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    Companies Amendment Bill 2016-(Part 4)

     

     

     

     

     

     

     

    Contributed by CS D V K Phanindra

     

     

     

     

     

     

     

     

     

    Sl.

    Section(s) under the CA,

    Clause No. in the

     

    Proposed amendment relating to

     

     

    Remarks/Comments/Penalty

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    63

    Section - 196 –

    64

    Amendment to Section (4) of Section 196 of the Act, to

    Welcome amendment.  The scope

     

    Appointment of

     

    provide that approval of Central Government shall

    be

    of approval of Central Government

     

    Managing Director,

     

    required on matters specified in “Part I of Schedule V”.

     

    is proposed to be restricted to Part-I

     

     

     

     

     

     

     

     

    of the Schedule-V only.

    64

    Section - 197 –

    65

    Amendment to the 1st proviso to Sub-section (1) section 197 of the

    Welcome Amendment, and ease of

     

    Overall Maximum

     

    Act, to remove the requirement of obtaining approval of Central

    operations.

     

    Managerial

     

    Government, for payment of remuneration and amendment to 2nd

     

     

     

    proviso  to

    sub-section

    (1)  of  Section  197,  to

    include

    the

     

     

    Remuneration and

     

     

     

     

    requirement

    of special

    resolution for payment of

    managerial

     

     

    Managerial

     

     

     

     

    remuneration in respect of the payment of limits for the limits

     

     

    Remuneration in Case

     

     

     

     

    prescribed therein.

     

     

     

     

     

    of Absence or

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    Inadequacy of Profits

     

    Further to include a new proviso after the 2nd proviso to sub-

    Welcome  Amendment  in  the

     

     

     

     

     

     

    section (1) of Section 197, relating to obtaining of priorapproval of

    interest of all the stakeholders.

     

     

     

    bank or public financial institution, in case of any term loan is

     

     

     

     

    subsisting or the company is defaulted in payment of dues to non-

     

     

     

     

    convertible debenture holder or secured creditor, before obtaining

     

     

     

     

    the approval of shareholders, for payment of remuneration to the

     

     

     

     

    Directors.

     

     

     

     

     

     

     

     

    Amendment to Sub-section (3) of Section 197, for deleting the

    Welcome Amendment, and ease of

     

     

     

    requirement as to obtaining of Central Government approval, in

    operations.

     

     

     

    case the Company is not able to comply with the provisions of

     

     

     

     

    Schedule-V, in case of payment of remuneration due to lack of

     

     

     

     

    profits or inadequate profits.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    19 | P a g e


     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Remarks/Comments/Penalty

    No.

    2013, amended

    Proposed amendment relating to

    Amendment Bill

     

     

    Substitution of a new sub-section (9) in place of the existing sub-

     

    section, there providing time frame, within which the director

    has top refund the unauthorised remuneration drawn by him

    from the Company.

     

    Amendment of sub-section (10) of Section 197, relating to the Welcome Amendment, and ease of authority for waiver of the refund of unauthorised remuneration operations.

    drawn by the Director.              The earlier authority of Central

    Government, is proposed to replaced with the Shareholders of

    the Company, who will have to pass a special resolution within

    two years from the date the sum becomes refundable; and to

     

    include a proviso to the sub-section that in cases where any term

     

    loan of any bank or public financial institution is subsisting or the

     

    company has defaulted in payment of dues to non-convertible

    debenture holders or any other secured creditor, their prior

    approval is required before the obtaining the approval of the

    members.

     

    Amendment of sub-section (11) of Section 197, the requirement Welcome Amendment, and ease of as to obtaining of Central Government approval, in case the operations.

    Company is not able to comply with the provisions of Schedule-V,

    for any increase of remuneration payable to the Directors.

     

    Insertion of two new sub-section (16) & (17) to Section 197, Welcome Amendment, to have firstly sub-section (16) to provide that the Auditors in their better transparency and better report, to report on the remuneration drawn by the directors and Corporate Governance.

    whether the same are within the limits or not.  Secondly, sub-

    Insertion to give clarity.

    section (17) relating to the fate of applications pending with the

     

    remuneration to the Director, other than in accordance with the

     

    provisions of the Schedule.

     

     

    20 | P a g e


     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

    65

    Section - 198 -

    66

    Amendment to Clause (a) of Sub-section (3) of Section 198 of

    Amendment to remove

     

     

    Calculation of Profits

     

    the Act to exclude Investment Companies [As per the

    ambiguity.

     

     

     

     

    Explanation given in Section 186] from the requirement of not

     

     

     

     

     

    giving credit for profits on sale of shares or debentures for

     

     

     

     

     

    calculation of profit.

    Amendment to remove

     

     

     

     

     

     

     

     

    Amendment to Clause (l) of sub-section (4) of Section 198 of

    ambiguity.

     

     

     

     

    the Act, to omit the words “which begins at or after the

     

     

     

     

     

    commencement of this Act”.

