Legal update: This page explains the amendments enacted by the Companies (Amendment) Act, 2017. Because the Companies Act, 2013 has been amended subsequently, historical amendment text should be read with the current Act, applicable rules, notifications and MCA filing requirements.
Section 135 - Corporate Social Responsibility
What the provision covers: Section 135 of the Companies Act, 2013 governs Corporate Social Responsibility (CSR). The 2017 Amendment Act changed the financial-year test, CSR Committee composition for companies not required to appoint an independent director, the wording concerning Schedule VII, and the explanation of "net profit".
2017 amendment - section 37
In section 135 of the principal Act:
(i) In sub-section (1):
(a) for the words "any financial year", the words "the immediately preceding financial year" were substituted;
(b) a proviso was inserted providing that where a company is not required to appoint an independent director under section 149(4), its Corporate Social Responsibility Committee shall have two or more directors.
(ii) In sub-section (3), clause (a): the words "as specified in Schedule VII" were replaced by "in areas or subject, specified in Schedule VII".
(iii) In sub-section (5): the Explanation was substituted so that, for section 135, "net profit" does not include such sums as may be prescribed and is calculated in accordance with section 198.
Current-law note: Section 135 has been amended further after the Companies (Amendment) Act, 2017. For present compliance, including CSR spending, unspent amounts, ongoing projects and CSR Committee requirements, read the current Companies Act, 2013 together with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended.
Section 136 - Right of Member to Copies of Audited Financial Statement
What the provision covers: Section 136 deals with circulation and access to financial statements and related documents before a general meeting, including requirements concerning subsidiary financial statements.
2017 amendment - section 38
In section 136(1), the opening reference to section 101 was omitted. The amendment also provided a member-consent mechanism for documents sent less than twenty-one days before the meeting: for a company having share capital, consent is required from a majority in number entitled to vote representing at least ninety-five per cent of the paid-up voting share capital; for a company without share capital, consent of members having at least ninety-five per cent of the total voting power is required.
For a listed company having subsidiaries, separate audited accounts of each subsidiary are to be placed on its website, if any. Special rules were inserted for a foreign subsidiary, including use of consolidated financial statements where statutorily prepared, and placement of unaudited statements where audit is not required under the law of the country of incorporation. Where such statements are not in English, an English translation is also required.
Section 136(2) was supplemented so that a company having a subsidiary must provide a copy of the subsidiary's separate audited or unaudited financial statements, as applicable, to a member who asks for it.
Section 137 - Filing of Financial Statements with Registrar
What the provision covers: Section 137 regulates filing of financial statements and related documents with the Registrar of Companies.
2017 amendment - section 39
The amendment removed several references to the time specified under section 403. It also inserted a rule for a foreign subsidiary that is not required to have its financial statements audited under the law of its country of incorporation and does not have them audited. In that situation, the holding Indian company may file the unaudited financial statement with a declaration to that effect and, where the statement is not in English, an English translation.
Section 139 - Appointment of Auditors
What the provision covers: Section 139 concerns appointment and reappointment of statutory auditors.
2017 amendment - section 40
In section 139(1), the first proviso was omitted. This removed the statutory requirement that the appointment of an auditor be ratified by members at every annual general meeting during the auditor's term.
Section 140 - Removal, Resignation of Auditor and Special Notice
What the provision covers: Section 140 addresses removal and resignation of auditors and the procedure connected with a change of auditor.
2017 amendment - section 41
In section 140(3), the words "fifty thousand rupees" were replaced by "fifty thousand rupees or the remuneration of the auditor, whichever is less".
Current-law note: Penalty provisions in the Companies Act have been amended on multiple occasions. The current statutory text should be checked before relying on a historical penalty amount.
Section 141 - Eligibility, Qualifications and Disqualifications of Auditors
What the provision covers: Section 141 prescribes who may be appointed as an auditor and the circumstances that disqualify a person or firm.
2017 amendment - section 42
Section 141(3)(i) was substituted to disqualify a person who, directly or indirectly, renders a service referred to in section 144 to the company, its holding company or its subsidiary company. The expression "directly or indirectly" takes its meaning from the Explanation to section 144.
Section 143 - Powers and Duties of Auditors and Auditing Standards
What the provision covers: Section 143 sets out auditors' powers, inquiries, reporting duties and related audit requirements.
2017 amendment - section 43
The amendment: (i) extended the proviso to section 143(1) from subsidiaries to "subsidiaries and associate companies"; (ii) changed the reporting expression in section 143(3)(i) from "internal financial controls system" to "internal financial controls with reference to financial statements"; and (iii) replaced "cost accountant in practice" with "cost accountant" in section 143(14)(a).