MCA provided waiver of additional fees on list of forms

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Annual Return of LLP (Form 11) required to be file by July 31, 2021

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DIR-3 KYC form to be filed by September 30, 2021

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RBI to give booster shot to Covid-hit services, MSMEs

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The tax department has launch the much-awaited new portal 2.0

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MCA launches first phase of MCA21 V3.0 portal

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RBI announced to cut the key repo rate, at which it lends to banks, for a third straight time by 25 basis points to 5.75 percent.

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The Ministry of Corporate Affairs has hereby on March 5th, 2021 via notification has stated that, MGT-7 is required to be file by all Companies except Small Company and One Person Company (OPC).

This amendment has been bought by Companies (Management and Administration) Amendment Rules 2021.

Small Company and One Person Company shall file annual return in Form No. MGT-7A from the financial year 2020-2021 onwards.

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DESIGNATED PARTNERS BE ALERT

The Ministry of Corporate Affairs has hereby on February 18th, 2021 via notification has stated that the following provisions of Companies Act, 2013 shall now be applicable to LLP under Section 67(1) of LLP Act, 2008 soon:

a. Register of significant beneficial owners in a company;

b. Disqualifications for Appointment of Director/DP;

c. Number of Directorships;

d. Vacation of Office of Director;

e. Power to Call for Information, Inspect Books and Conduct Inquiries;;

f. Conduct of Inspection and Inquiry;

g. Appeal to Tribunal;

h. Offences to be Non-cognizable;

 

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Issue of ESOP's and Its Procedure

  • By : abiZa Team
  • May 11,2020
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EMPLOYEES STOCK OPTION SCHEME

MEANING (SECTION 2(37) OF COMPANIES ACT, 2013):

“Employees’ Stock Option” means the option given to the directors, officers or employees of a Company or of its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a pre-determined price.

Employees’ Stock Option Scheme helps a company to enter into a strategic and robust relationship with their employees on a voluntary basis and in a gracious manner for their genuine benefit. It has now been accepted internationally that stock options are an effective instrument to align the interest of the employee with that of the company. It also provides an opportunity to employees to participate in the growth of the company, besides creating long term wealth in their hands.

Section 62(1)(b) provides that a company may, at any time, issue shares to its employees under a scheme of employees’ stock option, subject to special / ordinary resolution in the case of a public / private company respectively passed by company and subject to such conditions as may be prescribed.

> An employee stock ownership plan gives workers ownership interest in the company.

> ESOP is usually formed to allow employees the opportunity to buy stock in a closely held company to facilitate succession planning.

> ESOPs encourage employees to do what's best for shareholders since the employees themselves are shareholders and provide companies with tax benefits, thus incentivizing owners to offer them to employees.

> Companies typically tie distributions from the plan to vesting.

Employee shall have the same meaning as defined in clause (b) of sub-section (1) of section 62 and Rule 12 of the Companies (Share Capital and Debentures Rules 2014). ‘‘Employee’’ therefore means-

(i) A permanent employee of the company who has been working in India or outside India; or

(ii) A director of the company, whether a whole time director or not but excluding an independent director; or

(iii) An employee as defined in clauses (a) or (b) of a subsidiary, in India or outside India, or of a holding company of the company or of an associate company but does not include-

(a) An employee who is a promoter or a person belonging to the promoter group; or

(b) A director who either himself or through his relative or through any body corporate, directly or indirectly, holds more than ten percent of the outstanding equity shares of the company.

ROUTES OF ESOPS

There are two routes available to companies for the creation and implementation of an ESOP:

1. Direct Route; and                             

2. Creation of a Trust

Direct Route:            

Under the Direct Route the ESOP is approved of and administered by and/or with the approval of the Company’s Board of Directors. As per the provisions of the Companies Act 2013 an ESOP scheme should be drafted and approved by the shareholders’ by passing a special resolution.

Once the ESOP scheme has been approved by the shareholders, it should be implemented and governed in the manner set forth in the ESOP document so approved. The Board of Directors should issue to their employees a Letter of Grant stating the number of Options being granted to them along with other details such as the Vesting Period and the Exercise Price at which the Employee will be entitled to exercise the Options.

The Direct Route is simpler and is a generally recommended route of ESOP implementation for start-ups.

The Trust Route:

The formation of a trust for the purposes of implementing an ESOP is more complex than implementing an ESOP via the direct route.

For the implementation of an ESOP under the trust route, a trust is formed as per the provisions of the Indian Trust Act 1882. A Trust Deed is executed and has to be registered with the jurisdictional sub-registrar.

Under this route shares and/or options are not allotted directly to the employees. The shares are first received by the Trust by any of the following methods:

1. Shares may be allotted to the Trust;

2. The Trust may purchase the shares from existing shareholders in the open market;

3. The owner of the Company may sell shares of his holding to the Trust

The Trust arranges for funds to purchase these shares either through a loan from a financial institution or from a seller of shares or even from the issuing company (as permitted under the provisions of section 77(2)(b) and (c) of the Companies Act.

If the Employees decide to exercise their Options the Trust allots the shares to the Employees and the Exercise Price received by the Trust is used by it to repay its loans.

Trust Route is the second method of issuing shares pursuant to an ESOP scheme. In this method, a Trust is specifically created and registered for the purpose of implementing ESOP Plan. A company drafts a scheme and gets it approved from the members of the company. Simultaneously, a Trust is formed and registered to act as an intermediary between the company and employees. As and when options are exercised by the option holders, Trust is responsible for issuing shares to employees. In this structure, trust is formed and funded by the company itself. The capital of the trust and further funding requirements are fulfilled by the company by way of loan. The funds are then utilized by the trust to acquire shares either by subscribing to the issue of shares by the co. or from the secondary market. Generally, it is observed that shares are transferred by the promoters of the company. Further, as and when options are exercised by the employees, shares are transferred to them in conformity of the ESOP Scheme.

Procedure for Issue of Shares via ESOP

Step 1: Check the Articles for any specific provision on issue of share under ESOP

Check the Articles to understand if any specific provision has been provided with respect to issue of share under ESOP

Step 2: Hold Board Meeting

Action to be taken in the Board Meeting

> Authorisation for issue of shares under ESOP

> Formation of Compensation Committee

> Calling of General Meeting for approval of shareholder by way of ordinary resolution

> Issue notice of General Meeting

Step 3: Issue Notice of General Meeting

Notice of General Meeting shall be send at-least 21 clear days and explanatory statement shall disclose the details

1. Brief description of scheme and total no. of ESOP to be granted.

2. Appraisal process

3. Vesting requirements

4. Exercise price or pricing formula

5. Exercise period

6. Lock in period

7. Scheme implementation through company or trust

Step 4: Hold General Meeting

Hold General Meeting for approval of shareholder by way of Ordinary Resolution:-

1. Authorisation for issue of shares under ESOP

2. Formation of Compensation Committee

3. Approval of shareholders by way of separate resolution is required in case of:

(a) grant of option to employees of subsidiary or holding company

(b) grant of option to identified employees, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant of option.

Step 5: Hold Compensation Committee Meeting

a) No ESOP shall be offered unless the company constitutes a Compensation Committee for administration and superintendence of the ESOP.

b) The Compensation Committee shall be committee of Board of Directors consisting of majority of Independent Directors.

Step 6: Hold Board Meeting

1. Company shall allot the shares under ESOP.

2. Issuance of share certificates

3. Authorisation for stamping of shares

Step 7: Filing of Form PAS-3

After allotment of shares, intimation of such allotment shall be filed with Registrar of Companies within 30 days of such allotment

Step 8: Maintenance of Register

Company shall maintain a register of ESOP in SH-6 at registered office of the company or such other place as Board may decide.

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Secretarial Audit and its Scope

  • By : abiZa Team
  • May 8, 2020
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SECRETARIAL AUDIT

Secretarial Audit is the process of independent verification, examination of level of compliance of applicable Corporate Laws to a company. The audit process f properly devised ensures timely compliance and eliminates any unintended non-compliance of various applicable rules and regulations. An action plan of the Corporate Secretarial Department is to be designed so as to ensure that all event based and time based compliance are considered and acted upon. Secretarial Audit is to be on the principle of “Prevention is better than cure” rather than post mortem exercise and to find faults.

NEED FOR SECRETARIAL AUDIT

> Broadly, the need for Secretarial Audit is:

1. Effective mechanism to ensure that the legal and procedural requirements are duly complied with.

2. Provides a level of confidence to the directors, officers in default, Key Managerial Personnel etc.

3. Directors can concentrate on important business matters as Secretarial Audit ensures legal and procedural requirements.

4.  Strengthen the image and goodwill of a company in the minds of regulators and stakeholders.

5. Secretarial Audit is an effective compliance risk management tool.

6. It helps the investor in analysing the compliance level of companies thereby increase the reputation.

7. Secretarial Audit is an effective governance tool.

PREREQUISITES TO SECRETARIAL AUDIT

Section 204 of the Companies Act, 2013 provides for mandatory secretarial audit for every listed company and companies belonging to other prescribed class of companies. Such companies are required to annex a secretarial audit report with its Board’s Report.

As per Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the prescribed class of companies is as under:

1. every public company having paid-up share capital of fifty crore rupees or more;

2. every public company having turnover of two hundred fifty crore rupees or more;

3. every unlisted and private company who has outstanding loans of 100 crore or more to banks and financial institutions.

Company Secretary in Practice has been exclusively recognised for conducting secretarial audit. The format of Secretarial Audit Report shall be in Form No. MR-3. Section 134 and sub-section (3) of 204 provides that the Board of Directors, in its report, shall explain in full any secretarial audit report.

OBJECTIVE OF SECRETARIAL AUDIT

The objective of secretarial audit may be summarized as under:

1. To check and report on compliances of applicable laws and Secretarial Standards.

2. To point-out non-compliances and inadequate compliances.

3 To protect the interest of various stakeholders i.e. the Customers, Employees, society etc.

4. To avoid any unwarranted legal actions/penalties by law enforcing agencies and other. Persons as well.

PROCESS OF SECRETARIAL AUDIT

Institute of Company Secretaries of India (ICSI) has suggested the following process for Secretarial Audit, to be conducted by a Practicing Company Secretary:

1. APPOINTMENT SECRETARIAL AUDITOR

As per Rule 8 of the Companies (Meetings of Boards and its powers) Rules, 2014, read with section 179 of the Companies Act, 2013 secretarial auditor is required to be appointed by means of resolution at a duly convened board meeting.

2. COMMUNICATION TO EARLIER INCUMBENT

Whenever a company secretary in practice is engaged as a secretarial auditor in place of an earlier incumbent, he shall communicate to the earlier incumbent about the proposed engagement in writing to be sent by registered/speed post or any other mode of delivery, as may be recognised by the Institute of Company Secretaries of India.

3. ACCEPTANCE OF APPOINTMENT

A formal letter of appointment should be issued by the company to the secretarial auditor along with the copy of the board resolution for appointment. The secretarial auditor shall confirm acceptance of appointment in writing.

4. PRELIMINARY DISCUSSION/SURVEY

It is important to have relevant information about the company. The secretarial auditor is expected to take general overview of the operations of the company and interact with the personnel involved to know about the nature of the business. He may opt for surveys for generating information about the company.

5. PRELIMINARY MEETING

The preliminary meeting with the senior management and the administrative staff involved in the audit will give a fair idea of what is expected and the manner in which audit activities are to be undertaken. At this stage a time frame of the secretarial audit should be determined and finalised. The secretarial auditor shall discuss the scope and objectives of the audit, gather information on important board process, evaluate existing control systems and prepare the audit plan. He advise to get Management Representation letter for the purpose of secretarial audit.

6. FINALISATION OF AUDIT PLAN AND BRIEFING THE STAFF

It is important to work out an audit plan. The plan involves briefing the audit staff as to allotment of work, fieldwork responsibility and other roles. The audit plan should comprehensively outline the fieldwork and usage of audit tools.

7. TESTING, INTERVIEWS AND ANALYSIS

The Secretarial Auditor may use a variety of tools and technology to gather information about the company’s operations. The secretarial auditor should determine whether the controls identified during the preliminary review are operating properly and in the manner described by the Company. Fieldwork typically consists of   interviewing with staff of the company whether formally or informally, reviewing procedure manuals, processes, testing and analysing compliance with applicable policies and procedures and laws, rules, regulations and assessing the adequacy of controls. This exercise may result in significant findings which the secretarial auditor may bear in mind while preparing the secretarial audit report.

