CA/CS/CMA Inter Law RTP-Amendment Siddharth Agarwal. … · 01/03/2019 · In relation to One...

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Siddharth Agarwal Classes 4, R.N. Mukherjee Road (Dalhousie), Near Lal Bazar Police Station, Nearest Metro - Chandani Chowk, Ph: 7603093714, 9830556635.

Law Amendment Inter May 2019

© Siddharth Agarwal. All Rights Reserved.

CA/CS/CMA

Inter Law RTP-Amendment

Siddharth Agarwal

May/June 2019 Exams

Contents Sl. No. Topic Page No.

1 Section 132 (NFRA) 2 – 3

2 Start‐up Company 4

3 RTP based Amendments Point 1 to 21 including Negotiable Instruments Amendment (Point 21)

5 – 10

4 Private Placement – Rule 14 10 – 11

5 Companies (Amendment) Act 2017 – Differential Amendment Sections 2,5,6,8,10,13,15,16,18 to 26, 30,31,33,36,37,39,40

13 – 42

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Topic Detailed Explanation

132 (1) CG Constitutes NFRA

The Central Government may, by notification, constitute a National Financial Reporting Authority (NFRA) to provide for matters relating to accounting and auditing standards under this Act.

132 (2) Role of NFRA

Notwithstanding anything contained in any other law for the time being in force, the NFRA shall‐ (a) make recommendations to the Central Government on the formulation and laying

down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;

(b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed;

(c) oversee the quality of service of the professionals associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed; and

(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

132 (3) Constitution of NFRA

The NFRA shall consist of :‐ (1) Chairperson, who shall be a person of eminence and having expertise in

accountancy, auditing, finance or law to be appointed by the Central Government and

(2) such other members not exceeding 15 consisting of part‐time and full‐time members as may be prescribed:

Provided that the terms and conditions and the manner of appointment of the chairperson and members shall be such as may be prescribed:

Provided further that the chairperson and members shall make a declaration to the Central Government in the prescribed form regarding no conflict of interest or lack of independence in respect of his or their appointment:

Provided also that the chairperson and members, who are in full‐time employment with NFRA shall not be associated with any audit firm (including related consultancy firms) during the course of their appointment and 2 years after ceasing to hold such appointment.

132 (4) Powers of NFRA

Notwithstanding anything contained in any other law for the time being in force, the NFRA shall— (a) have the POWER TO INVESTIGATE, either suo moto or on a reference made to it

by the Central Government, for such class of bodies corporate or persons, in such manner as may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949:

Secti

on

132 Constitution of National Finance Reporting Authority (NFRA)

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Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the NFRA has initiated an investigation under this section;

(b) have the same powers as are vested in a CIVIL COURT under the Code of Civil Procedure, 1908, while trying a suit, in respect of the following matters, namely:—(i) discovery and production of books of account and other documents, at such

place and at such time as may be specified by the NFRA; (ii) summoning and enforcing the attendance of persons and examining them

on oath; (iii) inspection of any books, registers and other documents of any person

referred to in clause (b) at any place; (iv) issuing commissions for examination of witnesses or documents;

(c) where professional or other misconduct is proved, have the power to make order for— (A) imposing penalty of—

In case of Individuals ` 1 lakh ≤ Fine ≤ 5 times the Fees

In case of Firms ` 5 lakhs ≤ Fine ≤ 10 times the Fees

(B) debarring the member or the firm from engaging himself or itself from practice as member of the Institute of Chartered Accountant of India

Individuals/Firms 6 months ≤ Ban ≤ 10 years

Explanation.—For the purposes of his sub‐section, the expression "professional or other misconduct" shall have the same meaning assigned to it under section 22 of the Chartered Accountants Act, 1949.

132 (5) Appeal to NCLAT

Any person aggrieved by any order of the NFRA issued above, may prefer an appeal before the NCLAT.

132 (6,7,8,9) Omitted

132 (10) Meetings

The NFRA shall meet at such times and places and shall observe such rules of procedure in regard to the transaction of business at its meetings as may be prescribed.

Section 132 (11) Secretary

The Central Government may appoint a secretary and such other employees as it may consider necessary for the efficient performance of functions by the NFRA.

Section 132 (12) Offices

The head office of the NFRA shall be at New Delhi and the NFRA may, meet at such other places in India as it deems fit.

Section 132 (13) Books – C&AG

NFRA shall cause to be maintained such books of account and other books as the CG may, in consultation with the C&AG prescribe.

Section 132 (14) Audit – C&AG

The accounts of the NFRA shall be audited by the C&AG of India and shall be forwarded annually to the Central Government by the NFRA.

Section 132 (15) Parliament

The NFRA shall prepare its annual report and forward a copy thereof to the CG and the CG shall cause the annual report and the audit report given by the C&AG to be laid before each House of Parliament.

Notes

Sub Section (3) and (11) have been notified on 21st March 2018

The Central Government hereby appoints the 1st October, 2018 as the date of constitution of NFRA.

Sub‐sections (1) and (12) have been notified on 1st October 2018

Sub Section (2),(4),(5),(10),(13),(14) and (15) have been notified on 24th October 2018.

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TOPIC DETAILED EXPLANATIONS

Definition

An entity shall be considered as a Startup: a) If it is incorporated as a private limited company or registered as a partnership firm

or LLP in India; and b) Up to 7 years from the date of its incorporation; however, in the case of Startups

in the biotechnology sector, the period shall be up to 10 years from the date of its incorporation; and

c) If its turnover for any of the financial years since incorporation has not exceeded ` 25 crores; and

d) If it is working towards innovation, development or improvement of products or processes or services, or if it is a scalable business model with a high potential of employment generation or wealth creation.

Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a ‘Startup’.

Explanation

(a) An entity shall cease to be a Startup on completion of 7 years from the date of its incorporation or if its turnover for any previous year exceeds ` 25 crores. However, in respect of Startups in the biotechnology sector, an entity shall cease to be a Startup on completion of 10 years from the date of its incorporation or if its turnover for any previous year exceeds ` 25 crores.

(b) Turnover is as defined under the Companies Act, 2013.

Process of recognition

The process of recognition as a ‘Startup’ shall be through an online application to Inter‐Ministerial Board of Certification (IMBC) established by Department of Industrial Policy and Promotion (DIPP). Entities will be required to submit the online application along with the Certificate of Incorporation and other relevant details as may be sought. Startups also have to submit a write‐up about the nature of business highlighting how is it working towards innovation, development or improvement of products or processes or services, or its scalability in terms of employment generation or wealth creation.

