The Union Government on 3 January 2018 notified the Companies (Amendment) Act, 2017 (Amendment Act). The provisions of the Act will come into force once the Union Government notifies it in the Official Gazette.
A few provisions in the Amendment Act have important bearing in the working of the Insolvency and Bankruptcy Code, 2016 (Code).
Issuance of shares at discount
The Companies (Amendment) Act, 2017 allows companies to issue shares at discount to its creditors when its debt is converted into shares in pursuance of any statutory resolution plan such as resolution plan under Insolvency and Bankruptcy Code.
However, Section 53 of the Companies Act, 2013 prohibited issuance of shares at discount.
Payment of Managerial Remuneration
Section 197 of the Companies Act, 2013 required approval of the company in a general meeting for payment of managerial remuneration in excess of 11 per cent of the net profits.
The Amendment Act now says that if a company has defaulted in payment of dues to any bank or financial institution or non-convertible debenture holders, then it requires the prior approval of the bank or concerned institution for payment of managerial remuneration before obtaining the approval in the general meeting.
Prohibition of registered valuer from undertaking valuation of any asset
The Amendment Act prohibits a registered valuer from undertaking valuation of any asset in which he has direct or indirect interest or becomes so interested at any time during three years prior to his appointment as valuer or three years after valuation of assets was conducted by him.
However, the Companies Act, 2013 prohibited a registered valuer from undertaking 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. It was stated under Section 247 of the Act.
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