Introduction

Another move by the Ministry of Corporate Affairs towards benefit of the stakeholders. The Ministry vide its notification dated 13.06.2018 bought another five Sections of the Companies Amendment Act, 2017 in effect. The Sections of the Companies Amendment Act, 2017 which mere made effective are 22, 24, 25, 26 and 71. The corresponding amendment will have the impact on following sections of the Companies Act, 2013:

1. Section 90: Register of significant beneficial owners in a company
2. Section 93: Return to be Filed with Registrar in Case Promoters’ Stake Changes
3. Section 94: Place of keeping and Inspection of Registers, Returns, etc.
4. Section 96: Annual General Meeting
5. Section 216: Investigation of ownership of Company

Effect of Modification

1. Section 90: Register of Significant Beneficial Owner in a Company
   • The most important section implemented to find out the actual beneficial owner of the Company and is applicable on all the Companies. The Section has laid down the definition of Significant Beneficial Owner to find out the actual owner of the Company. Though the Section covers individual holding more than 25% of share/control/significant influence. However, this chunk has been reduced to 10% by rules relating to the Companies (Significant Beneficial Owner) Rules, 2018 in order to cover maximum person.
   • The definition has been laid down in line with the international governance standards and OECD principals. Every person holding beneficial interest needs to give declaration and even power has been given to Company can ask for beneficial interest details from the person it deems fit.
   • Further, the Company has to maintain register and file return with ROC. In order to ensure adherence to the rules, penalty is implemented not only on the Company but also on person who wilfully gives wrong information or misleading information or if they conceal any information.
   • [Kindly note that detailed Article on Section 90 has already been published, for more details kindly click on this link https://complianceship.wordpress.com/2018/06/22/significant-beneficial-owner-find-out-the-real-owner-of-shares/]
2. Section 93 : Return to be filed with Registrar of Companies in case Promoters Stake Changes
   • The Provision related to filing of return by every listed company with respect to change in the number of shares held by promoters and top ten shareholders of such company, within fifteen days of such change has been omitted.”
   • i.e. Form MGT-10 to be filed by the Promoters of the listed Company for change in their stake has been omitted.
   • This Section was introduced in the Companies Act, 2013 for the first time so that ROC has sufficient data/ information of change of stake of Promoter’s in the Company.
   • ”Due to duplication of reporting to SEBI as well as ROC resulted in unnecessarily increase of filling return under the Act.
   • Hence, the same has been omitted vide notification dated 13.06.2018.”
3. Section 94: Place of Keeping and Inspection of Registers, Returns etc.
   • Provision of Section 94 lays down the procedure for place of keeping and Inspection of Registers, Returns, etc.
   • Under this Section, there was requirement to file Special Resolution in advance to the Registrar.
   • However, Special resolution are also mandatory to be filled with ROC u/s 117(3)(a) and hence did not serve the purpose. Therefore, the same has been omitted vide notification dated 13.01.2018.
   • Further, that such particular of registers/ index/returns as may be prescribed shall not be available for public inspection u/s 94(2) or for taking extracts or copies u/s 94(3) has been added as proviso to Sec. 94(3).
4. Section 96 : Annual General Meeting 
   • Section 96 deals with conduct of Annual General meeting.
   • This Section prohibited conduct of Annual General Meeting at a place other than the outside the local area where the registered office is situated.
   • But this option will help to save time and money involved in conducting the Annual General Meeting.
   • With the amendment, relaxation has been provided to unlisted Company who can conduct Annual General Meeting at any place outside the local limit but within India, if consent is given by all the members in advance, either in writing or by electronic mode.
5. Section 216 : Investigation of Ownership of Company
   • Where the Central Government has appointed any inspector to provide report on matters related to the Company and its membership for the purpose of determining true person:
     • financially interested in the success or failure of the Company
     • able to control or to materially influence policy of the Company
     • holding beneficial interest or are significant beneficial owner  of the Company
   • The above amendments are the steps towards providing ease of doing business and a step toward more transparent and governed corporate system. The introduction of Significant Beneficial Owner will help to trace the actual owner and provide transparency in doing business.

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