January 08, 2018
The Ministry of Law and Justice notified the Companies (Amendment) Act, 2017 on January 3, 2018. The provisions of the Act will come into force on the date notified by the Central Government.
Some provisions in the Amendment Act have important bearing on the working of the Insolvency and Bankruptcy Code, 2016 (I&B Code).
Some Key Highlights of the Amendment Act
- Issuing of Shares at a Discount- The Act of 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 I&B Code or debt restructuring scheme.
- 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, as the case may be, for such payment of managerial remuneration shall 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 or becomes so interested at any time 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 or becomes so interested at any time during three years prior to his appointment as valuer or three years after valuation of assets was conducted by him.
- Insider Trading- Provisions dealing with insider trading under Sections 194 and 195 of the Companies Act, 2013 have been omitted as the SEBI (Securities Exchange Board of India) Regulations cover commission of such offences.
- Determining Quantum of Penalty- As per the Amendment Act, the quantum of penalty will now be determined in accordance to the consideration of the size of company, injury to public interest, nature of company and quantum of default.
The Amendment Act can be accessed Companies (Amendment) Act, 2017.