Southern India Regional Council of
The Institute of Chartered Accountants Of India
(Setup by an Act of Parliament)

Professional Updates- September 2017

 

Company Law Updates

  • Section 212 (8), (9) & (10) of CA, 2013 come into force wef 24th August, 2017

  • In exercise of the powers conferred by sub-section (3) of section 1 of the Companies Act, 2013 (18 of 2013), the Central Government hereby appoints the 24th day of August,2017 as the date on which the provisions of sub-sections (8), (9) and sub-section (10) of section 212 of the said Act shall come into force.
  • (8) If the Director, Additional Director or Assistant Director of Serious Fraud Investigation Office authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of any offence punishable under sections referred to in sub-section (6), he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
  • (9) The Director, Additional Director or Assistant Director of Serious Fraud Investigation Office shall, immediately after arrest of such person under sub-section (8), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as may be prescribed.
  • (10) Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction:

    Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's court.
  • Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 comes into force with effect from 24th August, 2017.
  • Where the Director, Additional Director or Assistant Director of the serious Fraud Investigation office (SFIO) investigating into the affairs of a company other than a Government company or foreign company has, on the basis of material in his possession, reason to believe (the reason for such belief to be recorded writing) that any person has been guilty of any offence punishable under section 212 of the Act, he may arrest such person; Provided that in case of an arrest being made by Additional Director or Assistant Director, the prior written approval of the Director SFIO shall be obtained.
  • The Director SFIO shall be the competent authority for all decisions pertaining to arrest.
  • Where an arrest of a person is to be made in connection with a Government company or a foreign company under investigation, such arrest shall be made with prior written approval of the Central Government. Provided that the intimation of such arrest shall also be given to the Managing Director or the person in-charge of the affairs of the Government Company and where the person arrested is the Managing Director or person in-charge of the Government Company, to the Secretary of the administrative ministry concerned, by the arresting officer. The Director, Additional Director or Assistant Director, while exercising powers under sub-section (B) of section 212 of the Act, shall sign the arrest order together with personal search memo in the Form appended to these rules and shall serve it on the arrestee and obtain written acknowledgement of service.
  • The Director, Additional Director or Assistant Director shall forward a copy of the arrest order along with the material in his possession and all the other documents including personal search memo to the office of Director, SFIO in a sealed envelope with a forwarding letter after signing on each page of these documents, so as to reach the office of the Director, SFIO within twenty four hours through the quickest possible means.
  • An arrest register shall be maintained in the office of Director, SFIO and the Director or any officer nominated by Director shall ensure that entries with regard to particulars of the arrestee, date and time of arrest and other relevant information pertaining to the arrest are made in the arrest register in respect of all arrests made by the arresting officers.
  • The entry regarding arrest of the person and information given to such person shall be made in the arrest register immediately on receipt of the documents as specified under rule 5 in the arrest register maintained by the SFIO office.
  • The office of Director, SFIO shall preserve the copy of arrest order together with supporting materials for a period of five years a) from the date of judgment or final order of the Trial court, in cases where the said judgment has not been impugned in the appellate court; or b) from the date of disposal of the matter before the final appellate court, in cases where the said judgment or final order has been impugned, whichever is later.
  • The provisions of the code of criminal Procedure, 1973 (2 of t974), relating to arrest shall be applied mutatis mutandis to every arrest made under this Act.
  • The National Company Law Appellate Tribunal (Amendment) Rules 2017 facilitates CA to appear before the NCLAT (Notification dt 23rd August, 2017)
Rule 63: Appearance of authorised representative.- (1) Subject to provisions of section 432 of the Act, a party to any proceedings or appeal before the Appellate Tribunal may either appear in person or authorise one or more chartered accountants or company secretaries or cost accountants or legal practitioners or

any other person to present his case before the Appellate Tribunal.

The Central Government, the Regional Director or the Registrar Companies or Official Liquidator may authorise an officer or an Advocate represent in the proceedings before the Appellate Tribunal. The officer authorised by the Central Government or the Regional Director or the Registrar of Companies or the Official Liquidator shall be an officer not below the rank of Junior Time Scale or company prosecutor.

Companies (Incorporation) Second Amendment Rules, 2017 amended to provide for Shifting of registered office within the same State (Rule 28) & Rule 30 for Shifting of Registered Office from one State or Union Territory to another State. (Notification dated 27th July, 2017).

