Companies Amendment Act 2017: Sections 201, 216, 223, 236, 247, 366

The Companies (Amendment) Act, 2017 amended several provisions of the Companies Act, 2013. This article explains the amendments corresponding to sections 201, 216, 223, 236, 247 and 366 and places the statutory changes in context.

Statutory context: The Companies (Amendment) Act, 2017 is Act 1 of 2018. It received Presidential assent on 3 January 2018. Different provisions were brought into force on dates appointed by the Central Government. Readers should therefore use the current consolidated Companies Act, 2013 for present compliance.
Contents

Amendment relating to Section 201 of the Companies Act, 2013

Section 201 deals with the forms of, and procedure in relation to, certain applications connected with managerial appointments. Section 70 of the 2017 Amendment Act narrowed the references in section 201 from the broader expression referring to the Chapter or the sections previously mentioned to a specific reference to section 196.

In section 201(1), the reference to "this Chapter" was substituted by a reference to "section 196". In section 201(2)(a), the reference to "any of the sections aforesaid" was likewise substituted by "section 196".

Amendment relating to Section 216: Investigation of ownership of company

Section 216 empowers the Central Government, in the circumstances stated in that provision, to appoint inspectors to investigate company ownership and membership so as to identify the persons who are financially interested in the company or are able to control or materially influence its policy.

Section 71 of the 2017 Amendment Act expanded section 216(1) by adding clause (c), covering persons who have or had beneficial interest in shares and persons who are or have been beneficial owners or significant beneficial owners of a company.

Amendment relating to Section 223: Inspector's report

Section 223 concerns reports made by inspectors appointed to investigate the affairs of a company. Section 72 of the 2017 Amendment Act amended section 223(3) to expressly identify persons who may obtain a copy of the report.

The words covering "members, creditors or any other person whose interest is likely to be affected" were inserted after the words concerning a copy that "may be obtained".

Amendment relating to Section 236: Purchase of minority shareholding

Section 236 provides the statutory framework for purchase of minority shareholding where the prescribed majority threshold is reached. Section 73 of the 2017 Amendment Act replaced the expression "transferor company" in sub-sections (4), (5) and (6) with the clearer expression "company whose shares are being transferred".

Amendment relating to Section 247: Valuation by registered valuers

Section 247 regulates valuation where valuation is required under the Companies Act, 2013 and addresses the duties and independence of registered valuers. Section 74 of the 2017 Amendment Act amended section 247(2)(d) to specify the relevant conflict-of-interest period.

The provision refers to an interest arising during the period of three years before appointment as valuer or three years after the valuation of assets conducted by the valuer.

Amendment relating to Section 366: Companies capable of being registered

Section 366 forms part of the provisions dealing with registration of certain existing entities under the Companies Act, 2013. Section 75 of the 2017 Amendment Act changed the membership reference in section 366(2) from seven or more members to two or more members.

It also inserted a further condition in the proviso stating that a company with fewer than seven members shall register as a private company.

Practical reading of these amendments

These provisions should not be read as a substitute for the current consolidated Act. The 2017 Amendment Act records the textual changes made at that time, while the operative legal position is best checked against the current Companies Act, 2013, applicable rules, notifications and MCA filing requirements.