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The Central government notified the Companies (Amendment) Act, 2017 on January 3, 2018 after receiving the assent of the President. The Amendment Bill was passed by Lok Sabha on July 27, 2017 and then was referred to a Standing Committee and was subsequently passed by Rajya Sabha on December 19, 2017. The Amendments made are broadly aimed at: addressing certain difficulties in implementation owing to stringent compliance requirements; facilitating ease of doing business in order to promote growth with employment; harmonization with accounting standards, the Securities and Exchange Board of India Act, 1992 and the regulations made there under, and the Reserve Bank of India Act, 1934 and the regulations made thereunder and also, rectifying omissions and certain inconsistencies in the Principal Act. We look at some of the major changes brought in by the 2017 Amendment. These provisions shall come into force once the Union Government notifies the same in the Official Gazette. Here we discuss the key amendments that have been made to the Principal Act covering directors, auditors, funding, disclosure,etc.



With reference to incorporation of a company, as under Section 7(1)(c), the word ‘affidavit’ has been replaced by ‘self declaration’ from the first subscribers to memorandum and first directors. This will ease the additional documentary burden to and avoid delay in the incorporation process.

As per the Revised Section 2(51) - Under the definition of the term “Key Managerial Personnel”, the following is proposed to be included: “such other officer not more than one level below the directors who is in whole time employment and designated as KMP by the Board”. This has created another class of officers who can be termed as KMP for the purposes of the Act.

Amendment to Section 4(5)(i) decrease the period of reservation of the name by the registrar to 20 days from 60 days. Section 12(4) now provides a 30 day limit to give notice of change of registered office to the ROC.

The Amendment has added a Proviso to Section 100(1) according to which, the wholly owned subsidiary of a company incorporated outside India is now allowed to hold its extra ordinary general meeting outside India. Further, it also allows an unlisted company to hold its Annual General Meeting anywhere in India if consented to, by all members in writing or in electronic mode. This is likely to save the time and energy of many companies.

As per the Revised First Proviso to Section 197(1), the requirement of approval of the Central Government for Managerial Remuneration, above the prescribed limits is now replaced by approval through special resolution by shareholders in general meeting.


With a view to facilitate ease of doing business and for reducing the burden of One Person Company and Small Company, the Central Government is now empowered under Section 92(1) to prescribe an abridged form of Annual Return likely to save time.

As per Revised Section 92(3), in case the disclosures as required under Section 134 (3) are appearing elsewhere in financial statement, instead of repeating the same, it is provided that reference of such disclosure may be given. This will significantly reduce the burden of companies in preparing bulky Board’s Report and the amount of paper work.

With respect to Disclosures to be made to the ROC, Section 93 of the Principal Act which mandated every listed company to file a return with the Registrar respect to change in number of shares held by promoters and top ten shareholders of such company, now stands omitted post the 2017 Amendment.

As per the Revised First Proviso to Section 197(1), the requirement of approval of the Central Government for Managerial Remuneration, above the prescribed limits is now replaced by approval through special resolution by shareholders in general meeting.

As per the Revised Section 134(1), the Requirement of having extract of Annual return (Form MGT-9) has been done away with by placing the copy of annual return on website of the company (if any) and the web address/ link disclosed in the Board’s Report.


In section 153, the provision to use any universally accepted identification number can be used as an identification document similar to the director identification number has been added.

According to the amendment now any person can have the directorship of not more than 20 companies according to Section 165. The amendments exclude the directorship of dormant companies.

The amendments made in Section 149(3) bring ease to the Resident Directors. The term, “calendar year” was substituted with “financial year” this speaks in relation to the resident directors’ stay in India for a total period of not less than 182 days during the financial year”. Currently it is calculated in reference to previous calendar year.

The requirement of filing a copy of resignation to the ROC by the director himself is made optional.