Rule 28: An application seeking confirmation from the Regional Director for shifting the registered office within the same State from the jurisdiction of one Registrar of Companies to the jurisdiction of another Registrar of Companies, shall be filed by the company with the Regional Director in Form No.INC.23 along with the fee and following documents, —

(a) Board Resolution for shifting of registered office; (b) Special Resolution of the members of the company approving the shifting of registered office; (c) a declaration given by the Key Managerial Personnel or any two directors authorised by the Board, that the company has not defaulted in payment of dues to its workmen and has either the consent of its creditors for the 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) acknowledged copy of intimation to the Chief Secretary of the State as to the proposed shifting and that the employees interest is not adversely affected consequent to proposed shifting.

Rule 30: An application under sub-section (4) of section 13, for the purpose of seeking approval for alteration of memorandum with regard to the change of place of the registered office from one State Government or Union territory to another, shall be filed with the Central Government in Form No. INC.23 along with the fee and shall be accompanied by the following documents, namely: — (a) a copy of Memorandum of Association, with proposed alterations; (b) a copy of the minutes of the general meeting at which the resolution authorising such alteration was passed, giving details of the number of votes cast in favour or against the resolution; (c) a copy of Board Resolution or Power of Attorney or the executed Vakalatnama, as the case may be.

Professional Updates- August 2017

Company Law Updates

  • (A Round-Up of Policy Decisions/Major Achievements of MCA during the Month of June, 2017
  • Exemptions from certain provisions of the Companies Act, 2013 to Private companies, Government Companies and Section 6 companies.
  • A notification for amending the Companies (Transfer of Pending Proceedings), 2014 by which cases where a company has issued a notice for voluntary winding up through advertisement and gazette notification as required under section 485 of Companies Act, 1956 are allowed to continue to be dealt with under the provisions of CA, 1956. Prior to this amendment only voluntary winding up petitions pending with High Court as on 1st April, 2017 were to be continued with High Court.
  • Change of a technical nature, has also been made in the rule relating to transfer of pending proceedings where companies were not able to repay debts with a view to provide greater clarity in interpretation.
  • An order under section 470 (Removal of Difficulty) has been issued in order to provide for applicability of provisions of the CA, 19556 in respect of pending voluntary winding up matters as per the revised stage.
  • The threshold for private companies required to enforce rotation of auditors have been raised from ₹ 20 crores to ₹ 50 crore of paid up share capital or more.
  • As on 30th June, 2017, names of 1,02,982 companies have been removed from the register of companies maintained by the ROC by following the due procedure under section 248 of CA, 2013 read with Rules thereunder.
  • July, 2017 Updates
  • Amendment in the Rules relating to Meeting of the Board: Any director who intends to participate in the meeting through electronic mode may intimate about such participation at the beginning of the calendar year and such declaration shall be valid for one year. However, such declaration shall not debar him from participation in the meeting in person in which case he shall intimate the company sufficiently in advance of his intention to participate in person. . (Notification dt 13th July, 2017)
  • Committees of the Board: The Board of Directors of every listed company and a company covered under rule 4 Audit committee and nomination committee shall be constituted by following category of Companies (public company having paid up capital 10 crore rupees or more, public company having turnover 100 crore rupees or more, public company having outstanding loan and advances, debenture, deposits of 50 crore rupees or more, except following unlisted public companies namely, a joint venture, a wholly owned subsidiary and a dormant company as defined under section 455 of CA, 2017. (Notification dt 5th July, 2017)
  • MCA has issued amendments to National Company Law Tribunal (Amendment) Rules, 2017 to introduce the new Form NCLT–9 for filing an appeal or application to NCLT for revival or restoration of the name of the company. (Notification dt 5th July, 2017)
  • Amendments In Companies (Appointment and Qualification of Directors) Rules to provide that JV, WOS and dormant unlisted public companies need not have independent directors. . (Notification dt 5th July, 2017).