     

     

     

     

     

     

     

     

    66

    Section - 200 -

    67

    Amendment to Section 200 of the Act to omit the words

    Amendment in tune with the

     

     

    Central Government or

     

    "Central Government or", since the requirement of obtaining

    amendments made to Section

     

     

    Company to Fix Limit with

     

    the  approval  from  Central  Government  under  Section

    196 & 197

     

     

    Regard to Remuneration

     

    196(except  for  appointment  of  MD/WTD/Manager  in

     

     

     

     

     

     

     

     

     

     

    variation with the provisions of Part-I of Schedule-V)& 197, is

     

     

     

     

     

    omitted.  Accordingly, the Company alone can fix the limit

     

     

     

     

     

    with regard to the remuneration payable to the Directors.

     

     

     

     

     

     

     

     

    67

    Section - 201 –

    68

    Amendment to Section 201 of the Act as a consequential

    Amendment in tune with the

     

     

    Forms of, and Procedure

     

    change to amendment made section 196, thereby limiting the

    amendments made to Section

     

     

    in  Relation  to,  Certain

     

    purpose of making application in MR-2, for the purpose of

    196

     

     

    Applications

     

    appointment of MD/WTD/Manager in variation with the

     

     

     

     

     

    provisions of Part-I of Schedule-V.

     

     

     

     

     

     

     

     

    68

    Section - 216 –

    69

    Amendment to sub-section (1) Section 216 of the Act to insert

    Amendment for better

     

     

    Investigation of

     

    a clause (c) to provide for  Central Government to appoint

    transparency in the company

     

     

    Ownership of Company

     

    inspectors for determining true persons who have or had

    management.

     

     

     

     

    beneficiali nterest in shares of a company or who are or have

     

     

     

     

     

    been beneficial owners or significant beneficial owner of the

     

     

     

     

     

    company.

     

     

     

     

     

     

     

     

     

    21 | P a g e


     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

    Remarks/Comments/Penalty

     

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    69

    Section – 223 –

    70

    Amendment to Sub-section (3) of Section 223 of the Act so as

    Welcome

    Amendment

    to

     

     

    Inspector’s Report

     

    to include, as to provide that the members, creditors or any

    remove ambiguity, as to there

     

     

     

     

    other person whose interest is likely to be affected, can apply

    was no provision in the principal

     

     

     

     

    for copy of inspectors report.

    act, as to who can apply for a

     

     

     

     

     

    copy of the Inspector’s Report.

     

     

     

     

     

     

     

    70

    Section – 236 –

    71

    Amendment to Sub-section (4), (5) & (6) of section 236 of the

    Amendment to provide clarity.

     

     

    Purchase of Minority

     

    Act to substitute the words 'transferor company' with the

     

     

     

     

     

     

     

    Shareholding (Section

     

    words 'company whose shares are being transferred' for

     

     

     

     

     

     

     

    not yet notified)

     

    providing clarity

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    71

    Section – 247 -

    72

    Amendment to Clause (d) of sub-section (2) of Section 247 of

    A m e n d m e n t

    t o

    p r o v i d e

     

     

    Valuation by Registered

     

    the Act to provide that a registered valuer shall not undertake

    ambiguity, as in the principal

     

     

    Valuers. (Section not yet

     

    valuation of any asset in which he has direct or indirect

    act, there was no limit or period

     

     

    notified)

     

    interest three years before appointment as valuer or three

    provided for the disqualification

     

     

     

     

    years after valuation of assets.

    for valuing the assets.

     

     

     

     

     

     

     

     

     

    72

    Section–366–

    73

    Amendment to Sub-Section (2) of Section 366of the Act

    Welcome Amendment for ease

     

     

    Companies Capable of

     

    reducing the general requirement of number of members for

    of operations.

    Lot

    of small

     

     

    Being Registered

     

    conversions of partnership firms, etc. into companies from

    partnership  firms

    with  2

     

     

     

     

    seven or more to two or more members.

    partners  can

    be

    directly

     

     

     

     

     

    converted in to private limited

     

     

     

     

    Insertion of a new clause (vi) to the proviso to Sub-section (2)

    c o m p a n y,

    w i t h o u t

    t h e

     

     

     

     

    of Section 366, to provide that  where the number of

    requirement re-constitution of

     

     

     

     

    members are less than seven members the conversion would

    the firm for admission of new

     

     

     

     

    be into a private company

    partners.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    22 | P a g e


     

    Sl.

    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to

     

    Remarks/Comments/Penalty

    No.

    2013, amended

    Amendment Bill

     

     

     

     

     

     

     

     

     

    73

    Section –379 -

    74

    Amendment to Section 379 of the Act, thereby re-numbering

    Amendment to provide clarity.

     

    Application of Act to

     

    the existing section as Sub-section (2) and inserting a sub-

     

     

    Foreign Companies.

     

    section (1 to provide that the provisions of Section 380 to 386

     

     

     

     

    and sections 392 and 393 of the Act, shall apply to all foreign

     

     

     

     

    companies, and  a proviso giving power to the

    Central

     

     

     

     

    Government,  to  except  certain  companies  from  the

     

     

     

     

    applicability of the provisions by way of an order, and copy of

     

     

     

     

    every such order shall, as soon as may be after it is made, be

     

     

     

     

    laid before both Houses of Parliament.

     

     

     

     

     

     

     

     

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