Half of the Companies Amendment Act, 2017 effective


Vide Notification S.O. 351(E) dated 23rd January 2018 Section 1 and 4 of the Companies (Amendment) Act, 2017 came into force on 26th January 2018. According to a draft notification placed on the website of Ministry of Corporate Affairs[i], Central Government appoints 9th February 2018 as the date on which 42 other sections and a major part of section 2 of the Companies (Amendment) Act, 2017 came into force.

Here is a bird’s eye view.

S. No. Section of the Companies (Amendment) Act, 2017 Section of Companies Act, 2013 Name of Section Major Amendment  
1 Section 2 [except clause (i) and clause (xiii)] Section 2 Definitions (except definition of Associate & Subsidiary) Definitions of Cost Accountant, debenture, financial year, holding company, interested director, key managerial personnel, public company, public financial institution, related party, small company, and turnover amended
2 Section 3 New Section 3A Member severally liable in certain cases New Liabilities on Members
3 Section 7 Section 21 Authentication of Documents, Proceeding & Contracts Now Employees authorised
4 Section 9 Section 35 Civil Liability for misstatement in prospectus Additional exception
5 Section 11 Section 47 Voting Right Right to vote for related parties in certain cases
6 Section 12 Section 53 Prohibition on issue of shares at discount Issue of shares on discount
7 Section 14 Section 62 Further issue of share capital  
8 Section 17 Section 76A Penalty on Deposit Higher limit of penalty amount
9 Section 27 Section 100 Calling of extraordinary general meeting Wholly Owned Subsidiaries of Foreign companies may hold EGM outside country
10 Section 28 Section 101 Notice of Meeting Shorter Notice for AGM
11 Section 29 Section 110 Postal Ballot Electronic Voting permitted
12 Section 32 Section 123 Declaration of Dividend New exclusions, new permissions
13 Section 34 Section 130 Reopening of accounts of courts or tribunals order Reopening up to 8 years only

 

14 Section 35 Section 132 Constitution of National financial reporting authority Reduced Penalty
15 Section 38 Section 136 Right of members to copies of audited financial statement Shorter notice related
16 Section 41 Section 140 Removal, resignation of auditor Reduced Penalty
17 Section 42 Section 141 Eligibility, qualifications and disqualification of auditors Clarification
18 Section 43 Section 143 Power and duties of auditors and auditing standards Clarification
19 Section 44 Section 147 Punishment for contravention Penalty reduced
20 Section 45 Section 148 Central Government to specify audit of items of cost in respect of certain Companies Cost Accountants related clarification
21 Section 47 Section 152 Appointment of Directors Some other number for DIN
22 Section 48 Section 153 Application of allotment of DIN Some other number for DIN
23 Section 50 Section 160 Right of persons other than retiring directors to stand for directorship Exemption
24 Section 51 Section 161 appointment of additional director, alternate director and nominee director Clarification
25 Section 53 Section 165 Number of directorship Dormant Companies Excluded
26 Section 59 Section 180 Restrictions of power of board Relaxation
27 Section 60 Section 184 Disclosure of interest by Director Minimum penalty relaxed, Clarification
28 Section 63 Section 188 Related party transaction Voting right relaxed
29 Section 64 Section 194 Prohibition on Forward dealings in securities of company by director or key managerial personnel Omitted
30 Section 65 Section 195 Prohibition on insider trading of securities Omitted
31 Section 72 Section 223 Inspector’s Report Right to obtain report
32 Section 73 Section 236 Purchase of minority shareholding Clarification
33 Section 74 Section 247 valuation by registered valuer Relaxation for appointment
34 Section 77 Section 379 Application of act to foreign companies Sections 380 to 386 (both inclusive) and sections 392 and 393 shall apply to all foreign companies.
35 Section 78 Section 384 Debentures, annual return, registered of charge, books of account Corporate Social Responsibility applicable
36 Section 79 Section 391 Application of section 34 to 36 and chapter XX Limiting application of Chapter XX
37 Section 82 Section 409 Qualification of president and member of tribunal Rationalisation
38 Section 84 Section 411 Qualification of chairperson and member of appellate tribunal Rationalisation
39 Section 85 Section 412 Selection of members of Tribunal and appellate tribunal Casting vote
40 Section 90 Section 441 Compounding of certain offences all offences (other than those punishable with mandatory imprisonment) be compounded
41 Section 91 Section 446 Insertion of new section 446A and 446B 446A Factors for determining level of Punishment 446B Lesser penalties for One Person Companies or Small companies
42 Section 92 Section 447 Punishment for fraud Categorisation
43 Section 93 Section 458 Delegation by central government Proviso deleted as Section 194 and 195 deleted

The combined effect of these two notifications shall make nearly half of the Companies (Amendment) Act, 2017 effective.

[i] Unless a copy of official Gazette made available, It is not advisable to rely on draft notification and contents of this blog post.

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