Professional Updates- July 2017

Company Law Updates

  • 1. Rotation of Auditors – Threshold Limit raised in respect of Private Companies: 1. MCA has notified that paid up share capital limit for rotation of auditors in case of private companies has been increased from rupees twenty crore to rupees fifty crore or more w.e.f 22 June 2017. (Notification, dated 22nd June, 2017)
  • 2. Clarification regarding due date of transfer of shares to IEPF Authority: 2. The seven year period provided under sub-section (5) of section 124 is completed during 7th September, 2016 to 31st May, 2017, the due date of transfer of such shares by companies is 31st may, 2017. The modalities for transfer/transmittal of shares from companies accounts to the demat account of the IEPF authority are being finalised with the depositories. IEPF is considering opening special demat accounts and till such time, the due date for transfer of shares stands extended. The revised due date for transfer/tr4ansmittal of shares shall be notified soon. Companies are advised to complete all formalities as laid down in the Rule 6 of the IEPF (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 without waiting for the fresh dates. Companies which have already published notice in newspaper and send notices to the shareholders need not give the fresh notices again due to the proposed extension of dates. (General Circular No 06/2017, dated 29th May, 2017)
  • 3. Clarification regarding transmission of Securities by operation of law: 3. MCA has clarified that the procedure similar to what is followed in case of transmission of shares may be followed by companies while transferring shares to IEPF Authority pursuant to section 124 (6) read with the applicable Rules. (General Circular 07/2017 dated 5th June, 2017)
  • 4. Exemption to Section 8 Companies under section 462 of CA, 2013:
    (a) Clause (b) and first proviso to sub-section (1) of section 149, (that the company to have a maximum of fifteen directors and further that a company may appoint more than fifteen directors after passing a special resolution shall not apply to a section 8 company. The exceptions, modifications and adaptations provided shall be applicable to a company covered under section B of the said Act which has not committed a default in filing its financial statements under section 137 or annual return under section 92 of the said Act with the Registrar. (Notification dated 13th June, 2017).
    (b) New proviso to Sub-section (7) of section 186:): The following proviso shall be inserted, namely:- Provided that nothing contained in this sub-section shall apply to a company in which twenty-six per cent or more of the paid-up share capital is held by the Central Government or one or more State Governments or both, in respect of loans provided by such company for funding Industrial Research and Development projects in furtherance objects as stated in its memorandum of association. (Notification dated 13th June, 2017)
  • 5. Exemption to Private Companies under section 462 of CA, 2013:
    (a) Chapter I, clause (40) of section 2 (financial statement) : For the proviso, the following shall be substituted, namely:- Provided that the financial statement, with respect to person company, small company, dormant company private company (if such private company is a start-up) not include the cash flow statement; one and may Explanation. - For the purposes of this Act, the term 'start-up' or "start-up company" means a private company incorporated under the Companies Act, 2013 (18 of 20'l3) or the Companies Act, 1956 ('l of 1956) and recognised as start-up in accordance with the notification (a) issued by the Department of industrial Policy and Promotion, Ministry of Commerce and Industry.
    (b) Chapter V, clauses (a) to (e) of sub-section (2) of section 73 (Prohibition on acceptance of deposits from public): shall not apply to a private company- (A) which accepts from its members monies not exceeding one hundred per cent. of aggregate of the paid up share capital, free reserves and securities premium account; or (B) which is a start-up, for five years from the date of its incorporation; or (C) which fulfils all of the following conditions, namely:- (a) which is not an associate or a subsidiary company of any other company; (b) if the borrowings of such a company from banks or financial institutions or anybody corporate is less than twice of its paid up share capital or fifty crore rupees, whichever is lower; and (c) such a company has not defaulted in the repayment of such borrowings subsisting at the time of accepting deposits under this section: Provided that the company referred to in clauses (A), (B) or (C) shall file the details of monies accepted to the Registrar in such manner as may be specified.
    (c) Chapter Vll, clause (S) of sub-section (1) of section 92 (Annual Return): shall apply to private companies which are small companies, namely: - section (1) of section 92 "(g) aggregate amount of remuneration drawn by directors.
    (d) Chapter Vll, proviso to sub-section (1) of section 92: Provided that in relation to One Person Company, small company and private company (if such private company is a start-up), the annual return shall be signed by the company secretary, or where there is no company secretary, by the director of the company.
    (e) Chapter X, clause (i) of sub-section (3) of section 143 in respect of auditor’s report): shall not apply to a private company:- (i) which is a one person company or a small company; or (ii) which has turnover less than rupees fifty crores as per latest audited financial statement or which has aggregate borrowings from banks or financial institutions or any body corporate at any point of time during the financial year less than rupees twenty five crore.
    (f) Chapter Xll, sub-section (5) of section 173 Meetings of Board): A One Person Company, small company, dormant company and a private company (if such private company is a start-up) shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days. Provided that nothing contained in this sub-section and in section 174 shall apply to One person Company in which there is only one director on its Board of Directors.
    (g) Chapter Xll, sub-section (3) of section 1 74 (Quorum for meetings of Board): shall apply that the interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184.
    The above exceptions, modifications and adaptations shall be applicable to a private company which has not committed a default in firing its financial statements under section 137 of the said Act or annual return under section 92 of the said Act with the Registrar. (Notification dated 13th June, 2017)
  • 6. Exemption to Government Companies under section 462 of CA, 2013:
    (a) Chapter Vll, subsection (2) of section 96, (Annual general Meeting): In sub-section (2), for the words "such other place as the Central Government may approve in this behalf', the words "such other place within the city, town or village in which the registered office of the company is situate or such other place as the Central Government may approve in this behalf shall be substituted.

