May 2018 Amendments

Amendments for May 2018 1.1

Amendment No 1: Sec 152(6) (7) & 2(42): Rotational & Non Rotational Director
Amendment & reference
The Central Government amends the Notification G.S.R. 463(E), dated 5th June 2015. Following are the
amendments:
(i) According to the amendment, section 152(6) & (7), shall not apply to –
(a) a Government company, which is not a listed company, in which not less than fifty-one per cent. of paid up
share capital is held by the Central Government, or by any State Government or Governments or by the
Central Government and one or more State Governments;
(b) a subsidiary of a Government company, referred to in (a) above."

Implication
Earlier Now
Earlier Sec 152(6) & (7) was not Now the section is not applicable to normal government company (51%)
applicable to wholly owned or its subsidiary. But above exemption is only applicable to the
government company or its government company who is regular in filing annual accounts & annual
subsidiary. returns.

Amendment No 2: Sec 230 to 232: Compromise Arrangement & Amalgamation

Amendment & reference
The word "Tribunal “wherever it occurs in sections 230 to 232, the words "Central Government” shall be
substituted.
Implication
Earlier Now
Every procedure of compromise & arrangement was Now the process of compromise & arrangement will
executed by NCLT. be executed by central government.

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 May 2018 Amendments

Exemptions to Private companies

1.2 Amendment No 3: Sec 143(3)(i): Powers of Auditor
Amendment & reference
The Central Government amends the Notification G.S.R. 464(E), dated 5th June 2015. Following are the
amendments:
(1) Section 143(3)(i), shall not apply to a private company: -
(i) which is a one-person company or a small company; or
(ii) which has turnover less than rupees fifty crore as per latest audited financial statement or which has
aggregate borrowings from banks or financial institutions or anybody corporate at any point of time
during the financial year less than rupees twenty-five crore

The aforesaid exceptions, modifications and adaptations shall be applicable to a Private company which has not
committed a default in filing of its financial statements under section 137 or annual return under section 92 of the
said Act with the Registrar.
Implication
Earlier Now
Earlier auditor’s report Now auditor need not state the (i) (mentioned by the side) for following companies
need to state for every in his report.
company: private company: -
(i) whether the (i) which is a one-person company or a small company; or
company has adequate (ii) which has
internal financial a. turnover < Rs. 50 crs as per latest audited financial statement or which has
controls system in aggregate borrowings from banks or
place and the b. aggregate borrowings from banks or financial institutions or anybody
operating corporate at any point of time during the financial year < Rs. 25 crs
effectiveness of such But above exemption is only applicable to the private company who is regular in
controls; filing annual accounts & annual returns.

Headings Case 1 Case 2 Case 3 Case 4

Turnover
Borrowings
Applicability of
143(3)(i)

Amendment No 4: Sec 173: Board Meeting & its notice

Amendment & reference
With respect to Section 173(5), the following sub- section shall be substituted:
(5) A One Person Company, small company, dormant company and a private company (if such private company is
a start-up) shall be deemed to have complied with the provisions of this section if at least one meeting of the
Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is
not less than ninety days:
Provided that nothing contained in this subsection and in section 174 shall apply to One Person Company in which
there is only one director on its Board of Directors.
Implication
Earlier Now
Earlier only OPC & small company & dormant company have Now this liberal requirement is also
liberal requirement to conduct 1 meeting in each half of applicable to private company which are just
calendar yr with min gap of 90 days. start up.

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 May 2018 Amendments

Earlier all private companies even though start up need to But above exemption is only applicable to
hold 4 BM in each calendar year. the private company who is regular in filing
1.3
annual accounts & annual returns.

