Parliament Passes the Companies Amendment Bill, 2016 (Download PDF)


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The Parliament passed Companies (Amendment) Bill, 2017 for strengthening corporate governance standards, initiating strict action against defaulting companies, and improving the ease of doing business in the country.

Image of The Companies Amendment Bill, 2016

Image of the Companies Amendment Bill, 2016

Image of The Companies Amendment Bill, 2016

Key Features of 2017 Bill

The bill provides for more than 40 amendments to Companies Act, 2013 to make compliance easy and take stringent action against defaulting companies. Important once are:

  • The bill changes definitions relating to ‘holding company’, ‘subsidiary company’, ‘associate company’. It will have impact on group company structure and compliance procedures.

  • Simplification of the private placement process

  • Rationalization of provisions related to loans to directors. It introduces certain checks and balances by way of approval process and for enabling ‘loans to directors’, in certain cases.

  • Replacing the requirement of approval of the central government for managerial remuneration above prescribed limits by approval through special resolution of shareholders

  • Aligning disclosure requirements in the prospectus with the regulations made by Sebi (Securities and Exchange Board of India)

  • Providing for maintenance of register of significant beneficial owners

  • Making offence for contravention of provisions relating to deposits as non-compoundable

  • Enhances scope of compliance procedures and approval mechanism of Related Party Transaction of related parties.

  • Changes provisions relating to board meetings and shareholders’ meetings, based on operational and compliance issues faced by the corporates.

  • Mandates requirement that Statutory Auditor of company to report in its Auditors Report on compliance of provisions of managerial remuneration.

  • The amendment to CSR provisions are related to its applicability and constitution of CSR taking into account the interpretational and operational issues.

  • Provides clarity in applicability and role of Resident Director and Independent Director. Further it elaborated ‘Pecuniary relationship’ in relation to independent directors.

2016 Amendments to the Companies Act

Earlier in 2016 the companies act was amended as follows:

  • The Bill amends the Companies Act, 2013 in relation to structuring, disclosure, and compliance requirements for companies.

  • The Act limits the number of intermediary companies through which investments can be made in a company. Similarly, the Act limits the number of layers of subsidiaries a company can have. The Bill removes these limits.

  • The Act requires an individual who has a beneficial interest in the shares of a company to disclose the same. The Bill also requires a group of persons who exercise beneficial control (above 25%) in a company to disclose such interest.

  • Under the Act, a separate offer letter should be issued to individuals to whom a private offer of shares has been made. The Bill removes the requirement of such offer letter, but retains the provision related to notifying the Registrar of the return of allotment.

  • The Act permits the appointment of members at the level of Joint Secretary to the quasi- judicial tribunal. Under the Bill, a technical member must be at least of the level of an Additional Secretary.

- Published/Last Modified on: January 2, 2018


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