Sections 173, 177, 178, 180, 184 and 185 of Companies Amendment Act 2017
The Companies (Amendment) Act, 2017 made important changes to the Companies Act, 2013 concerning Board meetings, Audit Committees, nomination and remuneration committees, restrictions on Board powers, disclosure of directors' interests and loans to directors. This article explains amendments numbered 56 to 61 and notes the present legal position where later amendments are relevant.
Section 173 - Meetings of Board
What section 173 covers: Section 173 regulates meetings of the Board of Directors, including frequency and participation through video conferencing or other audio visual means.
Section 177 - Audit Committee
What section 177 covers: Section 177 provides for constitution, functions and oversight responsibilities of the Audit Committee and also contains provisions concerning vigil mechanisms.
2017 amendment - section 57: In section 177(1), the expression "every listed company" was changed to "every listed public company".
Section 177(4)(iv) was also expanded. For transactions other than those referred to in section 188, where the Audit Committee does not approve a transaction, it is to make recommendations to the Board. The amendment also dealt with transactions up to Rs. 1 crore entered into by a director or officer without prior Audit Committee approval, ratification within three months, and the consequences of non-ratification. It further provided an exception for specified transactions between a holding company and its wholly owned subsidiary.
Section 178 - Nomination and Remuneration Committee
What section 178 covers: Section 178 governs the Nomination and Remuneration Committee and the Stakeholders Relationship Committee, including evaluation and remuneration-policy responsibilities.
2017 amendment - section 58: The scope in section 178(1) was changed from "every listed company" to "every listed public company". Section 178(2) was revised so that the committee specifies the manner for effective evaluation of the Board, its committees and individual directors, with evaluation capable of being carried out by the Board, the committee or an independent external agency, followed by review of implementation and compliance.
The amendment also revised disclosure of the remuneration policy under section 178(4)(c) and changed the wording in section 178(8) concerning inability to resolve or consider a grievance.
Later change: The Companies (Amendment) Act, 2020 subsequently altered the penalty language in section 178(8). Accordingly, current compliance should be based on the consolidated text rather than the 2017 wording alone.
Section 180 - Restrictions on powers of Board
What section 180 covers: Section 180 identifies specified powers that the Board may exercise only with consent of the company by special resolution.
Section 184 - Disclosure of interest by director
What section 184 covers: Section 184 requires directors to disclose specified concerns or interests and regulates participation where a director is interested in a contract or arrangement.
2017 amendment - section 60: Section 184(4) was amended by omitting the former minimum-fine words. Section 184(5)(b) was replaced to cover contracts or arrangements between two companies or between one or more companies and one or more bodies corporate where the relevant directors together hold not more than two per cent of paid-up share capital in the other company or body corporate.
Current penalty: A later amendment made by the Companies (Amendment) Act, 2020 changed section 184(4). A director contravening section 184(1) or 184(2) is now liable to a penalty of Rs. 1 lakh.
Section 185 - Loans to directors, etc.
What section 185 covers: Section 185 regulates loans, guarantees and securities involving directors and persons in whom directors are interested.
2017 amendment - section 61: Section 185 was substituted. The substituted provision prohibits loans, guarantees or security to specified directors, their partners or relatives, and firms in which such a director or relative is a partner.
It permits specified loans, guarantees and security for a person in whom a director is interested when a special resolution is passed and the borrowing company uses the loan for its principal business activities. The explanatory statement for the special resolution must disclose the prescribed particulars and purpose.
The provision defines persons in whom a director is interested and retains specified exceptions, including certain facilities for managing or whole-time directors, lending in the ordinary course of business at the prescribed Government-security-linked rate, and specified holding-company/subsidiary arrangements, subject to statutory conditions.
Penalty under section 185
Contravention can attract fines on the company and criminal consequences, including possible imprisonment and fine, for specified defaulting officers and recipients as stated in section 185(4). The consolidated statutory text should be consulted before acting on a transaction.
Effective dates and practical use
The Companies (Amendment) Act, 2017 did not bring every amendment into force on the same date. For example, the India Code consolidated text records the section 184(5)(b) substitution as effective from 9 February 2018 and the substituted section 185 as effective from 7 May 2018. When reviewing an older transaction, identify the transaction date and apply the version of the law then in force.
Updated: 18 September 2026. This page is a general legal-information guide. For a filing, Board decision or transaction, verify the latest Act, applicable rules, notifications and exemptions.