Heading Public company Private company One Person Company

Number of
Small Meeting
Company Time
difference
Number of
Dormant Meeting
Company Time
difference
Number of
Start Meeting
Up Time
difference

Amendment No 5: Sec 174: Quorum & Adjournment

Amendment & reference
(3) With respect to section 174(3)-
It shall apply with the exception that the interested director may also be counted towards quorum in such meeting
after disclosure of his interest pursuant to section 184.
Implication
Earlier Now
Interested Director as per sec 184 shall Now in case of private company such director can be counted
disclose his interest & He shall: in quorum.
1. Not vote on such resolution What about voting & participation?
2. Not participate in such resolution
3. Not be counted in quorum

But above exemption is only applicable to the private

company who is regular in filing annual accounts & annual
returns.

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 May 2018 Amendments

Exemptions to Sec 8 companies

1.4 Amendment No 6: Sec 149(1): Basic, Min/Max, 1-woman director
Amendment & reference
The Central Government amends the Notification G.S.R. 466(E), dated 5th June 2015. Following are the
amendments:
(1) Section 149(1)(b) & first proviso shall not apply on section 8 companies.
Implication
Earlier Now
Sec 8 Companies can have maximum number Now sec 8 company have no maximum limit of director so it
of bOD i.e. 15 can appoint any number of directors just by GM-OR. (Even
In case if company requires director above 15 above 15.)
it can pass GM-SR.
But above exemption is only applicable to the sec 8 company
who is regular in filing annual accounts & annual returns.

Sec 8 Public Company Sec 8 Private Company OPC

Defaulted Not Defaulted Defaulted Not Defaulted
BOD < 15

BOD > 15

Amendment No 7: Sec 186(7): Loans & Investments by Company

Amendment & reference
(2) In section 186(7)- following proviso shall be Inserted-
Provided that nothing contained in this sub-section shall apply to a company in which 26% or more of the paid-up
share capital is held by the Central Government or one or more State Governments or both, in respect of loans
provided by such company for funding Industrial Research and Development projects in furtherance objects as
stated in its memorandum of association."
Implication
Earlier Now
Ase per 186)7) No loan shall be given under Now sec 8 company having the holding of CG or 1 or more
this section at a rate of interest lower than SGs > 26% can give loan for industrial research &
the prevailing yield of one year, three year, development project below the rate of interest as stated by
five year or ten year Government Security the side.
closest to the tenor of the loan. But above exemption is only applicable to the sec 8 company
who is regular in filing annual accounts & annual returns.

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 May 2018 Amendments

Amendment No 9: Sec 139: Appointment of Auditor

Amendment & reference 1.5
The Central Government hereby amends the Companies (Audit and Auditors) Rules, 2014.
Through this amendment rule, in Rule 5(b), for the word “twenty”, the word “fifty” shall be substituted.
Implication
Earlier Now
Earlier Rule 5(b) stated that -all private limited companies having paid up Now rotation of auditor is
share capital of rupees 20 crore or more; applicable to private
Means rotation of auditor was applicable to private companies having paid companies having paid up
up capital > Rs. 20 crs. capital > Rs. 50 crs.

Chart for Understanding

Types of Companies

Public Company Private Company One Person Company

Listed Paid up Borrowings from Others

Capital > Rs. PFI / Loans / Paid up Capital Borrowings from Others
10 Cr Deposits > Rs. > Rs. 50 Cr PFI / Loans /
50 Cr Deposits > Rs. 50
Cr
Category B
Companies Category B
Companies
Category A
Companies

Amendment No 10: Sec 434: Transfer of proceedings to NCLT

Amendment & reference
In the Companies Act, 2013, in section 434, in sub-section (1), in clause (c),-
(a) in the third proviso, for “Provided further that-”, the following shall be substituted, namely: - “Provided also
that-”;
(b) after the third proviso, the following proviso shall be inserted, namely: -
“Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the
resolution by advertisement has been given under sub-section (1) of section 485 of the Companies Act, 1956 but
the company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with
provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959
Implication
Earlier Now
There was no provisions to decide that how Now the pending proceedings of the voluntary winding up
existing voluntary winding up will be will be proceeded as it is i.e. it will be conducted as per the
proceeded with in case of transfer of old provisions of the companies act 1956 by court.
proceedings to the NCLT.