8. WORKING PAPERS

Working papers are vital tool of the audit process. They form the basis for expression of the audit opinion. They connect the management’s records and information to the auditor’s opinion. They are comprehensive and serve many functions.

9. AUDIT SUMMARY FOR DISCUSSION

It is recommended that the findings during the course of audit are summarised and prepared for initial discussions with the management for their views/clarifications/replies.

10. SUBMISSION OF SECRETARIAL AUDIT REPORT

After considering the clarification/replies of the management, the secretarial auditor shall prepare the secretarial audit report in Form MRS-3. The report is addressed to the members but is to be submitted to the board. The report shall contain the opinion on the statutory compliances examined by the auditor and shall state whether in his opinion the company is carrying out/not carrying out due compliances of the applicable provisions of the various laws. The report shall be provided with or without qualifications.

 

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BONUS SHARE ISSUE AND ITS PROCEDURE

1. Meaning and its Feature

> Bonus shares are issued free of cost

> It is issued to current shareholders in proportion of their holding. For e.g. if it issued in 2:5 ratio, it means for every 5 shares held, they will get 2 bonus shares

> It is mandatorily to be issued as fully paid up shares

> It is non-taxable income

> It increases the Return on Investment of shareholders

> Paid up share capital increases with issue of bonus shares

2. Governing Acts and Rules

> Section 63 of Companies Act, 2013

> Rule 14 of the Companies (Share Capital and Debenture) Rules, 2014

> Chapter XI of the SEBI (ICDR) Regulations, 2018 and SEBI (LODR) Regulation, 2015, if it is a Listed Company

3. Sources for issue of Bonus shares

> Free Reserves

> Securities Premium Account

> Capital Redemption Reserve Account

Note :- Revaluation of assets reserve is excluded for the above purpose

4. Conditions for issue of Bonus shares

> It is authorize by its articles, if not then alter it with proper procedure

> It has not defaulted in payment of interest or principal of fixed deposits or any debt securities

> It has defaulted in payment of any of the statutory dues of the employees

> If any partly paid up shares are outstanding, then it is made fully paid on/before date of allotment

> It has been authorize by the shareholders in the General meeting

> It shall not issue Bonus shares in place of dividend

> It has made the reservation  of equity shares of same class in the favour of the holders of outstanding compulsorily convertible debt instruments if any

> If authorize capital is not enough then alter the MOA with proper procedure

> Permission of RBI under section 6(3)(b) of FEMA, 1999 to allot shares to Non-resident Indians if such issue do not fall under automatic route

5. Procedure for issue of Bonus Shares

1. Call Board meeting for the proposed issue of Bonus shares and keeping in mind the following important points given below

     > To pass the Board resolution for approving the bonus issue

     > To fix the ratio in which bonus shares to be issued

     > To authorize Company Secretary or any Director to take necessary steps

     > Fix the date, time, place and venue for the General Meeting or EGM

2. File eform MGT-14 with ROC Board Resolution of issue of shares within 30 days of passing of such resolution

3. Call General Meeting and pass the Ordinary Resolution for such issue

4. Call the Board Meeting and pass  the resolution for allotment of shares

5. File eform PAS-3 with ROC within 30 days of passing of resolution for allotment along with following attachments

      > Ordinary Resolution for Bonus issue of shares

      > Board Resolution for allotment of shares

      > List of allottees and number of securities allotted to each of the allottees

6. Issue share certificate to the shareholders within 2 months from the date of allotment

Note

1. In case of Listed entity, give prior intimation to stock exchange at least 2 working  in advance of the date of Board Meeting

2. If the company does not need approval from the shareholders for the capitalization of profits or reserves for Bonus issue, then it must implement Bonus issue within 15 days from the date of approval of issue by Board of Directors

3. If the company need approval from the shareholders for the capitalization of profits or reserves for Bonus issue, then it must implement Bonus issue within 2 months from the date of approval of issue by Board of Directors

4. Once the decision for issue is announced, the issue cannot be withdrawn

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PRIVATE PLACEMENT OF SHARES AND ITS PROCESS SECTION 42

 

‘Private Placement’ means any offer of securities or invitation to subscribe securities to a selected group of persons by a company through issue of a private placement offer cum application letter (Form PAS-4) and which satisfies the specified conditions.

 

Important Provisions:

Following are the key provisions relating to private placement:

1) A company shall not make any private placement unless the same has been approved by special resolution

2) The said offer cannot be made to more than 200 persons in aggregate in a financial year, excluding Qualified Institutional Buyers (QIBs) and employees offered securities through ESOP.

3) The minimum investment size shall not be less than Rs. 20,000/ of face value of the securities per person and payment for subscription shall be made through the bank account of the subscriber only.

4) Neither public advertisements will be released, nor any media, marketing or distribution channel or agents will be used to inform the public at large about such an offer.

5) The Company shall maintain complete record of Private Placement Offer in Form PAS-5.

 

Offer to be made to only to known specified persons:

A Company making private placement shall issue a private placement offer cum application letter in Form PAS-4 to identified persons, whose names and addresses are recorded by the company. It may be noted that private placement offer and application shall not carry any right of renunciation.

 

Allotment of Securities:

The Company shall allot securities within 60 days from date of receipt of application money. If it does not allot within 60 days, then application money shall be repaid, without interest, within 15 days after expiry of 60 days. Further if the Company does not pay money after the aforesaid period, the company is liable to repay the money with interest at 12 per cent per annum from expiry of 60th day.

 

Whenever a company makes any allotment of securities, it shall file with the Registrar of Companies, a return of allotment within 15 days of allotment in Form PAS-3, including the complete list of all security-holder, with their full names, addresses, number of securities allotted and such other relevant information as may be prescribed.

It may be noted that a company shall not utilise monies raised through private placement unless allotment is made and the return of allotment is filed with the ROC.

 

Penalty:

If a company makes an offer or accepts monies in contravention of this section, the company, its promoters and directors shall be liable for a penalty which may extend to the amount involved in the offer or invitation or two crore rupees, whichever is lower.

Further the company is also required to refund all monies to subscribers within a period of thirty days of the order imposing the penalty.

 

Procedure for Private Placement

 

Step 1: Hold Board Meeting for;

> Approval of Private Placement of Securities

> Approval of PAS-4 (Offer Letter)

> Call for EGM (Extra Ordinary General Meeting)

 

Step 2: Issue Notice for EGM

> Notice of atleast 21 clear days required.

> Send Notice to all Directors, Auditors, Members of the Company

 

Step 3: Hold EGM for;

> Pass Special Resolution by approval of members for Private Placement of Securities.

 

Step 4: Open Separate Bank Account

> Open Separate Bank Account of the Company for receipt of monies for the securities to be issued by Private Placement

 

Step 5: Circulation of Offer Letter

> Offer Letter shall be accompanied by an application form serially numbered and addressed specifically to the person to whom the offer is made.

> Offer Letter will be sent either in writing or in electronic mode.

> Issue Offer Letter within 30 days of General Meeting/ recording the name of such person(s).

 

Step 6: File Form MGT-14 within 30 days of passing of special resolution.

Attachments:

> CTC of Special Resolution along with explanatory statement

> Copy of Notice of meeting send to members

 

Step 7: File Form GNL-2 within 30 days of circulation of offer letter.

Attachments;

> PAS-4 (Offer Letter)

> PAS-5 (Complete record of Private Placement)

 

Step 8: Hold Board Meeting for allotment of Shares

> Pass resolution for allotment of shares

 

Step 9: File Form PAS-3 for allotment of Shares

Form PAS-3 to be filed within 15 days of allotment of shares

Attachments:

> List of Allottees

> Board Resolution or allotment of shares

 

Step 10: Issue of share certificate and update minutes book and register

> Issue Share Certificate in Form SH-1 within 2 months from the date of allotment off shares.

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Memorandum of association defines the relation of the company with the rights of the members of the company interest and also establishes the relationship of the company with the members.

Memorandum of Association (MOA) is the charter document of a company, or we can say a document which governs a company. A company is authorised to do only those activities which are mentioned in the MOA of the company. This document, however, can be amended at any time. In order to amend the MOA, a set procedure has to be followed laid down in the Companies Act, 2013.

Company can alter its object clause by way of addition, deletion, modification, substitution, or in any other way, only if it wants:

 

Under Section 13, the Objects Clause can be altered only if the alteration is required to enable the Company:

> To carry on its business more economically or more efficiently

> To attain its main purpose by new or improved means

> To enlarge or change the local area of operation

> To carry on some business which can be combined with the business of the Company

> To amalgamate the Company with any other Company

> To sell or dispose of the whole or any part of the undertakings of the Company

 

 

STEPS FOR ALTERATION IN OBJECT CLAUSE OF MOA SECTION 13:

 

Step 1: Notice of Board Meeting

A Notice is required to given 7 days prior Notice is required, if not then shorter consent of majority of directors need to be taken before the meeting.

Documents Required

> Issue of Notice/Shorter Notice Consent of BM

> Agenda

> Notes to agenda

> Resolution

 

Step 2: Hold Board Meeting

Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 and as per SS-1, for convening a meeting of the Board of Directors.

Action to be taken in Board Meeting

> Proposed new Objects

> Pass Board Resolution

> Get members approval through Special Resolution for change in objects

> Decide day, date, time and venue of General Meeting

> Acknowledgement of receipt of Notice

 

Step 3: Notice of General Meeting

Notice of EGM shall be given at least 21 days before the actual date of EOGM. If EOGM is decided to be taken shorter notice, then take the shorter consent of at least 95% before the dispatch of Notice.

 

Step 4: Hold EGM

Action Required:

> Check the proper quorum

> Check whether auditor present

> Pass Special Resolution

> Get approval for alteration of MOA

 

Step 5: File Form MGT-14

Form MGT-14 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of Special Resolution along with explanatory statement

> Copy of Notice of meeting send to members

> Copy Altered MOA

> Shorter Notice consent, if any

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Section 61- Alteration in Capital Clause of Memorandum of Association:

 

Introduction

Every company limited by shares must have a share capital. Share capital refers to the amount invested in the company for it to carry out its operations. The share capital of the company can be altered or increased, subject to certain conditions. A company cannot issue share capital in excess of the limit specified in the capital clause without altering the capital clause of the memorandum of association.

 

A Company limited by Share Capital can alter the Capital Clause of the MOA as follows

a) Increase Authorised Share Capital

b) Consolidate-divide-large amount per shares

c) Convert all paid-up shares into stock, and reconvert

d) Sub divide its shares

e) Cancel shares which have not been taken up

f) Cancel shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled.

 

We will briefly discuss the process involved in each of the alteration.

 

INCREASE IN AUTHORIZE CAPITAL (SECTION- 13 & 61):

 

Meaning:

The need for an increase in authorised share capital of the company may arise when the company is planning to enlarge its business operations by fresh issue of capital. If the increase of authorised share capital results in alteration of articles of association special resolution is required, otherwise ordinary resolution is to be passed.

 

Steps of Increase in Authorize Capital (Section- 13 & 61):

 

Step 1: Notice of Board Meeting

A Notice is required to given 7 days prior Notice is required, if not then shorter consent of majority of directors need to be taken before the meeting.

Documents Required

> Issue of Notice/Shorter Notice Consent of BM

> Agenda

> Notes to agenda

> Resolution

 

Step 2: Hold Board Meeting

Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 and as per SS-1, for convening a meeting of the Board of Directors.

Action to be taken in Board Meeting

> Approval for Alteration of Capital

> Decide day, date, time and venue of General Meeting

 

Step 3: Notice of General Meeting

Notice of EGM shall be given at least 21 days before the actual date of EOGM. If EOGM is decided to be taken shorter notice, then take the shorter consent of at least 95% before the dispatch of Notice.

 

Step 4: Hold EGM

Action Required:

> Check the proper quorum

> Check whether auditor present

> Pass Ordinary Resolution

> Get approval for alteration of MOA

 

Step 5: File Form MGT-14

Form MGT-14 to be filed within 30 days of passing of Ordinary Resolution.

Attachments

> CTC of resolution passed by the Members for Alteration of MOA along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

Step 6: File Form SH-7

Form SH-7 to be filed within 30 days of passing of Ordinary Resolution.

