DEC 12, 2016

Recommendation of The Standing Committee on Finance on The Companies (Amendment) Bill, 2016

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The Standing Committee on Finance has submitted its much-awaited report on the Companies (Amendment) Bill 2016 (‘Amendment Bill”). The Standing Committee has accepted almost all the amendments proposed in the Amendment Bill and also made observations and recommendations to impart greater vibrancy to the Companies Act 2013.

Observations and reccomendations:

  1. One major observation of the Standing Committee is that compliance threshold should be based on business volume or turnover or scale of operations rather than the form of the company. Further, a distinction may also be made between corporates involving public funds and substantial employment and other enterprises operating on a smaller scale. The Rules framed and circulars issued under the Companies Act 2013 should be waived/ modified with a view to making the compliance processes simpler and easier for all companies. Duplication, superfluity and purposeless documentation should be avoided. The prescribed procedures/processes should be subject to constant review depending on feedback received from stakeholders. A structured mechanism may be set up in the Ministry of Corporate Affairs for this purpose.
  2. Any contradiction between the substantive provisions or that with the Rules should be examined and rectified.
  3. Welcoming the waiver of seeking approvals for managerial remuneration the Committee observed that the Government should retain the right to seek necessary information on aspects relating to managerial remuneration of listed companies and companies operating with public funds from time to time, keeping in view factors such as adequacy of volume, reserves, repayment of debt etc. As ‘ease of doing business’ is conjoined with the object of ‘promoting economic growth’ in the country, it is necessary that an element of control is retained in the Act.
  4. The restrictions as to loans advanced by shareholders should be removed to enable growth and revival in the MSME sector. The prohibition, as to any loan in excess of the prescribed limits, to be treated as ‘deposit’ subject to rating and maintenance of redemption reserves should also be waived with a view to bolstering the finances of MSME. Prohibitions and controls inhibiting the growth of companies, particularly in the MSME sector should be removed.
  5. The Government should analyse and review the new concept of ‘One Person Company’ and its sustainability in company law & practice, particularly considering the shelter or scope it provides for incurring huge and needless liabilities without concurrent responsibility to discharge them.

Views of the Committee with respect to the amendment proposed in the Amendment Bill

S. No.

Section no.

Amendment Bill, 2016

Standing Committee Report


Section 2(6)- Definition of “associate company”

For the Explanation, the following Explanation shall be substituted, namely:—
Explanation.—For the purpose of this clause—

  1. the expression "significant influence" means control of at least twenty per cent, of total voting power, or control of or participation in business decisions under an agreement;
  2. the expression "joint venture" means a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.



Section 2(46)- Definition of “holding company”

The following Explanation shall be inserted, namely:—
'Explanation.—For the purposes of this clause, the expression "company" includes any body corporate



Section 2(76)- Definition of “related party”

For sub-clause (viii), the following sub-clause shall be substituted, namely:—
"(viii)any body corporate which is—
(A)  a holding, subsidiary or an associate company of such company;
(B)  a subsidiary of a holding company to which it is also a subsidiary; or
(C) an investing company or the venturer of a company.



Insertion of new section 3A- Members severally liable certain cases

The following section shall be inserted, namely:—
"3A. Members severally liable certain cases.
If at any time the number of members of a company is reduced, in the case of a public company, below seven, in the case of a private company, below two, and the company carries on business for more than six months while the number of members is so reduced, every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with less than seven members or two members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefor.



Section 4(5)(i)- Memorandum

In sub-section (5), in clause (i), for the words "sixty days from the date of theapplication", the words "twenty days from the date of approval or such other period asmay be prescribed" shall be substituted.

Allow longer reservation period i.e. 60 days or a longerperiod as may be prescribed.


Section 21- Authentication of documents, proceedings and contracts

In section 21 of the principal Act, for the words "an officer of the company", the words "an officer or employee of the company" shall be substituted.



Section 42(9) & (10)- Issue of shares on private placement basis

Section 42 (9) and (10) reads of as under:-

Section 42(9) - If a company defaults in filing the return of allotment within the periodprescribed under sub-section (8), the company, its promoters and directors shall beliable to a penalty for each default of one thousand rupees for each day during whichsuch default continues but not exceeding twenty-five lakh rupees.

