Monday, March 21, 2016

10 key takeaways from Companies Amendment Bill, 2016

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.

Govt. lowers interest rates on small savings schemes; interest on PPF reduced to 8.1%

Every year in the month of March, the Finance Ministry notifies the interest rates on various Small Savings Schemes for the next financial year.

However, as per the Press Release of the Government, dated 16th February, 2016, instead of annual resetting of interest rates for the next financial year, the interest rates now on will be reset a er every quarter based on the G-Sec yields of the previous three months.

Accordingly, interest rates on various Small Savings Schemes for the 1st quarter of 2016-17 have been notified by the Government considering the G-Sec yields for the months of December 2015 to February 2016. The rates of interest on various small savings schemes have been notified as under: