Sections 47, 53, 54, 62, 73 and 74 of the Companies Amendment Act 2017

The Companies (Amendment) Act, 2017, enacted as Act No. 1 of 2018, amended several provisions of the Companies Act, 2013. This article explains the amendments relating to voting rights, issue of shares at discount, sweat equity, further issue of share capital, acceptance of deposits and repayment of pre-2013 Act deposits.

Current-law note: The 2017 amendments remain part of the legislative history, but some affected provisions were amended again later. In particular, section 53(3), section 62 and section 73 have subsequent amendments. For present compliance, read this article with the latest consolidated Companies Act, 2013 and applicable rules.

2017 Amendment Act provision	Companies Act, 2013 provision affected	Broad subject	Effective date
Section 11	Section 47	Voting rights	9 February 2018
Section 12	Section 53	Issue of shares at discount	9 February 2018
Section 13	Section 54	Sweat equity shares	7 May 2018
Section 14	Section 62	Further issue of share capital	9 February 2018
Section 15	Section 73	Acceptance of deposits	15 August 2018
Section 16	Section 74	Repayment of earlier deposits	15 August 2018

Amendment to Section 47 - Voting rights

Section 47 of the Companies Act, 2013 deals with voting rights of members holding equity and preference share capital. Section 11 of the Companies (Amendment) Act, 2017 amended section 47(1) so that the voting right is expressly subject not only to section 43 and section 50(2), but also to section 188(1).

The practical effect is that the statutory voting-right provision must be read together with the restriction contained in section 188(1) concerning voting on specified related-party transactions, where that restriction applies.

Amendment to Section 53 - Prohibition on issue of shares at discount

Section 53 generally prohibits a company from issuing shares at a discount, subject to the statutory exceptions. The 2017 Amendment Act replaced the expression "discounted price" with "discount" in section 53(2) and inserted section 53(2A).

Section 53(2A) permits shares to be issued at a discount to creditors where debt is converted into shares pursuant to a statutory resolution plan or a debt restructuring scheme in accordance with applicable Reserve Bank of India guidelines, directions or regulations under the Reserve Bank of India Act, 1934 or the Banking Regulation Act, 1949.

Later amendment: Section 53(3) was subsequently substituted by the Companies (Amendment) Act, 2019. The current consolidated text should therefore be used for penalties and refund consequences.

Amendment to Section 54 - Issue of sweat equity shares

Section 54 governs the issue of sweat equity shares. "Sweat equity shares" are equity shares issued to directors or employees at a discount or for consideration other than cash for providing know-how, intellectual property rights or value additions, as defined in section 2(88) of the Companies Act, 2013.

The 2017 Amendment Act omitted clause (c) of section 54(1). That clause had imposed a waiting-period condition linked to the commencement of business. After the omission took effect on 7 May 2018, that statutory waiting-period condition ceased to apply.

Amendment to Section 62 - Further issue of share capital

Section 62 regulates further issue of share capital, including rights issues and specified issues to persons other than existing shareholders. The 2017 Amendment Act amended section 62(1)(c) to require valuation by a registered valuer subject to compliance with the applicable provisions of Chapter III and other prescribed conditions.

It also substituted section 62(2) at that time to prescribe dispatch of the rights-offer notice at least three days before opening of the issue through modes having proof of delivery.

Current-law caution: Section 62 was amended again after 2017, including changes made by the Companies (Amendment) Act, 2019 and the Companies (Amendment) Act, 2020. Use the latest consolidated text for the present rights-issue notice framework.

Amendment to Section 73 - Acceptance of deposits from members

Section 73 regulates acceptance of deposits by companies, subject to the exceptions, conditions and rules made under Chapter V. The 2017 Amendment Act substituted section 73(2)(c), omitted clause (d), and amended clause (e).

The substituted clause (c) requires a company, on or before 30 April each year, to deposit not less than 20 percent of the amount of deposits maturing during the following financial year in a scheduled bank in a separate deposit repayment reserve account. The amendment to clause (e) also addressed a company that had previously defaulted, requiring the default to have been made good and five years to have elapsed from the date of making good the default.

Later amendment: Section 73 has also been amended subsequently. Current deposit compliance must be checked against the latest Act and the Companies (Acceptance of Deposits) Rules, 2014, as amended.

Amendment to Section 74 - Repayment of deposits accepted before commencement of the 2013 Act

Section 74 concerns deposits accepted before commencement of the Companies Act, 2013 that remained unpaid or became due thereafter. The 2017 Amendment Act substituted section 74(1)(b).

As substituted, the provision required repayment within three years from the relevant commencement or on or before expiry of the period for which the deposits were accepted, whichever was earlier. Renewal of such deposits must comply with Chapter V and the rules made under it.

Official sources and legal status

The Companies (Amendment) Act, 2017 received Presidential assent on 3 January 2018 and was published as Act No. 1 of 2018. Different provisions were brought into force on different notified dates. For authoritative verification, consult the official Companies (Amendment) Act, 2017 PDF and the consolidated Companies Act, 2013 published by the Ministry of Corporate Affairs.

Related Companies Act resources

This page is an informational legal reference. For filing, compliance or transaction-specific advice, verify the current Act, applicable rules, notifications and regulatory requirements.