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Companies Amendment Bill 2017 Passed by Parliament

Published on December 20, 2017
The Companies (Amendment) Bill, 2017 was passed by the Rajya Sabha by a voice vote.

Companies Amendment Bill 2017 passed by Parliament
Now the bill will go to the President to become a law.
Once it becomes the law, this will be the second instance of the Companies Act getting amended under the current government.

Aim of the bill

The bill majorly focuses on empowering the corporate governance standards and taking strict action against the defaulter companies. The bill also aims at improving the ease of doing business in the country.

Major Changes

  • Simplification of the private placement process
  • Rationalization of provisions related to loans to directors
  • Replacing the requirement of approval of the central government for managerial remuneration above Prescribed limits by approval through special resolution of shareholders
  • Aligning disclosure requirements in the prospectus with the regulations made by SEBI
  • Providing for maintenance of register of significant beneficial owners
  • Making offence for contravention of provisions relating to deposits as non-compoundable
  • Stringent penalties in case of non-filing of balance sheet and annual return every year
  • Certain classes of profitable companies are required to shell out at least 2% of their three-year annual average net profit towards corporate social responsibility (CSR) activities
  • Remove the restriction on number of layers of investment companies and one to remove restrictions on the number of layers of subsidiaries.
  • Ease compliance burden for unlisted companies by allowing them to hold annual general meetings in place other than their registered offices as well


  • The structure if group company and compliance procedures will change as the definitions relating to ‘holding company’, ‘subsidiary company’, ‘associate company’ are undergoing a change. 
  • A completely new provision in the maintenance of the “Register of significant beneficial owners in a company” will be introduced thus there will be operational and compliance issues. 
  • Corporate Social Responsibility particularly relates to its applicability and constitution of Corporate Social Responsibility. CSR will also be amended.
  • The bill shows a clarity in applicability and role of Resident Director and Independent Director.  
  • The Government has introduced certain checks and balances by way of approval process and for enabling ‘loans to directors’, in certain cases.
  • Managerial Remuneration are being liberalized in the Bill. The requirement of Central Government approval is being replaced by the requirement of approval of the shareholders, secured creditors and non-convertible debenture holders, as the case maybe. 

Expected Questions

How many times has the Companies Act been amended under the present government?
a. Once
c. Thrice
d. Never Amended

According to the new amendments in the Companies Act what % of their three-year annual average net profit is required to shell out by the profitable companies towards corporate social responsibility (CSR) activities?
a. 1.5%
b. 2.5%
c. 3%
d. 2%

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