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    Companies Amendment Bill 2016- part 2

     

     

     

     

    Contributed by CS DVK Phanindar

     

     

     

     

     

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

    30.

    Section 123

    31

    Substitution  of  sub-section  (3)of  Section  123  to  allow

    Welcome  amendment,  as  it

     

     

    Declaration of Dividend

     

    declaration and payment of interim dividend, during the

    allows  a  new  criteria  for

     

     

     

     

    period from closure of financial year till date of Annual

    declaration of Interim Dividend,

     

     

     

     

    General Meeting for a financial year, and out of the profits of

    and  clarity  on  the  rate  of

     

     

     

     

    the said year; or from the surplus in the profit and loss

    dividend  in  the  absence  of

     

     

     

     

    account; or out of profits generated in the financial year till

    profits.

     

     

     

     

    the quarter preceding the date of declaration of the interim

     

     

     

     

     

    dividend.

     

     

     

     

     

    In addition to the above, the substitution also prescribes the

     

     

     

     

     

    rate at which the interim dividend can be declared, in case of

     

     

     

     

     

    loss is incurred during the financial year.

     

     

     

     

     

     

     

     

    31.

    Section  129  -Financial

    32

    Substitution of sub-section (3) of section 129, in connection

    Amendment/inclusion to

     

     

    Statements

     

    with preparation of Consolidated Financial Statements in the

    remove ambiguity.

     

     

     

     

    same form and manner as that of its own in accordance with

     

     

     

     

     

    applicable accounting standards, for associate companies

     

     

     

     

     

    also in addition to subsidiary.

     

     

     

     

     

     

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

     

    32.

    Section – 130 –

    Accounts

    33

    Amendment to sub-section (1) of Section  130, so as to

    Welcome amendment, as there

     

     

    Re-opening

    of

     

    provide that in addition to authorities already specified in the

    is  a  increased  scope  of

     

     

    on Court’s

    or

    Tribunal’s

     

     

     

    section, any other person concerned shall be given notice

    authorities, to whom notice as

     

     

    Orders (Section notified

     

     

     

    before passing an order for re-opening of accounts.

    to re-opening of accounts is to

     

     

    w i t h  e f f e c t  f r o m

     

     

     

     

     

     

     

    be given by the Tribunal; and

     

     

    01.06.2016)

     

     

     

     

    Insertion of a new sub-section (3) to provide that no order

     

     

     

     

     

     

    also  giving  the  periods  for

     

     

     

     

     

     

     

    shall be made for re-opening of books of account relating to a

    which order can be given by

     

     

     

     

     

     

     

    period  earlier  than  eight  financial  years  immediately

    Tribunal,  for  re-opening  of

     

     

     

     

     

     

     

    preceding the current financial year, unless there is a specific

    accounts.

     

     

     

     

     

     

     

    direction under section 128(5) [i.e., maintenance of books of

     

     

     

     

     

     

     

     

    accounts] from the Central Government for longer period.

     

     

     

     

     

     

     

     

    33.

    Section 132- Constitution

    34

    Amendment (reduction) of the minimum penalty that can be

    Welcome amendment.

     

     

    of  National

     

    Financial

     

    levied by way of an order by NFRA on CA Firms, if professional

     

     

     

    Reporting

     

    Authority

     

    or other misconduct is proved from Rs. 10 Lakhs to Rs.5 Lakhs.

     

     

     

    (NFRA). (Section yet to

     

     

     

     

     

    be notified)

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    34.

    Section 134

    Financial

    35

    Substitution of sub- section (1)of section 134, with a new

    Welcome amendment as the

     

     

    statements

    &  Board

     

    section, thereby removing the requirement that the CEO signing

    proposed amendments reduce

     

     

    Report

     

     

     

     

    the financials shall be a Director, and accordingly, a CEO shall

    the reporting requirements in

     

     

     

     

     

     

     

    now sign financial statements irrespective of whether he is a

    the Board Report.

     

     

     

     

     

     

     

    director or not.

     

     

     

     

     

     

     

     

    Amendments to sub-section (3) of section 134 seeks to modify

     

     

     

     

     

     

     

     

    the disclosure requirements with respect to (a) removal of the

     

     

     

     

     

     

     

     

    requirement of attaching the extract of annual return to the

     

     

     

     

     

     

     

     

    Board report, and just mentioning the web-address, if any,

     

     

     

     

     

     

     

     

    where the extract of annual return is placed is to be mentioned

     

     

     

     

     

     

     

     

     

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    (b)amendment to clause (p) of the sub-section relating to

     

     

     

     

     

     

    statement  on  annual  performance  of  the  Board,  its

     

     

     

     

     

     

    committees and independent directors by the companies to

     

     

     

     

     

     

    which the provision is applicable(c)mentioning only the salient

     

     

     

     

     

     

    features of the Remuneration and nomination policy (Section

     

     

     

     

     

     

    178) and CSR policy( Section 135) in the Board Report, and

     

     

     

     

     

     

    providing the web-address where  the complete policy is

     

     

     

     

     

     

    available.

