Companies Amendment
Bill, 2016 (the bill) was introduced in Lok Sabha on 16th March, 2016. Most of the amendments
proposed in bill are broadly aimed at addressing difficulties in implementation
of provisions of Companies Act, 2013.
Key amendments proposed
in the bill are as follows:
1) Appointment of auditors: It
has been proposed to do away with the requirements of annual ratification by
members with respect to appointment of auditors. Further, under the exisitng
provisions, the auditor who has resigned from the company needs to file Form
No. ADT-3 with the company and ROC. His failure to do so may attract maximum
penalty of Rs 5 lakhs. Now it has been proposed to reduce such penalty to Rs
50,000. However, such penalty should not exceed the remuneration of auditor.
2) Prohibition on loan or guarantee: Bill
seeks to limit the prohibition on loans, advances, etc., to any person in which
any of the director is interested in. It has been proposed to allow companies
to give loan's or guarantee's or provide security to any person in whom any of
the director is interested in subject to passing of special resolution by the
company and utilisation of loans by the borrower for its principal business
activities.
3) Restrictions on layers of investment companies: Under the existing provisions a
company shall make investment through not more than two layers of investment
companies. The Bill proposes to delete the restrictions on layers of
investments.