Attachments

> CTC of resolution passed by the Members for Alteration of MOA along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

STEPS FOR CONSOLIDATION OF SHARE CAPITAL SECTION 14:

Meaning:

A company may alter its existing paid-up share capital by consolidation or division of all or any of its shares into shares of larger denominations than its existing shares. To consolidates means to bring together (separate parts) into a single or unified whole.

 

Enabling Clause:

The company should ensure that Articles of Association contain a clause, authorizing it to consolidate its shares. If there is no such provision, the articles should be first altered in accordance with the provisions of Section 14 of the Companies Act, 2013.

 

Steps for Consolidation of Share Capital (Section 14):

 

Step 1: Notice of Board Meeting

A Notice is required to given 7 days prior Notice is required, if not then shorter consent of majority of directors need to be taken before the meeting.

Documents Required

> Issue of Notice/Shorter Notice Consent of BM

> Agenda

> Notes to agenda

> Resolution

 

Step 2: Hold Board Meeting

Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 and as per SS-1, for convening a meeting of the Board of Directors.

Action to be taken in Board Meeting

> Approval for Consolidation of Share Capital

> Decide day, date, time and venue of General Meeting

 

Step 3: Notice of General Meeting

Notice of EGM shall be given at least 21 days before the actual date of EOGM. If EOGM is decided to be taken shorter notice, then take the shorter consent of at least 95% before the dispatch of Notice.

 

Step 4: Hold EGM

Action Required:

> Check the proper quorum

> Check whether auditor present

> Pass Special Resolution for Consolidation of Share Capital

> Get approval for alteration of MOA

 

Step 5: File Form MGT-14

Form MGT-14 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of resolution passed by the Members for Consolidation of Share Capital along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

Step 6: File Form SH-7

Form SH-7 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of resolution passed by the Members for Consolidation of Share Capital along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

STEPS FOR CONVERSION OF SHARES INTO STOCK SECTION 14:

 

Meaning:

A company limited by shares may alter its capital clause of memorandum for converting any of its fully paid-up shares into stock or vice-versa. When a number of shares are converted into a single holding with a nominal value equal to that of the total value of the shares, it is called conversion of shares into stock. Stock is the aggregate of the fully paid-up shares legally consolidated and portions of which aggregate may be transferred or split up into fractions of any amount without regard to the original nominal value of shares.

 

Where a company having a share capital has converted any of its shares into stock, and given notice of the conversion to the Registrar, all the provisions of this Act which are applicable to shares only, shall cease to apply on so much of the share capital as is converted into stock

 

Enabling Clause:

The company has to make sure that its articles of association contain a provision authorising it to convert its fully paid shares into stock. If there is no such provision, the articles have to be first altered in accordance with the provisions of Section 14 of the Companies Act, 2013.

 

Steps for Conversion of Shares into Stock (Section 14):

 

Step 1: Notice of Board Meeting

A Notice is required to given 7 days prior Notice is required, if not then shorter consent of majority of directors need to be taken before the meeting.

Documents Required

> Issue of Notice/Shorter Notice Consent of BM

> Agenda

> Notes to agenda

> Resolution

 

Step 2: Hold Board Meeting

Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 and as per SS-1, for convening a meeting of the Board of Directors.

Action to be taken in Board Meeting

> Approval for Conversion of Shares into Stock

> Decide day, date, time and venue of General Meeting

 

Step 3: Notice of General Meeting

Notice of EGM shall be given at least 21 days before the actual date of EOGM. If EOGM is decided to be taken shorter notice, then take the shorter consent of at least 95% before the dispatch of Notice.

 

Step 4: Hold EGM

Action Required:

> Check the proper quorum

> Check whether auditor present

> Pass Special Resolution for Conversion of Shares into Stock

> Get approval for alteration of MOA

 

Step 5: File Form MGT-14

Form MGT-14 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of resolution passed by the Members for Conversion of Shares into Stock along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

Step 6: File Form SH-7

Form SH-7 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of resolution passed by the Members for Conversion of Shares into Stock along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

SUB-DIVISION OF SHARE CAPITAL:

 

Meaning:

A company may sub-divide its share capital if so authorised by articles of association. It is done by an ordinary resolution passed at a general meeting. Sub-division is the method by which the nominal value of each share is reduced to a smaller amount.

 

Enabling Changes:

The company should ensure that its articles of association contain a provision authorising it to sub-divide its shares. If there is no such provision then the articles have to be altered in accordance with the provisions of Section 14 of the Companies Act, 2013, before proceeding to sub-divide its shares.

 

Steps for Sub-Division of Share Capital:

 

Step 1: Notice of Board Meeting

A Notice is required to given 7 days prior Notice is required, if not then shorter consent of majority of directors need to be taken before the meeting.

Documents Required

> Issue of Notice/Shorter Notice Consent of BM

> Agenda

> Notes to agenda

> Resolution

 

Step 2: Hold Board Meeting

Issue notice in accordance with the provisions of section 173(3) of the Companies Act, 2013 and as per SS-1, for convening a meeting of the Board of Directors.

Action to be taken in Board Meeting

> Approval for Sub-Division of Capital

> Decide day, date, time and venue of General Meeting

 

Step 3: Notice of General Meeting

Notice of EGM shall be given at least 21 days before the actual date of EOGM. If EOGM is decided to be taken shorter notice, then take the shorter consent of at least 95% before the dispatch of Notice.

 

Step 4: Hold EGM

Action Required:

> Check the proper quorum

> Check whether auditor present

> Pass Special Resolution for Sub-Division of Capital

> Get approval for alteration of MOA

 

Step 5: File Form MGT-14

Form MGT-14 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of resolution passed by the Members for Sub-Division of Capital along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

 

Step 6: File Form SH-7

Form SH-7 to be filed within 30 days of passing of Special Resolution.

Attachments

> CTC of resolution passed by the Members for Sub-Division of Capital along with Explanatory Statement

> Notice of EGM

> Copy of Altered MOA

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Meaning and Its Feature

Sweat Equity shares are the shares issued by a company in the form of reward to its directors or employees. Shares are issued at discount or Consideration other than cash for providing knowhow or making any value additions which generates synergy to the company. Sweat Equity shares is the reward given to the directors or employees for their hardwork and dedication towards the Company.

> It is issued to Directors or Employees or Promoters of the company, or of subsidiary company or of holding company of the company

> It is issued at discount price or other than cash

> It issued for providing value addition like ‘Know how, Intellectual property rights, or valuable contribution’ which has help company to earn profits

 

Governing Acts and Rules

> Rule 8 of Companies(Share Capital and Debentures) Rules 2014

> Section 54 of Companies Act 2013

> SEBI (Issue of Sweat Equity Shares) Regulations, 2002., in addition to above acts and rules if it is a Listed Company

 

Conditions and Checklist for issue of Sweat Equity Share

> It is authorize by special resolution in the general meeting

> It has already issued such type or class of shares

> It is to be issued for a lock-in period of 3 years

> It is valid for a period of not more 12 months from the date of passing of special resolution

> Certificate from Auditors of the company for the compliance of rules and regulations relating to issue of Sweat Equity Shares, if it is a Listed Company 

 

Quantum for issue of Sweat Equity Shares  

> The issue shall not exceed higher of the following

  • 15% of existing paid up capital, or,
  • Issue value of INR 5 Crores

> Issued cannot exceed 25% of the paid up equity capital of the company anytime 

> A Start up company may issue not exceeding 50% of its paid up capital upto 5 years from the date of its incorporation

 

Contents of Special Resolution and Explanatory Statement

The following are to be specified in Special Resolution

a) Number of shares

b) Current market price

c) The Value of the intellectual property rights or technical know-how or other value addition to  be received from the employee or director along with valuation report or basis of valuation

d) Class or Classes of directors or employees to  whom such equity shares are to be issued

 

The following are to be specified in Explanatory Statement

a) Date of Board Meeting for the approval of issue

b) Reason of the issue

c) Class of shares

d) Total number of shares

e) Class of Directors or Employees

f) Price at which share is issued

g) Consideration or Non-consideration received for the shares

h) A statement declaring that the company will follow the applicable accounting standard

i) Diluted EPS after issue of shares

j) Principle terms and conditions for the issue of such shares

h) The names of directors or employees and their relationship with the promoter or/and KMP’s

k) Time period of association of such person with the company

l) The ceiling on managerial remuneration if any, be breached by propose issue and how it is proposed to be issued.

 

Procedure to issue Sweat Equity Shares

a) Call the Board Meeting to consider the proposal of issue of Sweat Equity Shares and to decide the date, time, place and agenda for the General Meeting

b) Hold the General Meeting and pass the necessary resolution for the approval of issue of Sweat Equity Shares

c) File form MGT-14 with ROC intimating of passing of resolution within 30 days of passing the resolution

d) Call the Board Meeting for the allotment of Shares and allot the shares within 15 days of passing of the resolution

e) File form PAS-3 with the ROC within 30 days of passing the resolution  for the allotment of shares

g) In case of Listed Company, apply to the stock exchange and obtain necessary listing and trading approval for the shares so allotted

h) The company shall maintain the register of Sweat Equity Shares in the form of SH-3 about details and particulars of  such Shares

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Meaning and its Features

rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date

Governing Section - Section 62 of Companies Act, 2013.

> It is a formal invitation to the existing shareholders to buy additional new shares in the company

> It is issued at a discounted rates than market rates

> It enables the shareholders to increase their exposure to the stock at a discount price

> The shareholder who getting this right can have option to assign such right to other person or can waived or modified it

> It is a method to increase the share capital of company

> It ensures equitable distribution of shares and the proportion of voting right is not affected by issue of fresh shares

> Example:- If right issue is 2:5, it means existing shareholder can buy 2 shares for every 5 shares held

 

A) Procedure for Private Company

1. Call board meeting for offer of shares, fixing price, number of shares to be issued, offer date, closing date, right of renunciation and pass the board resolution for the same

2. Dispatch Letter of offer to all the existing shareholders via register post or speed post or electronic mode.

3. As per section 62(2) of Companies act, the letter of offer must be posted at least 3 days earlier than the date of opening of the issue, but notice can be sent lesser than 3 days before the issue opens, provided 90% of the members have given their consent in writing.

4. The offer shall remain open for a minimum 15days and a maximum of 30 days, however it can be kept open for less than 15days provided 90% of the members give their consent.

5. Accept the application money

6. Call the board meeting and pass the resolution for the allotment of shares

7. File the PAS-3 within  30 days period from the date if allotment along with CTC of Board resolution for allotment of shares and list of allottees

8. Issue share certificates (Form SH-1) within period of two months from the date of allotment

 

B) Procedure for Public Company

1. Call board meeting for offer of shares, fixing price, number of shares to be issued, offer date, closing date, right of renunciation and pass the board resolution for the same

2. Dispatch Letter of offer to all the existing shareholders via register post or speed post or electronic mode.

3. As per section 62(2) of Companies act, the letter of offer must be posted at least 3 days earlier than the date of opening of the issue. The offer shall remain open for a minimum 15days and a maximum of 30 days.

4. File MGT-14 within 30 days from the date of passing Board Resolution along with CTC-of Board resolution for the issue of ‘Letter of offer’

5. Accept the application money

6. Call the board meeting and pass the resolution for the allotment of shares

7. File the PAS-3 within  30 days period from the date if allotment along with CTC of Board resolution for allotment of shares and list of allottees

8. Issue share certificates (Form SH-1) within period of two months from the date of allotment

 

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Registered office of a company is a principle place of business activity of a company. It is mandatory for all companies to have its registered office and to inform the Registrar of Companies (ROC) about the location and any change thereto within the prescribed time. 

The shifting of registered office within the local limits of city is covered under the provisions of Section 12 read with Rule 27 of the Companies (Incorporation) Rules, 2014.

 

Approval Requirements:

  • Board Resolution
  • Give authority to the Director of the company to file e-form INC-22 with Registrar of companies within whose jurisdiction the registered office is situated.

 

Procedure for Shifting of Registered Office:

1) Convene a Board Meeting: Meeting of the Board of director should be called by giving 7 days notice to directors.

 

2) Passing of Board Resolution: Resolution to shifting of registered office within the local limits of the city to be passed at duly convened Board Meeting.

 

3) Intimation to ROC: Notice of every change of the situation of the registered office, verified in the manner prescribed, after the date of incorporation of the company, shall be given to the Registrar within fifteen days of the change, in form INC-22, who shall record the same along with scan copies of:

a) Proof of Registered office address. (Conveyance/ Lease deed/ Rent agreement etc. along with the rent receipts)

b) Copies of the Utility bills. (not older than 2 months)

c) Proof that the Company is permitted to use the address as the registered office of the company. (NOC)

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Registered office of a company is a principle place of business activity of a company. It is mandatory for all companies to have its registered office and to inform the Registrar of Companies (ROC) about the location and any change thereto within the prescribed time. 