Extra

New Start-Up Company

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RTP based Amendments

No. Topic Details

1 Deposits "deposit" includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include, among other things – “(xviii) any amount received by a company from

Alternate Investment Funds,

Domestic Venture Capital Funds,

Infrastructure Investment Trusts (InvITs),

Real Estate Investment Trusts (REITs) and

Mutual Funds registered with the SEBI in accordance with regulations made by it.”

2 Govt Co. Government Company may hold its AGM at

such other place within the city, town or village in which the registered office of the company is situate or

such other place as the Central Government may approve in this behalf.

The exceptions, modifications and adaptations given in Notification dated 5th June 2015 and Notification dated 13th June, 2017 shall be applicable to a Government company which has NOT committed a default in filing of its financial statements u/s 137 or annual return u/s 92 of with the Registrar

.

3(a) Private Co. Sec 2(40)

The financial statement, with respect to One Person Company, small company, dormant company, and private company (if such private company is a START‐UP) may NOT include the cash flow statement.

3(b) Private Co. Sec 73

Section 73 (2) (a) to (e) shall NOT apply :‐ (A) A private company if deposit accepted from its members ≤ 100% of {PUSC + FR +

SP}. (B) A private company which is a START‐UP, for 5 years from the date of its

incorporation. (C) A private company which fulfils all of the following conditions, namely:‐

(a) which is not an associate or a subsidiary company of any other company; (b) the borrowings of such a company from banks or financial institutions or any

body corporate is less than Lower of:‐ 1) 2 X PUSC 2) ` 50 crores; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73.

Provided also that all the companies accepting deposits shall file the details of monies so accepted to the Registrar in Form DPT‐3.

3(c) Private Co. Sec 92

Annual Return shall disclose "aggregate amount of remuneration drawn by directors;". ‐ Notification Dated 13th June, 2017 instead of ‘Remuneration of directors and key managerial personnel’.

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No. Topic Details

3(d) Private Co. Sec 92

In relation to One Person Company, Small Company and private company (if such private company is a start‐up ‐ Notification Dated 13th June, 2017), the annual return shall be signed by:‐ 1) The CS, where there is a CS or, 2) The DIRECTOR of the company, where there is no CS.

3(e)

&

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&

6

&

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Private Co. Sec 143(3)(i)

Section 143(3)(i), shall not apply to a private company:‐ (i) which is a OPC or a SMALL company; or

(ii) which has turnover < ` 50 cr. as per latest audited financial statement AND which

has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year < ` 25 Cr.

The exemption regarding IFC shall be applicable for those audit reports in respect of financial statements pertaining to financial year, commencing on or after 1st April, 2016.

.

The exceptions, modifications and adaptations given in Notification dated 5th June 2015 and Notification dated 13th June, 2017 shall be applicable to a Private company which has NOT committed a default in filing of its financial statements u/s 137 or annual return u/s 92 of with the Registrar.

.

5 Auditor Rotation

The provisions relating to Auditor’s Rotation shall apply to the following classes of companies:

Type of Company Threshold

Listed Company NO limit.

All unlisted Public Companies having PUSC ≥ ` 10 crores All Private Limited Companies having PUSC ≥ ` 50 crores (20 crores) All companies having PUSC below 10/50 but having public borrowings from financial institutions, banks or public deposits

Borrowings from FI, Banks or Public Deposits ≥ ` 50 crores

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8(a) IFSC Company ‐ Deposits

An IFSC Public/Private company may accept from its members monies upto 100% of [PUSC + FR + SP] and such company shall file the details of monies so accepted to the Registrar in Form DPT‐3.

8(b) Private Company ‐ Deposits

Maximum Amount of Deposits = 35% of [PUSC + FR + SP]

Exception 1: ‐ A private company may accept from its members monies upto 100% of [PUSC + FR + SP] and such company shall file the details of monies so accepted to the Registrar in Form DPT‐3.

Exception 2: ‐ The maximum limit in respect of deposits to be accepted from members shall not apply to following classes of private companies, namely:‐ (i) A private company which is a START‐UP, for 5 years from the date of its

incorporation; (ii) A private company which fulfils all of the following conditions, namely:‐

(a) which is not an associate or a subsidiary company of any other company;

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No. Topic Details

(b) the borrowings of such a company from banks or financial institutions or any body corporate is less than Lower of:‐ 1) 2 X PUSC 2) ` 50 crores; and

(c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under section 73.

Provided also that all the companies accepting deposits shall file the details of monies so accepted to the Registrar in Form DPT‐3.

9 Subsidiary Company [Section 2(87)]

2 layers Restriction Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

10 Amend‐ ment 2017

Companies (Amendment) Act 2017 covered separately below.

11 Govt co. Defense product‐ion

Exemption to Government Companies Section 129 shall not apply to the companies engaged in defence production to the extent of application of relevant Accounting Standard on Segment Reporting. Accounting Standard 17 (Segment Reporting). Self‐Note:‐ AS – 17 or IndAS – 108.

12 RUN app Step 1 ‐ Reservation of Name Reserve a Unique Name for 20 days by using the RUN application on MCA website, which may either be approved or rejected, as the case may be, by the Registrar, Central Registration Centre after allowing re‐submission of such application within 15 days for rectification of the defects, if any.

13 Definition

Omitted by The companies (Specification of Definitions Details) Amendment Rules, 2018 Dated 7th May 2018 Rule 2 (1) (r) has been omitted. Total Share Capital”, for the purposes of Section 2(6) and Section 2(87), means the aggregate of the ‐ (a) paid‐up equity share capital; and (b) convertible preference share capital;

14 ESOP Sec 54

Meaning of EMPLOYEE for ESOP A permanent employee of the company who has been working in India or outside India, for at least last 1 year (Omitted); or

15 Deposit Sec 73

Fulfilment of conditions after which Deposits [from its Member] can be Accepted [Sec 73(2)] Deposit Insurance: Provide such deposit insurance in such manner and to such extent as may be prescribed;

16 OPC Eligibility for becoming a Member/Nominee Only a natural person who is an Indian citizen and resident in India shall be eligible to become a Member or Nominee of OPC.

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No. Topic Details

Explanation I ‐ For the purposes of this rule, the term "resident in India" means a person who has stayed in India for a period of ≥ 182 days during the immediately preceding FINANCIAL YEAR. Explanation II ‐ For the purposes of this rule, while counting the number of days of stay of a director in India for the financial year 2018‐2019, any period of stay between 01.01.2018 till the date of notification (27th July 2018) of this rule shall also be counted.

