Companies Amendment Bill 2016- part 3

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

45

Section  152

–

46

Amendment of sub-section (3) and (4) of section 152 of the

Welcome amendment, allowing to

Appointment

of

Act to provide any other identification number, as may be

have a prescribed Identification

Directors

prescribed,  to  be  recognised  as  Director  Identification

number as DIN, and a separate DIN

Number, and a person may hold such identification number in

need not be obtained.

place of DIN.

46

Section 153 –

47

Insertion of a proviso to section 153 of the Act, enabling the

Welcome amendment, allowing to

Application for

Central Government to recognise any other identification

have a prescribed Identification

Allotment of DIN

number to be treated as DIN, and any person possessing such

number as DIN, thereby removing

Identification Number need not obtain a DIN under the

the requirement for applying a

section.

separate DIN.

47

Section 160 –

48

Welcome amendment, exempting

Right of Persons Other

Insertion of a proviso to sub-section (1) of Section 160 of the

the requirement of deposit of

than Retiring

Directors

Act of the Act,exempting the requirement as to deposit of

money in respect of independent

to Stand for Directorship

Rs.1,00,000/-,  in  connection  with  appointment  of

directors or directors nominated

independent directors or directors nominated by nomination

by nomination and remuneration

and remuneration committee.

committee.

Vide exemption notification Dt:05.06.2015, the provisions of

Section 160 are not applicable to Private Companies.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

48

S e c t i o n

1 6 1

–

49

Amendment of sub-section (2) of Section 161 of the Act,

Amendment to remove

A p p o i n t m e n t

o f

restricting an existing Director in the Company, from being

ambiguity.

Additional

Director,

appointed as an Alternate director for other Director.

Alternate Director and

Nominee Director

Amendment of Sub-section (4) of Section 161 of the Act, to

Welcome  Amendment,  and

delete the word “In case of a Public Company”, thereby

ease of operations.

allowing the Board of all companies to fill casual vacancy and

obtain approval for the said appointment, in the immediate

next annual generalmeeting.

49

S e c t i o n

1 6 4

–

50

Insertion of a proviso to sub-section (2) of section 164 of the

W e l c o m e  a m e n d m e n t

Disqualifications

for

Act  to  provide  for  non-applicability  of  disqualification

providing relief to the directors

appointment of Director

provisions, for period of 6 months from the date of

who get appointed as Director

appointment, to a director, who is appointed, as a director in a

in  Company under defaulting

company, which is in default of non-filing of financial

status.

statements or annual return or failure to repay the deposit.

Substitution of a new proviso in place of the existing proviso

to provide that the clauses (d), (e) and (g) of sub-section (3) of

section 164 of the Act, shall continue to apply even if appeal

or petition is filed.

50

Section 165 –

51

Insertion of an Explanation to sub-section (1) of Section 165

Welcome amendment.

Number of Directorships

of the Act, to exclude the directorship in dormant companies

from the limit of directorships of 20 Companies.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

51

Section 167 –

52

Insertion of a proviso to Clause (a) of sub-section (1) of section

Amendment to remove

Vacation  of  office  of

167 of the Act, to provide that in case a director incurs any of

ambiguity.

Director

disqualifications under section 164 (2), he shall vacate office

incompanies other than the company which is in default.

Substitution of the proviso to Clause (f) of sub-section (1) of

W e l c o m e  a m e n d m e n t ,

section 167 of the Act to provide the time frame/criteria from

providing relief in cases where

which vacation of office of director shall take place, in case of

appeal  is  made  against  the

orders referred to in clauses (e) and (f)

order.

52

Section 168 –

53

Amendment of proviso to Sub-section (1) of Section 168 of

Welcome amendment, thereby

Resignation of Director

the  Act,  thereby making  the  requirement  of  filing  of

making  the  filing  of  form

Resignation letter by the Director with the Registrar of

optional on the part of the

Companies, optional.

Resigning Director.

53

Section – 173 – Meetings

54

Insertion of a proviso to sub-section (2) of Section 173 of the

Welcome amendment, thereby

of the Board

Act to allow participation of directors on certain items at

enabling  the  directors  who

Board meetings through video conferencing or other audio

cannot be present physically to

visual means if there is requisite quorum is present at the

participate in the meeting and

meeting through physical presence of directors.

be part of the decision making.