The shifting of registered office outside the local limits of city is covered under the provisions of Section 12 read with Rule 27 of the Companies (Incorporation) Rules, 2014.

 

Approval Requirements:

  • Board Resolution
  • Special Resolution
  • Give authority to any director of the company to file the e-form INC-22 and carry out all incidental activities.

 

Procedure for Shifting of Registered Office:

1) Convene a Board Meeting:

a) Pass the resolution for the recommendation for shifting of registered office outside the local limits of city.

b) Approval of notice calling of EGM, fixing of date, day and time.

c) Authorizing Company Secretary or any Director compliance required in this behalf.

d)To recommend Alteration of Registered Office Clause, if required.

 

2) Convene an Extra-Ordinary General Meeting (EGM):

a) Pass Special resolution for shifting of registered office.

 

3) File e-form MGT-14 with ROC:

The company shall file e-form MGT-14 with ROC within 30 days of passing special resolution and attach scan copies of:

i) CTC of Special resolution – shifting application.

ii) Notice of General Meeting along with explanatory statement, minutes of General meeting. 

 

4) File e-form INC-22 with ROC:

The company shall file e-form INC-22 with ROC within 15 days of passing Special resolution and attach scan copies of:

i) Proof of Registered Office address. (Conveyance/Lease deed/Rent agreement etc. along with the rent receipts)

ii) Copies of the utility bills. (not older than 2 months)

iii) Proof that the Company is permitted to use the address as the registered office of the company. (NOC)

iv) List of all the companies having the same registered office address, if any.

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Form 20A – Declaration for the Commencement of Business

 

Form 20A is a declaration that needs to be filed by the directors of the company at the time of the commencement of the business. It should be verified by a Chartered Accountant (CA) or Company Secretary (CS) or a Cost Accountant in practice.

 

1. Introduction

As per the Companies (Amendment) Ordinance 2018, there is a requirement for all the companies registered on or after 2 November 2018 and having share capital must file a Declaration for commencement of business in Form INC-20A. It is a declaration filed by the directors within 180 days of the date of incorporation of the company. This is one of the most important compliances to follow as the penalties for non-filing is extremely high.

 

2. Companies which are not required to file Form 20A

The following companies are not required to file form 20A:

  • Companies incorporated before 2 November 2018 (i.e. before the commencement of the Companies (Amendment) Ordinance, 2018).
  • Companies incorporated after 2nd November 2018 without share capital.

 

3. The time period for filing Form 20A

Every company required to file form 20A shall file the same within 180 days of its incorporation.

 

4. Requirement and procedure

The Company shall not commence any business or exercise any borrowing unless the Declaration of Commencement is filed with Registrar of Companies within 180 days from the date of incorporation. Proof of deposit of the paid-up share capital by the subscribers also needs to be attached in the eForm.

If a company pursues objects requiring registration or approval from any sectoral regulators such as The Reserve Bank of India and Securities and Exchange Board of India etc, then it shall obtain such registration or approval along with the attached declaration. The eForm has to be verified and certified by a practising professional before filing with the ROC (Registrar Of Companies).

 

5. Penalties for Default

The penalties for non-compliance are very high which has been done intentionally so as to curb out the number of shell companies incorporated. Following are the penalties for non-compliance:

 

Penalty to be levied on the company: A penalty of Rs 50,000 will be levied on the company if it fails to comply with the mentioned requirement.

 

Penalty to be levied on the officers: Every such officer in default shall be liable to a penalty of Rs 1,000 per day for each day during which the default continues subject to a maximum of Rs 1,00,000.

 

Company strike-off: If the Registrar has reasonable grounds to believe that the company is not carrying on any business or operations even after 180 days of incorporation, the registrar may remove the name of the company from the Register of companies under Chapter XVIII.

 

6. Fee for filing Form 20A

a) Fee for filing eForm for companies having share capital:

Nominal Share Capital

Applicable Fees in (Rs.)

Where share capital is less than 1,00,000

200

1,00,000 or above but not exceeding 4,99,999

300

5,00,000 or above but not exceeding 24,99,999

400

25,00,000 or above but not exceeding 99,99,999

500

1,00,00,000 or above

600

 

 

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Recently, with effect from 02.11.2018 vide the Companies (Amendment) Second Ordinance, 2019, the power to pass order for conversion of public Companies into private Companies has been delegated to Regional Director (RD) whereas earlier it was with National Company Law Tribunal (NCLT) making conversion more speedy and less cumbersome.

 

Accordingly, in this article, we shall study about the applicable sections and rules, procedure, timeline, documents to be filed and other frequently asked questions on topic under discussion.

APPLICABLE SECTION: Section 14 of the Companies Act, 2013

APPLICABLE RULE: Rule 41 of the Companies (Incorporation) Rules, 2014

 

PROCEDURE OF CONVERSION:

 

Step 1: Convene the Board Meeting for

> Finalise the draft list of creditors

> Decide upon the day, time, date and place to convene Extra ordinary General Meeting (“EGM”)

> Approval of draft notice to convene EGM.

> Approve the draft memorandum of association

> Approve the draft articles of association.

 

Step 2: Convene EGM to pass special resolution to take shareholders’ approval for conversion into a private limited.

 

Step 3: File MGT-14 within 30 days of passing the special resolution.

Attachments:

> Certified true copy of the special resolution along with the explanatory statement.

> Altered memorandum of association

> Altered articles of association

> Notice of the convened EGM.

 

Step 4: Newspaper Advertisement and Notice

At least 21 days before the date of filing the application in Form RD-1 (i.e. the gap between the filing of application and newspaper advertisement and other things mentioned below should be minimum of 21 days), do the following:

> Advertise in Form INC-25A, in English and regional language of the state in which the registered office of the Company is situated;

> Dispatch individual notice to each creditor;

> Dispatch notice to Regional Director (RD), Registrar of Companies (ROC) and any other regulatory authority such as RBI, IRDAI, in case applicable etc.

 

Step 5: Drafting of Application to be filed with Regional Director

 

Step 6: File the application with RD in Form RD-1 after expiry of 21 days as per step 4 but within 60 days of passing of special resolution.

 

Step 7: The order as received from RD shall be filed with ROC within 15 days from the date of receipt of order in Form INC-28.

 

TIMELINE FOR CONVERSION IN SHORT 

S. No.

Events

Timelines

1.

Convene of Board Meeting

X

2.

Convene Extra Ordinary General Meeting to approve conversion and send notice

X+25

3.

Filing of Form MGT-14

X+25+30

4.

Advertisement in INC-25A

21 days prior to filing of RD-1

5.

Notice to creditors

21 days prior to filing of RD-1

6.

Notice to RD and ROC

21 days prior to filing of RD-1

7.

Filing of Form RD-1

X+21+60

8.

RD may call for any other information or may pass order

X+21+60+30

9.

Filing of Form INC-28

Within 15 days of order of RD

 

Documents to be filed with the Application to the Regional Director

1) List of dates and events, setting out the date of board meeting and extra ordinary general meeting in which resolution for conversion was passed.

 

2)  Altered MOA and AOA.

 

3) Certified copy of minutes of extra ordinary general meeting.

 

4)  Power of Attorney or Board Resolution authorizing to file application.

 

5)  Separate Declaration with respect to the following by KMP or any of the Director:

> That total number of members are not more than 200;

> No deposit has been accepted by the Company till date;

> That there has been no non-compliance of section 73 to 76A, 177, 178, 185, 186 and 188 of the Act and rules made there under;

> That the Company was never listed on any Stock Exchange and if was so listed, all necessary procedures of delisting has been complied with Compliance with all necessary laws.

> That no enquiry, investigation or inspection is going on against the Company.

 

6) List of creditors, not more than 30 days, setting forth the details such as names, address, nature of amount due and total amount due. Further, an affidavit verifying the list of creditors shall also be attached.

 

7) Copy of newspaper advertisement.

 

If you wish to convert your existing Public Company to Private Company, then you can call us on 844-844-0306 or mail us on connect@abiza.in for availing the service.

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Introduction:

Register office of a company is a principle place of business activity of a company. It is mandatory for every company to have a registered office capable of receiving and acknowledging all communications and notices address to it. No company shall change the place of its registered office from the jurisdiction of one Registrar to the jurisdiction of another Registrar within the same State unless such change is confirmed by the Regional Director on an application made in this behalf by the company in the prescribed manner.

 

The shifting of registered office from the jurisdiction of one Registrar of Companies (ROC) to another ROC within the same state is covered under the provisions of Section 12 read with Rule 28 of the Companies (Incorporation) Rules, 2014.

 

Approval requirements

Board Resolution

Special Resolution

Approval of Regional Director of the respective jurisdiction.

 

Procedure for Shifting of the Registered Office.

1) Convene a Board Meeting

a) Pass the resolution for the recommendation for shifting of registered office from one jurisdiction to another jurisdiction.

b) To recommend Alteration of Registered Office Clause, if required.

c) Approval of notice Calling of EGM, fixing of date, day and time.

d) Authorizing Company Secretary or any Director compliance required in this behalf.

 

2) Convene an Extra-Ordinary General Meeting (EGM) :

a) Pass Special resolution for shifting of registered office

b) Pass Special Resolution for alteration of MOA for alteration of registered office Clause and authorising Directors/Company Secretary to file an application to Regional Director

 

3) File the form MGT-14 along with Certified True Copy of Special resolution along with explanatory statement annexed thereto with ROC.

 

4) Intimate the Chief Secretary of the state about the proposed shifting and that the employees’ interest is not adversely affected by proposed shifting.

 

5) File application to RD office in form INC-23 with the following documents

a) Board Resolution for shifting of Registered Office

b) Special resolution passed in EGM

c) Declaration by KMP or any two directors authorise by the Board, that the company has not defaulted in payment of dues to its workmen and has either the consent of its creditor for proposed shifting or has made necessary provision for the payment thereof

d) A Declaration not to seek change in the jurisdiction of the court where cases for prosecution are pending

e) Acknowledge copy of intimation to Chief Secretary

 

6) Regional Director approve the Form INC-23 if he is satisfied with the application and documents is fine and issue Order for shifting of registered office address.

 

7) File INC-28 for notice RD’s confirmation order with ROC.

 

8) File the notice of change in register office in e-form INC-22 with ROC with the following documents

a) Altered MOA

b) Proof of registered office address – Lease deed/Conveyance deed/Purchase agreement

c) If on free consent, then NOC

d) Utility bill like telephone, gas, electricity bill which is not older than two Months

e) RD Order.

 

Form Filling Formalities

 

 

E-forms

Nature of e-forms

Time period to file

 

MGT-14

Filling of resolutions and agreements to the ROC

 

Within 30 days of Special Resolution

INC-23

Application to regional director for approval

 

Upon Approval of Members in EGM

INC-28

Notice of order of Regional Director

Within 60 days from the date of receipt of order of Regional Director

 

INC-22

Notice of situation or change of situation of register office

Within 30 days from the date of order of Regional Director

 

 

If you wish to shift your registered office, please Click Here to avail or service or call us on 844-844-0306 or mail us on connect@abiza.in with your requirements. 

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Scheme shall come into force on the 16th of March, 2020 and shall remain into force up to 13th June, 2020. The following forms are covered under the settlement scheme.

1) Form-3 : Information with regard to limited liability partnership agreement and changes, if any, made therein;

2) Form-4 : Notice of appointment, cessation, change in name/ address/ designation of a designated partner or partner and consent to become a partner/ designated partner; 

3) Form-8 : Statement of Account & Solvency (Annual or Interim);

4) Form-11 : Annual Return of Limited Liability Partnership (LLP).

It is been observed by the Government that a large number of LLP’s have been defaulting in filing Form (3) viz. LLP Agreement and changes therein and statutory return viz. Form (8)-Statement of Account & Solvency (Annual or Interim) and Form 11-Annual Return of LLP. Due to this records in registry are not updated. Further, the LLP’s and their designated partners are liable for criminal prosecution and said LLP’s cannot be closed till all compliances are completed

Previously, In the event of requisite forms not being filed within prescribed time presently LLPs may file such documents on payment of additional fee for one hundred rupees for every day of such delay under Section 69 of the LLP Act in addition to any fee as is payable for filling of such document or return.

