Companies (Amendment) Act, 2017

The Companies (Amendment) Act, 2017 introduced several amendments to the Companies Act 2013 thereby realigning its provisions to improve corporate governance and ease of doing business while continuing to strengthen compliance and investor protection in India. The amendments under the Act are broadly aimed at:

• Addressing difficulties in implementation owing to stringent compliance requirements
• Facilitating ease of doing business in order to promote growth with employment
• Harmonization with the Accounting Standards, the Securities and Exchange Board of India Act, 1992 and the regulations made under the Reserve Bank of India Act, 1934.
• Rectifying omissions and inconsistencies in the Companies Act, 2013.
• Align the Act with the working of Insolvency and Bankruptcy Code, 2016.
• Section 53 of the Companies Act, 2013 prohibited issuance of shares at a discount. The Amendment Act now allows companies to issue shares at a discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan such as resolution plan under the Code or debt restructuring scheme.
• Section 197 of the Companies Act, 2013 required approval of the company in a general meeting for payment of managerial remuneration in excess of 11 percent of the net profits.
• The Amendment Act now requires that where a company has defaulted in payment of dues to any bank or public financial institution or non-convertible debenture holders or any other secured creditor, the prior approval of the bank or public financial institution concerned or the non-convertible debenture holders or other secured creditor should be obtained by the company before obtaining the approval in the general meeting.
• Section 247 of the Companies Act, 2013 prohibited a registered valuer from undertaking valuation of any assets in which he has a direct or indirect interest during or after the valuation of assets. The Amendment Act now prohibits a registered valuer from undertaking valuation of any asset in which he has direct or indirect interest at any time during three years prior to his appointment as valuer or three years after valuation of assets was conducted by him.