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Proposed Amendments in the Companies Rules - as per the report of the Companies Law Committee

News and Press Release - Dated:- 2-2-2016 - REPORT OF THE COMPANIES LAW COMMITTEE Proposed Amendments in COMPANIES (SPECIFICATIONS OF DEFINITIONS DETAILS) RULES, 2014 Proposed Amendments in COMPANIES (INCORPORATION) RULES, 2014 Proposed Amendments in COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014 (PAS RULES) Proposed Amendments in COMPANIES (SHARE CAPITAL AND DEBENTURE) RULES, 2014 Proposed Amendments in COMPANIES (ACCEPTANCE OF DEPOSIT) RULES, 2014 Proposed Amendments in COMPANI .....

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sed Amendments in COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014 Proposed Amendments in COMPANIES (AUTHORISED TO REGISTER) RULES, 2014 Proposed Amendments in COMPANIES (REGISTRATION OF FOREIGN COMPANIES) RULES, 2014 Proposed Amendments in COMPANIES (REGISTRATION OFFICES AND FEES) RULES, 2014 Proposed Amendments in NIDHI RULES, 2014 Proposed Amendments in COMPANIES (MISCELLANEOUS) RULES, 2014 RECOMMENDATIONS PROPOSING AMENDMENTS TO THE RULES PROVISION NATURE OF AMEND .....

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(e) of INC-29, wherein registration number of a company incorporated outside India is required to be specified, alpha-numeric registration numbers to be accepted. e. In point no. 6(e) of INC-29, wherein the particulars of the authorized person of the company incorporated outside India are required to be specified, PAN or Passport number of the authorized person to be accepted. Also, the form to be enabled to accept the foreign address of the said authorized person in the field present address of .....

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m requiring such information has to be prefilled and additional documentation would not be required. b. Rule 16(1)(q) to be omitted along with Form INC-10. (Para 2.6, 2.7) Rule 3(2) Formation of one person company To be suitably rephrased, to bring clarity. (Para 2.8) Rule 25 Registered office of company To be amended to make companies that have a website, for conducting online business or otherwise, to require to provide the registered office and other details as required in Section 12(3) on th .....

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ution is envisaged or no prosecution is pending, shifting of registered office shall be allowed . In case of a pending prosecution, on submission of an undertaking that the company would not seek any change in jurisdiction on account of shift in office, such shifting is to be allowed. b. Requirement of serving a copy of the notice to SEBI in Rule 30(6)(c) to be dispensed with. (Para 2.11, 2.12) Rule 8 Undesirable names Requirement in Rule 8(2) (a) (ii) to be changed and rule to be modified to re .....

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d out in Rule 13(2) with respect to entering of particulars of an illiterate subscriber electronically. b. Rule 13(4) to be redrafted keeping in view that an LLP can also be a subscriber to the MOA. (Para 2.16, 2.17) CHAPTER 3: COMPANIES (PROSPECTUS AND ALLOTMENT OF SECURITIES) RULES, 2014 Rule 3(6) Disclosures of Sources of Promoters Contribution Section 26 to be modified to allow prescription powers to SEBI, consequential changes resulting from the same to result in omission/modification of th .....

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nancial year in which the default was made good for a company to be eligible to issue such shares again. (Para 4.1) Form PAS-3 Issue of bonus shares Clause 5(e) of Form PAS-3 to be modified to replace the words special resolution with the word resolution . (Para 4.2) Form PAS-3 Conversion of Loans into equity Form PAS-3 to be appropriately modified so that genuine debt (including External Commercial Borrowings) converted into shares can be treated as allotment for cash. (Para 4.3) Rule 15 Change .....

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nies be allowed to appropriate any amount in excess of the DRR required for immediate redemption. (Para 4.6) Rule 18(1) Creation of Security for Debentures a. Rule 18(1)(b) to be amended so as to enable issue of debentures secured by charge on the properties or assets of the company or entities that form part of consolidated balance sheet of the company or any other collateral security. b. Rule 18(1)(d) to also enable creation of security for debentures in favour of the debenture trustee of mova .....

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ons (ESOPs) Rule to be relaxed to enable issuance of ESOPs to promoters who may be working as employees or employee directors or whole time directors. (Para 4.11) Rule 13 Preferential Allotments a. Rule 13(2)(h) to be amended, to consider providing for convertible instruments to be valued at the time of conversion. Formulation used in the FDI policy to be adopted. b. Rule 13(2)(c) to be amended to allow preferential allotment of partly paid-up shares. (Para 4.12) CHAPTER 5: COMPANIES (ACCEPTANCE .....