The Central Government has decided to introduce a scheme namely "LLP SETTLEMENT SCHEME, 2020", by allowing a One-Time Condonation of Delay in filing statutorily required documents with the Registrar.

The applicability of the Act is stated as, “Any "defaulting LLP" is permitted to file belated documents, which were due for filing till 31st October, 2019 in accordance with the provisions of this Scheme”.

Under new scheme “The defaulting LLPs may themselves avail of the scheme for filing documents which have not been filed or registered in time on

1) Payment of additional fee Rs 10- per day for delay in addition to any fee as is payable for filing of such document or return or

2) Payment of One Time fee of INR 5,000 per form.

Whichever is lower

For example: -

Form

Period Of Delay

Late Fees Under Old Scheme

Late Fees Under New Scheme

Savings

11(Annual Return)

1 Year

36,500 (365days *100)

3,650 (365days*10)

32,850

11(Annual Return)

2 Years

73,000(730days*100)

5,000

68,000

Immunity: The defaulting LLPs, which have filed their pending documents till 13th June 2020 and made good the default, shall not be subjected to prosecution by Registrar for such defaults.

This Scheme shall not apply to LLPs which has made an application in Form 24 to the Registrar, for striking off its name from the register as per provisions of Rule 37(1) of the LLP Rules, 2009.

If you want to file your pending returns through abiZa, then contact us at

Contact : 8448440306

Email : Connect@abiza.in

 

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The Ministry of Corporate Affairs (MCA) has vide its notification February 18, 2020 has amended the Companies (Incorporation) Amendment Rules, 2020. The amendment would be effective from February 23, 2020.

 

As part of Government of India’s Ease of Doing Business (EODB) initiatives, the Ministry of Corporate Affairs has deployed a new Web Form christened ‘SPICe+’ (pronounced ‘SPICe Plus’) replacing the existing SPICe form.

SPICe+ would offer 10 services by 3 Central Govt Ministries & Departments. (Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance) and One State Govt. (Maharashtra), thereby saving as many procedures, time and cost for Starting a Business in India and would be applicable for all new company incorporations.

Key Features:

1. SPICe+ would be an integrated Web Form.

2. SPICe+ would have two parts viz.:

Part A-for Name reservation for new companies and

Part B offering a bouquet of services viz.

-> Incorporation

-> DIN allotment

3. AGILE-PRO Form offering a bouquet of services viz. 

-> Issue of PAN

-> Issue of TAN

-> Issue of EPFO registration

-> Issue of ESIC registration

-> Issue of Profession Tax registration (Maharashtra)

-> Opening of Bank Account for the Company and

-> Allotment of GSTIN (if so applied for)

4. SPICe+ AOA and SPICe+ MOA

-> Select the appropriate table as per the type and categeogery of company

-> SPICe+ AOA and SPICe+ MOA are autogenerated once the SPICe+ Part B is successfully submited, except for some types of company

5. SPICe+ INC-9 Form is autogenerated once the SPICe+ Part B is successfully sumitted

SPICE+ is web based form which means that the applicant would have to login in the MCA portal, prepare the form online.

 

Get in touch with abiZa to get Easy Incorporation services at affordable prices. You may call on +91 9326999533 or email us at connect@abiza.in  

 

Click here to read official MCA notification

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The Ministry of Corporate Affairs vide its Notification dated Janaury 03, 2020 has hereby amended the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. This notification has amended the following rules of the Companies Act, 2013.

 

Rule 8A - Appointment of Company Secretaries in Companies

As per the amended Rules, now Companies having paid up capital more than Ten (10) Crore would now be mandatorily required to appoint Company Secretary

 

Effect of Amendment  - Companies having more than 10 Crore Paid Up Capital would be required to appoint Company Secretary instead of previous limit of Five (5) Crore Capital.

 

Rule 9 - Secretarial Audit Applicability

As per the amended rules, any Company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees (100) or more.

Effect of Amendment-  This amendment is introduced to include Private Limited Companies with huge borrowing to comply with Secretarial Audit. Earlier only public companies were required to conduct secretarial Audit.

 

Below is the Notification from MCA for your reference.

 

[To be published Scction (i)l in the Gazette of India, Extraordinary, Part II, Section 3,

Sub MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhl,

3rd January, 2020 

G.S.R. .-ln exercise of the powers conferred by sub-section (1) of section 203 of the companics Act, 2013 (18 of 2013) read with section 469 of the said Act, the central Government hereby makes the following rules further to amend the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, namely:-

1. (1) These rules may be called the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020. (2) They shall be applicable in respect of financial years commencing on or after 1st April, 2020.

2. ln the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (herein after referred to as said rules), for rule 8A, the following shall be substituted as under:-

"8A. Every private company which has a paid up share capital of ten crore rupees or more shall have a whole -time company secretary.".

3. In the said rulcs, in rule 9 of the said rules, in sub-rule (1), (i) after clause (b), at the end the word "or" shall be inserted. (ii) aftcr clause (b), the following clause shall be inserted, namely:-

"(c) every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more.". (iii) the following explanation shall be inserted, namely:-

"Explanation :- For the purposes of this sub-rule, it is hereby clarified that the paid up share capital, turnover, or outstanding loans or borrowings as the case may be, existing on the last date of latest audited financial statement shall be taken into account.".

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The Ministry of Corporate Affairs (MCA) has amended rules to allow such companies to make a filing about their directors and become compliant.

The MCA has amended what is called the Rule 25A related to the Active Company Tagging Identities and Verification (ACTIVE). A non-compliant company can now file Form DIR-12 to update details on its directors.

The change will allow a non-compliant company to file a form in case of appointment of new directors, or disqualification or deactivated.

 

Principle Rule

(1) Every company incorporated on or before the 31st December 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE (Active Company Tagging Identities and Verification) on or before 25.04.2019.

Provided also that no request for recording the following event-based information or changes shall be accepted by the Registrar from such companies marked as “ACTIVE-non-compliant”, unless ” e-Form ACTIVE” is filed

Amended Rule

Rule 25A (1) mandates the FILING e- FORM Active containing the particulars of the company. Companies defaulting in the filing of the Form shall be marked “Active Non-Compliant”. In such circumstances, no request for recording event-based information or changes as listed in the fourth proviso to the Rule shall be accepted by the Registrar unless “ e-Form ACTIVE” is filed.

This amendment seeks to substitute item (iii) – in the list of event-based disclosures which will not be accepted for failure to file eForm ACTIVE as under:

DIR-12 (changes in Director except in case of: 

1. cessation of any director or 

2. Appointment of directors in such company where the total number of directors is less than the minimum number (i.e. 2 in case of the private company and 3 in case of a public company) in on account of disqualification of all or any of the director under section 164.

3. Appointment of any director in such company where DINs of all or any it’s the director(s) has been deactivated. 

4. Appointment of the director(s) for implementation of the order passed by the Court or NCLT or NCLAT under the provisions of the Act or under the Insolvency and Bankruptcy Code, 2016).

This brings much-needed relief to companies which were marked ACTIVE non-compliant due to non-filing of e-form ACTIVE, owing to deactivation of the DINs of directors. The deadlock could now be removed by filing details of the new director’s appointment,

 

Click here to read mca notification

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Ministry of Corporate Affairs has came up with new initiative in form of online portal known as Compliance Monitoring System - MCA . The purpose of this portal is to monitor the compliance based on automatic intelligence and to issue the show cause notice to the non-compliant company(ies). The Company(ies) to whom the notices are served has to reply to said notice(s) through this portal.

Below are the steps for replying to the show cause notice(s):

Step 1 Form the copy of the Notice note down the CMS No. mentioned on the Top and Bottom of the Show Cause Notice.

Step 2. Open https://mcacms.gov.in/#/ on a browser.

Step 3. Click on Reply for Show Cause Notice.

Step 4 A new window shall open detailing the Section under which the Show Cause Notice has been issued.

Step 5 Click on provision under which the reply to the show cause notice is to be submitted.

Step 6 A new window shall open whereby the person is required to fill in the CMS Reference No. as noted in the first step and click Search.The System will validate the reference number.

Step 7 Once the CMS Reference No. is validated the person is required to click Send OTP Tab. OTP shall be sent on the Email Id on which the Show Cause Notice has been Received.

Step 8 Once the OTP is verified the user will be directed to new window where the person can write text up to 480 words. The person can also submit reply as an attachment. Maximum Number of Attachments allowed is 2 (two) attachment in pdf file only. Total size of the attachments shall not exceed 50 MB.Once the Reply is complete the user can click the Submit Reply tab

STEP 9 The System will show a Confirmation message of the reply submission and the action tab will show the Reply Status.

Important Note:

• Reply can be submitted once.

• Reply once submitted cannot be altered.

Source mcacms.gov.in

For further assistance please contact us on +91 932-699-9533 / +91 932-699-9359 or email us on connect@abiza.in.

 

 

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Important Update on Directors Disqualification

  • By : abiZa Team
  • November 11, 2019
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Text of Circular reproduced below for your easy reference:

IMPORTANT UPDATE

Please note that the Registrars of Companies (ROCs) are in process of identification and flagging of directors disqualified under section 164(2)(a) of Companies Act, 2013 for their default of non-filing of financial statement or annual return for continuous period of three financial year i.e. 2015-16, 2016-17 and 2017-18. In this regard all the defaulting directors are hereby cautioned to find the pending statutory returns and do necessary compliance as per provisions of law, otherwise action will be initiated Under Section 164 of the Companies Act, 2013 and Rules made thereunder. The DINs of such directors are not allowed to be used for filing any e-forms on MCA21 portal.
 

Source: Ministry of Corporate Affairs

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Ministry of Corporate affairs on Tuesday i.e. October 29, 2019 has vide its notification extended the due date for filing of Annual Filing forms i.e. Form AOC-4 and MGT-7.

The MCA has hereby extended the last date for filing forms as per follows;

1. Form AOC-4, AOC-4 XBRL, AOC-4 CFS - November 30, 2019

2. Form MGT-7 - December 31, 2019

The said notification has been issued by MCA after they had received recommendations from ICSI and various other Stakeholders requesting to extend the last date for Annual Filing forms.

The details of notification are as under;

General Circular No. 13/2019

F.No. 01/3412013 CL-V

Government of India

Ministry of Corporate Affairs

5s Floor,'A'Wing, Shastri Bhawan,

Dr. Rajendra Prasad Road,

New Delhi-l

Dated: 29.10.2019

To,

All Regional Directors,

All Registrar of Companies,

All Stakeholders.

Subject: Relaxation of additional fees and extension of last date in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statement) under the Companies Act 2013 

Sir,

Keeping in view the requests received from various stakeholders seeking extension of time for filing of financial statements for the financial year ended 31.03.2019 on account of various factors. It has been decided to extend the due date for filing of e-forms AOC-4, AOC-4 (CFS) AOC-4 XBRL upto 30.11.2019 and e-form MGT-7 upto 31.12,2019' by companies without levy of additional fee.

2. This issues with the approval of the competent authority

 

Source : Ministry of Corporate Affairs.

MCA Notification

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The Ministry of Corporate affairs has extended the date for filing of Cost Audit report in eform CRA-4 for financial year 2018-2019 without any additional fees under the Companies Act, 2013 vide General Circular No.12/2019 dated October 24, 2019. Text of Circular reproduced below for easy reference. 

General Circular No. (2,. /2019
F. No. 01/40/2013-CL-V (Pt.I)
Government of India
Ministry of Corporate Affairs


To
All Regional Directors,
All Registrar of Companies,
All stakeholders
5th Floor, 'A' Wing, Shastri Bhawan,
Dr. R.P. Road, New Delhi- 110001

Dated:- 24th October, 2019

Sub: Relaxation of additional fees and extension of last date of filing of CRA-4 (costaudit report)  for FY 2018-19 under the Companies Act, 2013- reg.

Sir,
With reference to subject cited above, an advisory was hosted on the website of the Ministry that:-
«Costing Taxonomy 2019 to cater to the annual filing of CRA -4 (cost audit report) for FY 2018-1 9 is under development. The companies which are required to file CRA -4 (cost audit report) for FY 2018-19 are required to use Costing Taxonomy 2019 only.

