From September 2017 onwards, various offices of the Registrar of Companies issued different lists of disqualified directors for period 1 November 2014 to 31 October 2019, 1 November 2015 to 31 October 2020 and 1 November 2016 to 31 October 2021, 1 November 2017 to 31 October 2022. All sets of these lists of directors so disqualified may be found here.
Immediately after that, few directors so disqualified approached High Courts under writ jurisdiction. High Court found disqualifications from 1 November 2014 to 31 October 2019 and from 1 November 2015 to 31 October 2020 invalid as the provision under Section 164(2)(a), introduced in the year 2014, and it has prospective effect only.
MCA deactivated the DIN of directors, so disqualified to implement their disqualification. These DIN so deactivated could not be used for any filing purpose on MCA for the period of disqualification.
There is a lengthy debate on the manner of implementation of this law. I was surprised with the way of quick acceptance of disqualification and wrote this long post here. But, these people know how to bow and run the show.
So, the first effective batch of persons disqualified to be a director completed their disqualification period on 31 October 2021. Now, our mighty directors once again keep mum. There is no automatic removal of disqualification on the practical side. The Government, while deactivating the DIN, forgot to place the automatic activation command in the system. Due to technological and bureaucratic excuses, MCA activated deactivated DIN after delays of 20 more days.
Those who support a violation of the human rights of others do not fight for their own human and legal rights (unless huge money involved). This incident is another fine example.
Now, these directors may again enjoy the tag of director on their business cards. However, they need to check their KYC Compliance status. Directors are clients of MCA. Therefore, MCA needs to know who they are. For this, they should check whether they have complied with the annual KYC requirement. (Un)fortunately, due to ignorance of the law, alienation, or professional advice, most people did not file their KYC documents with MCA. Anyway, such KYC non-compliance secure you from unwanted directorship in a company by fraud on you.
Now, these people, if willing to be directors, should file their KYC Documents with MCA.
The general public has little awareness about the function and duties of the office of the Registrar of companies. In this post, we will have an overview of the functions and duties of the Registrar of companies.
The registrar of companies is an office of a public authority under the administrative control of the Ministry of Corporate Affairs, Government of India. Each office of the Registrar has jurisdiction over the territory allocated by the administrative ministry. These jurisdictional terrorises may be a part of a state and more than one state. Maharashtra and Tamandu have two registrars of companies while the Registrar of Companies Guwahati has jurisdiction over 7 states.
The Registrar of Companies has its jurisdiction over companies and LLPs having registered office in his territory. The Registrar directly reports to the Regional Directors.
The Registrar has duties and functions as the regulatory authority under the corporate law as well as administrator of provision of corporate law.
Processing the documents, returns and forms filed by the companies/LLPs
Functioning as a registry of records relating to the companies/ LLP’s
Facilitating inspection of documents and returns by Public, Investors, Banks and Professionals and other public authorities and supply of certified copies of those documents.
Dealing with the change of names of companies and LLP’s, conversion of status of companies from Private to Public and vice versa, striking off names of companies& LLP’s, action against companies & LLPs for various violations
Monitoring of compliance requirements by companies/LLPs through the mechanisms envisaged under the Act.
Inspection of books of accounts of companies
Redressal of grievances of Investors of those companies
Launching prosecution against companies and their directors for violation of Acts.
Disposal of applications under the Companies Act
Issue of enquiry letters and show cause notices to companies, their directors and Secretaries
Communication with and reporting to the superior offices of the Ministry of Corporate Affairs and other Ministries/Departments and other offices in the Ministry of Corporate Affairs.
Interaction with the Professional bodies and Industry Associations
Powers and duties of officers of the Registrar office:
Registrar of Companies/Deputy Registrar of Companies/Assistant Registrar of Companies discharges their duties as empowered by the Acts including administering the provisions of the Acts and acting as a regulatory authority of corporate bodies.
Company Prosecutors are appointed for the conduct of prosecutions arising out of the Act. They have all the powers and privileges conferred by the code on Public Prosecutors appointed by the State Governments.
