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Key points from Cos (Amend.) Bill, 2017
The Companies (Amendment) Bill, 2017 has been passed by both the houses of parliament and is awaiting President’s assent. The proposed Amendments are broadly aimed at addressing difficulties faced by stakeholders and facilitating ease of doing business
The Companies (Amendment) Bill, 2017 has been passed by both the houses of parliament and is awaiting President’s assent. The proposed Amendments are broadly aimed at addressing difficulties faced by stakeholders and facilitating ease of doing business.
Ratification of Auditor [Section 139(1)]: The first proviso to S.139(1) required that the matter relating to appointment of auditor be placed for ratification by the members in each AGM. This requirement has now been omitted.
Private Placement [Section 42]: The process of private placement of securities has been simplified. It has been provided that private placement offer and application shall not carry any right of renunciation and that money received under the private placement shall not be utilized unless the return of allotment is filed with the ROC. Such return has to be filed within 15 days of allotment as against the 30 days time period provided earlier.
Concept of Significant Beneficial Owner Introduced [Section 90]: As per S.90, every individual, who acting alone or together, through one or more persons, holds beneficial interests, of not less than 25%, in shares of a company shall be identified as “significant beneficial owner” (SBO). Such SBO will have to make a declaration about influence and his nature of interest etc. Every company has to maintain register containing prescribed details of SBOs and file periodic returns with the Registrar within such time, in such form and manner as may be prescribed.
Penal Provisions Rationalized: The penal provisions for procedural and technical defaults are rationalized and liabilities are reduced. Two new sections with respect to factors for determining the level of punishment and for lesser penalties for one person companies and small companies are also inserted and penal provisions for these companies are reduced
Loan to related parties [Section 185]: A completely new S.185 has been proposed which has categorized loans into prohibited, conditional and eligible. Loans to Director of company/ holding company or partner/relative/firm of such director is expressly prohibited. (Courtesy: Taxguru; for full article: https://taxguru.in/company-law/25-key-takeaways-companies-amendment-bill-2017.html)
