Changes in Annual Return and Meetings as per Companies Amendment Act, 2017

The Companies Act 2013, came with significant changes and challenges in the Companies law in India. The Government of India in order to address the difficulties posed in the implementation of rigorous compliances, facilitate with the ease of doing business, harmonizing with the various Acts and regulations came up with the introduction of Companies (Amendment) Bill 2016 in the Lok Sabha after rectifying inconsistencies in the Act. The Bill was referred to the Standing Committee on Finance, it was further examined and renamed as Companies (Amendment) Bill 2017 after making related changes as per the suggestions received by the committee. The Bill was further reintroduced in the Lok Sabha and passed on 27^th July 2017. Then the Bill was approved by the Rajya Sabha on 19^th December 2017 and got the assent by the Honourable President Mr. Ram Nath Kovind on 3^rd January 2018.

1.      Annual Return (Section 92)

The Act has brought various changes in respect with the disclosures required to be given under this Section.

a) The disclosure as required U/s 92(1)(c) relating to indebtedness has been omitted.

b) The disclosure as required u/s 92(1)(j) has been modified and has removed the requirements of detailed description of Foreign Institutional Investors. After the amendment, the details of the shares have to be given in this respect.

c) Further to provide with the ease of business, a welcoming change has come in respect of the One Person and Small Company, thereby empowering the Central government to provide an abridged form of Annual return.

d) Another requirement prescribed U/s 92(3) has been revised and it has removed the requirement of attaching an extract of annual return (MGT-9) with the Board Report.

e)      Every company having a website has to place a copy of annual return on the website of the company, if any, and the web-link of the same has to disclosed in Board Report.

As per Section 403, the timeline of 270 days beyond the due date for filing of forms with additional fees has been removed. The act has specified the late filing fees/penalty in case of filing of financial statements and annual return after the statutory time limit. The delayed fees will be Rs. 100 per day and different amounts may be specified for different class of companies.

2.      Place of keeping and Inspection of Registers and Returns (Section 94)

The proviso of Section 94(1) has been revised and the requirement of filing of special resolution in advance in respect of keeping the registers at some other place other than registered office has been omitted.

Further a restriction has also been imposed for the purpose of confidentiality, restricting inspection on certain register and returns, as may be prescribed, shall or availing copy thereof U/s 94(2).

3.      Annual General Meeting (Section 96)

A new proviso has been added to Section 96(2) stating that an unlisted company can hold its AGM anywhere in India if the consent of all the members is received in advance through writing or by electronic means.

As per Section 121(2) the report on AGM has to be filed within 30 days and the extended timeline of 270 days as prescribed U/s 403 has been laid off.

4.      Extra Ordinary General Meeting (Section 100)

Section 100 (1) has been revised in such a manner that it gave relaxation as well as a restriction. The change says that EGM of the wholly owned subsidiary company incorporated O/s India can be held outside India which will definitely be an ease of business whereas it has also restricted other companies to hold EGM at any place in India only.

5.      Calling of general meetings at shorter notice (Section 101)

The section 101(1) has been modified bringing out the clarity for calling shorter notice. It has been bifurcated as per the nature of company and says that:

General meetings may be called at shorter notice if the consent is received in writing or by electronic means in following manner:

AGM: Consent of not less than 95% of the members entitled to vote.

Any other general meeting:

· Co having share Capital: Majority in numbers entitled to vote and not less than 95% of paid up share capital giving a right to vote at that meeting.

· Co not having share capital: Not less than 95% of total voting power exercisable at that meeting.

6.      Postal Ballot (Section 110)

A new proviso has been added in Section 110(1) giving out the relief for the companies who need to compulsorily pass certain resolutions through postal ballot only.

The act has now given the relaxation to the companies thereby allowing them to call the general meeting for the matters which required to be conducted solely through postal ballot and providing the facility to members to vote electronically(compulsory) as per Section 108.

7.      Resolutions to be filed (Section 117)

As per Section 117(1), the extended time limit of 270 days (after 30 days) for filing of resolutions with additional fee has been done away and now the company can file the same at any time after paying the additional fees as may be prescribed.

Another major change relates to the decrease in penalty for non-filing of forms within specified time period. The minimum penalty for the company and officer in default has been reduced from Rs. 5 lakhs to 1 lakhs and from Rs. 1 lakhs to 50 thousand respectively. (Section 117(2))

Clause (e) of sub-section (3) of Section 117 has been omitted which dealt with the filing of resolutions U/s 180 (a) and 180(c) with registrar however the same has to be filed U/s 117(3)(a) with regards to special resolutions.

An exemption has been provided to the banking companies in respect of filing of resolution U/s 179(3)(f) under ordinary course of business which relates to grant loans or give guarantee or provide security in respect of loans.