Duties of staff and employees of RoC office
The staff assists the officers in discharging duties of processing the e-forms filed by companies/LLPs, an inspection of books of account of companies, prosecution of defaulting companies, scrutiny of documents filed, an inspection of records and maintenance of records. This includes receipt and processing of:
Documents, returns and applications filed by companies/LLP’s
Applications from shareholders for payment of unpaid dividend
Preparation of reports, enquiry letters, show cause notices etc
Facilitating inspection of documents of companies by Public
Supplying certified copies of documents registered to the applicants
The recent consultation paper issued by the National Financial Reporting Authority (NFRA) generated lot of discussion in media, social media and professional circle. This consultation paper is first serious attempt from regulators to discuss a critical issue of compliance. I have made suggestion to remove requirement of compulsory audit to the Company Law Committee constituted by the Ministry of Corporate Affairs in year 2018, though not considered by the committee. I am sharing my views on this well studied consultation paper in public before submitting it to the NFRA.
The quality of statutory audit, cost audit and secretarial audit are not satisfactory because of a valid reason for which blame should be shared by the legislature. Auditors are not investigation agencies but just a watchdog who could not bark just report to Chaukidar aka Regulator. Auditors have to relied on documents, if made available or for rest on management representation letters. He cannot ascertain the truth in the representation so made, even if a suggestive draft is made by him. No such representation is made on an oath under law. The auditor have to assume it as true. Except a few cases of Government audits or regulatory audits, all auditors are appointed and importantly paid by the management of the company – the auditee not by the shareholder or any other stakeholders. None of our paymaster want any thing which may trouble the management, our paymaster.
We have number of tax audits but requirement of assessment, re-assessments and more seriously tax raids, (whatsoever fancy names government call it) are there. Should not the tax computed by the management and confirmed by tax auditor be final. If the government think it is not, these audits are Ponzi scheme of employment generation for benefit of we – the professionals.
Same way we have Satyam, Sahara, Sharada, DHFL, Srei and a long list of corporate fraud. Either auditors were co-accused or helpless. In year 2015, an auditing firm issued a public notice that the client is fraud. That was an interesting case showing helplessness of auditors. All major non-performing assets of Bank are of well audited companies. Almost all cases of non-cooperation under the Insolvency and Bankruptcy Code auditors are one of the helpless respondents. Even Forensic and Transaction Audit do not have satisfactory result. But if audit is there, why should we need so many Forensic and Transaction Audit?
Few years earlier when a reputable law firm was under scanner of law enforcement agency in a scam, private chats were full to claim professionals – Corporate Law firms, Chartered Accountants and Company Secretaries as gurus of fraud not as whistle blower. What MCA data on fraud reporting by these professionals say in relation to corporate fraud in limelight? There is no real power and motivation but pay-cuts, resignations, removal and punishment.
In corporate history the most cited reason of the resignation as position of auditor is personal reason (?), Health (??) old age (?), paucity of time (??) when without any such reason we continue with audit of other companies.
I am happy to note in most reportable frauds we have globally reputable auditing and legal firms to name (and shame?) who have most exhaustive check lists to marks ticks in mechanical manner.
Except a few, promoters have no inbuild intention to comply the law in spirit. Most of the time they do not bother on annual filing of accounts and even taxation considering it as useless cost unless there is a fine, penalty or imprisonment is waiting. Promoters leaves everything to ‘manage’ by the professionals. Only 52.48% companies filed annual account and annual return with MCA for year 2018-19 till the consultation papers while the last date was 30 September 2019. Earlier when the Ministry strike off name of many such companies defaulting in filing of annual accounts and annual returns, the most used ground to seek restoration was lack of professional advice. If you have no idea of the route of business in corporate, why are you on the corporate highway? Promoters need to be responsible from day one. Contrary to the legislative intention, Audit provide them window to shift responsibility and blame.
This is interest data shared in the consultation paper: 30.26% companies paid no fees to the auditors, 6.79% companies paid less than Rs. 5,000/-. No professional can devote more than 5 hours on these audit assignments in reality. What assurance these accounts and audit provide to stakeholders? No, I am not raising question on all these companies as professionals give huge discounts to new companies, companies with no turnover or facing troubled time. A good number of these assignment may be attached with a well-paying group company or promoter. In a good number of these companies the auditor himself or their related entity write accounts. However, question remain of the real value of the audit in these companies.