Section 42(10) - Subject to sub-section (11), if a company makes an offer or acceptsmonies in contravention of this section, the company, its promoters and directors shallbe liable for a penalty which may extend to the amount raised through the private placement or two crore rupees, whichever is lower, and the company shall also refundall monies with interest as specified in sub-section (6) to subscribers within a period ofthirty days of the order imposing the penalty.



Section 92- Annual return

In sub-section (1),—after the proviso, the following proviso shall be inserted, namely:—

"Provided further that the Central Government may prescribe abridged form of annual return for One Person Company and small company

In section 92 (3) of the Principal Act, -

(3) Every company shall place a copy of the annual return on the website of thecompany, if any, and the web-link of such annual return shall be disclosed in theBoard's report.

An abridged andsimple form of annual return may be prescribed for small companies, one personcompanies and private companies (less than an annual sales turnover of say, Rs100 crore).

For other forms of companies as well, the annual return format shouldalso be devised in a manner avoiding repetitive or superfluous information.


Section 101- Notice of meeting

In sub-section (1), for the proviso, the following proviso shall be substituted namely:-

Provided that a general meeting may be called after giving shorter notice than thatspecified in this sub-section, if consent in writing or by electronic mode is accorded thereto:

  1. in the case of an annual general meeting, by not less than ninety-five per cent of the members entitled to vote thereat; and
  2. in the case of any other general meeting, by members of the company-
    1. holding, if the company has a share capital, not less than ninety-five of such part of the paid-up share capital of the company as gives a right to vote at the meeting; or
    2. having, if the company has no share capital, not less that ninety-five percentof the total voting power exercisable at that meeting.

A general meeting of Companies having share capital maybe called after giving shorter notice if consent thereto is accorded by majority ofmembers in number entitled to vote and representing holding not less than 95%percent of such part of the paid-up share capital of the company entitled to votethereat;

In case of Companies not having share capital a general meeting may be calledafter giving shorter notice if consent thereto is accorded by majority of membersrepresenting not less than 95% of the voting rights exercisable at the meeting.


Section 129- Financial Statement

For sub-section (3), the following sub-section shall be substituted, namely:—

"(3) Where a company has one or more subsidiaries or associate companies, it shall, inaddition to financial statements provided under sub-section (2), prepare a consolidated financial statement of the company and of all the subsidiaries and associate companiesin the same form and manner as that of its own and in accordance with applicableaccounting standards, which shall also be laid before the annual general meeting of thecompany along with the laying of its financial statement under sub-section (2):

Provided that the company shall also attach along with its financial statement, aseparate statement containing the salient features of the financial statement of itssubsidiary or subsidiaries in such form as may be prescribed:

Provided further that the Central Government may provide for the consolidation ofaccounts of companies in such manner as may be prescribed.

It is recommended that insuch cases, where a Consolidated Financial Statement was statutorily requiredto be prepared as per the law of the jurisdiction in which the overseas subsidiaryis established and is placed on the website in the statutory format, there should be no requirement for standalone financial statements of the step downsubsidiaries to be placed on the website as per 4th proviso to Section 136(1) andincluded in the salient features that are required to be attached. There shouldhowever be no exemption in other cases.

In theabsence of a statutory requirement of Consolidated Financial Statement in anoverseas jurisdiction, it may be difficult to ensure compliance at a standard level.

Hence there is no scope for any further exemption in the preparation anddisclosure of Consolidated Financial Statements beyond that provided in the Bill.


Section 136- Right of member to copies of audited financial statement

In section 136 ,—
in sub-section (1),—
the following shall be substituted, namely:—
Provided that if the copies of the documents are sent less thantwenty-one days before the date of the meeting, they shall, notwithstanding that fact, bedeemed to have been duly sent if it is so agreed by ninety-five per cent of the membersentitled to vote at the meeting.

In order to facilitate"ease of doing business", the Ministry should further amend section 136(1) andexempt the companies from the requirement of uploading financial statements of foreign subsidiaries, in case such companies upload the consolidated financialstatement on website of such foreign companies.