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1.6

Amendment No 11: Sec 149(4) + Rule 4 (Appointment and Qualification of Directors)

Rules, 2014: Applicability of Independent Director
Amendment & reference
In the Companies (Appointment and Qualification of Directors) Rules, 2014, rule 4 shall be numbered as sub-rule
(1) and after sub-rule (1) as so renumbered, the following sub-rule shall be inserted namely: -
“(2) The following classes of unlisted public company shall not be covered under sub-rule (1), namely: -
(a) a joint venture;
(b) a wholly owned subsidiary; and
(c) a dormant company as defined under section 455 of the Act.”
Implication
Earlier Now
The following unlisted companies need to have min 2 Now if the company belongs from the
independent directors: companies mentioned from the side are as
(1) the Public Companies having paid up share capital of follows then they need not appoint min 2
10crore rupees or more; or independent directors.
(2) the Public Companies having turnover of 100 crore rupees (d) a joint venture;
or more; or (e) a wholly owned subsidiary; and
(3) the Public Companies which have, in aggregate, outstanding (f) a dormant company as defined under
loans, debentures and deposits, exceeding 50crore rupees. section 455 of the Act.

Through the issue of this circular, it is hereby clarified that a "joint venture, would mean a joint arrangement,
entered into in writing, whereby the parties that have joint control of the arrangement, have rights to the net
assets of the arrangement. The usage of the term is similar to that under the Accounting Standards.

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 May 2018 Amendments

Amendment No 12: Sec 173 + Rule 3 of Companies (Meetings of Board and its Powers)
Rules, 2014.: Board meeting & its notice 1.7
Amendment & reference
(1) In rule 3 for clause (e), the following shall be substituted, -
“(e) Any director who intends to participate in the meeting through electronic mode may intimate about such
participation at the beginning of the calendar year and such declaration shall be valid for one year: Provided that
such declaration shall not debar him from participation in the meeting in person in which case he shall intimate
the company sufficiently in advance of his intention to participate in person.”
Implication
Earlier Now
Earlier Rule 3(e) stated - The director, who desires, to participate may Now even if the director give the
intimate his intention of participation through the electronic mode at notice to attend the meeting
the beginning of the calendar year and such declaration shall be valid electronically at the start of the
for one calendar year. calendar year can still he can
The interpretation of provision was taken as such director will not be attend the meeting in the person.
allowed to attend the meeting in person.

Amendment No 13: Sec 212: Appointment of SFIO (Officer)

Amendment & reference
The Central Government notified the provisions of sub-sections (8), (9) and sub-section (10) of section 212 of the
Companies Act, 2013 with effect from 24th day of August, 2017
Implication
Earlier Now
Earlier sec 212(8) to (10) was not applicable. Now sec 212(8) to (10) was applicable.

212(8): Power to arrest the person.

If the Director, Additional Director or Assistant Director of Serious Any Director or Additional Director or
Frauds Investigation Office authorised in this behalf by the Central Assistant Director or SFIO can arrest the
person on the basis of all of the
Government by general or special order, has on the basis of material in his following points.
possession reason to believe (the reason for such belief to be recorded in a. If the officer is authorised to do so
writing) that any person has been guilty of any offence punishable under by CG on general or special order.
b. The officer have evidence to
sections referred to in sub-section (6), he may arrest such person and shall, as
believe that the person is guilty of
soon as may be, inform him of the grounds for such arrest. offence under this section
212(9): Forwarding the copy to the SFIO by inspector regarding arrest.
The Director, Additional Director or Assistant Director of Serious Fraud 1. After the arrest of the person
Investigation Office shall, immediately after arrest of such person under sub- by above stated officers shall
forward the copy of the order
section (8), forward a copy of the order, along with the material in his possession, to the SFIO.
referred to in that sub-section, to the Serious Fraud Investigation Office in a 2. The officer shall also forward
sealed envelope, in such manner as may be prescribed and the Serious Fraud the supporting documents to
SFIO in the sealed envelope.
Investigation Office shall keep such order and material for such period as may be
prescribed.
212(10): Attendance of arrested person before authority.
Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a Judicial Magistrate or a
Metro politan Magistrate, as the case may be, having jurisdiction.
Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest
to the Magistrate’s court.