Filing of financial statements or annual return or repayment of deposits or pay interest or redemption of debentures or payment of interest thereon or payment of dividend

Loans to directors:

Under the Companies Act 2013, companies were not allowed to advance any loan to its directors or to any persons related to the Director of the Company. The Companies (Amendment) Act, 2017 has relaxed this restriction and allowed companies to extend advancement of loans to its Directors or related persons, but only after passing a special resolution [u/s 185(2)]. However in case the Director uses the loan amount contrary to the conditions under which it was extended, such Director shall be liable for punishment under the Act and every officer in default of these provisions shall also be punishable with imprisonment.


With regard to auditors changes have been made with respect to the punishment of the auditors in case of contraventions. Changes have been made under Section 147 with regard to the fines. In cases where the auditor has been convicted (Section 147(3)(ii)) he shall be liable to pay the damages to the member of creditors of the company along with the company, statutory bodies or authorities.

A proviso has been inserted stating that in case of criminal liability of the audit firm the concerned partner or partners will also be held liable.

Ratification by the members at the general meeting for the appointment of auditors under Section 139 (First proviso) has been omitted.


Under funding we will be discussing the amendments made with regard to private placement (Section 42) and deposits (Section 73).

Private Placement (Section 42)

Sub Section 2 has been amended to insert select group of people identified by the board (Referred to as “identified persons”) in addition to the previously existing conditions for issue of private placement under the sub Section.

A proviso has been inserted stating the placement offer and application will not carry any right of renunciation.

Sub Section 4 has been amended and it includes a proviso stating that the money received under the private placement shall not be utilized unless the return of allotment is filed with the ROC.

Sub Section 8 of the amended Act states that the allotment of securities under this Section must be resisted with the ROC within 15 days from the date of allotment along with the details under Sub Section 9 of the principal Act.

SubSection 9 of the amended Act inserts a punishment for non compliance with the 15 day limit under Sub Section 8. The company, its promoters and directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty-five lakh rupees.

Sub Section 11 of the amended Act states that any private placement issue not made in compliance of the provisions of the sub-Section (2) shall be deemed to be a public offer and all the provisions of this Act and the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 shall be applicable.’

Deposits (Section 73 under Chapter 5)

Under SubSection 2 of the foresaid Section, clause (c) has been substituted. It states that an amount being not less than 20% of the amount of deposits, maturing during the following financial year be deposited on or before the 30th day of April each year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account. Currently at least 15% of such amount is required to be deposited and that is also of amount of deposits maturing during a financial year and the financial year next following.

Clause (d) of SubSection 2 which stated the requirement of providing deposit insurance has been omitted thus no longer requiring deposit insurance.

Clause (e) of Sub Section 2 has been amended not enabling defaulters to accept deposits after 5 years of making good the default.


The amendments made to Corporate Social Responsibility bring more clarity to the provision.

The words “any financial year” are replaced by the words ‘immediately preceding financial year’. Section 135(1) is applicable to companies, which falls under the specified net worth or turnover or net profit and are required to comprise a CSR Committee in any financial year.

The amendments in regard to CRS directors, provides some ease for private and foreign companies and in addition permits unlisted companies to have CRS Committees without Independent Directors, where they are exempted under sub-section 3 of this section.


The penalty for delayed filing of a Company’s Annual Return (u/s 92) or Copy of Financial Statement to be filed with the Registrar (u/s 137) has significantly increased upon 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 is a minimum amount of not less than Rs 100 per day of default. Further, the defaulting company will be liable for penalty or punishment as provided under the Act for such failure or default. It also notified that if a company defaults on filing the annual return or financial statements for two or more times, the penalty levied will be doubled. Further, different amounts can be prescribed for different class of companies.


A constant amendment of Act is necessary to prevent stagnation and to keep up with the dynamic nature of today's world.

Changes made in the Companies Act not only benefit existing companies but also encourage the growth of start ups in the nation. Constant update and change in the law helps regulate the corporate field meticulously.

Here we cover some of the key amendments to the Companies Act, 2013. The other amendments include allowing the companies to issue Shares at discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan (earlier prohibited); Relaxed norms for conversion of Partnership Firm into a Private Company so that a Partnership firm with two or more partners (earlier 7 minimum members required) can now be converted into a private company under Section 366(1) along with several Section wise amendments.


The Companies Act,2013

The Companies (Amendment) Act, 2017 (

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