54

Section 177–

55

Amendment to Sub-section (1) of Section 177 of the Act, to

Welcome  Amendment  to

Audit Committee

replace the words “Every Listed Company” with words “Every

remove ambiguity and ease of

Listed Public Company”, thereby making the applicability of

operations.

the Section only to listed public companies and other

companies as prescribed under the rules.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

Insertion of new provisos in clause (iv) of sub-section (4) of

Section 177 of the Act, relating to authorities/powers to the

Audit committees, such as (i) ratification of transactions

entered in to by the Directors with the company, neither

without approval of the Audit Committee and involving

amount not exceeding Rs.1 Crore rupees, not the said

transaction is ratified by the Audit Committee, within 3

months of transaction, (ii) consequences of non-ratification

and  (iii)  exemption  from  obtaining  approval  of  audit

committee for to related party transactions between holding

compan yand its wholly owned subsidiary, other than those

covered under Section 188

55

Section 178 –

56

Amendment to Sub-section (1) of Section 178 of the Act, to

Welcome  Amendment  to

replace the words “Every Listed Company” with words “Every

remove ambiguity and ease of

Nomination and

Remuneration

Listed Public Company”, thereby making the applicability of

operations.

Committee and

the Section only to listed public companies and other

Stakeholders

companies as prescribed under the rules.

Relationship Committee

Amendment of Sub-section (2) of Section 178 of the Act, that

Welcome Amendment for ease

instead of the Committee carrying out evaluation of every

of operations.

director’s  performance,  the  Committee  will  specify

methodology for effective evaluation of performance of

Board and committees and individual directors, and the said

performance evaluation to be carried out either by the Board,

Nomination  and  Remuneration  Committee  or  an

Independent external agency.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

Insertion of Proviso to Clause (c)of Sub-section (4) of Section

D i s c l o s u re

re q u i re m e nt

178, to provide that the policy framed by the Nomination and

included.

Remuneration  Committee,  relating  to   criteria  for

determining  qualifications,  positive  attributes  and

independence of a director and recommend to the Board a

policy, relating to the remuneration for the directors, key

managerial personnel and other employees, shall be placed

on the website of the Company, if any, and the salient features

policy and changes therein, if any, along with the web address

of the policy, if any, shall be disclosed in the Board’s report.

Amendment of proviso to Sub-section (8) of Section 178 for

Amendment to remove error in

substituting the words “inability to resolve or consider any

wording

grievance” in place of “non-consideration of resolution of any

grievance”.

56

Section 180 –

57

Amendment to item (c) of sub-section (1) of Section 180 of

Amendment

to  maintain

Restrictions on Powers of

the Act, to substitute for the words “paid-up share capital,

uniformity

Board.

free reserves and securities premium”, in place of “paid-up

share capital and free reserves”, i.e., to include securities

premium, thereby making the requirement of obtaining

consent from the members of the company, only for the

cases, where the proposed borrowings, will be in excess of its

paid-up share capital, free reserves and securities premium.

Note: This section is does not apply to a Private Company, by

virtue of the exemption notification Dt:05.06.2015.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

57

Section 184 –

58

Amendment to Sub-section (4) of Section 184 of the Act, to

Since there is no minimum fine

Disclosure of Interest by

remove the minimum fine of Rs.50,000/-, for contravention

slab, the penalty levied can be

Director

by the Director of the provisions i.e., failure to disclose his

upto Rs.1 Lakh.

interest in general and/or in particular with reference to a

contract

Amendment to Clause (b) of sub-section(5) of Section 184 of

Amendment to remove

the Act, to provide for non-applicability of the provisions of

ambiguity

this section, relating to the transactions between Companies

and body Corporates, where any of the directors of the one

company or body corporate or two or more of them together

holds or hold not more than two per cent. of the paid-up

share capital in the other company or the body corporate,

which was inadvertently left out.

