Companies Amendment Act 2017 (Mumbai)

The Companies (Amendment) Act, 2017 which was passed by the Lok Sabha on July 27, 2017 and by the Rajya Sabha on December 19, 2017, has received the assent of the President of India on January 3, 2018 and subsequently published in the Gazette of India. MCA has notified that 9th Feb’ 2018 is the date on which a number of sections of Companies (Amendment) Act, 2017 shall come into force.

The amendments under the Companies (Amendment) Act, 2017, 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
  • harmonisation with the Accounting Standards, the Securities and Exchange Board of India Act, 1992 and the regulations made thereunder, and the Reserve Bank of India Act, 1934 and the regulations made thereunder
  • rectifying omissions and inconsistencies in the Act

Key changes in Definitions and Implications:

  • Associate Company - `significant influence` 
  • Subsidiary Company
  • Joint Venture
  • Holding Company
  • Foreign bodies corporate
  • Debentures
  • Key Managerial Personnel


Related Party Transactions
     - Changes in Section 188

Section 89 – Declaration of beneficial interest


Section 90: Significant beneficial owners in a company – Implications

Amendments related to:

  • Section 42: Private Placement of Shares
  • Section 53: Allotment of Share at Discount:
  • Issue of Sweat Equity Shares
  • Right Issue of Shares

Section 197: Managerial Remuneration

Implications from IBC Perspective

Harmonization with SEBI, RBI and Accounting Standards:

  • Disclosures in the Prospectus
  • Rationalising Penal Provisions


Loan to directors - Effect of the Amendment is Section 185

New Section 186: Loans and Investments by a Company

Impact on M&As

Directors Responsibilities

Corporate Governance Issues

Disqualification of Directors 

   - Condonation of Delay Scheme

Krishna Venkat
Partner
Krishnamurthy & Co.

Karan Kalra
Leader M&A Practice
Nishith Desai Associates

Karan is a leader in the M&A and Private Equity practice at the firm. He also heads the firm’s banking and financial services practice. Karan focuses largely on domestic and cross border M&As, JVs, private equity transactions and structured finance along with providing regulatory and general corporate advice across sectors.

Prior to joining Nishith Desai Associates, Karan has experience working with one of the largest private banks in India. Karan completed his LL.B. from Symbiosis Law School, Pune and has also pursued a masters from Northwestern University – Pritzer School of Law and Kellogg School of Management. He is eligible to practice law both in India and New York, USA.

Karan has been credited for his work in IFLR 1000, Legal 500 and the Financial Times - RSG Consulting Survey.


Sandhya Iyer
Partner
Vaish Associates Advocates
Sandhya Iyer is a senior member of the Corporate practice of the Firm at Mumbai and been associated with the Firm since 2007. She is a post graduate in Financial Management and a Solicitor (non-practicing) of the Supreme Court of England and Wales and a certified associate of the Indian Institute of Bankers.
 
Her areas of practice include Banking and NBFC laws, litigation, corporate transactions and advisory, securitisation, FEMA laws and intellectual property. She has handled transactions involving drafting loan agreements, mortgages, hypothecations, pledges, factoring agreement, invoice discounting, risk participation, letters of credit, guarantees and opinions on various issues.
 
She has handled the documentation related to more than 100 transactions involving assignment/ securitization of receivables by various banks, NBFCs and financial institutions. She is registered as an insolvency professional with the Insolvency and Bankruptcy Board of India.

Sanjay Asher
Sr. Partner
Crawford Bayley & Co.

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