    (b) Chapter Xl, subsections (6) and (7) of section 152 (Appointment of Directors): shall not apply to - (a) a Government company, which is not a listed company, in which not less than fifty-one per cent. Of paid up share capital is held by the Central Government, or by (b) any State Government or Governments or by the Central Government and one or more State Governments; (b) a subsidiary of a Government company, referred to in (a) above.

    (c) Chapter XV, sections 23O to 232 (Compromises and Amalgamations): For the word "tribunal” wherever it occurs, the words “the Central Government” shall be substituted. The exceptions, modifications and adaptations provided in aforesaid Table shall be applicable to a Government company which a default in firing its financial statements under section 137 of the return under section 92 of the said Act with the Registrar. (Notification dated 13th June, 2017)

Professional Updates-June 2017

Company Law Updates

  • 1. Aadhaar Integration under MCA 21: MCA is actively considering Aadhaar Integration for availing various MCA21 related services. As a preparatory step, all individual stakeholders viz. DIN holders/Directors/Key Managerial Personnel/Professionals of the Institute of Company Secretaries of India-Institute of Chartered Accountants of India-Institute of Cost Accountants of India (whether in employment or in practice) are requested to obtain Aadhaar as early as possible for integrating their details with MCA21 and also ensure that the information in Aadhaar is in harmony with PAN. When implemented, all MCA21 services shall be available based on Aadhaar based authentication ONLY. The date of Aadhaar integration with MCA21 would be announced shortly. Stakeholders are requested to plan accordingly on PRIORITY so as to avoid future inconvenience. (Important Announcement by MCA)
  • 2. Deposits: As per the Companies (Acceptance of Deposits) Amendment Rules, 2017, Domestic Venture Capital Funds and Infrastructure Investment Trusts included within the ambit of acceptance of deposits under the Companies Act, 2013. Further, the companies may accept deposits without deposit insurance contract till the 31st March, 2018 or till the availability of deposit insurance policies whichever is earlier.
  • 3. Clarification regarding applicability of section 16 (1)(a) of the Companies Act 2103 with reference to cases under corresponding provisions of Companies Act, 1956: A representation was received from the Regional Director, Mumbai seeking clarification as to whether Regional Directors can entertain fresh applications under section 16 of the Companies Act, 2013 in respect of earlier application which were earlier rejected by them under the Companies Act, 1956 on the ground of being time barred as the prescribed period of twelve months had been completed under section 22 (1) (ii) (b) of the Companies Act, 1956. It was expressed that section 16 of the Companies Act, 2013 does not specify any time limitation. MCA has clarified that the applications which were earlier rejected by the RDs under section 22 (1) (ii) (b) of the Companies Act, 1956, on the ground that such applications were made after the requisite period of twelve months specified therein cannot apply afresh under section 16 of the Companies Act, 2013 as the extinguished limitation cannot be considered to be revived even if no limitation period has been prescribed/laid down in the said section. (MCA General Circular 04/2017, dt 16th May, 2017)
  • 4. Transfer of Shares to IEPF Authority: Pursuant to second proviso to Rule 6 of the IEPF (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 4. notified on 28th February, 2017, where the seven year period provided under sub-section (5) of section 124 of the Companies Act, 2013 is completed during September, 7, 2016 to May, 31, 2017, the due date for transfer of such shares by companies is 31st May, 2017. All companies required to transfer shares to IEPF authority under the aforesaid Rules shall transfer such shares whether held in dematerialised form or physical form to the demat account of IEPF Authority. (General Circular 03/2017 dt. 27th April, 2017). The said circular is now withdrawn by the MCA with immediate effect and fresh instructions on the matter will be issued in due course of time (General Circular 05/2017 Dt. 16th May, 2017).