17 Audit Amendment in the Rules as shown below:‐1) Following has been Omitted by The Companies (Audit and Auditors) *Second

Amendment Rules, 2018 Dated 7th May 2018 Rule 3 Explanation.‐ For the purposes of this rule, it is hereby clarified that, if the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down in this behalf under the Act. [Provided that such appointment shall be subject to ratification in every annual general meeting till the sixth such meeting by way of passing of an ordinary resolution.]

2) Rule 10A. For the purposes sectlon 143(3)(i), for the financial years commencing on or after 1st April, 2015, the report of the auditor shall state about existence of internal financial controls with reference to financial statements (adequate internal financial controls system) and its operating effectiveness:

3) Rule 14 Instead of ‘cost accountant in practise’ the words ‘cost accountant’ shall be substituted.

18 Accounts Extra Disclosures inserted in the Board Report u/s 134 Rule 8(5) (ix) a disclosure, as to whether maintenance of cost records as specified by the Central

Government u/s 148, is required by the Company and accordingly such accounts and records are made and maintained,

(x) a statement that the company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Rule 8(5) This rule 5 in entirety shall NOT apply to

a) OPC or b) Small Company.

19 CSR Rule 2(1)(c) “Corporate Social Responsibility (CSR)” means and includes but is not limited to :‐ (i) Projects or programs relating to activities, areas or subjects (newly inserted)

specified in Schedule VII to the Act; or (ii) Projects or programs relating to activities undertaken by the board of directors of a

company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such

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No. Topic Details policy will cover subjects enumerated include activities, areas or subjectsspecified in Schedule VII of the Act.

Rule 5(1)(i) an unlisted public company or a private company A company covered under subsection (1) of section 135 which is not required to appoint an independent director pursuant to sub‐section (4) of section 149 of the Act, shall have its CSR Committee without such director.

Rule 6 ‐ CSR Policy (1) The CSR Policy of the company shall, inter‐alia, include the following namely :‐ (a) a list of CSR projects or programs which a company plans to undertake falling within the purview of areas or subjects specified in the Schedule VII of the Act, specifying modalities of execution of such project or programs and implementation schedules for the same. Provided further that the Board of Directors shall ensure that activities included by a company in its Corporate Social Responsibility Policy are related to the activities included in Schedule VII areas or subjects specified in Schedule VII of the Act.

20 NFRA Sec 132

Covered at the top of these Notes.

21 NI Act 1881 Nego‐tiable Instru‐ment Act

INTRODUCTION The pendency of cheque dishonour cases still remains a critical issue and adversely affects the cash flows of small businesses. With a view to curb such practices, the Negotiable Instruments (Amendment) Act, 2018 ("Amendment Act") was notified on August 02, 2018. The amended provisions introduced are likely to contribute towards reducing the number of cheque bounce cases pending in the courts. This will provide immediate relief to the payees of dishonoured cheques, the disposal of which consumes considerable time and resources.

KEY FEATURES OF THE AMENDMENT ACT: (1) Section 143A has been inserted which essentially empowers the court trying the

offence u/s 138, to direct the drawer of the cheque to pay interim compensation to the Payee in situations of a SUMMARY TRIAL or SUMMONS CASE or any other case where CHARGE has been framed wherein the drawer pleads to be "not guilty". This interim compensation shall be ≤ 20% of the cheque amount.

(2) Section 148 has been inserted which specifies that in case the drawer files an appeal against his/her conviction, the Appellate court has the power to direct the drawer to deposit a minimum amount of 20% of the fine or compensation that was awarded by the Trial court. The Appellate Court may direct to release the amount deposited by the appellant to the payee at any time during the pendency of the appeal. This amount shall be in addition to the compensation paid at the trial stage.

(3) The interim compensation at the trial as well as the deposit amount at the appellate stage (as the case may be) shall be paid within 60 days from the date of the order by the court trying the offence or the appeal. The concerned court may further extend this period by an additional time of 30 days subject to the sufficient reasons being shown.

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No. Topic Details (4) In case of ACQUITTAL of the drawer/ appellant by the Trial Court or the Appellate

Court, (as the case may be) the payee/complainant shall be directed to repay the interim compensation or amount deposited (as maybe applicable), to the drawer/appellant along with such interest as may be fixed by Reserve Bank of India at the beginning of the relevant financial year. This amount shall be repaid within 60 days of the court's order and this period may be further extended by another 30 days subject to sufficient reasons being shown.

Private Placement – Rule 14


Rule 14(1) Pass SR for P/P P/P of Non‐Convertible Debentures may require BR/SR

For the purposes of section 42(2) & (3), a company shall not make an offer or invitation to subscribe to securities through private placement unless the proposal has been previously approved by the shareholders of the company, by a SPECIAL RESOLUTION for each of the offers or invitations:

Explanatory Statement annexed in the Notice Provided that in the explanatory statement annexed to the notice for shareholders' approval, the following disclosure shall be made:‐ a) particulars of the offer including date of passing of Board Resolution; b) kinds of securities offered and the price at which security is being offered: c) basis or justification for the price (including premium, if any) at which the

offer or invitation is being made; d) name and address of VALUER who performed valuation; e) amount which the company intends to raise by way of such securities; f) material terms of raising such securities, proposed time schedule, purposes or

objects of offer, contribution being made by the promoters or directors either as part of the offer or separately in furtherance of objects; principle terms of assets charged as securities:

P/P of Non‐Convertible Debentures amounting to ≤ {PUSC + FR + SP} Provided further that this sub‐rule shall not apply in case of offer or invitation for non‐convertible debentures, where the proposed amount to be raised through such offer or invitation does not exceed the limit as specified in Section 180(1)(c) i.e., {PUSC + FR + SP} and in such cases relevant BR u/s 179(3)(c) would be adequate:

P/P of Non‐Convertible Debentures amounting to > {PUSC + FR + SP} Provided also that in case of offer or invitation for non‐convertible debentures, where the proposed amount to be raised through such offer or invitation exceeds the limit as specified in Section 180(1)(c), it shall be sufficient if the company passes a previous special resolution only once in a year for all the offers or invitations for non‐convertible debentures during the year.

Rule 14(2) P/P offer to maximum 200 persons in a FY.

For the purpose of Section 42(2), an offer or invitation to subscribe securities under private placement shall not be made to persons more than 200 in the aggregate in a financial year:

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Provided that any offer or invitation made to qualified institutional buyers, or to employees under ESOP u/s 62 shall NOT be considered while calculating the limit of 200 persons.

Explanation.‐ For the purposes of this sub‐rule it is hereby clarified that the restrictions aforesaid would be reckoned individually for each kind of security that is equity share, preference share or debenture.

Rule 14(3) P/P Offer Letter

A PRIVATE PLACEMENT OFFER‐CUM‐APPLICATION LETTER shall be in the form of an application in Form PAS‐4 addressed specifically to the person to whom the offer is made and shall be sent within 30 days.

