The provisions of the Companies Act, 2013, came in to force with effect from 12.09.2013, and out of the 470 sections, 282 sections are in force, mostly effectivefrom 01.04.2014. The rest of the sections are still to be notified.
With in a period of 15 months of the commencement, on the pretext of ease of doing business in India, and to overcome some practical difficulties as to implementation of the provisions,some amendments were proposed to the Companies Act, 2013, and accordingly, the Companies Amendment Act, 2015, came in to force, and 29.05.2015 was the appointed date for coming in to force of the Sections 1 to 12, 15 to 23, and 14.12.2015, as the commencement date for Section 13 and 14 of the said Amendment Act.
Even after the above amendment, there were lot of provisions which required amendments/relaxations, and accordingly the Ministry had come with 4 notifications Dt:05.06.2015, giving exemptions/relaxation from the applicability of various provisions of the Act to Government Companies, Private Companies, Section 8 Companies and Nidhi Companies.
To sort out any further difficulties, the Ministry had constituted a Corporate Law Committee, to obtain opinion from the various sections in the industry and recommend amendments to the Act. The Committee submitted its report on 01.02.2016.
Based on the recommendation of the Corporate Laws Committee, the Ministry had come up with an Amendment Bill with nearly 86 amendments , and the said bill was introduced in the Loksabha on 16.03.2016. The bill was referred to the parliamentary standing committee on 12.04.2016. The committee is to submit its report with in a period of 3 months.
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Sl. |
Section(s) under the CA, |
Clause No. in the |
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Proposed amendment relating to |
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2013, amended/Altered |
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Amendment to Section 2 |
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(6)-Associate Company- Inclusion of an explanation to the |
Amendment/inclusion |
to |
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(6), (28), (30), (41), (46), |
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1. |
2 |
definitions of associate company, to include the basis of |
remove ambiguity. |
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(49), (51), (57), (71), (76), |
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control for joint venture. |
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(85), (87), (91) |
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(6)-Associate Company- Inclusion of an explanation to the |
Amendment/inclusion |
to |
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definitions of associate company, to include the basis of |
remove ambiguity. |
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control for joint venture. |
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(30)-Debentures- Inclusion of proviso to the debentures |
Exemption proposed to |
be |
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definition, so as not to term certain instruments as |
given to some companies |
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debentures, i.e., instruments under CH-III-D of the RBI act, |
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and other instruments as may be prescribed by the CG in |
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consultation with RBI. |
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(41)- Financial Year- inclusion of the word associate company |
Amendment/inclusion |
to |
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in the proviso to the financial year definition to make an |
remove ambiguity. |
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application to the Tribunal to follow different financial year, |
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than of the other associate company/holding/subsidiary |
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company, for the sake of consolidation of a/cs |
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(46)- Holding Company - inclusion of a proviso stating that for |
Amendment/inclusion |
to |
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this clause, “Company” includes any Body Corporate. |
remove ambiguity. |
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(47) – The definition interested director omitted |
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(51)-KMP- inclusion of clause expanding the scope of officers |
Expanding the |
scope |
of |
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under the definition of key managerial personnel, (Officers |
applicability, for |
ease |
of |
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under full time employment, not more than 1 level below the |
operations and also to fix up |
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directors, and designated as KMP by the Board.) |
responsibilities. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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(57)-Networth-inclusion to the definition of net worth, so as |
Amendment/inclusion |
to |
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to include the debit and credit balances of P&L account. |
remove ambiguity. |
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(71) – Public Company - punctuation correction to the |
Amendment/inclusion |
to |
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definition of Public Company. |
remove ambiguity. |
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(76)-related party – expanding the scope of related party |
Expanding |
the |
scope |
of |
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under the head “body corporate”, an investing company or |
applicability |
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the venturer of the company. |
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(85)-Small Company- The maximum prescribed limit of paid- |
Expanding |
the |
scope |
of |
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up capital stands increased from Rs. 5 crores to Rs.10 Crores. |
applicability. Cushion to Govt to |
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prescribe the limit upto Rs. 10 |
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Change in the wordings as to the P&L account requirement. |
crores. |
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i.e., “last P&L account” to “P&L of immediately preceding FY” |
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The turnover to be prescribed by the govt, is proposed to be |
Amendment/inclusion |
to |
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increased from 20 crores to 100 crores. |
remove ambiguity. Expanding |
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the scope |
of |
applicability. |
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Cushion to Govt to prescribe |
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the turnover limit upto Rs. 100 |
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crores. |
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(87)- subsidiary company- amendment to alter the holding of |
Amendment |
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to basis |
of |
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more than 51 % in the “voting power” rather than “total share |
s u b s i d i a r y, |
f r o m a s |
a |
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capital”. |
percentage of share capital to |
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“voting power” |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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/Inserted |
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To omit the proviso to the definition. Proviso not notified till |
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now. |
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To omit explanation (d) regarding “Layer”. |
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(91)-turnover- a new definition substituting the existing |
Amendment/inclusion to |
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definition. |
remove ambiguity of the earlier |
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turnover definition. |
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2. |
Amendment to section 3. |
3 |
A new Section 3(A) is proposed in connection with, if the |
New provision to fix liability on |
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minimum number of members are reduced in a Public |
the members of for the debts by |