Amendment No 14: Sec 2(87): Subsidiary Company

Amendment & reference

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 May 2018 Amendments

The Central Government hereby appoints the 20th September' 2017 as the date on which proviso to clause (87)
of section 2 of the said Act shall come into force.
1.8 Implication
Earlier Now
Earlier sec 2(87) was not applicable. Now sec 2(87) is applicable.

Amendment No 15: Sec 2(87): Subsidiary Company

Sec 186: Loans & Investment by Company / layers of Investment Subsidiaries
Amendment & reference
(1) On and from the date of commencement of these rules, no company, other than a company belonging to a
class specified in sub-rule (2) , shall have more than two layers of subsidiaries:
Provided that the provisions of this sub-rule shall not affect a company from acquiring a company incorporated
outside India with subsidiaries beyond two layers as per the laws of such country:
Provided further that for computing the number of layers under this rule, one layer which consists of one or
more wholly owned subsidiary or subsidiaries shall not be taken into account.
(2) The provisions of this rule shall not apply to the following classes of companies, namely: —
(a) a banking company as defined in the Banking Regulation Act, 1949
(b) a non-banking financial company as defined in the Reserve Bank of India Act, 1934 which is registered
with the Reserve Bank of India and considered as systematically important non-banking financial company
by the Reserve Bank of India;
(c) an insurance company being a company which carries on the business of insurance in accordance with
provisions of the Insurance Act, 1938 and the Insurance Regulatory Development Authority Act, 1999.
(d) a Government company referred to in clause (45) of section 2 of the Companies Act.
(3) The provisions of this rule shall not be in derogation of the proviso to sub-section (1) of section 186 of the Act.
(4) Every company, other than a company referred to in sub-rule (2), existing on or before the commencement of
these rules, which has number of layers of subsidiaries in excess of the layers specified in sub-rule (1) –
(i) shall file, with the Registrar a return disclosing the details specified therein, within a period of 150
days from the date of publication of these rules in the Official Gazette;
(ii) shall not, after the date of commencement of these rules, have any additional layer of subsidiaries
over and above the layers existing on such date; and
(iii) shall not, in case one or more layers are reduced by it subsequent to the commencement of these
rules, have the number of layers beyond the number of layers it has after such reduction or
maximum layers allowed in sub rule (1), whichever is more.
(5) If any company contravenes any provision of these rules the company and every officer of the company who
is in default shall be punishable with fine which may extend to Rs 10,000 and where the contravention is a
continuing one, with a further fine which may extend to Rs 1000 for every day after the first during which such
contravention continues.

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 May 2018 Amendments

Amendment No 16: Sec 247: Registered Valuer

Amendment & reference 1.9
The Central Government hereby appoints the 18th October, 2017 as the date on which the provisions of section
247 of the said Act shall come into force.
Implication
Earlier Now
Earlier sec 247was not applicable. Now sec 247 is applicable.

(1) Where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or
goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under
the provision of this Act, it shall be valued by a person having such qualifications and experience and registered
as a valuer in such manner, on such terms and conditions as may be prescribed and appointed by the audit
committee or in its absence by the Board of Directors of that company.
(2) The valuer appointed under sub-section (1) shall,
(a) make an impartial, true and fair valuation of any assets which may be required to be valued;
(b) exercise due diligence while performing the functions as valuer;
(c) make the valuation in accordance with such rules as may be prescribed; and
(d) not undertake valuation of any assets in which he has a direct or indirect interest or becomes so interested
at any time during or after the valuation of assets.
(3) If a valuer contravenes the provisions of this section or the rules made thereunder, the valuer shall be
punishable with fine which shall not be less than Rs 25,000 to Rs 1,00,000:
Provided that if the valuer has contravened such provisions with the intention to defraud the company or its
members, he shall be punishable with imprisonment for a term which may extend to 1 year and with fine
which shall not be less than Rs. 1 lakh and can extend to Rs. 5 lakhs.
(4) Where a valuer has been convicted under sub-section (3), he shall be liable to—
(i) refund the remuneration received by him to the company; and
(ii) pay for damages to the company or to any other person for loss arising out of incorrect or misleading
statements of particulars made in his report.

