10 key takeaways from Companies Amendment Bill, 2016

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Customer Care No. 91-11-45562222
10 key takeaways from Companies Amendment Bill,
2016
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• Companies Amendment Bill, 2016 (the bill) was
  introduced in Lok Sabha on 16th March, 2016. Most
  of the amendments proposed in bill are broadly
  aimed at addressing difficulties in
  implementation of provisions of Companies Act,
  2013.
• Key amendments proposed in the bill are as
  follows
•   1) Appointment of auditors It has been
  proposed to do away with the requirements of
  annual ratification by members with respect to
  appointment of auditors. Further, under the
  exisitng provisions, the auditor who has resigned
  from the company needs to file Form No. ADT-3
  with the company and ROC. His failure to do so
  may attract maximum penalty of Rs 5 lakhs. Now it
  has been proposed to reduce such penalty to Rs
  50,000. However, such penalty should not exceed
  the remuneration of auditor.
•   2) Prohibition on loan or guarantee Bill seeks
  to limit the prohibition on loans, advances,
  etc., to any person in which any of the director
  is interested in. It has been proposed to allow
  companies to give loan's or guarantee's or
  provide security to any person in whom any of the
  director is interested in subject to passing of
  special resolution by the company and utilisation
  of loans by the borrower for its principal
  business activities.
• 3) Restrictions on layers of investment
  companies Under the existing provisions a
  company shall make investment through not more
  than two layers of investment companies. The Bill
  proposes to delete the restrictions on layers of
  investments.
• 4) Managerial remuneration 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.

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• 5) DIN It has been proposed to recognise any
  other identification number, as may be
  prescribed, in place of DIN.
•   6) Repayment of deposit Under the exising
  provisions, pubic deposits shall be repaid within
  one year from commencement of the Companies Act,
  2013 or from due date of payment, whichever is
  earlier. Now the bill proposes to provide that
  such public deposits shall be repaid within 3
  years from the enforcement of Section 74
  (Repayment of deposit etc., accepted before
  commencement of the Act) of the Companies Act,
  2013 or before expiry of the period for which
  deposits were accepted, whichever is earlier.
•   7) Simplification of private placement Bill
  proposes to simplify the requirements with
  reference to private placements, such as doing
  away with separate offer letter, reducing number
  of filings with registrar.
•   8) Liberty on public issue Bill proposes to
  remove the restriction which requires company to
  make issue only after one year has elapsed from
  the date of commencement of its business.
•   9) Annual Return Bill proposes to remove the
  extract of annual return forming part of Board's
  report and provide disclosure of web
  address/web-link of the annual return in Board's
  report. It also proposes to omit requirement
  regarding disclosure of indebtedness, and modify
  requirement of disclosure of names, addresses,
  countries of incorporation, registration and
  percentage of shareholding of Foreign
  Institutional Investors.
• 10) Maintenance of registered office Under the
  existing provisions, the company has to maintain
  its registered office within 15 days of its
  incorporation. The bill proposed to provide that
  a company to has to maintain its registered
  office within 30 days of incorporation.

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