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Company/Private Company to what is prescribed under the |
non-complying companies. |
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Act i.e., 7 & 2 respectively, and the company carries on the |
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business for a period of more than 6 months, then for the |
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debts for the said period, the said members shall be severally |
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liable and they may be sued severally. |
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3. |
Amendment to Section 4 |
4 |
Amendment of Section 4(1)(c) to allow companies an |
Welcome amendment. |
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(Memorandum) |
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unrestricted object clause, to engage in any lawful act or |
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activity, rather than fixed objects. |
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Amendment to Section 4(5) as to the validity of the name |
The same is not welcome, as |
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from 60 days to 20 days, from the date of allotment |
the period is too short. |
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Insertion of new sub-sections (6A) and (6B) regarding the |
Will result in creation of |
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model Memorandum of Association. |
u n i f o r m i t y i n t h e |
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documentation. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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/Inserted |
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4. |
Amendment to Section 7- |
5 |
Amendment to Section 7(1)(c) in connection with the |
Will result in simplification of |
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Incorporation of Company |
requirement for incorporation of a company. To replace the |
the incorporation process. |
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obtaining of affidavit from subscribers and directors and to |
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replace the same with declarations from them with reference |
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to incorporation of company. |
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5. |
Section 12- |
6 |
Amendment of Section 12 (1) as to requirement of having |
W e l c o m e a m e n d m e n t |
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Registered office |
Registered office by a company within 30 days of |
increasing the time lines for |
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incorporation from the present 15 days. |
intimation to ROC. |
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Amendment of Section 12 (4) as to increase of time frame |
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within which the change in registered office to be intimated to |
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ROC, increased from 15 days to 30 days. |
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6. |
Section 21-Authentication |
7 |
Amendment to include even an employee of the company to |
W i l l r e s u l t i n e a s e |
o f |
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of documents |
authenticate the documents for and on behalf of the Board, in |
operations. |
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addition to KMP and other officer. |
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7. |
Section – 26 – Matters to |
8 |
Omission of sub-clauses (a) & (b) of Section 26(1), and |
Probably simplification |
of |
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be disclosed in prospectus |
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inclusion of new clause in its place, in connection with the |
information/Data. |
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contents of the prospectus with respect to information and |
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reports on financial information. Post the amendment, the |
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information shall be in such manner, as specified by SEBI in |
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consultation with Central Government. |
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Further, amendment also provides that till the new |
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requirements are specified by SEBI, the existing requirements |
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as per SEBI act, shall apply. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
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Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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/Inserted |
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8. |
Section 35- Civil Liability |
9 |
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New Clause- Insertion to include a sub-clause to hold experts |
Burden on professionals to be |
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liable for their statements made by them forming part of the |
more cautious while giving |
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for mis-statement in |
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prospectus, and to provide immunity to Directors from |
statements /certifications in |
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prospectus. |
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liability, as the directors had relied on the statements made |
prospectus. |
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by the experts, and do not result in misstatement by director |
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himself. |
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9. |
Section 42 – Private |
10 |
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Replacement with new section |
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Placement |
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Offer letter to be issued to selected persons, not exceeding 50 |
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Compliance will become very |
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or such high number as may be prescribed, in a financial year, |
complicated. |
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whose names are to be recorded by the Board. |
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Private placement offer does not carry renunciation right. |
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Offer to more than the prescribed number will amount to |
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public offer and compliance of section 23 is to be done. |
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Amounts to be received through Cheque/DD or other normal |
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Banking channels. |
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Allotment to be done within 60 days from the receipt of |
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money, and filing to be completed with in 15 days of allotment |
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and only after that monies can be used. |
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If return not filed with ROC with 15 days, then the Company, |
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the promoters, Directors shall be liable for penalty of |
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Rs.2,000/- for each day, during which the default continues |
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but not exceeding Rs.25,00,000/-, for each default. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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If, allotment not in compliance with the provisions, then the |
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Company, the promoters, Directors shall be liable for penalty |
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of equalling to amounts raised or Rs.2 Crores which ever is |
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lower. Company to refund the amounts with in 30 days of the |
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order imposing the penalty. |
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Any offer not made in compliance with the provisions of the |
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Section shall be deemed to be public offer and all the |
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provisions of SCRA & SEBI Act, shall be applicable. |
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10. |