Those who have already filed CRA-4 (cost audit report) using the existing Costing Taxonomy 2015 for FY 2018-19 are NOT required to file afresh. However, those companies which are yet to file their Cost Audit Reports are requested to await deployment of Costing Taxonomy 2019 on MCA21 portal. Once the Costing Taxonomy
2019 is deployed, sufficient time would be given for filing CRA-4 without levying additional fee. Stakeholders may kindly take note and plan accordingly."

2. In this regard, it is hereby informed that the Companies (cost records and audit) Amendment Rules, 2019 and Companies (Filing of Documents and Forms in Extensible Business Reporting Language), Amendment Rules, 2019 have been notified on 15.10.2019 and simultaneously the work of deployment of costing taxonomy 2019 is under process.

3. In view of above and the difficulties expressed by various stakeholders for extending the last date of filing of CRA-4 (cost audit report), it has been decided to extend the last date for filing of CRA-4 (cost audit report) for all eligible companies for the FY 2018-19, without payment of additional fee till 31st December, 2019.

4. It may be noted that the said extension is being given for the entire process starting from 'preparation of Annexures to the Cost Audit Report' to 'submission of Cost Audit Report by the Cost Auditor to the Company' and finally 'filing of Cost Audit Report by the Company with the Central Government'.

5. This issues with the approval of competent authority.

Yours faithfully,
~ (Atma Sah)
Deputy Director
Copy to:-
1. E-Governance Cell, MCA (HQ) ..... with a request to upload the same on MCA21
portal. ·
2. Guard File.

Source: Ministry of Corporate Affairs

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For better understanding of the concept, procedure(s) and other related issues we are coming out with various series on Employees Stock Option Scheme (ESOP)
Series 1: Employees Stock Options concept and legal procedure
Series 2: Method of allotment of ESOP (a) Direct method (b) Trust Route
Series 3: Stock Appreciate Rights (SARs)
Series 4: ESOP for start up.

Series 1: Employees Stock options concept and legal procedures.

ESOP may be introduced by the companies as a tool issue further share capital to its employees. ESOP may also be used as a strategy for employees' recognition and reward.


Section - 62 (1) (b) Employees' stock option may be allotted to employees by passing a Special Resolution by the company (Ordinary resolution in case of private company) and subject to such conditions as may be prescribed under the relevant rules. Rule 12:


Conditions prescribed for the Issue of ESOP.
1. ESOP has been approved by passing a special resolution. Note: Rules do not specify exemption for private companies from passing special resolution. However, provisions of Section 62 (1) (b) prescribe so. Since provisions of the Act has overriding effect over rules, the provisions of Section 62(1)(b) shall be followed. Hence, passing of resolution by simple majority (i.e. Ordinary Resolution) shall be sufficient for approving ESOP scheme in a private limited company.

It is essential to know about definition of employee: (a) a permanent employee (b) a director whether whole-time director or not but excluding independent director (c) employee as defined in a and b, of a subsidiary company in or outside India, or of a holding company

But does not include: (a) promoter (b) person belonging to promoter group (c) director holding more than 10% of equity shares (individually or through any relative/body corporate)
This exclusion shall not apply to start-up companies as defined by DIPP via notification no. GSR 180(E) dated 17th Feb, 2016 upto 5 years from the date of its incorporation.

2. Disclosure in explanatory statement to the notice for calling of general meeting.

(a) Total no of stock options to be granted.
(b) Identification of employees entitled to participate in the scheme.
(c) Appraisal Process
(d) The requirement of vesting and period of vesting
(e) Maximum period within which the options shall be vested
(f) Exercise price or formula for arriving at the same.
(g) Exercise period and process of exercise h. Lock-in period, if any

(i) Maximum no. of options to be granted per employee and in aggregate
(j) Method of valuation of options.
(k) Conditions on which options may be lapsed.
(l) Time period for exercise of options in case of termination/resignation of employee.
(m)Statement of compliance with the applicable accounting standards

The company shall be free to determine exercise price in conformity with the applicable accounting standards.


4. Separate resolution is required to be passed in case of; Grant of options to employees of subsidiary or holding company. And/or Grant of options to identified employees > or = 1% of issued capital of the company at the time of grant of options (excluding outstanding warrants/conversions.)


5. (a) The company may vary the terms of scheme not exercised yet by the employees by passing special resolution provided such variation is not prejudicial to the interest of option holders.

(b) Notice of passing of special resolution of such variation shall disclose full variation, rational thereof, details of beneficial employees.


6. (a) Minimum period of 1 year between grant of option and vesting of option. In case of merger, the said period shall be adjusted against the period during which the options were held by the employees in merging company.

(b) The company may provide for any lock-in period for shares issued pursuant to scheme of ESOP.

(c) The employee shall not have any right of dividend, right to vote or any other shareholder right until issue of shares on exercise of such options.


7. Any advance amount given by the employees at the time of grant of options

(a) may be forfeited, if option is not exercised with the exercise period,

(b) may be refunded, if options are not vested due to non-fulfillment of conditions of vesting of options.

8. (a)The options granted shall not be transferrable.

(b) The options granted shall not be pledged, hypothecated, mortgaged or otherwise encumbered.

(c) Subject to (d), no other person than the employee shall be entitled to exercise the option.

(d) In the event of death, all the granted option till date shall vest in the legal heir/nominee of the deceased employee.

(e) In case of permanent incapacitation, all the options granted to him till the day of such incapacitation, shall vest in him on that date.

(f) In the event of termination/resignation, options which are not vested in him shall expire. However, vested options may be exercised by the employee as per terms of the scheme.


9. Disclosure in Directors' Report:

(a) options granted;

(b) options vested;

(c) options exercised;

(d) the total number of shares arising as a result of exercise of option;

(e) options lapsed;

(f) the exercise price;

(g) variation of terms of options;

(h) money realized by exercise of options;

(i) total number of options in force;

(j) employee wise details of options granted to:- (i) key managerial personnel; (ii) any other employee who receives a grant of options in any one year of option amounting to five percent or more of options granted during that year. (iii) identified employees who were granted option, during any one year, equal to or exceeding one percent of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant;

 

10. The company shall maintain a Register of ESOP in SH-6 at the registered office of the company and shall be authenticated by company secretary of the company or any other officer authorized in this behalf.


11. If company is listed, SEBI Regulations on the ESOP has to be complied with. METHODS FOR IMPLEMENTING ESOP

To know more about ESOP - Click here

 

 

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The Corporate Affairs Secretary on Tuesday said that the personal insolvency regime is expected to be fully operational in a year.

 

The Insolvency and Bankruptancy Code (IBC) which came into force in 2016, which provides personal insolvency, but the provision is still not operational.

 

“There are several new challenges we need to address as we move on. The first among these challenges is personal insovency. We have not yet commenced personal insolvency. It is a very large subject because it will bring in every type of borrower in its ambit. Srinivas said at a function to mark the third aniversary of the Insolvency and Bankruptancy Board of India (IBBI) here.

 

The corporate affairs ministry will be implementing the personal insolvency regime in phases. “In the first phase, personal guarantor to a corporate debtor is almost under commencement. The second phase would  be a fresh start process,that  is giving relief to very small borrowers who are not in a position to repay the debt, which will be commenced in another four to six months. Then proprietorship and partnership and others” said Srinivas.

 

According to him, an year’s time will be required for the personal insolvency to be fully operational and Debt Recovery Tribunals (DRTs) will be the main institutions for it.

 

Srinivas  also extended in his speech that for entities having small exposures, for them, and adjudicatory process is been worked out.....which will be fully online system and also based on verification....whether it is about assets they (borrowers) have or their monthly  personal insolvency to be income.

 

Srinivas also expressed confidence that cross border insolvency regime-based on the UNCITRAL model-would be enacted in the upcoming winter session of parliament. On home buyers, Srinivas also stated that a threshold would be introduced for home buyers to fasten the IBC process for real estate developer.This will ensure that no single home buyer can misuse the provisions for taking the real estate developer to the NCLT.

 

Group insolvency would also be addressed by looking at the international best practices, he said.

 

He also said that the government is keen on developing a market place for stressed assets, which will ensure maximum competition and participation of foreign players.The move will also ensure these assets get maximum value and stressed companies get the best people to revive and run them, Srinivas added.

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The Government has constituted a Company Law Committee for examining and making recommendations to the government on various provisions and issues pertaining to the implementation of the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.

 

The objective of setting up this committee is to improve the ease of living by providing ease of doing business by law abiding corporates, fostering improved corporate compliance for stakeholders at large and also address emerging issues having impact on the working of corporates in the country.

 

The company law committee will be chaired by Injeti Srinivas, secretary of the corporate affairs ministry will look into issues including the introduction of a settlement mechanism for offences under the companies act as well as de-clogging the National Company Law Tribunals and the measure to improve the functioning of statutory bodies under the Companies Act including the Serious Frauds Investigations Office (SFIO),The Investor Education And Protection Fund Authority (IEPFA) And The National Financial Reporting Authority (NFRA).

 

An ammendment passed in the budget session session of the parliament stated that the government has recategorized 13 offences under Companies Act as civil offences.Finance And Corporate affairs minister Nirmala Sitharaman had also announced that the government would not seek to pursue criminal against individuals for violations of CSR provisions.

 

The committee would also look to identify specific provisions under the Companies Act and the LLP act that could be amended to improve ease of doing business and that the committee would not be restricted to only reviewing the forms that companies and LLPs are require to file under the acts, which means that the committee can review anything  about companies and their restriction is not only to the forms that are registered under the Companies Act and the LLP act.

 

The committee will also examine the feasibility of a mechanism through which the government could settle the cases involving the violations under the Companies act.

 

 

The committee will also look into measures to further de-clog the National Companies Law Tribunal which deals with the offenses under the companies act,the competition act and insolvency cases under the insolvency and bankruptancy code.In an amendment in the budget session the government transfered the power to grant approval for the conversion of public company to a private company or a change of financial year of company to the corporate affairs ministry from the NCLT.

 

ET had in its April 16 edition reported that the government was set to do a comprehensive review of the LLP act inncludng steep penalties for delays  in filing of returns and other issues in the implementation of the act.

 

The Companies law committee set up by government to address issues related to Companies Act 2013 will give its final report on changes required next month. The final meeting of the committee will be held on November 30 in Mumbai which will be chaired by the Corporate Affairs Secretary.

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Your are requested to kindly note that the due date for filing & uploading DIR-3 KYC for the financial year 2018-2019 has been extended till 14th of October 2019. Please get your KYC done at the earliest.

Source: Ministry of Corporate Affairs

Please click here to avail our services only @999 all inclusive and get your KYC done on the same day. No hidden fees.

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MCA - Initiatives for ease of doing business

  • By : abiZa Team
  • September 21, 2019
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Ministry of Corporate Affairs has taken various inititatives for ease of doing business in India which are as follows:

- Ministry of Corporate Affairs has provided exemption to private companies through Companies (Amendment) Act, 2015, wherein the requirement for minimum paid up capital was removed.

- Central Registration Centre(CRC) was established by MCA under Section 396 of the Companies Act, 2013 (Act) vide notification dated 22.01.2016 in an initiative of Government Process Re-engineering (GPR) for providing speedy incorporation related services in line with global best practices.

- CRC was established with one clear objective i.e. – Applications for Name reservation and Incorporation of a company should be processed and completed within D or D+1 days (D=Date of Payment Confirmation). In the first phase, the CRC processed applications for name availability through e-form INC-1. In the second phase CRC started processing e- forms for incorporation of companies.

- The Ministry of Corporate Affairs launched the Simplified Proforma for Incorporating Company Electronically (SPICe) e-Form in place of INC-29. Further, the Ministry has also integrated the MCA21 System with the CBDT for issue of PAN and TAN to a company incorporated using (SPICe). Stakeholders submit applications for PAN and TAN at the time of submitting applications for incorporation through SPICe. The PAN/TAN allotted by Income Tax Department are being affixed on the Certificate of Incorporation of the company. Stakeholders can apply for DIN(Director Identification Number) through SPICe up to three directors. This has resulted in reduction in the number of processes and time taken for Starting a Business in the country.

- After SPICe, MCA launched a new and simplified web based service R.U.N. (Reserve Unique Name) for reserving a name in place of INC-1. This has also removed the requirement to use a Digital Signature Certificate (DSC) during name reservation. It was another value addition to Ease of Doing Business in India.