Section 137- Copy of financial statement to be filed with Registrar

In Section 137(1), the following proviso shall be inserted after the fourth Proviso :—
'Provided also that in the case of a subsidiary which has been incorporated outsideIndia (herein referred to as "foreign subsidiary"), which is not required to get its financialstatement audited under any law of the country of its incorporation and which does notget such financial statement audited, the requirements of the fourth proviso shall be metif the holding Indian listed company files such unaudited financial statement along with adeclaration to this effect and where such financial statement is in a language other thanEnglish, along with a translated copy of the financial statement in English.

The Committee recommend that the suggestion to broadenthe applicability of the section to all holding Indian Companies for filling copy offinancial statement with the Registrar may be suitably incorporated in the Bill.

The Committee also recommend that in order to facilitate "ease of doingbusiness" in case a company files consolidated financial statements (which inany case has been mandated under the law), it should be exempted from therequirement of filing individual financial statement of subsidiary companies.


Section 141- Eligibility, qualifications and disqualifications of auditors

In section 141 of the principal Act, in sub-section (3),—
(i) in clause (d), the following Explanation shall be inserted, namely:—
'Explanation.—For the purposes of this clause, the term "relative" means the spouse ofa person; and includes a parent, sibling or child of such person or of the spouse,financially dependent on such person, or who consults such person in taking decisionsin relation to his investments;'

The Committee are inclined to accept the suggestion for removal of thewords "or who consults such person in taking decisions in relation to hisinvestments", as these words make the intended definition of 'relative' under section 141 too broad and open-ended, leaving scope for mis-interpretation.

Instead, the words "institutionalized consultation in the usual course ofbusiness'' may be substituted to bring greater clarity. The Committee are of theview that such phraseology in the main clause or explanations thereunder shouldbe avoided, as it will only obfuscate the intent behind the law, leading toavoidable disputes and litigation. Necessary modifications may accordingly bemade in the Bill.


Section 160- Right of persons other than retiring directors to stand for directorship

The following proviso shall be inserted in Section 160(1):—
"Provided that requirements of deposit of amount shall not apply in case ofappointment of an independent director or a director recommended by theNomination and Remuneration Committee, if any, constituted under sub-section(1) of section 178."

The following may also may be added:-
“or a director recommended by the Board of Directors of the Company, in thecase of a company not required to constitute Nomination & RemunerationCommittee”


Section 197- Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits

Section 197 of the Act dealing with Managerial remuneration is sought to be amended by way of changes in sub-sections (1), (3), (9), (10) and (11) and inserting new sub-sections (16) and (17) with a view to omitting altogether the requirement for government approval with necessary safeguards in the form of additional disclosures, special resolutions and auditor certifications etc.



Section 403- Fee for filing, etc.

In section 403 of the principal Act,— (i) in sub-section (1),for the first and second provisos, the following provisos shall besubstituted, namely:—
"Provided that where any document, fact or information required to be submitted, filed,registered or recorded, as the case may be, under section 89, 92, 117, 121, 137 or 157is not submitted, filed, registered or recorded, as the case may be, within the periodprovided in those sections, it may be submitted, filed, registered or recorded, as thecase may be, within a period of two hundred and seventy days from the expiry of theperiod so provided in those sections, on payment of such additional fee as may beprescribed: Provided further that where the document, fact or information, is not submitted, filed,registered or recorded, as the case may be,—
(a) in case of document, fact or information referred to in section 89,92, 117, 121, 137or 157, within the period of two hundred and seventy days as provided in the firstproviso; or
(b) in any other case within the period in the relevant section, it may, without prejudiceto any other legal action or liability under this Act, be submitted, filed, registered orrecorded, as the case may be, on payment of such higher additional fee or additionalfee, as may be prescribed:
Provided also that where there is default on two or more occasions in submitting, filing,registering or recording of the document, fact or information under section 89, 92, 117,121, 137 or 157, the provisions of the first and second provisos shall not apply, until the document, fact or information is submitted, filed, registered or recorded, as the casemay be, with additional fee, without prejudice to any legal action or liability under this Act.";
(ii) in sub-section (2), for the words "first proviso to that sub-section", the words"relevant section" shall be substituted.