Section - 47 – Voting |
11 |
Amendment as to inclusion of section 188(1), in the |
Amendment/inclusion to |
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Rights |
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restriction of voting rights, in addition to the existing Section |
remove ambiguity. |
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43 and Section 50. |
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11. |
Section - 53 – Issue of |
12 |
Amendment of a grammatical error. |
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Shares at Discount |
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Insertion of a new Sub-section 2(A) permitting issue of shares at a |
Welcome amendment. |
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discount to creditors pursuant to settlement/restructuring scheme |
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under directions/regulations specified by RBI under RBI Act or the |
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Banking regulation Act. |
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12. |
Section – 54 – Issue of |
13 |
Deletion of Section 54 (1) (c), the requirement being the |
W e l c o m e a m e n d m e n t , |
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Sweat Equity Shares |
company could issue sweat equity shares only after |
relaxing |
the period, thereby |
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completion of 1 year from the date the company was eligible |
allowing |
the |
companies to |
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to commence business |
issue sweat |
equity shares, |
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without |
any |
limitation of |
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period. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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/Inserted |
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13. |
Section – 62 – Further |
14 |
Section 62(1) (c), is proposed to be amended to include the |
Welcome amendment. |
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issue of Share Capital |
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compliance of the Chapter III i.e., Section 42 and such other |
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conditions as may be prescribed. |
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Insertion as to the mode of dispatch ofRights issue offer letter. |
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“Courier or any other mode having proof of delivery”, is |
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proposed to be included. |
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14. |
Section 73 - Deposits |
15 |
Amendment to increase the amounts to be deposited in the |
Welcome amendment in the |
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deposit repayment reserve account, from 15 % to 20 % of the |
interest of the depositors. |
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deposits maturing during the following financial year. |
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Amount to be deposited on or before 30 of April each year. |
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Omission as to requirement of deposit insurance. |
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Amendment of one of the condition to accept deposits, as to |
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stricter certification from the company side that it has not |
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committed any default in repayment of deposits and where |
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defaults have taken place, the company has made good the |
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default, and a period of 5 years has lapsed since the date of |
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making good the default. |
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15 |
Section 74- Repayment of |
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Amendment as to the term of repayment of deposits |
Relief to some companies, who |
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Deposits accepted before |
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accepted under the old act, from 1 year to 3 years of the |
had obtained deposits under |
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commencement of the |
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commencement of the new act or on or before expiry of the |
the old act. |
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Act |
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period for which the deposits were accepted, whichever is |
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earlier. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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16. |
S e c t i o n |
7 6 A |
- |
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Amendment as to the increase of the minimum fine on the |
Welcome amendment in the |
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Punishment |
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company for non-compliance of the deposit rules either at |
interest of the depositors. |
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for contravention |
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the time of taking the deposit or its repayment, then the |
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of section 73 or |
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minimum fine shall be Rs. 1 Crore or two times of the deposit |
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section 76. |
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accepted, whichever is lower, and the maximum fee Rs.10 |
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Crores. |
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17. |
Section 77 |
– |
Duty |
to |
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Insertion of a new proviso after the existing 3rd proviso to |
Welcome amendment. |
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Register Charges |
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Section 77 (1), providing non-applicability of the section for |
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some charges, as may be prescribed in consultation with RBI. |
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18. |
S e c t i o n |
7 8 |
– |
19 |
Amendment of the section in line with Section 77, to include |
No comment |
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A p p l i c a t i o n f o r |
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the period of filing of 30 days. |
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registration of Charge |
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19. |
S e c t i o n |
– |
8 2 |
– |
20 |
Amendment to provide time lines for filing of satisfaction of |
W e l c o m e a m e n d m e n t , |
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Satisfaction of Charge |
Charge by the Company or Charge holder with in a period of |
because, now, we need to |
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300 days of satisfaction of the charge, and upon payment of |
approach for condonation if |
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additional fees, as may be prescribed. |
delayed more than 30 days. |
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20. |
Section 89 – Beneficial |
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Insertion of a new Sub-section (10), to section 89 which |
Welcome amendment defining |
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interest |
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defines the term “beneficial interest” for the purposes of |
the term, thereby making it |
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Section 89 and Section 90. |
more clear. |
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21. |
S e c t i o n |
9 0 |
– |
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The existing Section 90 to be substituted with a new section |
Welcome amendment in order to |
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I n v e s t i g a t i o n |
o f |
22 |
and in a much more detailed way detailing who has to give |
have a control as to who are the |
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beneficial ownership of |
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notice of having beneficial ownership and who is not |
real owners of the company, and |
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shares in certain cases. |
