This presentation explores efforts by Ministry of Corporate Affairs of Government of India to take forward the agenda of Ease of Doing Business by way of amending 87 Section of Companies Act, 2013.

2. AGBians
SNAP SHOT
 Total Proposed
Amendment-87
 Clarity in Practical
Difficulties
 Easing for OPC & Small
Companies
 Insertion of New Sections
 Modification by way of
Addition
 Deletion of Section

3. AGBians
Purpose of Amendment Bill, 2016
Addressing difficulties in implementation owing
to stringency of compliance requirements
 Facilitating ease of doing business in order to
promote growth with employment
 Harmonization with accounting standards, SEBI
Act, 1992 & the RBI Act, 1934 and regulations made
there under

4. AGBians
Purpose of Amendment Bill, 2016
Rectifying omissions & Inconsistencies
in the Act
Carrying out amendments in the
provisions relating to qualifications &
Selection of Members of the NCLT
and NCLAT in accordance with the
direction of the supreme court

5. AGBians
Deletion of Few
S2 Clause 49- Interested
Director
S 93- Return to be filed with
Registrar in case Promoters’
stake Changes

6. AGBians
Insertion/Substitution of Two Section
S 3A- Member severally
liable certain cases
Substituted S 90- Register
of significant beneficial
owners in a company

7. CHAPTER I
PRELIMINARY
AGBians

8. SECTION 2
C6 Associate
Company –
“Control and
Participation in
Business Decision
Added”
AGBians
Definition of Joint
venture Added

9. SECTION 2
C28 Cost Accountant
AGBians
“And Holds
Valid
Certificate of
Practice”
Added

10. SECTION 2
C30 Debenture
AGBians
2 Exclusions Added –
• Instrument prescribed by
CG
• Instruments mentioned in
IIID of RBI Act

11. SECTION 2
C41 - Financial Year
AGBians
“Associate
Company” Added
Now Foreign
Associate
Company can also
apply for having
different FY

12. SECTION 2
C46 Holding Company
AGBians
Co. includes
Body Corporate

13. SECTION 2
C49 Interested Director
AGBians
Deleted

14. SECTION 2
C51 KMP
AGBians
Added – “Whole
time employee till
one level below
Board designated
as KMP”

15. SECTION 2
C57 Net worth
AGBians
Added “Debit
and Credit
Balance of
P & L”

16. SECTION 2
C71 Public Company
AGBians
Both condition
should be fulfilled
 Not a private Co.
 has minimum
paid up capital
Added “AND”

17. SECTION 2
C76 Related Party
AGBians
Substituted
“Body Corporate
for Company”
Added “Investing
& Venturer Co.”

18. SECTION 2
C85 Small Company
AGBians
Increased
Paid up From 5 Cr. To
10cr
Turnover 20 Cr. To 100cr

19. SECTION 2
C87 Subsidiary
Company
AGBians
Substituted
Total Voting power
for Total share
capital
Limit of upto 2
Layers removed

20. SECTION 2
C91 Turnover
AGBians
Gross amount of
Revenue –
Recognized instead
of Realized

21. CHAPTER II
INCORPORATION OF
COMPANY AND
MATTERS INCIDENTAL
THERETO
AGBians

22.  S 3A- Members
severally liable
certain cases
AGBians
Liability of
members when the
business is carried on for
more than 6 months with
members fewer than
7 in case of public co.
and fewer than 2 in case
of private co.

23.  S 4- Memorandum
AGBians
 Now its upto Company
whether to state
object or not
 Name reservation up to
20 days instead of 60
 Company Model
Memorandum will
available

24. S 7– Incorporation of
Company
AGBians
Replacement of
requirement of Affidavit
from 1st Subscribers and
Directors with Self
Declaration from them

25.  S 12- Registered Office
of Company
AGBians
 Have registered office
within 30 days from
date of incorporation
instead of 15 days as
specified earlier
 Change of Situation
shall be given to
registered within 30
days instead of 15
days as specified
earlier

26.  S 21- Authentication of
documents,
proceedings and
contracts
AGBians
Allowed authentication by
any employee duly
authorized by the Board in
addition to KMP & Officer

27. CHAPTER III
PROSPECTUS AND
ALLOTMENT OF
SECURITIES
AGBians

28.  S 26- matters to be
stated in prospectus
AGBians
Added
Information & Reports
on Financial
informations specified
by SEBI in
consultation with CG

29.  S 35- Civil Liability for
mis-statements in
Prospectus
AGBians
Exemption Added
Person Not liable if he
believes on Report or
Statement of an
Expert

30.  S 42– Offer or Invitation
for subscription of
securities on private
placement
AGBians
 Simplify the requirement of
Private Placement
 Separate Offer Letter
Reduced No. of Filing
Modify Penalty Provision

31. Sharpening the axe
in the Forest
AGBians
NOW ITS STORY TIME

32. CHAPTER IV
SHARE CAPITAL
AND
DEBENTURES
AGBians

33. S 47- Voting Rights
AGBians
Added “Shall be
subject to Section
188 (1)

34.  S 53- Prohibition on Issue of
Shares at Discount
AGBians
Allowed Companies
to issue shares at
discount to its creditor
subject to requirement
of passing of SR.