The Committee apprehend that the proposed amendments with regard tofee structure for delayed filing of documents may turn out to be a revenue mobilizing proposal for the Ministry and the government, rather than a steptowards ensuring timely compliance by companies and an up-to-date registry.

The Ministry, themselves, have stated in their reply that a low level of annualstatutory filings have been reported currently as compared to previous years. The Committee believe that enhanced fee may not actually deter non-compliance. Itmay thus be a fallacious assumption that the fee structure can be used to ensurestatutory compliance.

The Committee would rather suggest in this context thatthe compliance requirements may be made less onerous with a reasonable timeperiodfor all companies, and simultaneously, non-compliance within thestipulated period should invite strict penalty and prosecution. In view of theCommittee, only such an approach will ensure an up-to-date registry ofcompanies. The present approach of condonation of delay, late filing by paymentof higher fee etc. may not really help achieve this objective, as borne out by theMinistry's own experience in the matter.


Section 447- Punishment for fraud

In section 447 of the principal Act, —

  1. after the words "guilty of fraud", the words "involving an amount of at least ten lakh rupees or one percent. of the turnover of the company, whichever is lower" shall be inserted;
  2. after the proviso, the following proviso shall be inserted, namely:—

Provided further that where the fraud involves an amount less than ten lakh rupees orone per cent. of the turnover of the company, whichever is lower, and does not involvepublic interest, any person guilty of such fraud shall be punishable with imprisonment fora term which may extend to five years or with fine which may extend to twenty lakhrupees or with both."


Other Issues dealt with Standing Committee

S. No.


New Amendment

Standing Committee Report


Adequacy of Internal Financial Controls

The words Internal Financial Controls under section 134(5)(e) to be replacedwith ‘Internal Controls Over Financial Reporting’ in line with the proposedamendment of Section 143(3)(1) in the Companies (Amendment) Bill, 2016.

The certification requirements be limited to listed entities only.



Inconsistencies between SEBI Regulations and the Act

Section 188(1) have led to the following practical difficulties:

Related Party Transaction

  • The thresholds for determining which transactions should be approved by a special resolution are different under both the sets of laws.
  • Listing agreement does not give exemption to transactions entered into in the company’s ordinary course of business other than transactions which are not on an arm’s length basis.

The differences may lead to different policies and consequently differentdisclosures to comply with both the requirements.

The Committee recommend that the provisions in the Companies Act 2013and Rules framed thereunder should be harmonised with SEBI Regulations andvice-versa, wherever some dis-harmony exists. In this context, particular attention may be paid to provisions relating to 'related party transaction','independent director' and other corporate governance matters covered in SEBIregulations. Duplication and superfluity in the Regulations may thus be removed.


Exemptions to unlisted closely held public companies

The issue of exemptions of unlisted closely held public companies have submitted the following suggestion:
"Closely held Public companies with less than 10% public shareholding are stillrequired to comply with many onerous requirements like appointing womendirectors, restrictions on related party transactions, Board committees and so on.Therefore, exemptions given to Private Companies may also be extended topublic companies with public share ownership of less than10%."

It is desirable that compliancerequirements, in general, are made less onerous for all forms of companies.However, companies with a business volume or sales turnover of less than say,Rs. 100 crore annually,(which do not accept public deposits) whatever their form,may be treated on a different footing with simplified formats of disclosure andminimum compliance. This will also keep the compliance and scrutiny loadmanageable at the levels of the Registry, regulators and other mandatedauthorities, while facilitating 'ease of doing business' for smaller entities.Regulators will thus be in a better position to ensure effective oversight.


Corporate Social Responsibility

Suggestion on the Corporate Social Responsibility under Section 135 of the Principal Act:-
"There are stringent requirements concerning constitution of CSR Committee,formulation of CSR Policy, monitoring the Policy and various other matters aboutproject-based expenditure and so on. Such elaborate requirements are quiteunnecessary and cumbersome for Private companies. The provisions madeapplicable to private companies here seem unintentional.

The expenses towards capacitybuilding of the CSR personnel of the corporateshould also constitute the CSR spend, especially where projects are beingdirectly executed. The administrative expenses should be on actual basis and nottied up with percentage of CSR spend.

Private companies which get covered under Section 135 should have simplifiedprocedures for such compliances & implementation.