Provided that no person other than the person so addressed shall be allowed to apply through such application form.

Rule 14(4) Record of P/P offers

The company shall maintain a complete RECORD of private placement offers in Form PAS‐5.

Rule 14(5) Record of Payer’s Bank A/c

Record of the bank account of person subscribing to such P/P offer shall be kept.

Provided that monies payable on subscription to securities to be held by joint holders shall be paid from the bank account of the person whose name appears first in the application:

Provided further that the provisions of this sub‐rule shall not apply in case of issue of shares for consideration other than cash.

Rule 14(6) Return of Allotment

A RETURN OF ALLOTMENT of securities u/s 42 shall be filed with the Registrar within 15 days of allotment in Form PAS‐3 along with a complete list of all the allottees containing‐ (i) the full name, address, permanent Account Number and E‐mail ID of such

security holder; (ii) the class of security held; (iii) the date of allotment of security ; (iv) the number of securities herd, nominal value and amount paid on such

securities; and particulars of consideration received if entire securities were issued for consideration other than cash.

Rule 14(7) Exemption to NBFC & HFC

The limit of 200 P/P offerees shall NOT be applicable to –(a) NBFC and (b) HFC (Housing Finance Companies),

if they are complying with regulations made by the Reserve Bank of India or the National Housing Bank in respect of offer or invitation to be issued on private placement basis:

Provided that such companies shall comply with the limit of 200 P/P offerees in case the Reserve Bank of India or the National Housing Bank have not specified similar regulations.

Rule 14(8) File BR/SR with ROC

A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed in the Registry.

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Notes

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Companies Amendment Act 2017 (Sec 1-45)Applicability Chart

CA Intermediate (Sec 1 - 148)

The unshaded Amendment Sections below are already covered in the last term Amendment session (Nov 2018) and uploaded on Youtube. https://www.youtube.com/watch?v=Cxgsi‐c3ego. The notes for the same were also uploaded on my website https://siddharthagarwalclasses.com/wp‐content/uploads/2018/08/Inter‐RTP‐Law‐Audit‐Amendment‐Nov‐2018.pdf Only differential Amendments are produced here.

Differential AmendmentsSections Descriptions Name of the Section as in Companies Act

2013 Notified on

1 Short Title & Commencement

NA 23.01.2018

2 Amendment in Section 2 [Except clause (i) & (xiii)]

Definitions 09.02.2018

2 Amendment in Section 2 [Clause (i) & (xiii)]

Definitions 07.05.2018

3 New Section Inserted 3A Members Severally Liable in Certain Cases 09.02.2018

4 Amendment in Section 4 Memorandum 23.01.2018

5 Amendment in Section 7 Incorporation of Company 27.07.2018

6 Amendment in Section 12 Registered office of the Company 27.07.2018

7 Amendment in Section 21 Authentication of documents, proceedings and contracts.

09.02.2018

8 Amendment in Section 26 Matters to be stated in Prospectus 07.05.2018

9 Amendment in Section 35 Civil liability for mis‐statements in prospectus

09.02.2018

10 Amendment in Section 42 Private Placement 07.08.2018

11 Amendment in Section 47 Voting rights 09.02.2018

12 Amendment in Section 53 Prohibition on issue of shares at discount. 09.02.2018

13 Amendment in Section 54 Issue of Sweat Equity Shares 07.05.2018

14 Amendment in Section 62 Further issue of share capital 09.02.2018

15 Amendment in Section 73 Deposits 15.08.2018

16 Amendment in Section 74 Repayment of Deposits 15.08.2018

17 Amendment in Section 76A Punishment for contravention of section 73 or section 76

09.02.2018

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Differential AmendmentsSections Descriptions Name of the Section as in Companies Act

2013 Notified on

18 Amendment in Section 77 Duty of Register, etc 07.05.2018

19 Amendment in Section 78 Application for Registration of Charge 07.05.2018

20 Amendment in Section 82 Satisfaction of Charges 05.07.2018

21 Amendment in Section 89 Declaration in respect of Beneficial Interest in any Share

07.05.2018 13.06.2018

22 Substitution of new section for Section 90

Investigation of Beneficial Ownership of Shares in Certain Cases

13.06.2018

23 Amendment in Section 92 Annual Return 07.05.2018

24 Omission of Section 93 Returns to be filed with Registrar in case Promoters’ Stake Changes

13.06.2018

25 Amendment in Section 94 Place of Keeping & Inspection of Registrar, Returns, etc.

13.06.2018

26 Amendment in Section 96 Annual General Meeting 13.06.2018

27 Amendment in Section 100 Calling of extraordinary general meeting 09.02.2018

28 Amendment in Section 101 Notice of meeting 09.02.2018

29 Amendment in Section 110 Postal ballot 09.02.2018

30 Amendment in Section 117 Resolutions and Agreements to be filed 07.05.2018

31 Amendment in Section 121 Report on AGM 07.05.2018

32 Amendment in Section 123 Declaration of dividend. 09.02.2018

33 Amendment in Section 129 Financial Statement 07.05.2018

34 Amendment in Section 130 Re‐opening of accounts on Court‘s or Tribunal‘s orders

09.02.2018

35 Amendment in Section 132 Constitution of National Financial Reporting Authority

09.02.2018

36 Amendment in Section 134 Board Report 31.07.2018

37 Amendment in Section 135 Corporate Social Responsibility 19.09.2018

38 Amendment in Section 136 Right of member to copies of audited financial statement

09.02.2018

39 Amendment in Section 137 Copy of Financial Statement to be filed with Registrar

07.05.2018

40 Amendment in Section 139 Appointment of Auditor 07.05.2018

41 Amendment in Section 140 Removal, resignation of auditor and giving of special notice

09.02.2018

42 Amendment in Section 141 Eligibility, qualifications and disqualifications of auditors.

09.02.2018

43 Amendment in Section 143 Powers and duties of auditors and auditing standards

09.02.2018

44 Amendment in Section 147 Punishment for contravention 09.02.2018

45 Amendment in Section 148 Central Government to specify audit of items of cost in respect of certain companies.

09.02.2018

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Section 2 Amendment in Section 2 (Definitions)

TERM DEFINITIONS

Associate Company [Section 2(6)]

Associate Company, in relation to another company, means a company in which that other company has a significant influence, but which is not a subsidiary company of the company having such influence and includes a joint venture company.