In these cases, the audit is not the actual assignment. The actual assignment is account writing. The audit assignment just ensure that the account writing will not go to a non – professional accounting graduate and may improve the quality of accounts slightly.
Baseline of NFRA Consultation
“A majority of these MSMCs is essentially family-owned enterprises formed as companies for the sake of limited liability, or to get bank loans, bus route permits, mining licences, and the like. They are effectively glorified proprietorships or partnerships. There is no public interest in foisting external audit on them. In any event, it is clear that such audit as is being carried out cannot boast of any quality at all.”
I have no disagreement on this observation except limited liability concept. Limited liabilities of a promoter end in India as soon as a company seek loan. Personal Guarantees of promoters effectively make small companies unlimited liability firm in real sense. (Discussed this aspect earlier here). These promoters do not attract with the limited liability concept. They choose a reputation called director or managing director, which comes with a company. If they have money and big family, they will not choose a private company but public company as in popular terms directorship of limited company bring more reputation than directorship of private limited companies. Same time various rules related loan, license, authorizations, permits and like favor companies than partnerships and proprietor firms. You can choose a good and unique name unlike partnership and proprietor concern which have no mechanism to ensure unique name.
I agree there is no benefit of audit in a family-owned company without any external liabilities. To my understanding all companies with small shareholding should have self-certification from shareholder – directors about the fair and correct accounts. We have such practice in case of limited liabilities firms. They may otherwise made aware not to make such certificate unless they are sure or have counter certificate from a professional.
However, in the audit may be conducted without requirement of filing audit report to the Government, where:
article require audits;
a shareholding or investment agreement require audit;
there is a contractual requirement of audit;
the board of director opt for audit;
Shareholders with a simple majority opted for audit of one or more year;
In following cases, there audit report should be filed with the Government:
Any enforcement agency requested an audit for ono or more year;
One or more scheduled bank require audit with filing of such requisition to MCA by such bank. In such case, the auditor appointed in first requisition shall conduct audit. In case of any subsequent request, report of auditor appointed in first request be made available to all banks having exposure.
Where there is a repayment default for three continuous months or four months in a financial year, an audit including a forensic and transaction audit be conducted with prior intimation by banks to RBI and MCA.
The company made an erosion of net worth of more than 10% after 3 years from incorporation, on application by shareholders with more than 1% shares, the Registrar of Companies may direct companies to have an audit.
Where company fail to file its self-declaration accounts and annual return for more than two financial years.
Whether or not my suggestion accepted, I will strongly suggest no statutory audit in first five years for a small company.
NFRA requests views/comments
My Draft Reply
Do you think that Micro, Small and Medium Companies (MSMCs) depending upon some criteria and threshold should be exempted from the mandatory statutory audit under Companies Act, 2013? If not, why not and if yes, what would be the criteria and thresholds for exemption?
Yes. All MSMCs which are private companies with less than 10 members having voting powers should be exempted from mandatory statutory Audit. All MSMCs which are wholly owned subsidiaries may also be exempted. In case of all contractual requirement of audit, filing should not be required. In case of certain well enumerated defaults or requisitions, the Registrar of Companies may order audit for one or more years being year not earlier than 3 years from the date of such order. Such audit report may be required to be filed with the Registrar and be a public document.
Do you think there is a requirement for a separate set of auditing standards for MSMCs as it exists for accounting standards? If no, why not and if yes, what should be the basis for the same?
I do not think so. All companies should have accounting and audit on same pattern, where require to have audit. This will help companies to follow same set of internal and external audit upon growth. This will also help investors, present and future
The cost of conducting an audit as per the prescribed standards is an important input for the responses to Questions 1 and 2. Do you agree with the approach for estimating standard cost of audit computed by NFRA?If not, which areas/ assumptions need changes?
The cost of conducting an audit should not be prescribed and should be leaved to the market forces. However, where it is unreasonable low or high, the auditor should explain.