Clarification is required in terms of reporting as to whether only what is planned isto be reported or also what is executed along with what is planned is to bereported. The annual report includes CSR projects undertaken with budget andspent by the company in that financial year. However the Rules specify onlyabout what is planned by the company need to be reported.”

  1. The Committee recommend that the proviso to Section 135(5) of the Companies Act, 2013 stipulating that "the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for CSR activities" should be strictly enforced to preserve the trueletter and spirit of the CSR mandate.
  2. Contradictions and ambiguities, if any, regarding CSR reporting should also be removed forthwith. The Ministry should also regularly monitor scrupulous compliance of CSR provisions by corporates and follow-it up with them in a structured manner through a proactive Management InformationSystem (MIS) which will improve awareness about CSR activities as also facilitateMIS in government system.

Auditor Rotation


Auditors rotation should not be mandated.

Unlisted Indian subsidiaries of foreign multinationals should be permitted to aligntheir auditors with that of the parent company, thus, exempting them frommandatory auditor rotation requirements. Similarly private limited companiesshould also be exempted from mandatory audit rotation since there is very littlepublic interest involved in the same.

The Committee find that only about 1.6% of totalnumber of unlisted companies are required to rotate their auditors as per theprescribed criteria under the Companies Act 2013. Since this is a minisculecoverage, it is only appropriate that subsidiaries of foreign companies andprivate companies are given justifiable relief depending upon their capital andturnover thresholds. Accordingly, the exemption limits/thresholds prescribedunder the Rules may be reviewed in consultation with the ICAI.


Constitution of National Financial Reporting Authority (Section 132 of the Act)

Sec 132 of the Act provides for the creation of National Financial ReportingAuthority (NFRI) for matters relating to accounting and auditing standards under the Act.However. this section is yet to be notified.

The key functions of NFRA as envisaged by the Act include:

  • Recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or their auditors.
  • Monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed.
  • Oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of service and such other related matters as may be prescribed.
  • Have the power to investigate, either suomotu or on a reference made to it by the Central Government, for specified class of bodies corporate or persons, into the matters of professional or other misconduct committed by any member or firm of Chartered accountants.

The Institute of Chartered Accountants of India (ICAI) have expressed theirreservations over the constitution of NFRA.

Consistent with its position on strengthening the oversight of corporateaudit, the Committee desire that the existing mechanism in this regard under theICAI Act should be streamlined and strengthened without needlessly adding toregulatory levels. This may be undertaken in consultations with the Institute ofChartered Accountants of India (ICAI), which is the designated elected selfregulatorybody for professional audit in the country. Necessary amendments tothe ICAI Act may be brought before Parliament, if required, for this purpose sothat adequate transparency can be ensured in maintaining accounting andauditing norms as well as ethical standards with a view to protecting the interestof investors and stakeholders.


Ease of compliance for Start-ups


For ease of compliance for start-ups, it has been suggested by the stakeholdersthat start-ups as defined under start-up India program should qualify for benefits asavailable to small companies under Section 2 (85) even if they exceed the thresholds.

The Committee recommend that in conformity with governmentpolicy on Start-ups under the Start-up India Programme, appropriate exemptionsfrom compliances may be given to start-ups. The relevant Rules and proceduresmay accordingly be modified to give necessary relief to start-ups including ease of raising finance at the earliest. As observed by the Committee earlier, theseexemptions and waivers should be linked to thresholds of business volume orturnover, regardless of the form of the company, which would enable smallerplayers to organise themselves easily and do business in an unhindered andsmooth manner.


Role of Independent Directors


The institution of Independent Directors shouldbe made more effective and there is need to reduce their liability to make their role morepurposeful.

The Committee are of the view that the Ministry should encourage andcreate a conducive and positive legal environment for the institution ofIndependent Directors to evolve in the country. As there is a shortage ofIndependent Directors, the Ministry must play a pro-active role to develop acredible data-bank of Independent Directors, wherefrom corporates can choose.It should be recognised that this mechanism is meant for rendering non- partisanexpert advice to the Board as integral part of corporate governance.Therefore, itis not necessary or fair to saddle Independent Directors with penal liabilities. TheCommittee would thus expect the Ministry to review the position accordingly.