Explanation.—For the purpose of this clause,— (a) the expression "significant influence" means control of at least 20% of total

voting power, or control of or participation in business decisions under an agreement;

(b) the expression "joint venture" means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement;

[Substituted via The Companies (Amendment) Act, 2017]

Subsidiary Company [Section 2(87)]

Subsidiary Company or ―subsidiary, in rela on to any other company (that is to say the holding company), means a company in which the holding company— (i) controls the composition of the Board of Directors; or (ii) exercises or controls more than one‐half of the total share capital total voting

power [Substituted by The Companies (Amendment), 2017] either at its own or together with one or more of its subsidiary companies: Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

Explanation—For the purposes of this clause— (a) a company shall be deemed to be a subsidiary company of the holding company

even if the control referred to in sub‐clause (i) or sub‐clause (ii) is of another subsidiary company of the holding company;

(b) the composition of a company‘s Board of Directors shall be deemed to be controlled by another company if that other company by exercise of some power exercisable by it at its discretion can appoint or remove all or a majority of the directors;

(c) the expression ―company includes any body corporate; (d) layer in relation to a holding company means its subsidiary or subsidiaries;

Section 5 Amendment in Section 7 (Incorporation)

TOPIC DETAILED EXPLANATION

Section 7(1)(c) an affidavit A Declaration [Substituted via The Companies (Amendment), 2017] from each of the subscribers to the memorandum and from persons named as the

Secti

on

7 Incorporation of Company

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TOPIC DETAILED EXPLANATION

first directors, if any, in the articles that he is not convicted of any offence in connection with the promotion, formation or management of any company, or that he has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years and that all the documents filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his knowledge and belief.

Section 6 Amendment in Section 12 (Registered Office)


Registered Office of the Company

A company shall, on and from the 15th day of its incorporation within 30 days of its incorporation [Substituted via The Companies (Amendment), 2017] and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it.

Notice of any change in the Registered Office to Registrar

Notice of every change of the situation of the registered office in Form INC‐22 shall be given to the Registrar within 15 days within 30 days [Substituted via The Companies (Amendment), 2017] of the change, who shall record the same.

Section 8 Amendment in Section 26 (Prospectus)


Matters to be contained in the Prospectus

(1) Every prospectus issued by or on behalf of a public company either with reference to its formation or subsequently, or by or on behalf of any person who is or has been engaged or interested in the formation of a public company, shall be dated and signed and shall state such information and set out such reports on financial information as may be specified by the Securities and Exchange Board in consultation with the Central Government:

Provided that until the Securities and Exchange Board specifies the information and reports on financial information under this sub‐section, the regulations made by the Securities and Exchange Board under the SEBI Act, 1992, in respect of such financial information or reports on financial information shall apply. [Substituted via The Companies (Amendment), 2017]

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Every prospectus issued by a PUBLIC COMPANY shall: (a) State prescribed information (See Below ‐ CONTENTS OF PROSPECTUS) (b) Set out prescribed reports for the purposes of the financial information (See Below

– REPORTS IN PROSPECTUS) (c) Make a declaration about the compliance of the provisions of this Act, the

Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act, 1992 and the rules and regulations made thereunder; and

(d) State such other matters and set out such other reports, as may be prescribed further.

CONTENTS OF PROSPECTUS (Full Deleted) [Omitted via The Companies (Amendment), 2017].

Section 10 Amendment in Section 42 (Private Placement)


Private Placement Rule 14 – covered above

Covered in detail earlier in these notes.

Conditions to be fulfilled

1. A company shall not make a private placement of its securities unless the proposed offer of securities or invitation to subscribe securities has been previously approved by the shareholders of the company, by a SPECIAL RESOLUTION.

2. Such offer or invitation shall be made to ≤ 200 persons in the aggregate in a financial year. Provided that any offer or invitation made to Qualified Institutional Buyers, or to employees of the company under a scheme of Employees Stock Option shall not be considered while calculating the limit of 200 persons.

3. The value of such offer or invitation per person shall be with an investment size of ≥ ` 20,000 of face value of the securities.

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Offer or Invitation for Subscription of Securities on Private Placement (Substituted by Amendment Act 2017)

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Section 13 Amendment in Section 54 (Sweat Equity Shares)


Conditions for Issue of Sweat Equity Shares [SEC]

In spite of anything contained in section 53, a company may issue Sweat Equity Shares of a class of shares already issued, if the following conditions are fulfilled, namely: (a) The issue is authorised by a Special Resolution passed by the company; (b) The resolution specifies the number of shares, the current Market Price,

consideration, if any, and the class or classes of DIRECTORS OR EMPLOYEES to whom such equity shares are to be issued;

(c) At least 1 year has elapsed since the date on which the company had commenced business; and [Omitted via The Companies (Amendment), 2017]

(d) Where the equity shares of the company are listed on a recognised stock exchange, the Sweat Equity Shares are issued in accordance with the SEBI regulations and if they are not listed, the Sweat Equity Shares are issued in accordance with Companies rules.

Section 15 Amendment in Section 73 (Deposits)


Prohibition of acceptance of Deposits Form Public [Sec 73(1)]

On and after the commencement of this Act, no company shall invite, accept or renew deposits under this Act from the public except in a manner provided under this Chapter (Section 76A).

Exception:‐ Nothing in this sub‐section shall apply to a BANKING COMPANY and NBFC.

Fulfilment of conditions after which Deposits [from its Member] can be Accepted [Sec 73(2)]

1) Pass Ordinary Resolution in GM 2) Follow Companies (Acceptance of Deposits) Rules, 2014,

A company may accept deposits from its members by complying with the following conditions: (a) Issue a circular in Form DPT – 1 to its members including therein a statement

showing the financial position of the company, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company;

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(b) Filing DPT – 1 with ROC within 30 days before circulating it to members; (c) Maintain Liquidity: Deposit at least 15% of the amount of its deposits maturing

during a financial year and the next financial year in a scheduled bank in a separate bank account to be called as Deposit Repayment Reserve Account; Depositing, on or before the 30th day of April each year, such sum which shall not be less than 20%. of the amount of its deposits maturing during the following financial year and kept in a scheduled bank in a separate bank account to be called deposit repayment reserve account; [Substituted via The Companies (Amendment), 2017].

(d) Deposit Insurance: Provide such deposit insurance in such manner and to such extent as may be prescribed; [Omitted via The Companies (Amendment), 2017].

(e) No history of default: Company shall certify that it has not committed any default in the repayment of deposits or payment of interest on such deposits such deposits and where a default had occurred, the company made good the default [Substituted via The Companies (Amendment), 2017];

(f) Furnishing Security: Company shall provide security for the due repayment of the amount of deposit or the interest thereon including the creation of such charge on the property or assets of the company.

