The Central Government had notified the Companies (Amendment) Act, 2017 (Amendment Act) on 3rd January 2018 wherein the following sections of the Companies Act, 2013 have been amended to accommodate the requirements of Insolvency and Bankruptcy Code 2016:
- Section 53: Section 53 of Companies Act, 2013 deals with prohibition on issuance of shares at discount. The amendment now allows the companies to issue their shares at discount to its creditors when their debts are been converted into equity pursuance to any statutory resolution plan (under IBC or any debt restructuring scheme of RBI);
- Section 197: Section 197 of Companies Act, 2013 deals with overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits. As per the Section the approval of shareholders in the general meeting of the Company is required in case the managerial remuneration is exceeded beyond 11% of the net profits. The amendment now allows that the companies who have defaulted in payment of dues to any bank or public financial institution or nonconvertible debenture holders or any other secured creditor, will now have to take prior approval of such lenders for payment of managerial remuneration. The approval from lenders needs to be taken prior to the approval of shareholders in general meeting.
- Section 247: Section 247 of Companies Act, 2013 deals with Valuation by registered valuers, Further the section bars a registered valuer from undertaking valuation of any assets in which he has a direct or indirect interest or becomes so interested at any time during or after the valuation of assets. The amendment now prohibits a registered valuer from undertaking the assignment of valuation of assets in which he has direct or indirect interest or becomes so interested at any time during the three years prior to his appointment as valuer or three years after valuation of assets was conducted by such valuer.
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