Introduction

The Rajya Sabha on December 19, 2017, passed the Companies (Amendment) Bill, 2017[1], (hereinafter referred to as the “Bill”) which seeks to bring about major changes in the Companies Act, 2013. The Bill is aimed at strengthening corporate governance standards, providing for strict action against defaulting companies and improving ease of doing business in the country.

The Bill was earlier adopted by the Lok Sabha on July 27, 2017, and now will have to receive the assent of the President to become law. If the bill becomes law, then it will be the second instance of the Companies Act getting amended under the current Government.

The Bill aims to provide for more than 92 amendments in the Companies Act, 2013, which includes amendment of existing Sections, insertion of new section, substitution of the existing sections with new sections and omission of sections.[2]

Amendments in Companies Act, 2013

Sections

Amendment of Existing Sections

2, 4, 7, 12, 21, 26, 35, 47, 53, 54, 62, 73, 74, 76A, 77, 78, 82, 89, 92, 94, 96, 100, 101, 110, 121, 123, 129, 130, 132, 134, 135, 136, 137, 139, 140, 141, 143, 147, 148, 149, 152, 153, 157, 160, 161, 164, 165, 167, 168, 173, 177, 178, 180, 184, 186, 188, 196, 197, 198, 200, 201, 216, 223, 236, 247, 366, 374, 379, 384, 391, 403, 409, 410, 411, 412, 438, 439, 440, 441, 447, 458

Insertion of New Sections

3A (Members severally liable in certain cases); 446 A (Factors for determining level of punishment), 446 B(Lesser penalties for One Person Companies or small companies)

Substitution of Existing Section with New Sections

42 (Issue of shares on private placement basis.); 90 (Register of significant beneficial owners in a company); 185 (Loans to directors, etc.); 406 (Provision relating to Nidhis and its application, etc.); 435 (Establishment of Special Courts.)

Omission of Sections

93, 194 and 195 of Companies Act 2013

 

The major changes included in the new Amended Bill are as follows:-

  • Simplification of the private placement process;
  • Rationalization of provisions related to loans to directors;
  • Replacing the requirement of approval of the central government for managerial remuneration above prescribed limits by approval through special resolution of shareholders;
  • Aligning disclosure requirements in the prospectus with the regulations made by Securities and Exchange Board of India;
  • Providing for maintenance of register of significant beneficial owners;
  • Making offence for contravention of provisions relating to deposits as non-compoundable.

A copy of the bill can be found over here.