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The Companies Amendment Bill, 2017 was introduced in the Lok Sabha on 16th March, 2016. It was referred to the standing committee on finance on the 12th of April, 2016. After consultation with various professional bodies and chambers of commerce, the company adopted its report on 30th November 2016. The Government then provided notice of the approval of the amendment by the Cabinet to the Lok Sabha after taking into consideration the reports of the committee. The Lok Sabha passed the bill on July 27, 2017 after which it became the Companies (Amendment) Act, 2017.
In its pursuit of the moving up high in the list of ease of doing business and attracting private investment, the Government has introduced major changes in the Companies Act.
Small and medium sized companies are now allowed under the 2017 Act to undertake a wide array of business activities without indulging in the difficulty of changing the MOA. The mere statement of a lawful activity in the MOA will suffice.
The new Act has provided for a simpler and more efficient version of the annual returns form that every company has to file with the Ministry of Corporate Affairs leaving time for the business to engage in substantial issues of the company.
The Act has also imposed penalty and penal consequences of the non-filing of returns. It has mandated the payment of Rs. 100 per day which will be doubled in case default is made more than two times.
The 2017 Act provides a more comprehensive definition of the term ‘related party’ by including any venture of a company or an investing company. This amendment is targeted at the shell companies which are merely created in name as venture businesses.
Although the 2017 Act has allowed the provision of giving loan by the company to its directors or related party, it has restricted that freedom by allowing the director to use the loan only under the conditions for which it has been granted.
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