Do you think the current exemption thresholds for CARO, ICFR and statutory audit applicability need to be standardised and made uniform? Ifno, why not and if yes, what would be the criteria and thresholds?
Other than exemption to MSMCs, no change is required as of now. All companies where CARO, ICFR and Statutory Audit is not applicable, there should be a corresponding self-declaration to file with the Registrar signed on behalf of the Board and be placed in the General Meeting for adoption.
The concept of ‘Symbiosis’ is nurtured by Dr. S. B. Mujumdar (Chancellor, Symbiosis International (Deemed University)) on the principles of Vedic thought ‘Vasudhaiva Kutumbakam’ which means ‘World as One Family’.
Symbiosis Law School (SLS) Hyderabad was established in 2014 inheriting splendid novelty, dynamism and excellence under the aegis of Symbiosis International (Deemed University), Pune.
About the Centre:
Established in 2018, the Centre for Corporate and Competition Law (CCCL) is a student-run centre aiming to provide a platform for students of the institute to explore and learn more about the nuances of Corporate and Competition Law, and to prepare them for the corporate world. To advance our agenda, CCCL has been successful in conducting multiple landmark events in the history of our institute, which has carved a niche corner for our centre within the legal fraternity. Amongst others, CCCL conducted our flagship event, the first-ever National Corporate Restructuring Competition in India in 2019. We have also spread our roots into banking law by conducting a three-day value-added course on Insolvency and Bankruptcy Code. Over the past two years, we have invited eminent personalities like Mr. Dhanendra Kumar, first Chairperson of the CCI and Dr. K. D. Singh, Joint Secretary for Law at CCI conduct webinars on relevant topics.
About the event:
The centre is conducting a national discussion on ‘challenges in online contracts: an international perspective”, 17th October, 2021.The event aims to provide a platform for the participants to have an intellectual discussion on the given theme amongst themselves. This event will have a total maximum of 20 participants, including students and professionals, who will come together to express their views on the given topic. Selected participants are expected to do thorough research on the subject and associated topics. The panellist will be facilitating the discussion and proving insights wherever requires. She shall also guide the participants and assess their performance.
To register for the national discussion fill in the google form attached below.
Theme: “Challenges in Online Contracts: An International Perspective”
Date: 17th October, 2021.
Time: 12:30p.m. to 2:00 p.m.
Platform: Will be intimated on confirmation of participation.
Last day to register: 11th October 2021 before 11.59 p.m.
Dr. P. Sree Sudha is the Assistant Professor at Damodaram Sanjevayya National Law University (DSNLU), Visakhapatnam. She has completed her LL.D (2016) from National Law School of Indian University, Bangalore. Her areas of specialization are International Trade Laws, E-commerce Law, Intellectual Property Law and Tax Law. She has been the recipient of Four gold medals from Andhra Pradesh University for scoring the highest marks in B.L. Addition to this she has also been a visiting faculty to GITAM School of International Business, GITAM University and has been the Assistant-editor for Journal Academy of Jursitical Studies.
Co-existence is the key to survival. The legal ecosystem for corporate India is no exception. For better survival, we need the help of numerous professionals who, in turn, have multiple qualifications. Chartered Advocates, Accountants, Company Secretaries, Cost Accountants, Insolvency professionals and Registered Valuers and other professionals work together. However, their contractual relationship had no formal legal structure.
8 July 2021 shall be a memorable day for professionals when multidisciplinary firms become legally possible.
There was a beginning when the Institute of Company Secretaries of India (ICSI), on 3 February 2020, amended its regulations (The Company Secretaries Regulations, 1982).
Regulations 165A of CS Regulations permits company secretaries to form multidisciplinary firms: A member in practice may form a multidisciplinary firm with the member of other professional bodies as prescribed under regulations 168A and 168B in accordance with the regulating guidelines of the Council for functioning and regulation of such multidisciplinary firm.
Regulations of professionals like the Institute of Chartered Accountants of India have similar provisions.