     

     

     

     

     

     

    Insertion of a new section 3A, which empowers the Central

     

     

     

     

     

     

    Government to prescribeabridged Board's report for small

     

     

     

     

     

     

    company and one person company.

     

     

     

     

     

     

     

     

     

     

    35.

    Section - 135 – Corporate

    36

    Amendment to sub-section (1) of section 135,with regard to

    Amendment  to

    remove

     

     

    Social Responsibility.

     

    the period for which the criteria for applicability of CSR to a

     

     

    ambiguity  and

    ease  of

     

     

     

     

    Company (i.e., Turnover, Net worth & Net Profit) are to be seen

     

     

     

    operations.

     

     

     

     

     

    from “any financialyear” to “immediately preceding financial

     

     

     

     

     

     

     

     

     

     

     

    year”.

     

     

     

     

     

     

    Insertion of a proviso to sub-section (1) regarding composition

     

     

     

     

     

     

    of CSRcommittee with two or more directors, by a company

     

     

     

     

     

     

    which is not required to appointindependent director under

     

     

     

     

     

     

    section 149.

     

     

     

     

     

     

    Amendment of Clause (a)  in sub-section (3) with regard to

     

     

     

     

     

     

    areas in which CSR activity can be undertaken "as specified in

     

     

     

     

     

     

    Schedule VII", the words and figures "in areas or subject,

     

     

     

     

     

     

    specified in Schedule VII", thereby providing more scope in

     

     

     

     

     

     

    the CSR activities.

     

     

     

     

     

     

     

     

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Amendment to the explanation given in sub-section (5) earlier

     

     

     

     

     

     

    with regard to “Average Net profit”, now changed to “Net

     

     

     

     

     

     

    profit”, and further to empower the CentralGovernment to

     

     

     

     

     

     

    prescribe sums which shall not be included for calculating 'net

     

     

     

     

     

     

    profit' of a Company for the purpose of section 135.

     

     

     

     

     

     

     

     

    36.

    Section  - 136 – Right of

    37

    Amendment to sub-section (1) of section 136 by inserting a new

    Welcome amendment.

     

     

    member

    to  copies  of

     

    proviso to provide that copies of audited financial statements

     

     

     

    a u d i t e d

    f i n a n c i a l

     

    and other documents can be sent at shorter notice if 95 % of

     

     

     

    statement.

     

    members entitled to vote at the meeting agree for the same;

     

     

     

     

     

     

    and  accordingly  aligning  the  existing  provisos,  after  the

     

     

     

     

     

     

    insertion.

     

     

     

     

     

     

    Substituting the existing 4th proviso to Sub-section (1) with new

     

     

     

     

     

     

    proviso,   to rationalise the requirements with respect to

     

     

     

     

     

     

    financial statements of foreign subsidiaries of a listed company

     

     

     

     

     

     

    subject to conditions.

     

     

     

     

     

     

    Insertion of a proviso to Sub-section (2) thereby companies

     

     

     

     

     

     

    having subsidiaries to provide financials of the subsidiary for

     

     

     

     

     

     

    inspection by the member who asks for it.

     

     

     

     

     

     

     

     

     

    37.

    Section  –  137  –  Copy

    38

    Insertion of a new proviso after the existing 4th proviso to sub-

    Welcome amendment.

     

    section (1)   so as to enable filing of unaudited financial

     

     

     

    offinancialstatement

     

     

     

     

    tobe filed with

     

    statements by listed companies, of their foreign subsidiaries

     

     

     

    Registrar.

     

     

    which is not required to get its accounts audited, under the laws

     

     

     

     

     

     

    of the country of incorporation.  The filing of unaudited

     

     

     

     

     

     

    financial statements are to be accompanied by a declaration by

     

     

     

     

     

     

    the listed company, to the above effect.

     

     

     

     

     

     

     

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

     

     

    Amendment Bill

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    38.

    S e c t i o n

    1 3 9

    39

    Omission  of  the  first  proviso  to  sub-section  (1),  i.e.,

    Welcome amendment.