Professional Updates-May 2017

Company Law Updates

  • 1. Section 234 of the Companies Act, 2013 dealing with Merger or amalgamation of company with foreign company has been notified (w.e.f 13th April, 2017. [F.NO.1/37/2013 CL.V], DATED 13-4-2017).
  • 2. Accordingly, the Companies (Compromises, arrangements and Amalgamations) Amendment Rules, 2017 introduced by way of insertion of Rule 25A relating to Merger or amalgamation of a foreign company with a company and vice-versa./li>
  • 3. Forms CHG-1 and CHG-9 were revised w.e.f. 22nd April 2017(Saturday). If the 'Type of Charge' is 'immovable property or a􀅶y interest therein', the location parameters (Latitude and Longitude) shall be mandatory. Stakeholders may take note and plan accordingly.
  • 4. MCA has revised the versions of e Form – Form INC-22, Form AOC-4 Addendum, Form SCP (Serious Complaint Form), Forms CHG-1, Form CHG- 9, Form CHG - 4 and Form STK – 2 (w.e.f. 22nd April 2017)
  • 5. MCA has issued clarification regarding online generation of challans for offline payment cases (vide Notification dated 20/04/2017).
  • 6. MCA has revised the versions of e Form – .
  • 7. MCA is actively considering Aadhaar Integration for availing various MCA21 related services. As a preparatory step, all individual stakeholders viz. DIN holders/Directors/Key Managerial Personnel/Professionals of the Institute of Company Secretaries of India-Institute of Chartered Accountants of India-Institute of Cost Accountants of India (whether in employment or in practice) are requested to obtain Aadhaar as early as possible for integrating their details with MCA21 and also ensure that the information in Aadhaar is in harmony with PAN. When implemented, all MCA21 services shall be available based on Aadhaar based authentication ONLY. The date of Aadhaar integration with MCA21 would be announced shortly. Stakeholders are requested to plan accordingly on PRIORITY so as to avoid future inconvenience.
  • 8. Stakeholders are advised to ensure that Form 3 (Information with regard to Limited Liability Partnership agreement and changes, if any, made therein) has been mandatorily filed for initial agreement before filing of Form 8 (Statement of Account & Solvency) and Form 11 (Annual Return of Limited Liability Partnership (LLP).

Professional Updates-April 2017

Company Law Updates

Companies (Indian Accounting Standards) (Amendment) Rules, 2017: These rules shall come into force on the 1st day of April, 2017. The amendment in the rules pertain to Indian Accounting Standards (Ind AS) 102 relating to Share-based payment. G.S.R. 258E, 17th March, 2017.


Professional Updates-March 2017

Company Law Updates

Notice inviting application for empanelling Experts (CA’s) as Mediators or Conciliators for the FY 2017-18.

MCA has empowered the Regional Director to prepare and maintain the Mediation and Conciliation Panel of eligible experts in pursuance of Rule 3(1) of Section 442 of the Companies Act, 2013 who are willing to be appointed as mediator or conciliator in the respective region. Accordingly the Mediator or Conciliator included in the Panel for the Region may make an application to provide relevant services for parties in any other region as well, as may be allowed by the Central government or Tribunal (Company Law Tribunal or Appellate Tribunal) under the Mediation & Conciliation Rules. Besides other experts listed in the qualifications, CA’s who is or has been a professional for at least fifteen years of continuous practice may submit the application in Form No. MDC – 1, online as well as in the physical form with all attachments. The application shall be forwarded physically at the Office of the Regional Director, Southern Region, V Floor, “A” Wing, Shastri Bhavan, 26, Haddows Road, Chennai 600 006. The last date for receiving application is 10th March, 2016 before 5.00 PM. The empanelled list of applicants will be posted in the MCA website within a month of closing date of the applications.