Key Managerial Personnel


The Act does not, presently, specify the qualifications of a Chief FinancialOfficer. In view of the significantly enhanced compliance requirements and theoverarching role of the finance function in the present day context, it may berelevant to consider appointing Chartered Accountants in such CFO positionswhich are to be mandatorily filled up under the above mentioned KMPrequirement.

The Committee recommend that the qualifications forappointment as Chief Financial Officer (CFO) may be best left to the concerned company. As it is mandatory to appoint a CFO by every listed company and everyother public company having a paid-up share capital of Rs. 10 crore or more, itwill in the natural course open up avenues for employment of CharteredAccountants, who are the best equipped for the post.


Removal of Object Clause

In section 4 of the principal Act,—

(i)    in sub-section (1), for clause (c), the following clause shall be substituted, namely:—

"(c) that the company may engage in any lawful act or activity or business, or any act or activity or business to pursue any specific object or objects, as per the law for the time being in force: Provided that in case a company proposes to pursue any specific object or objects or restrict its objects, the Memorandum shall state the said object or objects for which the company is incorporated and any matter considered necessary in furtherance thereof and in such case the company shall not pursue any act or activity or business, other than specific objects stated in the Memorandum.

The Committee find that the amendment proposed in Section 4(1)(c) (videclause 4(iii)) of the Companies Act 2013) allows companies to have an option tohave an unrestricted or generic object clause, that is, to engage in any lawfulactivity or business in their Memorandum of Association filed at the time of theirincorporation. The Committee note that this proposed amendment is aculmination of the process of relaxing the objects clause since the 1990s. Earlier,the approval of the Company Law Board was required for any change in objectsby a company. Subsequently, this change was allowed on the basis of a special resolution passed by companies. The Committee are of the view that althoughenumeration of detailed objects in the Memorandum of Association may not beessential, making the object clause itself redundant is far-fetched. It cannot beanybody's case that a company should incorporate itself in a vacuum withoutspecifying the objects or its business. An open-ended provision such as this maylead to incorporation of bogus entities without any specified business activity,which would be counter-productive. The Committee believe that mererequirement of stating the object of a company at the time of incorporation is notsuch a cumbersome or complex task, which needs relaxation. In fact, theCommittee believe that such a statement of object(s) is necessary forestablishing the credentials and seriousness of intent of the promoter(s) of thecompany and build confidence of investors and creditors. The Committee would, therefore, recommend that the proposed amendment in clause 4(iii) of the Billmay be re-considered and the status quo ante restored.

Additional Key Amendments proposed by MCA which are not covered in the Amendment Bill


Changes proposed


2(72) / Definition of “Public Financial Institution”

It is proposed toinsert an explanationin this definitionclause to clarify thatCompanies Act, 2013or previous companylaw would not bedeemed to be aCentral Act for thepurposes of clause(A) of proviso tosection 2(72)

There is an ambiguity as to whether the companies incorporatedunder the Companies Act, 2013 or previous company law can be allowed for notification as “Public Financial Institution” (PFI). It is felt that “Companies Act, 2013” or “previous company law”should not be treated as Central Act under clause (A) of provisoto section 2(72) for the purpose of companies registered undersuch Act/previous company law being considered as PFIs without having share capital held/controlled by Government asindicated in clause (B) of such proviso. The intention behindprovisions of Clause (A) of proviso to section 2(72) appears tobe to empower Central Government to notify as PFIs only thoseinstitutions which are constituted under Central or State Special Statutes and not under general Act like Companies Act.

76A(b)/ Punishment for contravention of section 73 or section 76.

It is proposed toreplace the words“seven years or withfine” appearing insection 76A(b) withthe words “sevenyears and with fine”.Also the words “orwith both” appearingat the end in suchclause may beomitted as aconsequentialchange.

Offenceto be made non- compoundable on the lines of provisions under CA 56.

Section 197(1) and 197(10) - proviso regarding prior approval of bank, public financial institution etc

Change in theproviso to providethat prior approvalshall not be requiredif there is no defaultin the repayment.

It is proposed to provide that prior approval provided under such provisionswould be required if the term loan/ debentures/ debt issubsisting and the company has made default in repayment.