A Company Secretary may share or accept fee, commission, a brokerage in the fee or profit or enter into partnership, or accept work only from members of particular professional bodies or person having specific qualifications. [Clause (2)-(5) of Part I of the First Schedule to Act – ICSI Act and ICAI Act] According to Regulation168B of CS Regulations, A company secretary, other than any other Company Secretary, may enter into a partnership with a member of any of the following professional bodies, namely:
(a) The Institute of Chartered Accountants of India;
(b) The Institute of Cost Accountants of India;
(c) Bar Council of India;
(d) The Institute of Engineers or Engineering from a University established by law;
(e) The Indian Institute of Architects;
(f) The Institute of Actuaries of India; and (g) Professional bodies or institutions outside India whose qualifications relating to Company Secretary recognized by the Council under Sub-section (2) of Section 38 of the (ICSI) Act.
There is a similar provision in Regulation 53B of CA Regulations. A Chartered Accountants, other than any other Chartered Accountants, may enter into a partnership with a member of any of the following professional bodies, namely:
(a) The Institute of Company Secretaries of India;
(b) The Institute of Cost Accountants of India;
(c) Bar Council of India;
(d) The Institute of Engineers or Engineering from a University established by law;
(e) The Indian Institute of Architects;
(f) The Institute of Actuaries of India; and
(g) Professional bodies or institutions outside India whose qualifications relating to Company Secretary recognized by the Council under Sub-section (2) of Section 29 of the (ICAI) Act.
The Institute of Chartered Accountants of India has on 8 July 2021, notified a form to establish multidisciplinary firms by substituting its existing Form 18 in Schedule A of its Regulations. This form comes into force from 8 July 2021.
The Institute of Company Secretaries is in the process to finalize relevant forms and guidelines. Present Form1 does not support multidisciplinary firms.
S.No. 3 of Form 18 have two tables: the first for members having qualifications like Chartered Accountants, Company Secretaries and Cost Accountants and the second table for partners holding other qualifications.
Such multidisciplinary firms shall have a name with prior approval of the councils of all institutes or regulatory bodies. This requirement may be a real challenge if all governing bodies require approval of trade name or firm name from these bodies.
My law teacher told me in law class, human is a social animal. Yesterday I found, modern human is social media animal. Last two days, we received a flood of social media messages claiming change in definition of small and medium enterprises. Only a fine reader can point out misunderstanding caused by this statement.
We need to understand interplay of the Companies Act, 2013, Micro, Small and Medium Enterprises Development Act, 2006 and newly notified the Companies (Accounting Standards) Rules, 2021.
No Government can change even a single alphabet in an Act of Parliament by way of notification of a Rule unless power is given specifically. Definition of the small companies is given in the definition clause Section 2(85) of the Companies Act, 2013:
“Small company” means a company, other than a public company, —
(i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and
(ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees:
Provided that nothing in this clause shall apply to—
(A) a holding company or a subsidiary company;
(B) a company registered under Section 8; or
(C) a company or body corporate governed by any special Act.
The definition under this definition clause is applicable wherever word “small company” in the Companies Act, 2013. This definition may be amended by the Companies (Specification of definitions Details) Rules, 2014 or any amendment therein. No amendment in this general definition may be made by the Companies (Accounting Standards) Rules, 2021 or its earlier version.
Rule 2(1)(t) of the Companies (Specification of definitions Details) Rules, 2014 with effect from 1 April 2021 amends the definition of Small Company saying that For the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small company shall not exceed rupees two crores and rupees twenty crores respectively.
The final definition of small company under Section 2(85) read with Rule 2(1)(t) of the Companies (Specification of definitions Details) Rules, 2014 with effect from 1 April 2021 is hereunder:
“Small company” means a company, other than a public company, — (i) paid-up share capital of which does not exceed two crores rupees or such higher amount as may be prescribed which shall not be more than ten crore rupees; and (ii) turnover of which as per profit and loss account for the immediately preceding financial year does not exceed twenty crore rupees or such higher amount as may be prescribed which shall not be more than one hundred crore rupees: Provided that nothing in this clause shall apply to— (A) a holding company or a subsidiary company; (B) a company registered under Section 8; or (C) a company or body corporate governed by any special Act.
Any change in the definition of small company, more than ten crore and one hundred crore respectively for paid up capital and turnover shall require an amendment to the Companies Act, 2013.
