Monday, 4 September 2017
Company Law Updates
Provisions related to investigation of companies by by Serious Fraud Investigation Office notified.
1. The Ministry of Corporate Affairs notified the provisions of sub-sections (8), (9) and sub-section (10) of Section 212 of the Companies Act, 2013 relating to investigation into the affairs of a company by Serious Fraud Investigation Office vide commencement notification dated August 24, 2017. In this regard, the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 were also notified on August 24, 2017.
Revised secretarial standards released
2. The Institute of Company Secretaries of India notified the withdrawal of Notification ICSI No.1 (SS) of 2015 with respect to secretarial standards 1 & 2 (“Secretarial Standards”) with effect from September 30, 2017, vide notification dated August 16, 2017. The Institute announced that the revised Secretarial Standards will be applicable for compliance by all the companies (except the exempted class of companies) with effect from October 01, 2017 and will supersede the text of earlier Secretarial Standards. The Institute of Company Secretaries of India has subsequently announced that the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) have been revised and the revised Secretarial Standards have received approval from the Central Government which shall be applicable for compliance by Companies from October 1, 2017
Companies Act to be amended again
3. The Companies (Amendment) Bill, 2017 (“Amendment Bill, 2017”) introduced in the Lower House of the Parliament received its assent on July 27, 2017. The Amendment Bill, 2017 seeks to make the following amendments in the Companies Act, 2013 (“Existing Act”):
Ø Officers in whole time employment of a company at one level below the board of directors are proposed to be included in the definition of key managerial personnel;
Ø The process and timelines involved in the private placement of securities are proposed to be amended by substitution of Section 42 of the Existing Act with a new section;
Ø Section 90 of the Existing Act is proposed to be substituted by a new section to introduce the concept of significant beneficial owner, to mean an individual, holding beneficial interest not less than 25% in shares of a company, whether directly or indirectly;
Ø The annual general meeting are proposed to be allowed to be held at any place in India if the consent of members has been obtained;
Ø Extraordinary general meetings of a wholly owned subsidiaries are proposed to be allowed to be held at a place outside India as well;
Ø The requirement of ratification of auditors at every annual general meeting of a company is proposed to be done away with;
Ø Section 185 of the Existing Act relating to loan to directors is proposed to be substituted by a new section to provide the conditions of provision of loan to persons in which the directors are interested;
Ø Provisions relating to forward dealing and insider trading of securities are proposed to be omitted; and
Ø The requirement of obtaining the Central Government approval for payment of managerial remuneration by a company in terms of Section 197 of the Existing Act is proposed to be dispensed with.
Registered office - changes introduced in case of relocation from one state to another
4. The Ministry of Corporate Affairs, on July 27, 2017 notified the Companies (Incorporation) Second Amendment Rules, 2017 to prescribe certain changes in the process of shifting of registered office:
i. within the same state; and
ii. from one state to another.