Insolvency & bankruptcy Code, 2016

Amendment No 18: Sec 2 (a) to (d) of IBC, 2016: Voluntary liquidation or bankruptcy
shall come into force
Amendment & reference
The Central Government hereby appoints the 1st April, 2017 as the date on which the provisions of clause (a) to
clause (d) of section 2 of the Code relating to voluntary liquidation or bankruptcy shall come into force.

Applicability of IBC, 2016

Company as per Company Any Limited Any other Body Partnership

Companies Act, governed by Liability Incorporate as Firm &
2013 special law. Partnership. notified by CG Individual

The Code shall apply for insolvency, liquidation, voluntary liquidation or bankruptcy of the following entities: -
1. Any company incorporated under the Companies Act, 2013 or under any previous law.
2. Any other company governed by any special act for the time being in force, except in so far as the said
provision is inconsistent with the provisions of such Special Act.
3. Any Limited Liability Partnership under the LLP Act 2008.
4. Any other body incorporated under any law for the time being in force, as the Central Government may by
notification specify in this behalf.
5. Partnership firms and individuals.

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 May 2018 Amendments

Amendment No 18: Sec 30 & 31 of IBC, 2016: Voluntary liquidation or bankruptcy shall
1.10 come into force
Amendment & reference
Ministry of Corporate Affairs issued a clarification in view of the requirement under section 30(2)(e) of the Code
for the resolution professional to confirm that each resolution plan received by him does not contravene any of
the provisions of the law for the time being in force.
Accordingly clarification was sought whether approval of shareholders/ members of the corporate debtor/
company is required for a resolution plan at any stage during the process for its consideration and approval as laid
down under section 30 & 31 of the Insolvency and Bankruptcy Code and after approval during its implementation,
for any actions contained in the resolution plan which would normally require specific approval of shareholders/
members under provisions of Companies Act, 2013 or any other law.
Through the issue of this circular, it has been clarified that the approval of shareholders / members of the
corporate debtor/company for a particular action required in the resolution plan for its implementation, which
would have been required under the Companies Act, 2013 or any other law if the resolution plan of the company
was not being considered under the Code, is deemed to have been given on its approval by the Adjudicating
Authority.

Section 30 & 31
Section 30 to 31 of the Code deals with resolution plan. Resolution professional shall prepare an Information
Memorandum which shall contain information for preparing resolution plan.
(a) Submission of resolution plan:
A resolution applicant may submit a resolution plan to the resolution professional prepared on the basis of the
information memorandum.
(b) Examination of Resolution Plan:
n The resolution professional shall examine each resolution plan received by him to confirm that each resolution
plan—
(i) provides for the payment of insolvency resolution process costs in a manner specified by the Board in
priority to the repayment of other debts of the corporate debtor;
(ii) provides for the repayment of the debts of operational creditors in such manner as may be specified by
the Board which shall not be less than the amount to be paid to the operational creditors in the event of a
liquidation of the corporate debtor under section 53;
(iii) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan;
(iv) the implementation and supervision of the resolution plan;
(v) does not contravene any of the provisions of the law for the time being in force;
(vi) conforms to such other requirements as may be specified by the Board.