This definition in the Companies Act, 2013 is applicable for all purposes of the Companies except (a) the accounting practices therein and (b) benefits provided by the Government to MSMEs.
The Companies (Accounting Standards) 2021 deals with the presentation of company accounts.
The term enterprises mentioned in Accounting Standards and the Companies (Accounting Standards) Rules is specific and restricted only to companies not any other form of enterprises. It is not applicable to all industrial undertaking, business concerns or other establishments except companies.
The Companies (Accounting Standards) 2021 defines Enterprises in Rule 2(d):
“Enterprise” means a ‘company’ as defined in clause (20) of section 2 of the Act.
Thereafter the Companies (Accounting Standards) Rules 2021 defines “Small and Medium Sized Company (SMC)” not small and medium enterprises (SME). Definition of small enterprises and medium enterprises is given in the Micro, small and Medium Enterprises Development Act, 2006 as amended time to time. We have already discussed this definition in details here earlier.
The definition of “Small and Medium Sized Company (SMC)” in Rule 2(e) of the Companies (Accounting Standards) Rules 2021 is hereunder:
“Small and Medium Sized Company” (SMC) means, a company-
whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India;
which is not a bank, financial institution or an insurance company;
whose turnover (excluding other income) does not exceed two hundred and fifty crore rupees in the immediately preceding accounting year;
which does not have borrowings (including public deposits) in excess of fifty crore rupees at any time during the immediately preceding accounting year; and
which is not a holding or subsidiary company of a company which is not a small and medium-sized company.
Explanation. – For the purposes of this clause, a company shall qualify as a Small and Medium Sized Company, if the conditions mentioned therein are satisfied as at the end of the relevant accounting period.
For different purposes a company may either be:
Small Company or not;
Small and medium sized company or not;
Micro enterprises or small enterprises or medium Enterprises or none of these three.
It all depends upon relevant definition for the time being in force. One company may fall in one or more or none of these categories. Simple check points are:
Small and Medium Sized Company
Micro Small and Medium Enterprise
Paid up Capital
Investment in Plant and Machinery
The companies (Accounting Standards) Rules 2021 has limited applicability with respect to applicability of accounting standards in relation to books of account of companies. These rules come into effect from the date of publication which is 25 June 2021 not on its issue date which is 23 June 2021. Further Rule 3(2) made it clear that accounting standards notified under these rules comes into effect retrospectively from 1 April 2021.
“In the Companies (Meetings of Board and its Powers) Rules, 2014, rule 4 shall be omitted.”
In much-hyped digital India and the digital economy, this was a bureaucratic legacy. In the early days of digitalization, neither top government officers nor senior directors were comfortable with the digital display of papers. Even when Indian companies and directors start showing comfort with online meetings, some matters were reserved for physical board meetings. We love a gathering and get-together too.
Rule 4 lists particular items which should be discussed in a physical board meeting only.
Original as on 1 April 2014
As on 14 August 2014
(i) the approval of the annual financial statements; (ii) the approval of the Board’s report; (iii) the approval of the prospectus; (iv) the Audit Committee Meetings for consideration of accounts; and (v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
(i) the approval of the annual financial statements; (ii) the approval of the Board’s report; (iii) the approval of the prospectus; (iv) the Audit Committee Meetings for consideration of financial statement including consolidated financial statement, if any, to be approved by the Board under sub-section (1) of section 134 of the Act; and (v) the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover.
One significant change came into force on 7 May 2018 when relief was granted to attend a board meeting by directors not physically present at the venue, where the quorum is present at the venue of the physical meeting. The provision read:
“Where there is quorum presence in a meeting through the physical presence of directors, any other director may participate conferencing through video or other audiovisual means.”
This relief was drafting or interpretation hardship. What was the position of directors present through video or other audiovisual means? Where they actually or legally present? If yes, will they be counted for quorum? If not counted for the quorum, will they be able to express their opinion? Will they vote?
Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 was paused on 19 March 2020. Finally, it could not survive from COVID – 19.
Before that, it hoped for a life revival on 30 September 2020, 31 December 2020 and finally on coming 30 June 2020. A stroke of mighty killed it on 15 June 2021.