58

Section 185 –

59

Amendment to substitute the existing Section 185 of the Act,

V E R Y  M U C H

R E Q U I R E D

Loan to Directors, etc

with a new section with following provisions:

A M E N D M E N T

W e l c o m e

substitution  /Amendment  to

èSub-section (1): To prohibit giving loans, advances, etc.,

provide  for  relief  to  group

to directors of the company or its holding company or any

companies/Companies

with

partner of such director or any firm in which such director

common directors to provide

or relative is a partner.

l o a n s /g u a ra n t e e s

a f t e r

èSub-section (2): It allows a company to give loan or

compliance of the provisions.

guarantee or provide security to any person in whom any

of the director is interested subject to passing of special

resolution by the company and utilisation of loans by the

borrowing company for its principal business activities.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

It provides for an explanation for term any person in whom

any of the director is interested.

èSub-section (3): Provides for certain situations to which

the provisions of Sub-section (1) & (2)are not applicable.

èSub-section (4): Penalties for non-compliance. (penalties

remain the same as in the old Section)

59

Section 186 –

60

Omission of Sub-section(1) of Section 186 of the Act, relating

Loan and Investment by

to the  restriction on layers of investment companies i.e.,2

Company

Layers. Thereby investment can be done through more than

two layers of investment companies.

Welcome  Amendment

to

Insertion of an explanation to Sub-section (2), that for the

provide ease of operations.

purpose of the sub-section,  the word “person”does not

include any individual who is in the employment of the

company.

Amendment to substitute the existing sub-section (3) of

Welcome  Amendment

to

Section 186 of the Act, with a new sub-section, to include

provide ease of operations.

aggregate  of  loan  and  investments  so  far  made  and

guarantees, securities so far provided to all other bodies

corporate along with the investment, loan, guarantee or

security proposed to be made or given by the Board for the

purpose of calculating the limits of loans and investments.

Requirement  of  prior  Special  resolution  for

investment/loans/securities beyond the limits.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

Inclusion of a proviso to sub-section (3), to exempt the

Welcome Amendment to

requirement of passing a special resolution at general

provide ease of operations.

meeting, in cases where a loan or guarantee is given or where

a security has been provided by a company to its wholly

owned subsidiary companyor a joint venture company, or

acquisition is made by a holding company of the securities of

its wholly owned subsidiary company.   A further proviso

provides for the disclosure of the said details in the Financial

statement of the Company

Amendment to substitute the existing sub-section (11) of

Section 186 of the Actto rephrase the provisions.

Amendment of Clause (a) of the explanation provided to the

Amendment to provide for

section,  relating  to  “investment  company”,  to  include

clarity.

clarification to the existing explanation to provide for

criteria/cases, as to when the company will be deemed to be a

company principally engaged in the business of acquisition of

shares, debentures or other securities.

60

Section 188 –

61

Insertion of a new proviso (3rd one) after the existing second

Welcome Amendment to

R e l a t e d  P a r t y

proviso to sub-section (1) of Section 188, to provide that the

provide ease of operations.

Transactions

provisions of 2nd proviso to Section 188(1) shall not apply to a

company in which 90 % or more members in numbers are

relatives of promoters or related parties.

Sl.

Section(s) under the CA,

Clause No. in the

Proposed amendment relating to

Remarks/Comments/Penalty

No.

2013, amended

Amendment Bill

Amendment of Sub-section (3) of Section 188 of the Act, to

Amendment

to  provide

for

provide that any transaction entered into by a director or any

clarity.

other employee, without obtaining the consent of the Board

or approval by are solution in the general meeting under sub-

section (1) and if it is not ratified by the Board or, as the case

may be, by the shareholders at a meeting within three

months shall be voidable at the option of the Board or

shareholders, as the case may be

61

S e c t i o n

1 9 4  –

62

Amendment to Omit Section 194 of the Act relating to

Amendment

proposed  to

be

Prohibition on Forward

prohibition on forward dealings in securities of company by

made, since the same is covered

Dealings in

Securities

director or key managerial personnel

under other enactment, and the

of Company by Director

Companies Act, cannot have a

or  key  Managerial

control over the same.

Personnel

62

Section 195 –

63

Amendment to Omit Section 195 of the Act which provides

Amendment

proposed  to

be

Prohibition

on  Insider

for prohibition on Insider Trading of Securities.

made, since the same is covered

Trading of Securities

under other enactment, and the

Companies Act, cannot have a

control over the same.