Provided that in case where a company does not secure the deposits or secures such deposits partially, then, the deposits shall be termed as ‘‘unsecured deposits’’ and shall be so quoted in every circular, form, advertisement or in any document related to invitation or acceptance of deposits.

Section 16 Amendment in Section 74 (Repayment of Deposits)


Repayment of Deposits accepted before the commencement of the Act

Where any deposit is accepted by a company before the commencement of this Act and the amount of deposit or any interest that remains unpaid on such commencement, the company shall—

(a) Filing DPT‐4:‐ Company shall file DPT ‐ 4 within 3 months from such commence‐ment, and

(b) Repayment:‐ Company shall repay it within 1 year from commencement of the Act or from the date on which such payments are due, whichever is earlier.

(b) repay within 3 years from such commencement or on or before expiry of the period for which the deposits were accepted, whichever is earlier:

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Provided that renewal of any such deposits shall be done in accordance with the provisions of Chapter V and the rules made thereunder. [Substituted via The Companies (Amendment), 2017].

Section 18 Amendment in Section 77 (Charges)


Non‐Applicability of this Section

This section shall NOT apply to such charges as may be prescribed in consultation with the RBI. [Proviso added via The Companies (Amendment), 2017].

Section 19 Amendment in Section 78 (Charges)

Where a company fails to register the charge within the period specified in section 77, register the charge within the period of 30 days referred to in section 77(1) [Substituted via The Companies (Amendment), 2017],

without prejudice to its liability in respect of any offence under this Chapter,

the person in whose favour the charge is created may apply to the Registrar for registration of the charge

along with the instrument created for the charge,

within such time in Form No.CHG‐1 (for other than Debentures) or Form No.CHG‐9 (for debentures including rectification), and

the Registrar may within a period of 14 days after giving notice to the company, allow such registration, unless the company itself registers the charge or shows sufficient cause why such charge should not be registered.

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Section 20 Amendment in Section 82 (Satisfaction of Charges)


Intimation to Registrar on Payment or Satisfaction of Charge

A company shall give intimation to the Registrar in Form CHG ‐ 4, of the payment or satisfaction in full of any charge within 30 days from the date of such payment or satisfaction.

Condonation of delay

The provisions of Section 77 regarding Condonation of delay in filing by ROC/CG shall apply to an intimation given under this section. [Omitted via The Companies (Amendment), 2017]. Provided that the Registrar may, on an application by the company or the charge holder, allow such intimation of payment or satisfaction to be made within a period of 300 days of such payment or satisfaction on payment of such additional fees as may be prescribed. [Proviso added via The Companies (Amendment), 2017].

Section 21 Amendment in Section 89 (Beneficial Shareholder)


Meaning of a beneficial interest

For the purposes of section 89 & 90, beneficial interest in a share includes, directly or indirectly, through any contract, arrangement or otherwise, the right or entitlement of a person alone or together with any other person to— (i) exercise or cause to be exercised any or all of the rights attached to such share;

or (ii) receive or participate in any dividend or other distribution in respect of such

share. [Added via The Companies (Amendment), 2017].

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89 Declaration in respect of Beneficial Interest in any share

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Section 22 Substitution of New Section 90 (Investigation of Beneficial Ownership of Shares)

Where it appears to the Central Government that there are reasons so to do, it may appoint one or more competent persons to investigate and report as to beneficial ownership with regard to any share or class of shares and the provisions of Section 216 shall, as far as may be, apply to such investigation as if it were an investigation ordered under that section.

New inserted via The Companies (Amendment), 2017


Declaration by significant beneficial owner

Every individual, who acting alone or together, or through one or more persons or trust, including a trust and persons resident outside India, holds beneficial interests, of

1) ≥ 25%. or such other percentage as may be prescribed, in shares of a company or

2) the right to exercise, or the actual exercising of significant influence or control as defined in section 2(27), over the company (herein referred to as "significant beneficial owner"),

shall make a declaration to the company, specifying the nature of his interest within such period of acquisition of the beneficial interest or rights and any change thereof, as may be prescribed. Provided that the Central Government may prescribe a class or classes of persons who shall not be required to make declaration under this sub‐section.

Penalty for Non‐Compliance of the Provision:

Normal Punishment ` 1 lakh ≤ Fine ≤ ` 10 lakhs Continuing offence ` 1,000 per day.

.

Register Every company shall maintain a register of the interest declared by individuals and changes therein which shall include the name of individual, his date of birth, address, details of ownership in the company and such other details as may be prescribed.

The register shall be open to inspection by any member of the company on payment of such fees as may be prescribed.

Penalty for Non‐Compliance of the Provision:

Normal Punishment ` 10 lakhs ≤ Fine ≤ ` 50 lakhs Continuing offence ` 1,000 per day.

.

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Filing Return Every company shall file a return of significant beneficial owners of the company and changes therein with the Registrar containing names, addresses and other details as may be prescribed within such time, in such form and manner as may be prescribed. Penalty for Non‐Compliance of the Provision:

Normal Punishment ` 10 lakhs ≤ Fine ≤ ` 50 lakhs Continuing offence ` 1,000 per day.

.

Notice to such person by Company if he has not made declaration

A company shall give notice to any person (whether or not a member of the company) whom the company knows or has reasonable cause to believe— (a) to be a significant beneficial owner of the company; (b) to be having knowledge of the identity of a significant beneficial owner or another

person likely to have such knowledge; or (c) to have been a significant beneficial owner of the company at any time during the

3 years immediately preceding the date on which the notice is issued, and who is not registered as a significant beneficial owner with the company as required under this section.

The information required by the notice shall be given by the concerned person within a period not exceeding 30 days of the date of the notice.

Application to NCLT on failure to receive information

The company shall,— (a) where that person fails to give the company the information required by the

notice within the time specified therein; or (b) where the information given is not satisfactory, apply to the Tribunal within a

period of 15 days of the expiry of the period specified in the notice, for an order directing that the shares in question be subject to restrictions with regard to transfer of interest, suspension of all rights attached to the shares and such other matters as may be prescribed.

The Tribunal may, after giving an opportunity of being heard to the parties concerned, make such order restricting the rights attached with the shares within a period of 60 days of receipt of application or such other period as may be prescribed.

The company or the person aggrieved by the order of the Tribunal may make an application to the Tribunal for relaxation or lifting of the restrictions placed above.

Wilful defaulters If any person wilfully furnishes any false or incorrect information or suppresses any material information of which he is aware in the declaration made under this section, he shall be liable to action under section 447.

