IMPACT ON INCORPORATION OF COMPANY DUE TO CO. AMENDMENT ACT 2017

INTRODUCTION

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.

IMPACT ON INCORPORATION OF COMPANY

1.      Change in Timeline for Reservation of Name (Section 4(5)(i))

With the amendment, the period for reservation of name at the time of incorporation has been substituted from sixty days from the date of application to “twenty days from the approval” of name. It is important to notice here that now the time period will be counted from the date when the name gets approved from the concerned authority.

A new proviso has been added to bring out the clarity on the concept of application/reservation of name by the exiting companies for alteration of name, thereby giving them period of 60 days for reservation of name from the date of approval.

This section has been notified by the Central Government as on 26^th January, 2018 by launching new web service (RUN) for reservation of name while incorporating or altering the name of existing company. This service can be used without the use of any DIN/DSC.

2.     Declaration by Subscribers and Directors (Section 7(1)(c)) (Not notified)

To provide an ease in documentation at the time of incorporation the requirement of furnishing affidavit by the first subscribers and directors has been replaced by a ‘self declaration’. 

3.    Registered Office of Company (Section 12(1) & 12(4)) (Not notified)

A company can now have its registered office from the day of its inception or within 30 days of the same. The earlier provision restricted a company to have its office on and from the fifteenth day of incorporation. This ambiguity has been resolved as a company can have its registered office from the day of incorporation also.

Further, relaxation has been provided with the amendment that the time period for giving notice of change of registered office has been increased from 15 to 30 days. This is a welcoming change as the companies had to face various difficulties in paper work and taking various approvals from the authorities for change in office. Now as the time period has been relaxed these issues will come to rest.

4.    Authentication of documents (Section 21)

The amendment now allows Board to authorize an officer or employee of the company to carry out any proceedings, contracts or any documents on behalf of the company. This will reduce the burden on KMPs’ and allow them to take various other major decisions. This section has been notified on 9th February, 2018.