- Further, Ministry of Corporate Affairs has amended the LLP Rules, 2009 through Limited Liability Partnership (Second Amendment) Rules, 2018 notified on 18.09.2018 and effective from 02.10.2018. The said amendment has introduced RUN-LLP Form in place of LLP Form 1 for reserving the name and FiLLiP Form in place of LLP Form2 for incorporation, earlier LLP incorporations were done in respective ROCs. Now this process is made centralized to keep it at par with companies and as a part of Starting a business in India.

- Ministry vide notification G.S.R. no. 180 (E) dated 06.03.2019 has amended the Rule 38(2) of the Companies (Incorporation) Rules, 2014. With the issue of this notification, zero fee is to be charged by MCA for all incorporations with authorized capital upto INR 15, 00,000.

- Declaration to be given in SPICe e-Form itself, in place of Affidavit which was earlier an attachment

- Ministry vide notification G.S.R. no. 275 (E) dated 29.03.2019 has amended the Companies (Incorporation) Rules, 2014 and inserted Rule 38A to facilitate integration of MCA21 system with registration of EPFO, ESIC, GST at the time of incorporation of companies in SPICe e-Form.

- Name Availability Rules have been simplified by MCA though Companies (Incorporation) Fifth Amendments Rules, 2019. These amended rules provide ample illustrations to avoid ambiguity in name reservation. Consequently, name rejection rate has fallen and the time taken for approval has reduced. This has resulted in speed, greater transparency, uniformity and eradication of discretion.

- MCA has amended the incorporation rules for section 8 companies vide notification no. 411 (E) dated 07.06.2019, as per which the application for license and incorporation of the said companies are to be submitted in a single form i.e. SPICe. Earlier such license was obtained through e-form INC-12 from respective ROCs/RDs which is now merged with SPICe and is made centralized. This simplified process has reduced the time line for incorporation of section 8 Companies.

Source: Ministry of Corporate affairs

 

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Highlights of Companies Amendment Bill, 2019

  • By : abiZa Team
  • August 06, 2019
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COMPANIES AMENDMENT BILL, 2019

The Companies (Amendment) Bill, 2019 has received the President’s assent and the bill has been published in the Official Gazette w.e.f. July 31, 2019

The key feature of the Bill is to replace the existing system of judicial prosecution for offences by a departmental process of imposition of penalties. As a result, while the monetary burden on companies may go up, but offenders will not be having to face criminal courts and the stigma attached with the same.

 

Major Highlights of Companies Amendment Bill, 2019

1. Dematerialization of Shares (Section 29)

The term ‘public’ has been omitted under section 29(1)(b). Government would now prescribe the class of companies (not restricted to public companies), which would be mandatorily required to issue the securities only in dematerialised form.

This means, that the Govt may now mandate dematerialisation for shares of private companies too. Whether this requirement will be made applicable only for new issues of capital by private companies, or will require all existing shares also to be dematerialised, remains to be seen. Evidently, all shareholders of all private companies will have to come within the system by getting their holdings dematerliaised.

 

2. CSR Expenditure (Section 135)

The Bill has amended and added the following provisions to the Section 135 of Companies Act, 2013 which relates to Corporate Social Responsibility;

(i) In case the unspent amount does not relate to any ongoing project, unspent amounts to be transferred to a Fund specified under Schedule VII within a period of six months of the expiry of the financial year.

(ii) In case the unspent amount relates to any ongoing project subject to fulfilling of prescribed conditions, unspent amounts to be transferred by the company within a period of thirty days from the end of the financial year to a special account to be opened by the company in that behalf for that financial year in any scheduled bank to be called the Unspent Corporate Social Responsibility Account.

(iii) Such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.

(iv) Penal provisions inserted as under:

The company – punishable with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 25 lakh

Every officer of such company who is in default – shall be punishable with imprisonment for a term which may extend to 3 years or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5 lakh, or with both.

(v) MCA empowered to give general or special directions to a company or class of companies as it considers necessary to ensure compliance of provisions of this section.

 

3. Matters to be stated in prospectus (Section 26)

The requirement of registration of prospectus with the Registrar of Companies has been done away with. Instead the prospectus would be filed with the Registrar.

 

4. Constitution of National Financial Reporting Authority (NFRA)(Section 132)

NFRA to perform its functions through such divisions as may be prescribed by the Central Government.

Executive body of NFRA shall consist of the Chairperson and full-time Members for efficient discharge of its certain functions.

Debarring of the member or firm from being appointed as an auditor or internal auditor etc. or performing any valuation under section 247 by NFRA in case professional or other misconduct is proved.

 

5. Investigation into affairs of Company by Serious Fraud Investigation Office

Any officer not below the rank of Assistant Director of Serious Fraud Investigation Office (SFIO), if so authorized, may arrest any person in accordance with the provisions of this section.

The person so arrested may be taken to a Special Court or Judicial Magistrate or Metropolitan Magistrate within 24 hours of his arrest.

Where an investigation report submitted by SFIO states that a fraud has taken place and any director, KMP or officer has taken undue advantage or benefit, then the Central Government may file an application before the Tribunal with regard to disgorgement and such director, KMP or officer may be held personally liable without any limitation of liability.

 

6. Application to Tribunal for relief in cases of oppression, etc (Section 241)

Central Government to prescribe such company or class of companies in respect of which, applications under such sub-section, shall be made before the Principal Bench of NCLT and shall be dealt with by such Bench.

In certain circumstances, the Central Government may refer the matter and request to the Tribunal to inquire into the case and record a decision about whether the person is a fit and proper person to hold the office of director or any other office connected with the conduct and management of any company.

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The Board of Directors of the Company are the Governing body and are entrusted with the day to day functioning of the Company. The Directors or the Board enjoy certain privileges to smoothly conduct the business operations of the Company. In this Article we will see such powers of Board which can be exercised by the Board of Directors without shareholders’ approval.

Applicable Section: Section 179 of the Companies Act, 2013

Explanation to text of the Section

-> The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting:

-> The Board shall not exercise any power or which the Company is required to do or exercise in the General meeting by virtue of Law of or Articles or in any regulations. Hence the powers of general meeting cannot be exercised by the Board in Board Meeting.

-> The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:

(a) to make calls on shareholders in respect of money unpaid on their shares;

(b) to authorise buy-back of securities under section 68;

(c) to issue securities, including debentures, whether in or outside India;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide security in respect of loans;

(g) to approve financial statement and the Board’s report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or reconstruction;

(j) to take over a company or acquire a controlling or substantial stake in another company;

(k) any other matter which may be prescribed which are as follows:

i. To make political contributions;

ii. To fill a casual vacancy in the Board;

iii. To enter into a joint venture or technical or financial collaboration

or any collaboration agreement;

iv. To commence a new business;

v. To shift the location of a plant or factory or the registered office;

vi. To appoint or remove key managerial persons and senior

management personnel one level below the key managerial personnel;

vii. To appoint internal auditors;

viii. To adopt a common seal;

ix. To take note of the disclosure of Director’s interest and shareholding;

x. To sell investments held by the company, constituting five percent or more

of the paid-up share capital and free reserves of the investee company;

xi. To accept public deposits and related matters;

xii. To approve quarterly, half-yearly and annual financial statements.

-> The Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager or any other principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in clauses (d) to (f) on such conditions as it may specify.

-> The acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, or the placing of monies on deposit by a banking company with another banking company on such conditions as the Board may prescribe, shall not be
deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company within the meaning of the section 179.

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The Ministry of Corporate Affairs vide its notification dated July 29, 2019 has hereby extended the due date for filing of Form BEN-2 under the new Significant Beneficial Ownership Rules, 2019 to September 30, 2019 from July 31, 2019.

The extension provides a big relief to the professionals as the due date was falling with other compliances such as the FLA (Foreign Liabilities and Assets) Return which is required to be filed with RBI through the FLAIR system of RBI.

The extension comes as many of the professionals were confused regarding the reporting of the form and the details to be filled while filling the form.

 

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Ministry of Corporate Affairs (MCA) has hereby issued amended the Companies (Appointment & Qualification of Directors), 2014 vide its notification dated July 25, 2019.

The MCA has hereby updated the Form DIR-3KYC which is required to be filed by every Director every financial year. The updated rules hereby state as follows;

Every Director who holds a DIN as on March 31, 2019 shall hereby file form DIR-3 KYC by September 30, 2019. The MCA has released a new form DIR-3 KYC Web pursuant to the notification.

The Directors shall be required to file their KYC in any of the form as per the following;

1. Form DIR-3 KYC Web

Web based E-form where the Director details have not changed as per the last DIR-3 KYC form. Such Directors would be required to file their KYC using the Form DIR-3 KYC Web.

2. Form DIR-3 KYC

The Directors whose details have been changed or who wants to update their email id or mobile numbers shall be required to file their KYC in Form DIR-3 KYC. Also the Directors who are filing the KYC for the first time shall file Form DIR-3 KYC.

Due date for filing both e-forms is September 30, 2019.

A penalty of INR 5,000 shall be leivied on those Directors who have failed to file the forms before September 30, 2019 and such DIN shall be marked as 'Deactivated due to Non-filing of DIR-3KYC'

 

abiZa can assist you in filing of your DIR-3KYC form online just @499/- all inclusive fees. Click here for more details.

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RETURN OF DEPOSIT FORM DPT 3

  • By : abiZa Team
  • June 26, 2019
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DPT – 3 (RETURN OF DEPOSIT)

Quick understanding:

MCA notification dated January 22, 2019 had directed to all the Company, except government company, to file:

a one-time return in e-Form DPT-3, by furnishing the details of all outstanding receipt of money or loan taken from April 01, 2014 to March 31, 2019, which is not considered as deposit i.e. exempted deposit, as per rule 2 (1) (c) of the Companies (Acceptance of Deposits) Rules, 2014, (hereinafter called as “One time return of exempted deposit”) and

 

- a return on annual basis in e-Form DPT-3, by furnishing the details of receipt of money or loan by a company but not considered as deposits i.e. exempted deposit, at the end of financial year, as per rule 2 (1) (c) of the Companies (Acceptance of Deposits) Rules, 2014 (hereinafter called as “Yearly return of exempted deposit”),

 

Last date of Filing

One-time return: June 29, 2019 i.e. 90 (ninety) days from March 31, 2019;

 

Yearly return: June 30 of that year for which the information is to be furnished.

 

Purpose

Onetime Return: To give the details of all outstanding receipt of money or loan taken from April 01, 2014 to March 31, 2019, which is not considered as deposit i.e. exempted deposit, as per rule 2 (1) (c) of the Companies (Acceptance of Deposits) Rules, 2014;

Yearly return for the:

(a) the details of receipt of money or loan by a company but not considered as deposits i.e. exempted deposit, at the end of financial year, as per rule 2 (1) (c) of the Companies (Acceptance of Deposits) Rules, 2014;

(b) return of deposit;

 

Exempted Deposit which needs to be stated in DPT 3

Given below is the list of transactions which shall not be covered as deposits or exempted deposits:

a) Any amount received from –

i. the Central Government; or

ii. a State Government; or any amount received from any other source whose repayment is guaranteed by the Central Government or State Government; or

iii. any amount received from a local authority; or

iv. any amount received from statutory authority constituted under an Act of Parliament or a State Legislature.

b) Any amount received from –

i. Foreign Governments; or

ii. Foreign or international banks;

iii. Multilateral financial institutions;

iv. Foreign Governments owned development financial institutions;

v. Foreign export credit agencies;

vi. Foreign collaborators;

vii. Foreign body corporates;

viii. Foreign citizens;

ix. Foreign authorities or;

x. Persons residents outside India subject to the provisions of Foreign Exchange Management Act, 1999 (42 of 1999).

c) Any amount received as –

i. A loan or facility from any banking company; or

ii. From the state Bank of India or any of its subsidiary banks; or

iii. From a banking institution notified by the Central Government under section 51 of the Banking Regulation Act, 1949 (10 of 1949); or

iv. A corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980); or

v. From a cooperative bank as defined in clause (b-ii) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934).

d) Any amount received as loan or financial assistance from –

i. Public Financial Institutions notified by the Central Government; or

ii. Any regional financial institutions; or

iii. Insurance companies; or

iv. Scheduled Banks as defined in the Reserve Bank of India Act,1934 (2 of 1934).

e) Any amount received against issue of commercial paper or any other instruments issued in accordance with the guidelines or notification issued by the Reserve Bank of India.

f) Any amount received by the company from any other company.

g) Any amount received and held pursuant to an offer made in accordance with the provisions of the Act towards subscription to any securities including share application money or advance towards allotment of securities pending allotment, so long as such amount is appropriated only against the amount due on allotment of securities applied for.