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required, maintenance of register and other incidental |
who are acting/representing them |
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matters, and the heading of the Section to be renamed as |
in disguise and the reason for the |
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“Register of significant beneficial owners in a company”. |
same. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
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Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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/Inserted |
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22. |
Section 92 – Annual |
23 |
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Omission of provisions relating to |
Welcome amendment, since, it |
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Return |
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will reduce |
the time of |
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(i) information as to indebtedness of the company. |
p r e p a r i n g |
d u p l i c a t e |
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(ii) Names, address and other details of the FII. |
documents. |
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CG to prescribe Abridged form of Annual Return to OPC and |
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small company. |
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Annual Return need not be part of the Board Report, but the |
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same shall be placed in the website of the company, if any, and |
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a web-link to be provided in the Board’s Report. |
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23. |
Section 93 – Filing of |
24 |
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The section is proposed to be omitted, and accordingly, the |
Welcome change. Because the |
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return with ROC in case |
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requirement of filing MGT-10, by a listed company, whenever, |
company any how files return |
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of change in promoters |
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there is increase or decrease of 2 % or more in the |
to Stock Exchanges. |
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stake |
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shareholding position of promoters and top ten shareholders |
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of the company in each case, will no longer be required. |
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24. |
Section 94 |
25 |
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Omission of the requirement that prior intimation/service of |
Welcome amendment in the |
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the Special resolution to keep the registers or copies of return |
interest of company operations |
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is to be given. |
and ease of doing business. |
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Insertion of a proviso that Government may prescribe that |
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certain registers, index, return shall not be available for |
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inspection or copies of the same can be obtained. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
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2013, amended/Altered |
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No. |
Amendment bill |
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/Inserted |
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25. |
Section 96 |
– Annual |
26 |
Insertion of proviso enabling unlisted companies to hold their |
Welcome amendment. |
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General Meeting |
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AGM any place in India, subject to consent in writing or |
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through electronic mode from all the members in advance. |
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26. |
Section 100 – Calling of |
27 |
Pursuant to rule 18 of Companies (Management and |
Welcome amendment in view |
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Extra-Ordinary General |
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Administration Rules), 2014, EGM of a company can be held |
of the practical difficulties |
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Meetings |
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only India. |
faced by the companies. |
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The proposed amendment provides that EGM of a Company |
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other than a WOS of a company incorporated out side India, |
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shall be held in India i.e., EGM of WOS of a company |
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incorporated out side India, can take place outside India. |
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27. |
Section 101 – Notice of |
28 |
Insertion of a proviso relating to hold of AGM & EGM at |
Removal of ambiguity as in the |
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meeting |
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shorter Notice after obtaining consent from 95 % |
principal act, there was no |
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shareholders, entitled to vote at the meeting in case of |
mention as to AGM or EGM, but |
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company having capital and in case of no share capital then |
only as GM |
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with the consent of the members holding not less than 95 % of |
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the voting power. |
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28. |
Section 110- |
Postal |
29 |
Insertion of a Proviso to Section 110 (1) to conduct the |
Welcome amendment. It will |
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Ballot |
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meeting in the form of a general meeting and not by postal |
reduce the expenditure and |
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ballot, and pass the resolutions through electronic voting. |
waste of stationery. |
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29. |
S e c t i o n |
1 1 7 – |
30 |
Amendment (reduction) of the minimum penalty for non |
Welcome amendment. |
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R e s o l u t i o n s |
a n d |
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filing of resolutions with ROC: |
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agreements to be filed |
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On the company: from Rs.5 Lakhs to Rs.1 Lakh |
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Every Officer: From Rs.1 Lakh to Rs.50,000/-. |
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Sl. |
Section(s) under the CA, |
Clause No. in the |
Proposed amendment relating to |
Remarks/Comments/penalty |
|
2013, amended/Altered |
|||||
No. |
Amendment bill |
||||
/Inserted |
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|||
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The requirement of filing of various resolutions that are |
Reduction in filings. |
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required to be done have been omitted, except for voluntary |
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winding up petition and resolutions passed under Section |
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179(3) (which any how is not applicable to private companies |
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pursuant to the exemption notification Dt:05.06.2015) |
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Insertion of a proviso that the clause shall not be apply to a |
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resolution passed by Banking company for grant of loans or |
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providing security, in its ordinary course of business. |
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Note:
1 Lakh = 100,000; 10 Lakhs = 1 Million; 1 Crore = 10 Millin; 10 Crore = 100 Million; 100 Crore = 1 Billion
Since there are many amendments proposed , due to paucity of space, we will bring up other amendements in the subsequent bulletins.
This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.