35.  S 54- Issue of Sweat Equity
Shares
AGBians
Remove Restriction
of 1 Year
Now Co. can issue
sweat equity share
right after
commencement of
its business

36.  S 62- Further Issue of Share
Capital
AGBians
 Wider Modes of Delivery –
any mode having proof of
Delivery
Applicability of Chapter III
in case of issue of
securities under S 62(1)(c)

37. CHAPTER V
ACCEPTANCE OF
DEPOSITS BY
COMPANIES
AGBians

38.  S 73- Prohibition on
Acceptance of Deposits
from Public
AGBians
• Depositing 20 % instead
of 15% of Maturity on
30th April every year
• Done away with Deposit
Insurance
• Now deposit can be
accepted after 5 years
of default made good

39.  S 74- Repayment of
Deposits etc accepted
before commencement of
this Act
AGBians
Now Repayment of deposit
accepted before this Act
within 3 year instead of 1 Year
earlier

40.  S 76A- Punishment for
contravention of section
73 or section 76
AGBians
Earlier Rupees 1Cr or
Added twice the amount of
deposit accepted,
whichever is lower

41. CHAPTER VI
REGISTRATION
OF CHARGES
AGBians

42.  S 77- Duty to
register Charges
etc
AGBians
Exemption Added
This section shall
not apply on
Charges Prescribed
in consultation with
RBI

43.  S 82- Company to
Report Satisfaction
of Charge
AGBians
Added
Additional fees
can be paid up
to 300 days

44. Lottery
Ka
Ticket
AGBians
NOW ITS STORY TIME

45. CHAPTER VII
MANAGEMENT
AND
ADMINISTRATION
AGBians

46.  S 89- Declaration in
respect of Beneficial
Interest in any Share
AGBians
Definition of
Beneficial Interest
in a Share

47.  S 90- Investigation of
Beneficial Ownership of
Shares in certain Cases
AGBians
Substituted
S 90- Register of significant
beneficial owners in a
company

48.  S 92- Annual Return
AGBians
 No need to disclose
Indebtedness
 Details of FII’s less now
 Annual return extract shall not
form part of Board Report
Disclosure of web address/ web
Link of annual return in Board
Report
 CG provide abridged Form of
Annual Return for OPC & small
Co.

49.  S 93- Return to be filed with
Registrar in case
promoters’ stake changes
AGBians
Deleted

50.  S 94- Place of Keeping
and Inspection of
Registers, Returns etc
AGBians
 Ambiguity removed - No
Need of proposed SR in
advance - in case of Place
other than Registered
Office
 Extract of Index/Return/
Register cannot be taken

51.  S 96- Annual
General Meeting
AGBians
Proviso Added
AGM of Unlisted
Company can be
convened at any place in
India with the approval
of all shareholder in
advance

52.  S 100- Calling of
Extraordinary General
meeting
AGBians
Allowed
Wholly Owned Subsidiary
of Foreign Co. to hold
EGM outside India

53.  S 101- Notice of
Meeting
AGBians
 General meeting may held
at shorter notice if AGM
Consent is given by 95%
members entitled to vote
 In case of any other
meeting, consent is given by
95% of paid up share capital

54.  S 110- Postal Ballot
AGBians
Co. may transact an item,
which is mandatorily
required to be transacted
through postal ballot, at GM
also where the facility of
electronic voting is provided
by Co.

55.  S 117- Resolution and
Agreement to be Filed
AGBians
 Exemption to Banking Co.
from filing resolution
mentioned u/s 179
 For Co.- Min. Fine reduces
to 1Lac from 5 Lac
For default in Officer- Min.
Fine reduces to 50,000 from
1 Lac

56. CHAPTER VIII
DECLARATION AND
PAYMENT OF
DIVIDEND
AGBians

57. S 123
Declaration of Dividend
Added : Now Interim
Dividend for FY can also be
declared after the closure
of FY till the date of AGM
Out of the Profits of quarter
preceding the date of
declaration of the interim
dividend AGBians

58. CHAPTER IX
ACCOUNTS OF
COMPANIES
AGBians

59. S 129- Financial
Statements
CFS of all
subsidiaries and
Associate Co to be
prepared in
addition to Parent
Co.
AGBians

60.  S 130- Re- opening of
Accounts on Court’s or
Tribunal’s Orders
Earlier - No period
prescribed for Re-opening.
Now - Accounts can be re-
opened for 8 years or
longer period as may be
prescribed
AGBians

61. S 132- Constitution of
National Financial
Reporting Authority
In case of firms-
Penalty for
Professional Mis-
conduct decreased to
Rs. 5 Lacs from Rs. 10
Lacs
AGBians

62. S134 - Financial
Statement, Board’s
Report etc.
• Earlier CEO Signature only
if he is a director
• Now CEO Signature –
Mandatory - whether he is
director or not
AGBians

63. S134 - Financial
Statement, Board’s
Report etc.
• Abridged Board Report for
OPC and Small Companies
may be prescribed in times
to come – power delegated
to CG
AGBians

64. S 135- Corporate
Social
Responsibility
Ambiguity resolved-
immediately
preceding the F.Y
No Independent
Director - CSR
Committee two or
more directors
AGBians

65.  S 136- Right of Member to
Copies of audited Financial
Statement
Added
• Copies of documents can be
sent 21 days before the
meeting – if, agreed by 95%
of the members
• CFS of foreign subsidiary is
placed on the website of the
listed company
• Copy of Financials of
Subsidiary to be provided to
all member who asks AGBians

66.  S 137- Copy of
Financial Statement
to be filed with
Registrar
Filing of unaudited
financials of foreign
subsidiaries, if not
required to be
audited under
foreign Laws
AGBians

67. Thomas Edison & his
Mother
AGBians
NOW ITS STORY TIME

68. CHAPTER X
AUDIT AND
AUDITORS
AGBians

69.  S 139 -
Appointment of
Auditors
Ratification of
auditor - Not
required now
AGBians

70. S140- Removal,
Resignation of Auditor
and giving of Special
Notice
Penalty for not filing
resignation within 30 days
lowered to Rs. 50,000 or
the remuneration of the
auditor, whichever is less
From Rs. 5Lacs
AGBians

71.  S 141- Eligibility,
Qualifications and
Disqualifications
of Auditors
Relative now Defined
for the Section –
relatively light
definition - Inserted
as Explanation
AGBians

72. S 143- Powers and Duties of
Auditors and Auditing
Standards
Added Right to access
records of Associate Co.
also
Earlier Right to access
records of only Subsidiary
Co.
AGBians

73. S 147- Punishment of
Contravention
Revised Upper limit –
connecting it with multiple of
fee received
4 times of Auditors
Remuneration -unknowingly
8 times of the auditors
remuneration - knowingly
AGBians

74. S148- CG to prescribe
audit of items of cost
in respect of certain
companies
Ambiguity removed – by way
of
• CAiP – to CA
• ICWAI to ICAI
AGBians

75. CHAPTER XI
APPOINTMENT AND
QUALIFICATIONS
OF DIRECTORS
AGBians

76. S 149- Company to have
Board of Directors
 Resident Director limit of
182 days shall apply
proportionately in case of
newly incorporated Company
 Independent Director -
Pecuniary Relationship
defined as transaction
exceeding 10% of his total
income or as may be
prescribed
AGBians

77. S 153 - Application for
allotment of Director
Identification Number
Empower CG to
recognize any other
Identification no. in
place of DIN
AGBians

78. S 160- Right of Persons
other than retiring
Directors to stand for
Directorship
Deposit of Rs 1 lac not
applicable in case
Independent director
Is recommended by
Nomination and
Remuneration Committee
AGBians

79. S 161- Appointment of Additional
Director, Alternate Director
and Nominee Director
Ambiguity Removed
 Added -- Director cannot
become Alternate Director
 Added – Casual Vacancy shall
also be approved
subsequently by Members in
next GM
AGBians

80.  S 164- Disqualifications
for appointment of
Director
Ambiguity Removed
Added – Director
appointed in Defaulting
Company shall not attain
disqualification for 6
months
AGBians

81. S 165- Number of
Directorship
Explanation Added –
Now Excludes
directorship of
Dormant Companies
AGBians

82.  S 167- Vacation of
Office of Director
Ambiguity Removed by
addition
If director incurs any
disqualification under
S164(2), director shall vacate
office in all companies other
than the company in default
AGBians

83. S 168- Resignation of
Director
Ease in case of
Resigning - DIR-11
Becomes Optional –
Now required only in
case of tussle with
Company
AGBians

84. Ajay Garg
Team AGBians
agbcorplegal@gmail.com
www.agbcorplegal.com
09811386723