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(c) Approval from Committee of creditors:

 The resolution professional shall present to the committee of creditors for its approval such resolution plans
1.11
which confirm the conditions as mentioned above.
 The committee of creditors may approve a resolution plan by a vote of not less than 75 % of voting share
of the financial creditors.
(d) Right of resolution applicant to attend the meeting of the committee of creditors:
 The resolution applicant may attend the meeting of the committee of creditors in which the resolution plan
of the applicant is considered:
 Provided that the resolution applicant shall not have a right to vote at the meeting of the committee of
creditors unless such resolution applicant is also a financial creditor.
(e) Submission of approved resolution plan to adjudicating authority:
The resolution professional shall submit the resolution plan as approved by the committee of creditors to the
Adjudicating Authority.
(f) Approval of resolution plan adjudicating authority:
(i) If the Adjudicating Authority is satisfied that the resolution plan as approved by the committee of creditors
meets the requirements, it shall by order approve the resolution plan which shall be binding on the corporate
debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution
plan.
(ii) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the requirements,
it may, by an order, reject the resolution plan.
(iii) After the order of approval of resolution plan—
 the moratorium order passed by the Adjudicating Authority shall cease to have effect; and
 the resolution professional shall forward all records relating to the conduct of the corporate insolvency
resolution process and the resolution plan to the Board to be recorded on its database.

SEBI, 1992
Amendment No 19: in regulation 2, in sub -regulation (1): of Securities and Exchange
Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment)
Regulations, 2017
Amendment & reference
(a) in regulation 2, in sub -regulation (1), -
i. in clause (zd), after sub -clause (xii), the following new sub-clause shall be inserted, namely, - “(xiii)
systemically important non -banking financial companies.”

Meaning: In the List of QIB systemically important non -banking financial companies are added.
“systemically important non -banking financial company” means a non-banking financial company registered
with the Reserve Bank of India and having a net - worth of more than Rs 500 as per the last audited financial
statements

(b) in regulation 16, -

i. in sub-regulation (1), -
a. after the words “If the issue size” and before the word “exceeds”, the symbol and words “, excluding
the size of offer for sale by selling shareholders,” shall be added;
b. the words “five hundred” shall be substituted by the words “one hundred”;
c. in the proviso, the words “an offer for sale or” shall be omitted.
ii. the existing sub-regulation (2) shall be substituted with the following, namely, “(2) The monitoring agency
shall submit its report to the issuer in the format specified in Schedule IX on a quarterly basis, till at least
ninety-five percent of the proceeds of the issue, excluding the proceeds under offer for sale and amount
raised for general corporate purposes, have been utilised.”
iii. after sub-regulation (2), the following new sub-regulations shall be inserted – “(3) The Board of Directors
and the management of the company shall provide their comments on the findings of the monitoring
agency as specified in Schedule IX. (4) The issuer shall, within forty-five days from the end of each quarter,
publically disseminate the report of the monitoring agency by uploading the same on its website as well as
submitting the same to the stock exchange(s) on which its equity shares are listed.”

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 May 2018 Amendments

(c) in regulation 70, in sub -regulation (4), after the words “Insurance Regulatory and Development Authority”
1.12 and before the symbol “.”, the following words and figures shall be inserted, namely, - “of India or a Scheduled
Bank listed under the Second Schedule of the Reserve Bank of India Act, 1934 or a Public Financial Institution
as defined in clause 72 of section 2 of the Companies Act, 2013.”

Monitoring agency
16.
1. If the issue size [excluding the size of offer for sale by selling shareholders,] exceeds [one hundred] crore
rupees, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by a public
financial institution or by one of the scheduled commercial banks named in the offer document as bankers
of the issuer:
Provided that nothing contained in this clause shall apply to [offer for sale] an issue of specified securities
made by a bank or public financial institution [or an insurance company].
2. The monitoring agency shall submit its report to the issuer in the format specified in Schedule IX on a
quarterly basis, till at least 95% of the proceeds of the issue, excluding the proceeds under offer for sale
and amount raised for general corporate purposes, have been utilized.]
3. The Board of Directors and the management of the company shall provide their comments on the findings
of the monitoring agency as specified in Schedule IX.
4. The issuer shall, within 45 days from the end of each quarter, publically disseminate the report of the
monitoring agency by uploading the same on its website as well as submitting the same to the stock
exchange(s) on which its equity shares are listed.]