     

     

    Appointment of Auditors

     

    ratification of the appointment of auditors by the members at

     

     

     

     

     

     

     

     

    every AGM.

     

     

     

     

     

     

     

     

     

     

     

    39.

    S e c t i o n

    1 4 0

    -

    40

    Amendment to sub-section (3) of section 140 to reduce the

     

     

    penalty/penalty  criteria,  withrespect  to  failure  to  file

     

     

     

    Removal,resignation

    of

     

     

     

     

    auditor and giving of

     

     

    resignation form (ADT-3) by auditor to the Registrar concerned

     

     

     

    Specialnotice

     

     

     

    and also to the Comptroller and Auditor General (CAG) for the

     

     

     

     

     

     

     

     

    applicable companies, from  the existing  “Rs.50,000/-“ to

     

     

     

     

     

     

     

     

    “Rs.50,000/-or  the remuneration of auditors whichever is

     

     

     

     

     

     

     

     

    less”.

     

     

     

     

     

     

     

     

     

     

     

    40.

    Section – 141 - Eligibility,

    41

    Insertion of an explanation to clause (d) of sub-section (3) of

    Amendment to remove

     

    section 141, to clarify the meaning of relative with reference to

     

    Qualifications and

     

     

    eligibility for appointment of auditors.

    ambiguity.

     

     

    disqualifications of

     

     

     

     

     

     

     

     

     

     

     

    auditors.

     

     

     

     

    Substitution of the existing clause (i) of sub-section (3) along

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    with explanation, for harmonisation with section 144 in respect

     

     

     

     

     

     

     

     

    of providing of certain non-audit services to holding or

     

     

     

     

     

     

     

     

    subsidiary company of a company.

     

     

     

     

     

     

     

     

     

     

     

    41.

    Section 143 - Powers and

    42

    Amendment to sub-section (1) of section 143 of the Act to

    Amendment to remove

     

    include   associate  companies  in  addition  to  subsidiary

    ambiguity.

     

     

    duties  of

    auditors  and

     

     

     

    companies with respect to right of auditors to have access to

     

     

     

    auditing standards.

     

     

     

     

     

     

     

    accounts and records for the purpose of consolidation.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Amendment to clause (i) of sub-section (3) to provide that

     

     

     

     

     

     

     

     

    auditors shall report on internal financial control systems

     

     

     

     

     

     

     

     

    relating to financial statements.

     

     

     

     

     

     

     

     

    Amendment to sub-section (14) to replace the term “cost

     

     

     

     

     

     

     

     

    accountant in practice” with “cost accountant”.

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

    43

    Section 148 - Central

    44

    Amendment to substitute the words 'cost accountant in

    Amendment to remove

     

     

    Government to specify

     

    practice' with the words 'cost accountant' in sub-section (3)

    ambiguity.

     

     

    audit of items of cost in

     

     

     

    & (5) of Section 148 and also to substitute the words 'Institute

     

     

     

    respect of certain

     

    of Cost and Works Accountants of India' with the words

     

     

     

    companies.

     

     

     

     

     

    'Institute of Cost Accountants of India',in the explanation to

     

     

     

     

     

     

     

     

     

     

    Sub-section (3) of Section 148.

     

     

     

     

     

     

     

     

    44

    Section 149 -

    45

    Amendment to Sub-section (3) of Section 149, relating to the

    Welcome  Amendment  to

     

     

     

     

    requirement of resident director, the amendment proposed

    remove ambiguity and ease of

     

     

     

     

    requires that “every company shall have at least one director

    operations.

     

     

     

     

    who stays in India for a total period of not less than 182 days

     

     

     

     

     

    during the financial year”instead of the existing requirement

     

     

     

     

     

    of “shall have at least one director who has stayed in India for

     

     

     

     

     

    a total period of not less than 182 days in the previous

     

     

     

     

     

    calendar year.”

     

     

     

     

     

    Further the amendment proposes that in case of a newly

     

     

     

     

     

    incorporated company the requirement under this sub-section

     

     

     

     

     

    shall apply proportionately at the end of the financial year in

     

     

     

     

     

    which it is incorporated.

     

     

     

     

     

    Amendment to clauses in sub-section (6) of Section 149, to

     

     

     

     

     

    specify limits with respect to pecuniary relationship of a

     

     

     

     

     

    director with respect to eligibility of a director to be appointed

     

     

     

     

     

    as an independent director. It also seeks to specify the scope of

     

     

     

     

     

    restriction on pecuniary relationship entered into by a relative.

     

     

     

     

     

     

     

     

     

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