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shares of the company within ten years to be excluded from the definition of deposit under Rule 2(1)(c)(ix). c. Amounts directly received by a company from Alternate Investment Funds, Domestic Venture Capital Funds and Mutual Funds registered with SEBI, to be excluded from the definition of deposits. d. To consider excluding unsecured debentures listed as per SEBI Regulations from the definition of deposits. e. Convertible Notes, convertible into equity or repayable within 5 years from the date .....

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nt/ Circular in the form of advertisement Rule to be amended to provide that individual circulars to members of the company under Rule 4(1) not to be sent if an advertisement has been issued by a company for acceptance of deposits from public and also when the same is placed on the website of the company. (Para 5.8) CHAPTER 6: COMPANIES (REGISTRATION OF CHARGES) RULES, 2014 Filings of charge creation/modification by recognized ARCs MCA21 system to be modified to allow filings of charge creation/ .....

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l fields in the transfer form SH-4. (Para 7.1) Rule 9(1) Declaration in respect of beneficial interest in any share Requirement of filing of Form MGT-4 and Form MGT-5 in duplicate to be done away and only scanned copies to be attached to Form MGT-6. (Para 7.4) Rule 11(1) Annual Return a. Annual Return to be further simplified by avoiding asking for repetitive information which may be available in other documents filed with ROC b. A simpler Annual Return form for OPCs and small companies to be pr .....

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(2) to be modified to allow holding of EGMs by requisition on a day which is not a national holiday. (Para 7.9) Rule 22 Postal Ballot a. Repeated provision from Rule 22(7) to be deleted. b. Rule 22(14), which provides that the resolution shall be deemed to be passed on the date of a meeting, convened in that behalf, to be omitted from the rules. (Para 7.10) Rule 25 Rule 25(1) (e) to be made consistent with Section 119, to enable the minutes book for general meetings to be maintained only at the .....

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the Act and Rule 3 would not be applicable. (Para 8.1, 8.2) CHAPTER 9: THE COMPANIES (ACCOUNTS) RULES, 2014 AND COMPANIES (CORPORATE SOCIAL RESPONSIBILITY POLICY) RULES, 2014 Rule 3(5) Location of servers for keeping backup of books and papers While the proviso with regard to maintenance of local servers to be retained, in case where free data access to all regulatory agencies of the country are allowed under a bilateral or multi-lateral treaty, data servers may be allowed to be kept in the spe .....

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these recommendations. (Para 9.6) Rule 13 Companies required to appoint internal auditor The words a firm to be replaced by an entity . (Para 9.7) Form MGT-9 and Rule 12 Disclosure of remuneration of directors and KMP MGT-9 requirements to be omitted and the threshold of Rupees Sixty Lakhs to be increased to ₹ 102 Lakhs per annum. Requirements under different Rules to be harmonized. (Para 9.8) Rule 3(2) Corporate Social Responsibility A company which ceases to be covered under Section 135 .....

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(7) Manner and procedure of selection and appointment of auditors Removal of the requirement to ratify the appointment of an auditor. (Para 10.1) CHAPTER 11: THE COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES, 2014 Rule 4 and Schedule IV Number of Independent Directors a. Joint venture companies, wholly-owned subsidiaries, and dormant companies that fall within the purview of Section 455 of the Companies Act, 2013 to be excluded from the requirement of appointing an independent dir .....

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DIR-11 on behalf of a foreign director. b. Form DIR-11 is only an information by resigning director. The change in status in Register of directors to get triggered only on filing DIR-12. (Para 11.9) CHAPTER 12: THE COMPANIES (MEETINGS OF BOARD AND ITS POWERS) RULES, 2014 Rule 3(12)(b) Meetings of Board held through video conferencing a. Video recording to be preserved only until the minutes of the meeting are irrefutably confirmed by each of the directors as required under Rule 3(12)(b) and sig .....

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iculars of appointment of directors and the key managerial personnel and the changes among them Form to be amended to restrict filing requirement pertaining to the return of appointment for managerial personnel. (Para 13.1) Rule 5 Disclosure in Board s Report a. The specific part of Rule 5(1)(vii) related to unlisted companies to be deleted. b. Ruled 5 to be pruned to exclude information prescribed under Rule 5(1) except Rule 5(1(i) and Rule 5(1)(iv). c. The reporting requirement threshold of &# .....

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