Now, the deletion of Rule 4 paved the way for a full digital Board for companies. There is no legal restriction to have a digital meeting.
Soon, board rooms may not be in our corporate houses. Not only that, the hospitality industry may miss some of its frequent visitors. Their meeting rooms may be reshaped as shared offices.
One corporate feature we will not miss surely – a destination board meeting. I hope some of our clients will invite us for a destination board meeting in the year 2022.
At the hight of the cold wave at New Delhi, Ministry of Corporate Affairs suddenly awakens to issue two circulars within hours. We have an interesting observation: the first one published a regular font Arial/Times New Roman (who cares the font) but second used a font called – Comic Sans MS. Use of the font in a law communication communicates. We will read this circular in this post.
The circular may use simpler language. Without a straightforward acknowledgement of the fact, many companies could not convene their Annual General Meeting due to be held in calendar 2020 it provide a bit of relief.
The circular applies to companies whose Annual General Meetings:
Were due to be held in the year 2020 (but could not be conducted due to whatsoever reason); or
Become due in the year 2021.
The Government decided to allow these companies to conduct their meetings on or before 31 December 2021.
The circular clarifies that such Annual General Meetings may be conducted in accordance with Circular 20/2020. The Circular 20/2020 allows companies to conduct Annual General Meetings through Video Conferencing or any other audiovisual mode.
The first paragraph of the circular may create two confusions:
a. Due date for the Annual General Meeting for Annual General Meeting legally due to be held any time during the year 2020 is extended till 31 December 2021.
b. Due date for the Annual General Meeting for Annual General Meeting legally due to be held any time during the year 2021 is extended till 31 December 2021.
This possible misinterpretation immediately clarified in the second paragraph.
The second paragraph clarifies that no extension is allowed. All these companies should follow legal time-limits or face legal actions.
We consider the circular as an indication of the government understanding of difficulties faced by companies. Same time it clarifies that no extension is coming for AGM missed 31 December 2020 deadline.
Secondly, the Government is planning a few announcements in the Budget speech.
The most important take away from the circular is hidden advice: Companies should not take the risk for the year 2021.
According to the law, any company which missed legal timeline in the year 2020 may opt for compounding but repeated miss in the year 2021.
I hope the Government will compound the offence of not holding Annual General Meeting timely during the year 2020 with ease.
Government bless us.
[P.S.: I have no interpretation of the font used.]
Aishwarya Mohan Gahrana
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The Journal Committee (“Committee”) at Dr. Ram Manohar Lohiya National Law University, Lucknow, in collaboration with Regstreet Law Advisors, is organising 8th edition of the RMLNLU International Legal Essay Writing Competition (“RILEC”) along with RMLNLU-Regstreet Law Advisors Conference on Financial Regulatory law on 14 March, 2021.
Regulatory hurdles to the growth of a successful IFSC in india
Financial regulations and the innovation in fintech
Direct overseas listing
Resolution of financial firms
Analysis of the stock exchange responses to curb the pandemic caused volatility
Social stock exchange
Trading member default
Authors must be pursuing their 5-year integrated LL.B. (Hons.) course / 3 year LL.B. course / LL.M. from any recognised university in India and equivalent law degree, abroad for the academic year of 2020-2021, to be eligible to participate in the Competition.
All entries will be judged and ranked by the Regstreet Law Advisors and Journal Committee. The last date for submission is 17 January 2021. A maximum of top five entries will be selected for the virtual conference to be organised on 14 March 2021. The participants may adopt any suitable means for presenting the papers including audio-visual aids, such as PowerPoint presentation.
The selected entries will be considered for publication in the next issue of RMLNLU Law Review Journal & the RMLNLU Law Review Blog. The top three essays will be conferred with rewards.
Co-authorship of entries (maximum two) among individuals from the same or different institutions is allowed.
Multiple entries for same authors are not allowed.
A participant may submit an entry related to ONE sub-theme ONLY. One may not juxtapose sub-themes in an entry
Entries should be original, unpublished and non-plagiarised.
Word Limit: 4000-5000 words (excluding footnotes).
