(LiveMint)
The government on Monday notified amendments to the Companies Act 2013, aimed at making the insolvency process more effective. The Companies (Amendments) Act 2017, which received Parliament’s nod in the just-concluded winter session, have put restrictions on managerial remuneration when a company has defaulted in its dues.
Companies, which have defaulted on their dues to financial institutions, will now require the prior approval of these creditors, besides approval in a general meeting in case the payment of managerial remuneration exceeds 11% of the net profits.Earlier, only the company’s prior approval in a general meeting was required.
The amendments have also allowed issuance of shares at a discount to the creditors in cases where debt is converted into shares in pursuance of a resolution plan under the Insolvency or Bankruptcy Code or a debt restructuring scheme.The changes to the Act also bar a registered valuer from undertaking valuation of any asset in which he has direct or indirect interest for a period of three years before or after his appointment.
