Companies Amendment Bill, 2016 as introduced in Lok Shabha

As we all know that from last one year the government is trying to make the practical applicability of corporate law unpretentious and easier. For the sake of the same the  Companies (Amendment) Bill 2016 was introduced in Lok Sabha. Total 87 amendments were proposed to make in which some of the amendment are as follows:-

1. Definition of Small company is proposed to be amended :  

Capital 50 lacs to 10 cores

Turnover 2 crores to 100 crores

2. The Requirement of having specific object in the MoA is proposed to be omitted, instead it will become optional.  MoA may contain a statement that the company may engage any lawful activity as may be permitted by the law of the land for the time being in force.

3. For incorporation the” affidavit “by the subscriber/director  as required under section 7 is proposed to be replaced with “Declaration”

4. Existing Section 42 (private placement) proposed to be replaced with a new section.

5. It is proposed to allow filing of satisfaction of charge within 300 days  with additional fee

6. It is proposed to make abridged form of  Annual Return for OPC and Small Companies

7. AGM of unlisted companies can be held any where in India with prior consent of all the members

8. EGM of all the companies (other than WOS  of foreign companies) shall be held in India

9. No need to file the Resolution under Section 180(1) Clause (a) and (c) 

10. More clarity is being brought about with respect to the declaration of  interim Dividend.

11. Removal of requirement for ANNUAL RATIFICATION of appointment or continuance of auditor;

12. Section 185 is proposed to be replaced with new section : Main changes will be Prohibition is only for loan/guarantee etc.  to Director of the company, director of the holding  company, relative of director, partner of director and a firm in which such director/relative is a partner.

Any company can give loan/guarantee etc to other companies in which directors are interested (Pvt company in which directors is director/member; Bodies coporate in which 25% or more of voting power is held by such director; B/C the Board of which is accustomed to act in accordance with the instructions of Board or Directors of lending Company) by passing a special resolution

13. Loan to employees are proposed to be excluded specifically from the provisions of Section 186.

14. Provisions relating to forward dealing and insider trading to be omitted from the Act;

15. Requirement of approval of the CG for Managerial remuneration above prescribed limits to be 

replaced by approval through special resolution by shareholders;

16. Remove restrictions on layers of subsidiaries and investment companies i.e. 186(1)

17. Align prescription for companies to have Audit Committee and Nomination and Remuneration Committee with that of Independent Directors;

18. Test of materiality to be introduced for pecuniary interest for testing independence of Independent Directors;

19. Provide for maintenance of register of significant beneficial owners by a company, and filing of returns in this regard to the Registrar;

20. Amend provisions relating to Corporate Social Responsibility to bring greater clarity

21. The restriction on related party transaction under 188 is not applicable if 90% in number of members are promoters or relatives of promoters or related parties.

22. The Public company will be entitled to pay in excess of 11% of net profit to its managerial personnel by a special resolution – without central government approval but subject to schedule V.

The proposed bill is expected to be passed very soon.........

(Author is Company Secretary in Practice, from Jodhpur Keshav Rathi & Associates and can be contacted at krassociates2014@gmail.com for suggestions, Comment and Queries).

Disclaimer:-

The entire contents of this article have been prepared on the basis of relevant provisions and as per the information existing at the time of preparation. Though utmost efforts has made to provide authentic information, it is suggested that to have better understanding kindly cross check the relevant sections, rules under the Companies Act, 2013. The observations of the author are personal view and the authors do not take responsibility of the same and this cannot be quoted before any authority without the written consent of author.