Individual Attachments: Name; contact details; current academic status (Year, University etc.); undertaking as to guarantee of originality
Font and size for the essay: Times New Roman | 12
Font and size for footnotes: Times New Roman | 10
Line spacing: 1.5
Citation Style: Uniform style of citation should be followed throughout the essay.
The file name must consist only of the author’s name.
Entries should be emailed to email@example.com under the subject title “Entry for 8th RILEC – [Name(s) of Author(s)]” in Microsoft Word (.doc or .docx) format.
The last date for the submission of soft copies is 17th January, 2021.
The copyright for all entries shall vest with the organisers who herewith reserve the right to modify, postpone or defer the competition and its adjudication indefinitely as and when exigencies of an unforeseen nature may arise.
Any attempt, direct or indirect, to contact the panel of judges will be met with the immediate disqualification of the relevant entry.
Any indication of author’s name or university in the entry shall lead to immediate disqualification from the competition.
Winner – INR 15,000
First Runner Up – INR 10,000
Second Runner Up – INR 5,000
Top three entries will be receiving a ‘certificate of achievement’ and an opportunity to intern at Regstreet Law Advisors.
A ‘certificate of merit’ shall be provided to the selected entries.
The year 2020 is an unprecedented year of unusual era. Technology is helping us to survive. In an earlier post Virtual Reception, Lobby and Meeting Rooms, we discussed the process of online hearing in NCLT and NCLAT. Both Tribunals were till recently hearing urgent matters only. Now, Tribunals are switching to regular cause lists. With new normal, tribunals will hear matters in video conferencing mode.
Video conferencing apps are the talk of the earth since COVID-19 lockdown and slowdown. Now Webex, Zoom, Google meet and other such apps are a household name. We all are using these apps for our Board Meetings, General Meetings and court hearings. However, none yet officially recognised WhatsApp as a tool assisting us in the court hearing, but it is doing its role without a celebrity public appearance.
A company website is not a simple affair of contents, design, SEO and brand building. It is more about compliance. A company may choose not to have a website. Once, a company decide to have a website; it should comply essential requirement of laws.
Ministry of Corporate Affairs has issued many amendment rules and circulars during the month of September 2020 for the ease of doing business. Though one thing always remains – chaos. In this brief post, we will discuss these ease and remaining chaos briefly.
Just a few days earlier, we made a case here for a general extension for holding Annual General Meeting. The way Government responded through General Circular 28/2020, (presently not accessible) dated 17th August 2020, was not appreciated by Industry and Professional. Now, the Ministry of Corporate Affairs allowed all Registrar of Companies to pass general orders for a general extension for holding Annual General Meeting. Why am I not truly satisfied with these orders?
During a call with a startup client, we heard the term investor Nth time. “What is a need for investor or investment? It is a self-sufficient business plan.” These days no promoters of startup interested in sales and services but on investment pouring in. They even do not have a plan of servicing of investment which may pour in. Continue reading →
What the Government did? It did not allow any extension as of now. It has not accepted a request to grant a general extension for holding the Annual General Meeting by companies. The Government, in its clarification, mentioned good reason for denial but missed the single and straightforward reason to grant a general extension. We discuss.
There is a common property of the God, Rupee and Shares? I replied. The question was how a share look like. Though it may be hard to believe but these three have an ultimate abstract only. You can see an idol of the God or gods, a note of one rupee or more rupees, a certificate of one or more shares, never the God, Rupee and Share (in a normal life). We will discuss a share in following paragraphs.
The Concept of Wholly Owned Subsidiary is an anti-thesis of the concept of the company. At least two persons are required to form a company which is true for wholly-owned subsidiary – but in case of wholly-owned companies one or more registered shareholder declare that one or more beneficial interests in their shares are with a particular company or body corporate.
Writer of this blog, Aishwarya Mohan Gahrana is Practicing Company Secretary and Insolvency Professional working with M/s Aishwarya M Gahrana & Associates, a New Delhi based peer reviewed firm of company secretaries having pan India presence through friends and associates. This blog is a knowledge sharing initiative. Views expressed here is of writer; not of the organization(s) he is working with.
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