule V. (Section 196) Suri & Co, Quality Control Wing

Amendment Act 2017 Fees for delay substantially increased in 403 – 100/ day – Differential penalty for different class of companies Rationalisation of penalties in many cases. Suri & Co, Quality Control Wing

Audit Requirements Physical Verification of Assets – Along with reasons for variation if any Physical Verification of Inventory – Along with reasons for variation if any Confirmation of Balances of Debtors along with Reconciliation if any Confirmation of Balances of Creditors along with Reconciliation if any Confirmation of Creditors for classification as MSMED Confirmation of Balances of between Inter Companies (Group Concerns) List of Related Parties along with Transactions entered with them Confirmation of balance of all the bank accounts as on 31st March 2018. Suri & Co, Quality Control Wing

Audit Requirements Physical Cash Confirmation as on 31st March 2018 along with Copy of the Cash Book Balance. Confirmation of balance of Bank Deposit and the interest accrued. Copies of Board Resolutions passed during the year Registers under Companies Act 2013 for Verification List of Contingent Liability as on 31st March 2018 Confirmation of Stock with sub contractors along with reconciliation if any Suri & Co, Quality Control Wing

Audit Requirements Reconciliation of Inward and outward supply with VAT/ Excise / Service tax/ GST Return State wise / GSTIN wise Copies of Orders received during the year – Income Tax / VAT / Excise / ST List of Fixed Assets Capitalised during the year – Copy of the same for our records and Income Tax Records Suri & Co, Quality Control Wing

Suri & Co, Quality Control Wing

Companies (Amendment) Act, 2017

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