Introduction- Companies Amendment Act of 2017
On 3rd January 2018 Companies, Amendment Act 2017 received the assent of the President. Since the Ministry of Corporate Affairs has notified many sections of the Companies Amendment Act 2017 in a phased manner. Ministry of Corporate Affairs vide notification dated: 05th July 2018 has amended many rules of the Companies Act, 2013 to support notified 75 sections of the Companies Amendment Act 2017.
Read: Companies Amendment Act 2017- Summary of Sections Notified by MCA
Such amended Rules of Companies Amendment Act 2017 are briefly discussed as follows:
1. The Companies (Acceptance of Deposits) Amendment Rules, 2018
Date of Enforcement: 15th August 2018
Rule 4- Form and Particular of advertisements or circulars
The following provision shall be inserted after Rule 4(1).
Certificate of the statutory auditor of the company is required to be attached in form DPT-1, which shall state that the company has not committed default in the repayment of deposits or the payment of interest on such deposits.
In case a company had committed a default in the repayment of deposits, or in the payment of interest, a certificate of statutory auditor of the company shall be attached in Form DPT-1, which shall state that the company had made good the default and a period of five years has lapsed the date of making good the default as the case may be.
Rule 5: Manner and extent of Deposit Insurance – OMITTED
Rule 13: Maintenance of Liquid Assets and Creation of Deposit Repayment Reserve Account.
The proviso of Rule 13 is SUBSTITUTED as follows:
The amount remaining deposited shall not at any time fall below 20% of the number of deposits maturing during the financial year.
Rule 14(1)(K): Register of Deposits –OMITTED
Form DPT-1 SUBSTITUTED by a new form
Form DPT-3 SUBSTITUTED by the new form.
Read: The Companies (Acceptance of Deposits) Amendment Rules, 2018
2. The Companies (Registration of Charges) Amendment Rules, 2018
Date of Enforcement: Date of publication in official Gazette.
Rule 8: Satisfaction of Charge
A Company or charge shall give intimation to the Registrar in Form No. CHG-4 along with the Fee, within 300 days from the date of payment or satisfaction in full or any charge registered under Chapter VI.
Rule 12: Condonation of Delay and Rectification of Register of Charges
The days of filing the satisfaction of charge are changed from thirty days to Three Hundred Days, in case the instrument creating or modifying a charge is not filed within a period of three hundred days from the date of its creation, which includes the acquisition of a property subject to a charge.
Read: The Companies (Registration of Charges) Amendment Rules, 2018
3. The Companies (Registration Offices and Fees) Third Amendment Rules, 2018
Date of Enforcement: 10th July 2018
Fee payable till the 30th April of every – financial year in respect of e-form DIR-3 KYC as at the 31st March of the immediately previous year- NIL
Fee payable in delayed cases- Rs. 5000
It is to be noted that for the current financial (2018-2019), no fee shall be chargeable till the 31st August 2018, and fee of Rs.5000 shall be payable on or after the 1st September 2018.
Read: The Companies (Registration Offices and Fees) Third Amendment Rules, 2018
4. The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018
Rule 3: Information to be stated in the prospectus- OMITTED.
Rule 4: Reports to be set out in the Prospectus- OMITTED.
Rule 5: Other matters and reports to be stated in the prospectus- OMITTED.
Rule 6: Period for which information to be provided in certain cases- OMITTED.
Read: The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018
5. The Companies (Appointment of Directors) Second Amendment Rules, 2018
Rule 5 ‘Qualification of Independent Director’ shall be numbered as Rule 5 sub-rule 1 and following sub-rule 2 followings shall be INSERTED:
(2) None of the relatives of an independent director, for sub-clause (ii) and (iii) of clause (d) of sub-section (6) of section 149,-
(i) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors; or
(ii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company,
for an amount of fifty lakhs rupees, at any time during the two immediately preceding financial years or during the current financial year.
Visit our blog to know about Managerial Remuneration and Procedure to Obtain DIN (with updates according to Companies Amendment Act 2017)
Read: Companies (Acceptance of Deposits ) Amendment Rules, 2018
6. The Companies (Meetings of Board and its Powers) Amendment Rules, 2018
Rule 4: Matters not to be dealt with in a meeting through video conferencing or other audiovisual means, the following Proviso shall be INSERTED-
“Provided that where there is quorum presence in a meeting through the physical presence of directors, any other director may participate through video conferencing or other audiovisual means”.
Rule 6: Committees of the Board:
For the words “every listed company”, the words “every listed public company’ shall be a substitute
Rule 13: ‘Special Resolution’ shall be SUBSTITUTED.
A resolution passed at a general meeting in terms of sub-section (3) of Section 186 to give any loan or guarantee or investment or providing any security or the acquisition under sub-section (2) of section 186 shall specify the total amount up to which the Board of directors is authorized to give such loan or guarantee, to provide such security or make such acquisition:
Provided that the company shall disclose to the members in the financial statement the full particulars under the provisions of sub-section (4) of section 186.
Read: The Companies (Meetings of Board and its powers) Amendment Rules, 2018
7. The Companies (Audit and Auditors) Amendment Rules, 2018
Rule 3: ‘Manner and procedure of selection and appointment of auditors’
The proviso to sub-rule 7- OMITTED
Rule 9: ‘Liability to devolve on concerned partners only’: OMITTED
In Rule 10A: ‘for the words “adequate internal financial controls system”, the words “internal financial controls about financial statements” shall be SUBSTITUTED.
Rule 14: ‘Remuneration of the Cost Auditor’
(a) in clause (a), in sub-clause (i), for the words, “who is a cost accountant in practice”, the words “who is a cost accountant” shall be substituted;
(b) in clause (b) for the words “who is a cost accountant in practice”, the words “who is a cost accountant’ shall be substituted.
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Rule 5 sub-rule 3 ‘Certificate of shares (where shares are not in Demat form)’ shall be SUBSTITUTED as Follows:
“(3) Every certificate shall specify the shares to which it relates and the amount paid-up thereon and shall be signed by two directors or by a director and the company secretary, wherever the company has appointed a company secretary
Provided that in case the company has a common seal it shall be affixed in the presence of persons required to sign the certificate.
Explanation. – For this sub-rule, it is hereby clarified that,-
(a) in the case of a One Person Company, it shall be sufficient if the certificate is signed by a director and the company secretary or any other person authorized by the Board for the purpose.
(b) a director shall be deemed to have signed the share certificate if his signature is printed thereon as facsimile signature using any machine, equipment, or other mechanical means such as engraving in metal or lithography or digitally signed, but not using a rubber stamp, provided that the director shall be personally responsible for permitting the affixation of his signature thus and the safe custody of any machine, equipment or other material used for the purpose.
9. The Companies (Registration Offices and Fees) Second Amendment Rules, 2018
In Proviso of Rule 10 sub-rule 3 ‘Procedure on receipt of an application or form or document electronically’ shall be SUBSTITUTED as Follow:
“Provided that Registrar shall allow fifteen days, time for re-submission in case of reservation of a name through web service -“RUN for rectifications of defects if any.”
Explanation.- For this rule, it is hereby clarified that, if the appointment is not ratified by the members of the company, the Board of Directors shall appoint another individual or firm as its auditor or auditors after following the procedure laid down on this behalf under the Act
Provided that such appointment shall be subject to ratification in every annual general meeting until the sixth such meeting by way of the passing of an ordinary resolution.
Read: The Companies (Registration offices and Fees) Second Amendment Rules, 2018
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