Parliament passed Companies (Amendment) Bill 2017

The Amendment Bill as passed by Lok Sabha which is also passed by Rajya Sabha is placed at the link:

Companies (Amendment) Bill 2017

 

Rajya Sabha has passed the Companies (Amendment) Bill, 2017 today i.e. December 19, 2017 and shall come into force on getting the President’s assent.   On July 2, 2017, the Companies (Amendment) Bill, 2016 has been passed by the Lok Sabha as Companies (Amendment) Bill, 2017 & referred to Rajya Sabha for consideration and passing.

The Bill to further amend the Companies Act, 2013 was introduced in Lok Sabha on 16th March, 2016 whereafter it was referred to the Parliamentary Standing Committee on Finance for examination and report. The Parliamentary Standing Committee on Finance had presented its report on the Companies (Amendment) Bill, 2016 to Lok Sabha and Rajya Sabha on 7th December, 2016.

Our Blogs presents a comparative analysis as well as the impact of the New Bill and we trust you will find the same useful. Highlights of the Companies (Amendment) Bill, 2017 are enclosed for ready reference of members.

Know more about :

Procedures for the conversion of partnership firm into Private limited company

Conversion of LLP into Company Limited by Shares

Objects of a Company : Currently, the Companies Act, 2013 requires all companies to mention the objects for which the company is prop-osed to be incorporated in the Memorandum of Association (MOA).

Under the Companies Amendment Act, 2017, the MOA of a company could state that the company could engage in any lawful act or activity or business. Hence, small or privately held companies would be able to undertake a range of business activities without making changes to the MOA. However, if the MOA restricts the objects of a company to certain activities, then the company would be able to abide by the objects specified.

Company Annual Return : All companies are required to file an annual return with the Ministry of Corporate Affairs each year. The Companies Amendment Act, 2017 has proposed to provide an abridged form of annual return for One Person Company and small company. The abridged form of annual return will make annual compliance for a company simpler for small businesses.

The Companies Amendment Act, 2017 has also mandated that all companies place a copy of the annual return on the website of the company and provide the web link for the annual report in the Board’s report.

Penalty for Late Filing of Annual Return :The penalty for late filing of company annual return is set to significantly increase on the implementation of the Companies Amendment Act, 2017 during the current financial year.

Under the Companies Amendment Act, 2017, the penalty for late filing of Annual Return or financial statements will be a minimum amount of Rs 100 per day of default. Further, the company would be liable for penal action. If a company defaults on filing the annual return or financial statements for two or more times, the penalty levied would be doubled.

Related Party Definition : under the Companies Act 2013, a ‘related party’ in relation to a company includes:

A holding, subsidiary or an associate company of such company; or

A subsidiary of a holding company to which it is also a subsidiary.

Companies Amendment Act, 2017 has proposed to make an investing company or the venture of a company a related party as well.

Loans to Directors :Under the Companies Act 2013, companies are not allowed to advance any loan to its directors or persons related to the Director. The Companies Amendment Act, 2017 has proposed to relax this restriction and allow companies to extend its Directors or related persons, after passing a special resolution.

To prevent abuse of this relaxation, an additional clause has also been introduced in the Companies Amendment Act, 2017 to punish Directors who use loans against conditions under which it was extended.

Con-donation of Delay Scheme 2018: The Central Government has decided to introduce a Scheme namely “Condonation of Delay Scheme 2018” [CODS-2018] as follows.

1. he scheme shall come into force with effect from 01.01.2018 and shall remain in force up to 31.03.2018

2. Applicability: –This scheme is applicable to all defaulting companies (other than the companies which have been stuck off/whose names have been removed from the register of companies under section 248(5) of the Act). A defaulting company is permitted to file its overdue documents which were due for filing till 30.06.2017 in accordance with the provisions of this Scheme.

3. Procedure to be followed for the purposes of the scheme: –

(1) In the case of defaulting companies whose names have not been removed from register of companies:-i)The DINs of the disqualified directors de-activated at present shall be temporarily activated during the validity of the scheme to enable them to file the overdue documents.

ii)The defaulting company shall file the overdue documents in the respective prescribed eForms paying the statutory filing fee and additional fee payable as per section 403 of the Act read with Companies (Registration Offices and fee) Rules, 2014 for filing these overdue documents.

iii) The defaulting company after filing documents under this scheme, shall seek condonation of delay by filing form e-CODS 2018 attached to this scheme along with a fee of Rs. 30,000/- (Rs. Thirty Thousand only) as prescribed under the Companies (Registration Offices and Fee) Rules, 2014 well before the last date of the scheme.

iv)The DINs of the Directors associated with the defaulting companies that have not filed their overdue documents and the eform CODS, and these are not taken on record in the MCA21 registry and are still found to be disqualified on the conclusion of the scheme in terms of section 164(2)(a) r/w 167(1)(a) of the Act shall be liable to be deactivated on expiry of the scheme period.

(2) In the event of defaulting companies whose names have been removed from the register of companies under section 248 of the Act and which have filed applications for revival under section 252 of the Act up to the date of this scheme, the Director’s DIN shall be re-activated only NCLT order of revival subject to the company having filing of all overdue documents.