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Section 23 Amendment in Section 92 (Annual Return)


Contents of Annual Returns to be submitted by companies

Every company shall prepare an annual return in the MGT‐ 7 containing following particulars as they stood on the close of the financial year regarding— a. Principal Activities & Group Companies: Its principal business activities,

particulars of its holding, subsidiary and associate companies; b. Shareholding Pattern: Its shares, debentures and other securities and

shareholding pattern; c. Borrowings: Its indebtedness; [Omitted via The Companies (Amendment), 2017].d. Management: Its promoters, directors, key managerial personnel along with

changes therein since the close of the previous financial year; e. Meetings: Meetings of members or a class thereof, board and its various

committees along with attendance details; f. Managerial Remuneration: Remuneration of directors and key managerial

personnel;

Amendment In case of Private Company:‐ "aggregate amount of remuneration drawn by directors;". ‐ Notification Dated 13th June, 2017

g. Punishment Imposed: Penalty or punishment imposed on the company, its directors or officers and details of compounding of offences and appeals made against such penalty or punishment;

h. Matters relating to certification of compliances, disclosures as may be prescribed;i. Its members and debenture‐holders along with changes therein since the close of

the previous financial year; j. Details, as may be prescribed, in respect of shares held by or on behalf of the

foreign institutional investors indicating their names, addresses, countries of incorporation, registration and percentage of shareholding held by them; [Omitted via The Companies (Amendment), 2017]; and

k. Such other matters as may be prescribed. 3)

Abridged Form of Annual Return

Provided further that the Central Government may prescribe abridged form of annual return for One Person Company, small company and such other class or classes of companies as may be prescribed. [Added via The Companies (Amendment), 2017].

Annual Return to be place on website and link

An extract of the annual return in MGT ‐ 9 shall be a part of the Board Report.

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in the Board report

Every company shall place a copy of the annual return on the website of the company, if any, and the web‐link of such annual return shall be disclosed in the Board's report. [Substituted via The Companies (Amendment), 2017]

Section 24 Omission of Section 93 (Return of Stake change)

What is to be filed? Answer: A Return in Form No. MGT.10 with respect to changes relating to either increase or decrease of ≥ 2% in the shareholding position of PROMOTERS AND TOP 10 SHAREHOLDERS of the company in each case.

Who shall file? Every listed company shall file with the Registrar within 15 days of such change. [Omitted via The Companies (Amendment), 2017].

Section 25 Amendment in Section 94 (Place of keeping Register)


Maintenance of Registers and Returns at Registered Office

The registers required to be kept and maintained by a company u/s 88 and copies of the annual return filed u/s 92 shall be kept at the registered office of the company.

Keeping Registers and Returns in any other place [Special Resolution]

Such registers or copies of return may also be kept at any other place in India in which more than 1/10th of the TOTAL NUMBER OF MEMBERS entered in the register of members reside, if approved by a SPECIAL RESOLUTION passed at a general meeting of the company and the Registrar has been given a copy of the proposed special resolution in advance: [Omitted via The Companies (Amendment), 2017].

Amendment Provided that SUCH PARTICULARS of the register or index or return as may be prescribed shall NOT be available for inspection or for taking extracts or copies. [Added via The Companies (Amendment), 2017]

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Returns to be filled with Registrar in case Promotors’ Stake Changes [Omitted via The Companies (Amendment), 2017].

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Section 26 Amendment in Section 96 (AGM)


Place of holding Annual General Meeting

1. Place of holding AGM: It shall be held either at the registered office of the company or at some other place within the city, town or village in which the registered office of the company is situated. Provided that annual general meeting of an unlisted company may be held at any place in India if consent is given in writing or by electronic mode by all the members in advance. (Inserted by Companies Amendment Act 2017)

2. Exemption by CG: The Central Government may exempt any company from this section subject to such conditions as it may impose.

Section 30 Amendment in Section 117 (MGT-14)


Filing of MGT‐14 with ROC within 30 days of passing Resolutions or making Agreements

A copy of every resolution or any agreement, as specified below together with the Explanatory Statement u/s 102, if any, shall be filed with the Registrar in Form MGT – 14 within 30 days of the 1. Passing Resolutions Or 2. Making Agreements. .

Punishment for contravention

If a company fails to file the resolution or the agreement before the expiry of the period specified u/s 403 (Next 270 days) with additional fee specified above (30 days)(Substituted by Amendment Act 2017), the punishment shall be as follows:

On Company ` 5 lacs ` 1 lac ≤ Fine ≤ ` 25 lacs On officer in default including

liquidator ` 1 lac ` 50,000 ≤ Fine ≤ ` 5 lacs

.

Resolutions/ Agreements which needs to be filed in MGT‐14

The provisions of this section shall apply to— (a) Special Resolutions (SR); (b) Resolutions which have been agreed to by all the members of a company, but

which, if not so agreed to, would not have been effective for their purpose unless they had been passed as Special Resolutions (SR);

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(c) Any Board Resolution (BR) or agreement executed by a company, relating to the Appointment/Re‐appointment/Renewal/Variation of the terms of appointment, of a Managing Director;

(d) Resolutions/Agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members;

(e) Resolutions passed by a company according consent to the exercise by its Board of Directors of any of the powers u/s 180 (1) (a) and (c); (Omitted by Amendment Act 2017)

(f) Resolutions requiring a company to be wound up voluntarily passed under section 59 of the Insolvency and Bankruptcy Code, 2016 – (Notification dated 15th November 2016);

(g) Resolutions passed u/s 179 (3); “Provided that no person shall be entitled u/s 399 to inspect or obtain copies of such resolutions; and Provided further that nothing contained in this clause shall apply to a banking company in respect of a resolution passed to grant loans, or give guarantee or provide security in respect of loans under section 179(3)(f) in the ordinary course of its business; and [Added via The Companies (Amendment), 2017]

Exemption Notification – Private Companies: Section 117 (3) (g) – SHALL NOT apply i.e., Resolutions passed u/s 179(3) need not be filed in MGT‐14 with ROC in case of Private Companies.

(h) Any other resolution or agreement as may be prescribed and placed in the public domain.

Section 31 Amendment in Section 121 (Report on AGM)


Report on AGM in MGT‐15 to be prepared by every Listed company

Every listed public company shall prepare in MGT‐15, a report on each AGM including the confirmation to the effect that the meeting was convened, held and conducted as per the provisions of this Act and the rules made thereunder.

Note: The report under this section shall be prepared in addition to the minutes of the general meeting.

Filing of MGT‐15 with ROC

The company shall file with the Registrar MGT‐15 within 30 days of the conclusion of the AGM.

