With
reference to our earlier blog dated 19.03.2016 regarding the Companies (Amendment) Act,
2016, please find below the highlights of same:
- In case of the members of the company falls below the minimum required members and business is carried on for more than six months liability of members shall be severally liable for the payment of the whole debts of the company
- The Companies have liberty w.r.t to the object clause in Memorandum. The company can engage in any lawful act or activity or business, or any act or activity or business to pursue any specific object or objects, as per the law for the time being in force.
- Affidavit from first subscribers and directors shall be replaced with declarations at the time incorporation of company.
- Contents of the prospectus with respect to information and reports on financial information shall be specified by SEBI in consultation with Central Government. The clause also provides for applicability of existing requirements on such matters specified by SEBI.
- Procedure for private placement is simplified. However, provided restrictions on utilization of moneys raised through private placement unless allotment is made and return of allotment is filed with the registrar within 15 days.
- Requirement relating to deposit insurance is omitted and provide that deposit repayment reserve shall not be less than twenty percent of the amount of deposits maturing during the following financial year.
- Deposit accepted under the Companies Act 1956 are to be repaid within 3 years from 1st April, 2014 or due for repayment whichever is earlier.
- Timelines for filing the form for satisfaction of charge shall be on the same lines of as provided for registration of charge i.e, 300 days
- Significant beneficial owner concept is introduced and necessary declaration required to be given
- Extract of Annual return and indebtedness details in Board report are omitted with some modification in the details of Foreign Institutional Investors. Further Abridged form of Annual Return for one person companies and small companies is proposed.
- Return required to be filed respect to change in promoters’ and top 10 shareholders’ stake omitted.
- Unlisted companies allowed to convene Annual General Meeting at any place in India with the approval of all shareholders taken in advance.
- Wholly owned subsidiary of a company incorporated outside India can hold its extra ordinary general meeting outside India
- Shorter notice consent of 95% of the members entitled to vote is required in case of Annual General Meeting.
- Company may transact an item, which is mandatorily required to be transacted through postal ballot, at a general meeting also where the facility of electronic voting is provided by the company.
- Interim dividend can be declared from the profits of the said year or from brought forward surplus in the profit and loss account or the profit generated upto quarter prior to declaration of dividend
- Chief executive officer required to sign financial statements irrespective of whether he is a director or not. The disclosure requirements with respect to annual return and polices in respect of remuneration and CSR modified.
- Rationalization of the requirements with respect to financial statements of foreign subsidiaries of a listed company subject to conditions and unaudited financial statements of foreign subsidiaries which is not required to get its accounts audited.
- Ratification of auditor by members with respect to appointment of auditors omitted.
- Restricts the liability of auditor for damages to the shareholders or creditors of the company instead of any other person. Also, concerned partners shall be liable in case of criminal liability of any audit firm.
- Requirements with respect to appointment of resident director eased out. The Scope of Pecuniary relationship of a director and relative with respect to eligibility of a director to be appointed as an independent director specified.
- Deposit of rupees one lakh with respect to nomination of directors shall not be applicable in case of appointment of independent directors or directors nominated by nomination and remuneration committee.
- Alternate director cannot be appointed if he is holding directorship in the same company. Causal vacancy of the director can be filed by the board in case of private company as well subject to approval of shareholders in next general meeting
- Directorship in dormant companies to be excluded for reckoning the limit of directorships of twenty companies
- In case a director incurs any of disqualifications due to non filing of return or repayment of deposits, he shall vacate office in companies other than the company which is in default. New Director shall not incur disqualification upto 6 months in the defaulting company.
- Requirement for forwarding of copy of resignation by director to the Registrar shall be optional.
- In case of Audit and Nomination and Remuneration committee, applicable to Listed Public Companies instead of listed Companies
- Participation of directors on certain items at Board meetings through video conferencing or other audio visual means shall be allowed if there is quorum through physical presence of directors
- Borrowing limits revision on upper side i.e, Paid Up capital + Free Reserves + Securities Premium
- Body corporate excluded for the purpose of section - 184
- Company allowed giving loan or guaranteeing or providing security to any person in whom any of the directors is interested subject to passing of special resolution by the company and utilization of loans by the borrowing company for its principal business activities.
- Layers of subsidiaries omitted. Also Loan to employee excluded for the purpose of calculating the limits of loans and investments
- Prohibition on forward dealings in securities of company and on insider trading of securities by director or key managerial personnel is removed.
- Approval of central government has been dispensed with for certain items in case of managerial remuneration
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