Companies Amendment Act 2017: Sections 1, 2, 3A, 4, 7 and 12 Explained
The Companies (Amendment) Act, 2017 is Act No. 1 of 2018. It received Presidential assent on 3 January 2018 and amended numerous provisions of the Companies Act, 2013. This article explains the amendments originally covered on this page, including definitions under section 2, the insertion of section 3A, name reservation under section 4, incorporation requirements under section 7 and registered-office requirements under section 12.
Updated: 18 September 2026. The amendment text below is presented with commencement context. For present-day compliance, the Companies Act, 2013, the applicable rules, later amendments and current MCA filing requirements should be read together.
Short title and commencement
Section 1 names the legislation the Companies (Amendment) Act, 2017. The Act did not bring every amendment into force on one date. Instead, section 1(2) authorised the Central Government to appoint different commencement dates for different provisions by notification in the Official Gazette.
Section 1 in substance: The legislation may be called the Companies (Amendment) Act, 2017. Its provisions come into force on dates appointed by the Central Government, and different dates may be appointed for different provisions.
For the provisions discussed here, important commencement dates include 26 January 2018 for amendment section 4, 9 February 2018 for most clauses of amendment section 2 and for amendment section 3, 7 May 2018 for clauses (i) and (xiii) of amendment section 2, and 27 July 2018 for amendment section 5 concerning section 7(1)(c) of the Companies Act, 2013.
Amendment of section 2 of the Companies Act 2013
Section 2 of the Companies Act, 2013 contains statutory definitions. The 2017 Amendment revised several of those definitions to align the Act more closely with voting rights, accounting concepts and related corporate-law terminology.
Associate company and significant influence - section 2(6)
The amended explanation treats significant influence as control of at least twenty per cent of total voting power, or control of or participation in business decisions under an agreement. It also defines a joint venture as a joint arrangement in which the parties having joint control have rights to the net assets of the arrangement.
Cost Accountant - section 2(28)
The amendment linked the definition to a cost accountant under the Cost and Works Accountants Act, 1959 who holds a valid certificate of practice under that Act.
Debenture - section 2(30)
The amendment provided exclusions for instruments referred to in Chapter III-D of the Reserve Bank of India Act, 1934 and for other instruments that may be prescribed by the Central Government in consultation with the Reserve Bank of India.
Financial year, holding company and key managerial personnel
The 2017 Amendment also modified section 2(41), inserted an explanation in section 2(46), omitted section 2(49), and expanded section 2(51) so that an officer not more than one level below the directors, in whole-time employment and designated by the Board, may fall within key managerial personnel, along with any other prescribed officer.
Net worth, public company, public financial institution and related party
Changes were made to section 2(57), section 2(71), section 2(72) and section 2(76). The related-party definition was revised in relation to specified bodies corporate, including holding, subsidiary and associate relationships and an investing company or venturer.
Small company - section 2(85)
The Amendment Act changed the statutory upper enabling limits in the definition of a small company from five crore rupees to ten crore rupees for paid-up share capital and from twenty crore rupees to one hundred crore rupees for turnover. These are enabling ceilings in the Act; the operative thresholds are subject to the amounts prescribed under the applicable rules as amended from time to time.
Subsidiary company and turnover
In section 2(87), the expression total share capital was replaced by total voting power. Section 2(91) was substituted so that turnover refers to the gross amount of revenue recognised in the profit and loss account from sale, supply or distribution of goods, services rendered, or both, during a financial year.
Section 3A: members severally liable in certain cases
Amendment section 3 inserted section 3A into the Companies Act, 2013. It addresses the consequences of carrying on business when membership falls below the statutory minimum.
If the number of members falls below seven in a public company or below two in a private company, and the company continues business for more than six months with the reduced membership, a person who remains a member during that period and knows of the deficiency may become severally liable for the debts contracted by the company during the relevant period after those six months.
The provision therefore creates a potential personal liability for a member who has the required knowledge and continues as a member while the company carries on business beyond the six-month period with fewer than the required number of members.
Amendment of section 4: reservation of company name
Amendment section 4 substituted section 4(5)(i) of the Companies Act, 2013. The statutory provision permits the Registrar, on the basis of information and documents furnished with the application, to reserve a proposed name for twenty days from approval or for another prescribed period. For an application by an existing company for reservation or change of its name, the statutory provision permits reservation for sixty days from approval.
Amendment of section 7: incorporation declaration
Amendment section 5 changed section 7(1)(c) of the Companies Act, 2013 by replacing the requirement for an affidavit with a declaration. This amendment came into force on 27 July 2018.
The provision concerns the declaration from each subscriber to the memorandum and the persons named as the first directors, if any, regarding specified convictions, fraud, misfeasance or breach of duty and the correctness, completeness and truth of the incorporation documents to the best of their knowledge and belief.
Amendment of section 12: registered office
The original page also covered amendment section 6, which amended section 12 of the Companies Act, 2013. It replaced the earlier timing language in section 12(1) with a requirement concerning the registered office within thirty days of incorporation, and changed the period in section 12(4) for notifying a change in the situation of the registered office from fifteen days to thirty days.
Official legal resources
For authoritative and current material, refer to the Ministry of Corporate Affairs, the official Gazette text of the Companies (Amendment) Act, 2017, the Companies Act, 2013 published by MCA, and India Code.