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Punishment for contravention

If the company fails to file the report before the expiry of the period specified u/s 403 with additional fee specified above (30 days)(Substituted by Amendment Act 2017), the punishment shall be as follows:

On Company ` 1 lac ≤ Fine ≤ ` 5 lacs On officer in default ` 25,000 ≤ Fine ≤ ` 1 lac

.

Section 33 Amendment in Section 129 (FS)

Topic Detailed Discussion

Section 129(3) Preparation of Consolidated Financial Statements Where a company has one or more subsidiaries or associate companies, it shall also prepare a CFS (consolidated financial statement) of the company and of all the subsidiaries and associate companies in the same form and manner as that of its own and in accordance with applicable accounting standards, which shall also be laid before the AGM.

Provided that the company shall also attach along with its financial statement, a separate statement containing the SALIENT FEATURES of the financial statement of its subsidiary or subsidiaries and associate company or companies in such form as may be prescribed.

Provided further that the Central Government may provide for the consolidation of accounts of companies in such manner as may be prescribed. [Substituted by Companies (Amendment) Act, 2017].

Section 36 Amendment in Section 134 (Board Report)

Section 134(1) – Signing of the financial statements

The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board at least by

(1) The chairperson of the company where he is authorized by the Board or by 2 directors out of which one shall be MD/CEO (if CEO is a director in the company),

(2) The Chief Financial Officer and (3) The company secretary of the company wherever they are appointed.

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Signing in case of a One Person Company ‐ only by 1 director, for submission to the auditor for his report thereon. The financial statement, including consolidated financial statement, if any, shall be approved by the Board of Directors before they are signed on behalf of the Board by the chairperson of the company where he is authorised by the Board or by two directors out of which one shall be managing director, if any, and the Chief Executive Officer, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of One Person Company, only by one director, for submission to the auditor for his report thereon. [Substituted by Companies (Amendment) Act, 2017] Section 134(3) & (4) – Board Report

Contents Contents of the Board Report in detail

(a) Annual Return The extract of the annual return as provided under Section 92(3) – The web address, if any, where annual return referred to in section 92(3) has been placed. [Substituted by Companies (Amendment) Act, 2017] Form No. MGT‐9 (Extract of Annual Return) Form No. MGT‐7, 8 (Annual Return and CS Certificate)

(p) Performance Evaluation of BOD & directors

In case of a listed company and every other public company having such paid‐up share capital of ` 25 crores or more as the end of the preceding F.Y., a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual Directors annual evaluation of the performance of the Board, its Committees and of individual directors has been made. [Substituted by Companies (Amendment) Act, 2017]

Exemption to Government Companies Section 134 (3) (p) shall not apply in case the directors are evaluated by the Ministry or Department of the Central Government which is administratively in charge of the company, or, as the case may be, the State Government, as per its own evaluation methodology.

.

(q) Residuary Such other matters as may be prescribed (See below) Provided that where disclosures referred to in this sub‐section have been included in the financial statements, such disclosures shall be referred to instead of being repeated in the Board's report. Provided further that where the policy referred to in clause (e) or clause (o) is made available on company's website, if any, it shall be sufficient compliance of the requirements under such clauses if the salient features of the policy and any change therein are specified in brief in the Board's report and the web‐address is indicated therein at which the complete policy is available. [Inserted by Companies (Amendment) Act, 2017]

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Section 134(3A) –

(3A) The Central Government may prescribe an abridged Board's report, for the purpose of compliance with this section by One Person Company or small company. [Inserted by Companies (Amendment) Act, 2017]

Note: ‐ Board Report in case of a One Person Company means a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.

Section 37 Amendment in Section 135 (CSR)


Section 135(1)

Which company is covered under Section 135 Every Company having(a) Net Worth of ` 500 Crores or more, or (b) turnover of ` 1000 Crore or more, or (c) a net profit (PBT) of ` 5 Crore or more during any of the last 3 financial years the

immediately 3 preceding financial year [Substituted by Companies (Amendment) Act, 2017] shall constitute a Corporate Social Responsibility Committee of the Board consisting of 3 or more directors, out of which at least 1 director shall be an independent director.

Provided that where a company is not required to appoint an independent director under Section 149(4), it shall have in its Corporate Social Responsibility Committee two or more directors. [Inserted by Companies (Amendment) Act, 2017]

Section 135(3) Role of CSR Committee

The Corporate Social Responsibility Committee shall — (a) Formulate and recommend to the Board, a Corporate Social Responsibility Policy

which shall indicate the activities to be undertaken by the company as specified in Schedule VII in areas or subject, specified in Schedule VII [Substituted by Companies (Amendment) Act, 2017]

(b) Recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and

(c) Monitor the Corporate Social Responsibility Policy of the company from time to time.

Section 135(5) Amount to be spent on CSR

At least 2% of the average net profits of the Company made during the 3 immediately preceding financial years shall be spent for every financial year commencing from 1st April 2014.

Explanation—For the purposes of this section “average net profit” shall be calculated in accordance with the provisions of section 198.

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Explanation —For the purposes of this section "net profit" shall not include such sums as may be prescribed, and shall be calculated in accordance with the provisions of section 198. [Substituted by Companies (Amendment) Act, 2017]

Section 39 Amendment in Section 137 (Filing of FS)


Section 137(1) Filing of Annual Accounts with ROC A copy of the financial statements along with all the documents which are required to be annexed or attached, duly adopted at the AGM of the company, shall be filed with the Registrar within 30 days of the date of AGM along with Form AOC‐4 and AOC‐4 CFS. Specified companies given later are required to file their FS in XBRL format.

Filing of Accounts of Subsidiary/ Foreign Subsidiary with ROC A company shall, along with its financial statements to be filed with the Registrar, attach the accounts of its subsidiary or subsidiaries which have been incorporated outside India and which have not established their place of business in India.

Provided also that in the case of a subsidiary which has been incorporated outside India (herein referred to as "foreign subsidiary"), which is not required to get its financial statement audited under any law of the country of its incorporation and which does not get such financial statement audited, the requirements of the fourth proviso shall be met if the holding Indian company files such unaudited financial statement along with a declaration to this effect and where such financial statement is in a language other than English, along with a translated copy of the financial statement in English. [Inserted by Companies (Amendment) Act, 2017]

Amendment Any Reference to Section 403 in this sub‐section is omitted via Companies Amendment Act, 2017

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Section 40 Amendment in Section 139 (Appointment of Auditor)


Step 3: Tenure and Ratification

The auditor appointed in the annual general meeting shall hold office from the conclusion of that meeting till the conclusion of the 6th AGM, with the meeting wherein such appointment has been made being counted as the 1st meeting.

Provided that the company shall place the matter relating to such appointment for ratification by members at every annual general meeting [Amended via Amendment Act, 2017].

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