Amendment No 20: Regulation 70: The Securities and Exchange Board of India (Issue
of Capital and Disclosure Requirements) (Fourth Amendment) Regulations, 2017
Amendment & reference
In regulation 70-
(i) in sub- regulation (1), in clause (c), after the words and figure “Sick Industrial Companies (Special Provisions)
Act, 1985 or” and before the words “the Tribunal”, the words “the resolution plan approved by” shall be
inserted

(ii) existing sub-regulation (5) shall be substituted by the following new sub – regulation:
(a) the guidelines for determining the conversion price have been specified by the Reserve Bank of India in
accordance with which the conversion price shall be determined and which shall be in compliance with
the applicable provisions of the Companies Act, 2013
(b) The conversion price shall be certified by two independent qualified valuers, and for this purpose
‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the
relevant Rules framed thereunder.
(c) specified securities so allotted shall be locked -in for a period of one year from the date of their
allotment: Provided that for the purpose of transferring the control, the lenders may transfer the
specified securities allotted to them before completion of the lock-in period subject to continuation of
the lock-in on such securities for the remaining period, with the transferee;
(d) the lock- in of equity shares allotted pursuant to conversion of convertible securities issued on
preferential basis shall be reduced to the extent the convertible securities have already been locked -
in;
(e) the applicable provisions of the Companies Act, 2013 are complied with, including the requirement of
special resolution.”

(iii) existing sub -regulation (6) shall be substituted by the following new sub-regulation, namely- “ (6) The
provisions of this Chapter shall not apply where the preferential issue, if any, of specified securities is made
to person(s) at the time of lenders selling their holding of specified securities or enforcing change in
ownership in favour of such person(s) pursuant to a debt restructuring scheme implemented in accordance
with the guidelines specified by the Reserve Bank of India, subject to the following conditions:

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May 2018 Amendments

(a) the guidelines for determining the issue price have been specified by the Reserve Bank of India in
accordance with which the issue price shall be determined and which shall be in compliance with the
applicable provisions of the Companies Act, 2013; 1.13
(b) the issue price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall
be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules
framed thereunder: Provided that till such date on which section 247 of the Companies Act, 2013 and
the relevant Rules come into force, valuer shall mean an independent merchant banker registered with
the Board or an independent chartered accountant in practice having a minimum experience of ten
years;
(c) the specified securities so allotted shall be locked- in for a period of at least three years from the date
of their allotment;
(d) the lock-in of equity shares allotted pursuant to conversion of convertible securities issued on
preferential basis shall be reduced to the extent the convertible securities have already been locked-in;
(e) a special resolution has been passed by shareholders of the issuer before the preferential issue;
(f) the issuer shall, in addition to the disclosures required under the Companies Act, 2013 or any other
applicable law, disclose the following information pertaining to the proposed allottee(s) in the
explanatory statement to the notice for the general meeting proposed for passing the special resolution
as stipulated at clause (e) of this sub-regulation:
a. the identity including that of the natural persons who are the ultimate beneficial owners of the shares
proposed to be allotted and/ or who ultimately control the proposed allottee(s);
b. the business model;
c. a statement on growth of business over the period of time;
d. summary of audited financials of previous three financial years;
e. track record in turning around companies, if any;
f. the proposed roadmap for effecting turnaround of the issuer.
(g) the applicable provisions of the Companies Act, 2013 are complied with.

Bare Text

© CA Darshan D. Khare
 May 2018 Amendments

1.14

Competition Act, 2002

Amendment No 21: Sec 6(2): Combination
Amendment & reference
In exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002, the Central
Government, in public interest, hereby exempts every person or enterprise who is a party to a combination as
referred to in section 5 of the said Act from giving notice within thirty days mentioned in sub-section (2) of section
6 of the said Act, subject to the provisions of sub-section (2A) of section 6 and section 43A of the said Act, for a
period of five years from the date of publication of this notification in the Official Gazette.