h) Any amount received from a person who, at the time of the receipt of the amount, was a director of the company or the relative of the director of a private company.

i) (a) Any amount raised by the issue of bonds or debentures secured by a first charge or a charge ranking pari passu with the first charge on any assets referred to in Schedule III of the Act excluding intangible assets of the company; or (b) bonds or debentures compulsorily convertible into shares of the company within ten years.

j) Any amount raised by the issue of non-convertible debentures not constituting a charge on the assets of the company and listed on recognized stock exchange as per applicable regulations made by Securities and Exchange Board of India.

k) Any amount received from an employee of the company not exceeding his annual salary under a contract of employment with the company in the nature of non-interest-bearing security deposit.

l) Any non-interest-bearing amount received and held in trust.

m) Any amount received in course of, or for the purposes of the business of the company-

i. As an advance for supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty-five days from the date of acceptance of such advance.

ii. As advance accounted for in any manner whatsoever, received in connection with consideration for immovable property under an agreement or arrangement, provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement.

iii. As security deposit for performance of the contract of supply of goods or provision of services.

iv. As advance received under long term projects for supply of capital goods except those covered under item (b) of sub-clause (xii) clause (c) of sub rule (1) of rule (2) of the Companies (Acceptance of Deposits) Rules, 2014.

v. As an advance towards consideration for providing future services in the form of a warranty or maintenance contract as per written agreement, if the period for providing such services does not exceed the period prevalent as per common business practice or five years, from the date of acceptance of such service whichever is less.

vi. As advance received and allowed by any sectoral regulator or in accordance with directions of Central or State Government.

vii. As an advance for subscription towards publication, whether in print or electronic to be adjusted against receipt of such publications.

n) Any amount brought in by promoters of the company by way of unsecured loans in pursuance of the stipulation of any lending financial institution or a bank.

o) Any amount received by a Nidhi company in accordance with the rules made under section 406 of the Act.

p) Any amount received by way of subscription in respect of chit under the Chit Funds Act, 1982(4 of 1982).

q) Any amount received by company under any collective Investment scheme in compliance with regulations framed by the Securities and Exchange Board of India.

r) Any amount of twenty-five lakh rupees or more received by a start-up company, by way of convertible note (convertible into equity shares or repayable within a period not exceeding five years from the date of issue) in a single tranche, from a person.

s) Any amount received by a company from –

i. Alternate Investment Funds;

ii. Domestic venture Capital Funds;

iii. Infrastructure Investments Trusts;

iv. Real Estate Investment Trusts;

v. Mutual Funds registered with the Securities and Exchange Board of India

 

Filing not applicable to

Every Company is required to filed the e-Form DPT-3, except the following:

  • Government Company;
  • Non-banking and finance company; and
  • Banking Company,

 

Disclaimer: The entire contents of this article is abridged version and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. All Readers are advised to refer relevant provision of law before applying or accepting any of the point mentioned above or not. Author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write up

abiZa Team

 

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The MCA has hereby issued notification on June 18, 2019 stating that the Tagging of non-compliant Companies/Directors for not filing eForm Active(INC-22A) is in progress. To facilitate completion of the activity, e-filing of the form (ACTIVE) has been suspended temporarily. The same would be restored soon for filing purposes with fee as provided under the relevant rules once the Tagging activity is complete. Stakeholders may kindly take note and plan accordingly.

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The Ministry of Corporate Affairs (MCA) by its notification dated May 22, 2019 has hereby amended the Companies (Prospectus and Allotment of Securities) Rules, 2019 by introducing Reconciliation of Share Capital Audit Report (Half-yearly) Pursuant to sub-rule (8) of rule 9A Companies (Prospectus and Allotment of Securities Rules, 2014.

The following rules shall be effective from September 30, 2019.

Every unlisted public company would be required to file Form PAS-6 (Reconcilliation of Share Capital Audit Report) to the Registrar within 60 days from the conclusion of each half yearly duly certified by a Company Secretary in practice or Chartered Accountant in practice.

The form PAS-6 would be required to be filed half yearly as per the follows

Particulars                                                             Due Date

For half year ended September 30                        November 30

For half year ended March 31                                May 30

 

Click here to read the notification

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The Ministry of Corporate Affairs (MCA) has by its notification dated May 16, 2019 has amended the Companies (Appointment and Qualification of Directors) Rules, 2014. The new rules Companies (Appointment and Qualification of Directors) Rules, 2019 has hereby inserted the following rule;

12B. Directors of Company required to file e-form ACTIVE

Where a Company fails to file e-form ACTIVE within the stipulated time, the Directors of the Company shall be marked as "Director of ACTIVE non-compliant Company". Where the DIN of such Director has been marked as Director of ACTIVE non-compliant company, the Director shall ensure steps to file e-form ACTIVE. 

 

Click here to read the notification

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In continuation of General Circular No. 09/2014 dated 25.04.2014, the Ministry of Corporate Affairs has received representation from stakeholders seeking relaxation of fees for filing e-form no.ADT- 1, particularly form ADT-1 filed through GNL-2 during the period from 01.04.2014 to 20.10.2014 for appointment of Auditor for the period from 01.04.2014 to 31.03.2019 due to non-availability of e-form ADT-1 during the said period.

Accordingly, the matter has been examined and it is here by clarified that companies which had filed Form no. ADT-1 through GNL-2 as an attachment (by selecting others) during thc period from 01.04.2014 to 20.10.2014 may file eform no.ADT-1 for appointmcnt of Auditor for thc period upto 31.03.2019 without fee, till 15.06.2019 (since fee had been paid for filing GNL-2 for the same purpose) and thereafter fee and additional fee shall bc applicable as per Companies (Registration of Office and Fees) Rules, 2014.

 

Click here to read the notification

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MCA vide its General Circular No 05 dated 12th April 2019 has stated  Filing of One Time return in DPT-3 form.

 

As per Rule 16A(3) of the Companies (Acceptance of Deposit) Rules,2014 "every company other than Government company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in terms of clause(c) of sub-rule 1 of rule 2 from the 01st April 2014 to the date of publication of the notification in the Official Gazette, as specified in form DPT-3 within ninety days from the date of said publication of this notification along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014. It may also be noted that data on deposits should be filed up to 31st March 2019 (as opposed to 22nd January 2019 which was originally indicated in the said Rule). The rule change is being issued separately.

 

MCA has notified that the due date for filing of one time return by companies in form DPT 3 stands extended upto 29 June 2019 (i.e. 90 Days from 31 March 2019), as against the earlier notified deadline of 90 days from 22 Jan. 2019.

 

It may be noted that on 22 Jan. 2019 the MCA has amended Rule 16A(3) of the Companies (Acceptance of Deposits) Rules, 2014, mandating every company (other than Government company) to file a one-time return of outstanding receipt of money or loan (not considered as deposits) from 1 April, 2014 till that date, in Form DPT 3 (along with applicable fee) within ninety days from the date of publication of said notification.

 

Later on 30 April 2019 the MCA has further amended the Rule 16A (3) of the Companies (Acceptance of Deposits) Rules, 2014. Now every such company is required to file one time return in Form DPT 3 within 90 days from 31 March 2019 (i.e. latest by 29 June 2019), along with applicable fee.

 

Click here to read the notification

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Ministry of Corporate Affairs has issued clarification on Filing of DIR-3-KYC annually by DIN holders. It is evident from filing of DIR-3-KYC for financial year 2019-20 that DIR-3-KYC is not required to be filed every year as DIR-3 KYC available on MCA website is not taking DIN of Directors who has already filed DIR-3 KYC but by the clarification issued by MCA on 13.04.2019 it is clear that DIR-3 KYC is required to be file every year.

 

CLARIFICATION BY MCA ON APRIL 13, 2019

As per rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014, “every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall, submit e-form DIR-3-KYC to the Central Government on or before 30th April of immediate next financial year.

Provided that every individual who has already been allotted a Director Identification Number (DIN) as at 31st March, 2018, shall submit e-form DIR-3 KYC on or before 5th October,2018.”

However, the DIR-3 KYC e-form presently available on the portal does not cater for the following:

(i) Filing on annual basis, and

(ii) Filing in respect of DINs allotted post 31 March 2018.

It presently caters only to those individuals who were allotted DINs as on 31st March 2018 and whose DINs have been marked as ‘Deactivated due to non-filing of DIR-3 KYC’.

Stakeholders may please note that DIN holders are required to file the DIR-3 KYC form every year, so that they are aware of and confirm the data & information as available in the MCA21 system.

With the objective of making the form more user friendly, the form is presently being modified to enable pre-filling of data & information so that annual filings can be done by DIN holders in a simple and user friendly manner.

The revised form, which will be shortly deployed, can be filed without any fee within a period of 30 days from the date of deployment.

Accordingly, DIN holders who had filed DIR-3 KYC form earlier and complied with the said provisions may kindly await the deployment of the modified form for fulfilling their compliance requirements.

 

Click here to read the notification

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MCA vide its Circular No: 04/2019 dated 4th April 2019 has issued circular stating relaxation of additional fees and extension of the last date of filing eform CRA-2.

Form CRA-2 is required to filed for intimation of appointment of Cost Auditor by the Company to the Central Government.

The Ministry has received several representations about the extension of the last date for filing e-form CRA-2 without additional fees where the company has been mandated to get it's cost records audited for the first time under Companies Act, 2013 on account of Companies (Cost Records and Audit) Amendment Rules, 2018 as notified vide G.S.R.I 157(E) dated 03.12.2018.

The matter has been examined and it has been decided to extend the last date for filing of e-form CRA-2 in the abovementioned cases without payment of additional fees up to 31.05.2019.

 

Click here to read the notification

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Ministry of Corporate Affairs with its new notification dated January 22, 2019 directed all companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act,2006 (27 of 2006) (hereafter referred to as “Specified Companies”), shall submit a half yearly return to the Ministry of Corporate Affairs stating the following:

(a) the amount of payment due; and

(b) the reasons of the delay;

Every specified company shall file in MSME Form I details of all outstanding dues toMicro or small enterprises suppliers existing on the date of notification of this order i.e. 22nd January, 2019 within thirty days from the date of deployed on MCA 21 portal.(i.e. within 30 days from the 1st may, 2019)

Specified Companies as referred above, shall have to File a “MSME Form I” which includes Details of all outstanding dues to such Enterprises Suppliers (hereafter referred to as “Specified Dues”) existing on the Date of Notification of this Order within 30 days from the Date of Publication of this Notification as below;

Date of Notification

Due Date

January 22, 2019

*February 21, 2019 (Now extended until 30 days from the date on which form would be made available – Refer MCA notification for extension)

 

In addition to the above, Every Specified Company is required to file a return as per MSME Form I, on half yearly basis as below;

Details for the Period

Due Date

For the period April to September

By October 31

For the period October to March

By April 30

Further, if the Company fails to comply with the above, provisions of Sub Section (4) of Section 405 (Power of Central Government to direct companies to furnish information or statistics) shall apply which states as follows;

“If any company fails to comply with an order made under sub-section (1) or subsection (3), or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect, the company shall be punishable with fine which may extend to twenty-five thousand rupees and every officer of the company who is in default, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to three lakh rupees, or with both.”

 

Click here to read the notification

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Ministry of Corporate Affairs by their notification dated April 25, 2019 has hereby extended the due date for filing of Form INC-22A to June 15, 2019. The government has extended the deadline for uploading photos of business premises giving corporates more time to comply with a provision aimed at spotting shell companies.

The disclosures, which came into effect from February, make it mandatory for registered companies to upload pictures of their business premises and at least one director. The last date for compliance was Thursday, April 25 which is now extended till 15th June 2019 and the move came after the ministry received representations from industry associations with many companies yet to comply. Startups have, in particular, pointed out that many of them operate out of homes or shared premises or office suites.

The new norm requires companies to upload a photograph of the external facade of their registered office with a board displaying the company name, corporate identity number, address of the entity, email and phone number. The entity also has to upload a photo of the office interior showing at least one director who will also sign the form.

This new electronic form INC-22A, which is also known as e-Form ACTIVE (Active Company Tagging Identities and Verification), was notified as part of the Companies (Incorporation) Amendment Rules, 2019 in February. If the form is filed within the due date, there is no fee, while late filing will attract a fine of INR 10,000.

 

Click Here to read the Notification

 

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