Various sections of Companies (Amendment) Act, 2017 notified
MCA has notified various sections of Companies (Amendment) Act, 2017. The major changes effected by the notified sections are as follows:
- While incorporating a company, a ‘declaration’ instead of an ‘affidavit’ is required as per Section 7, to be filed from each of the subscribers to the memorandum and the first directors that he is not convicted of any offence, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty under this Act or any previous company law during the preceding five years and that all the documents filed with the RoC for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief.
- The window of establishing the registered office of the company as per Section 12 has been extended from 15 days to 30 days and the time period for intimation to RoC in relation to change of registered office has also been increased from 15 days to 30 days.
- New Section 42 which relates to ‘offer or invitation for subscription of securities on private placement’ came into force implementing some major changes including scrapping the requirement of filing form PAS-4 and PAS-5 with RoC, no renunciation right with private placement offer cum application, no use of application money until filing of return of allotment with RoC under 15 days, penalty for not filing return of allotment which is Rs. 1,000/- for each day during which such default continues upto a maximum of Rs. 25 lakhs and filing for board and shareholders’ resolution with RoC before issuing of PAS-4.
- The sum which is to be deposited in the deposit repayment reserve account as per Section 73, has been increased from 15% to 20% of the total deposit accepted by the company from its members and the requirement of providing deposit insurance has been scrapped.
- The date of repaying the deposits accepted by a company before the commencement of the Act, mentioned in Section 74, has been extended from 1 year to 3 years from commencement of the Act or on or before expiry of the period for which the deposits were accepted, whichever is earlier.
- The explanation of beneficial interest in shares has been added in Section 89 which includes direct or indirect right or entitlement of a person to exercise any of the rights attached to such shares or to receive any dividend or other distribution in respect of such shares.
- The requirement of declarationof beneficial interest to the company by the share holders holding beneficial interest of more than 25% in a company has been added under Section 90 of the Act. The company is also required to maintain a register of such declarations which shall be updated by the company from time to time. The companies are also required to file a return of significant beneficial owners (holding more than 25% beneficial interst or such other percentage as may be prescribed) of the company to the RoC.
- The appointment of a person of more than 70 years of age as a key managerial person in the company under Section 196 of the Act can be done even if no special resolution is passed for the same. However, it should be noted that this can be done only if votes casted in favour of the motion exceed the votes casted against the motion and only if the Central Government is satisfied that such appointment is most beneficial to the company.
- Section 200 of the Act has been amended to remove the requirement of approval of Central Government to fix the appointment or remuneration of managing director under section 196 and 197 where the company has inadequate or no profits. Now such remuneration of appointment can be fixed by the company itself.
- Section 366 has been amended to reduce the minimum no. of members from 7 to 2 in case of an unlimited company, or a company limited by shares, or a company limited by guarantee. It has also been added that a company with less than 7 members shall be registered as a private company.