Implication
Earlier Now
If any person enters in combination need to give notice within 30 Now any person need not give the
days of approval of proposed combination or execution of such notice of the combination within 30
combination documents. days for 5 years from the date of above
(in original law it was 7 days) notification.

Amendment No 22: Sec 5 & 6: Combination

Amendment & reference
In exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002, the Central
Government, in public interest, hereby exempts the Regional Rural Banks in respect of which the Central
Government has issued a notification under sub-section (1) of section 23A of the Regional Rural Banks Act, 1976,
from the application of provisions of sections 5 and 6 of the Competition Act, 2002 for a period of five years from
the date of publication of this notification in the Official Gazette.
Implication
Earlier Now
Earlier provisions regarding combination were Now provisions regarding combination are not
applicable to the regional rural banks. applicable to the regional rural banks.

© CA Darshan D. Khare
 May 2018 Amendments

Amendment No 23: Sec 3: Anti-Competitive Agreements 1.15

Amendment & reference
In exercise of the powers conferred by clause (a) of section 54 of the Competition Act, 2002, the Central
Government, in public interest, hereby exempts the Vessels Sharing Agreements of Liner Shipping Industry from
the provisions of. section 3 of the said Act, for a period of one year with effect from the 20th June, 2017, in
respect of carriers of all nationalities operating ships of any nationality from any Indian port provided such
agreements do not include concerted practices involving fixing of prices, limitation of capacity or sales and the
allocation of markets or customers. During the said period of one year, the Director General, Shipping, Ministry of
Shipping, Government of India shall monitor such agreements and for which, the persons responsible for
operations of such ships in India shall file copies of existing Vessels Sharing Agreements or Vessels Sharing
Agreements to be entered into with applicability during the said period along with other relevant documents
within thirty days of the publication of this notification in the Official Gazette or within ten days of signing of such
agreements, whichever is later, with the Director General, Shipping.
Implication
Earlier Now
Vessels sharing Now its not anti-competitive agreement for 1 year from 20 June 2017. However,
agreements from linier following agreement will be still anti-competitive if its regarding:
shipping industry were a. fixing of prices,
anti-competitive b. limitation of capacity or
agreements. c. sales and the allocation of markets or customers.

Amendment No 24: Sec 5 & 6: Combination

Amendment & reference
In exercise of the powers conferred by clause (a) of Section 54 of the Competition Act, 2002 , the Central
Government in the public interest hereby exempts, all cases of reconstitution, transfer of the whole or any part
thereof and amalgamation of nationalized banks, under the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, from
the application of provisions of Sections 5 and 6 of the Competition Act, 2002 for a period of ten years from the
date of publication of this notification in the Official Gazette.

Banking Regulation Act, 1949

Amendment No 25: Sec 35AA & 35AB: Power of RBI to direct insolvency resolution
process
Amendment & reference
Following are the relevant amendments-
Insertion of new sections 35AA and 35AB-
In the Banking Regulation Act, 1949 (hereinafter referred to as the principal Act), after section 35A, the following
sections shall be inserted, namely: —
‘35AA: Power of Central Government to authorise Reserve Bank for issuing directions to banking companies to
initiate insolvency resolution process: The Central Government may, by order, authorise the Reserve Bank to
issue directions to any banking company or banking companies to initiate insolvency resolution process in respect
of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016.
Explanation — For the purposes of this section, “default” has the same meaning assigned to it in clause (12) of
section 3 of the Insolvency and Bankruptcy Code, 2016.
35AB: Power of Reserve Bank to issue directions in respect of stressed assets: (1) Without prejudice to the
provisions of section 35A, the Reserve Bank may, from time to time, issue directions to any banking company or
banking companies for resolution of stressed assets. (2) The Reserve Bank may specify one or more authorities or
committees with such members as the Reserve Bank may appoint or approve for appointment to advise any
banking company or banking companies on resolution of stressed assets.’

© CA Darshan D. Khare