The Companies (Amendment) Bill, 2017 was passed by Lok Sabha on July 27, 2017 following which The Rajya Sabha passed the same on December 19, 2017. The Amendments proposed in the bill broadly aim at addressing difficulties faced by stakeholders in implementing of the Companies Act, 2013 (“the Act”). The Key takeaways of the Amendment Bill are:
Easier norms for conversion of Partnership Firm into a Private Company
✓ The 2017 Bill proposes that Partnership firm with two or more partners can be converted into a private company [presently, partnership must have at least seven partners for conversion into a company] These provisions are useful to convert a partnership firm, LLP, society, cooperative society or society or any other business entity formed under any law into a company as per the Act.
Private placement should be only to ‘identified persons’. Further, more than one issue of securities can be made to each class of identified persons.
✓ It has been proposed to do away with requirement of obtaining special resolution and approval of Central Govt. for payment of managerial remuneration in excess of prescribed limits of Schedule V. However, for making such payments prior approval of bank or public financial institution or non-convertible debenture holder or secured creditor is also required before taking approval from shareholders.
✓ The 2017 Bill proviso to Section 110 has been inserted which provides that any item of business required to be transacted by means of postal ballot can be transacted at general meeting by a company which is required to provide facility to members to vote by electronic means under section 108. This means, if a company is providing facility to members to vote by electronic means then postal ballot is not required.
Greater late fee for large Companies
✓ It has been proposed that if document under section 92 (Annual Return) or 137 (financial statement) is not filed with Registrar within prescribed time, the minimum additional fees of Rs. 100 per day are payable. Further, the additional fees in above cases can be
*As carried by Lex Favious in its Newsletter