In a rare gesture, Ministry of Corporate Affairs notified two orders for Removal of Difficulty on same date. I have no legal understanding for the requirement of two separate orders, except little drafting hurdle of combined order for its statement of reason or preamble.
Now, we will discuss both orders here.
Posted in Chapter II - CA2013, Chapter IX - CA2013, Companies Act 2013
Tagged the Companies (Auditor’s Report) Order 2015, The Companies (Incorporation) Rules 2014, the Companies (Indian Accounting Standards) Rules 2015, The Companies (Removal of Difficulties) Order 2016, The Companies (Removal of Difficulties) Second Order 2016, The Companies Act 2013
One of the biggest concerns among stakeholders related to incorporation of companies in India was diverse practices across Company Registrar Offices related to documentation. There was a joke that Registrar Offices colour of ink using which documents should be signed, which will otherwise be scanned in black. All this was due to different interpretation of relatively simple laws related to incorporation. It was learned that Institute of Company Secretaries of India initiated for discussion across registrar offices and professionals to bring consensus among registrar offices. Many time Registrar transferred from one offices to another bring their local practise to another jurisdiction or adopt new one, keeping aside own interpretation. Without any doubt, majority of visit to Registrar Offices was related to incorporation only.
This year bring a welcome change. New financial year will be new as far as company incorporation is concern. Even though, I still see opportunity for more reform.
Recently introduced amendment bill to the Companies Act, 2013 propose to reintroduce unlimited liability for members in certain cases. Though, similar provision was there in earlier in the companies Act, 1956; I have no intention to go into history; but to examine this provision in light of justice and equity.
Recently, this blog received request form small promoters and investors asking information to receive information about company. Individual investors express fear about own investment in own companies.
Though, I suggest them to get professional help from local company secretary or chartered accountant, if company secretary is not available in their locality. But a simple, Do It Yourself (DIY) may help them.
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Central Registration of companies is under consideration since long and is being considered on different forums. The Central Government silently launched a pilot project for setting of Central Registry for companies in India. This should initiate more actively by all interest groups to avoid any future concern, as happened in case of companies. In this post, we will discuss notification setting the Central Registration Centre and corresponding amendment in the Companies (Incorporation) Rules 2014.
National Herald was a newspaper and is a building and, for most political activist on social media, a case by a politician against its rivals.
Companies Act, 2013 uses city 3 times (without taking subordinate legislations into account):
The Companies Act, 1956 also used this term in similar reference.
On 5th June 2015, Ministry of Corporate Affairs posted here a draft notification to be published in Official Gazette announcing some exemption to Private Companies.
As there is no effective date is announced in the Notification, this notification shall come into effect on the date of its publication in the Official Gazette.
[UPDATE 20th June 2015: MCA uploaded copy of Official Gazette dated 5th June 2015, in which this Notification is published. Meaning that; These exemption came into force from that date]
The Notification is issued in exercise of power conferred by Clauses (a) and (b) of Sub – section (1) of 462 read with sub –section (2) of said section of the Companies Act, 2013. A copy of this notification has been laid in draft before both Houses of Parliament as required by sub-section (2) of section 462 of the Companies Act, 2013.
Paragraph 2 of the Notification cast a condition on the Private Companies:
On 5th June 2015, Ministry of Corporate Affairs posted here a draft notification to be published in Official Gazette announcing some exemption to Not for profit Companies.
As there is no effective date is announced in the Notification, this notification shall come into effect on the date of its publication in the Official Gazette.
[UPDATE 19th June 2015: MCA uploaded copy of Official Gazette dated 5th June 2015, in which this Notification is published. Meaning that; These exemption came into force from that date.]
The Notification is issued in exercise of power conferred by Clauses (a) and (b) of Sub – section (1) and sub – section (2) of 462 read with Section 8 of the Companies Act, 2013. A copy of this notification has been laid in draft before both Houses of Parliament as required by sub-section (2) of section 462 of the Companies Act, 2013.
Paragraph 2 of the Notification cast a condition on the Not for Profit Companies:
Yes, you rightly read. Commencement of business suspended. One of fellow professional colleague told me with exclamation!!
Ministry of Corporate affairs few days ago announced about launch of updated versions of few forms including Form INC – 21 which is a declaration required to be filed before commencement of business or exercising borrowing powers. But suddenly stakeholders found that while updated version of all other forms is there, there was no Form INC – 21 on the portal.
A statement issued just said that due to deletion of Section 11 of the Companies Act, 2013 by relevant section of the Companies (Amendment) Act, 2015, which came into force on or before there is no requirement of Form INC – 21 remain. Earlier, the companies (Incorporation) Second Amendment Rules 2015 were also notified. The Form was removed from MCA 21 Portal on date 4th June 2015. By virtue of commencement of the Companies (Amendment) Act, 2015, this date legally is 29th May 2015.
What is in name? Everyone had said it sometimes in life. Here, I am discussing what is in display of name.
Every professional practicing Corporate Law, selecting a name is rather a complex issue. When promoters select name for proposed company or a company try to change its name, there is complex rules. Rule 8 of the Companies (Incorporation) Rules, 2014 list undesirable names. Thereafter, a promoters or company, as the case may be, have to reserve selected name before further steps. All these are not within scope of this post.
Noun Object Private Limited (OPC)
Recently, when Registrar of Companies issued a Certificate of Incorporation for a One Person Company. A question was raised whether name as appeared on Certificate is correct and proper or not? How company will present this name to public, as it appear on certificate or in some other manner.
The Ministry of Corporate Affairs placed here on its website a draft of the Companies (Incorporation) Second Amendment Rules, 2015. These amendment Rules will come into force from the date of its publication in Official Gazette.
These amendment rules proposed to amend:
Application for incorporation of companies:
The Amendment Rules introduce a proviso to Rule 12. After this amendment, Rule 12 of the Companies (Incorporation) Rules 2014 shall read:
Irrespective of political parties in power, Government of India fails to deliver any substantial ease of doing business or living life. #EaseOfDoingBusiness #EaseOfLivingLife
There is no real delivery except creating some online filing like MCA21 and online payment of fees, taxes and duties in first fifteen years of this 21st century. Switching to online environment from paper environment is just change of mode not a relaxation for ease of doing business or ease of living life from the side of government. This is just a technical advancement without role of government. One can understand it switching from inkpot system to fountain pen or ballpoint pen, which was also resulted in substantial reduction of time. Another example may be paper based tax calculation to calculator based tax calculation.
Presently, government has also come out of another gimmick called integrated incorporation forms. Without digging deep, name just suggests; there is no ease just integration. Instead of less pain, all quantum of pain at one place one time with more possible error of treatment at once. #EaseOfDoingBusiness #EaseOfLivingLife
Posted in Chapter II - CA2013, Companies Act 2013, Governance and Responsibility, Truth of Our Time
Tagged Corporate Law, Ease of Doing Business, Ease of Living Life, India, Kheej of Doing Business, Ministry of corporate affairs, Official Gazette, Tease of Doing Business, The Compaanies (Incorporation) Amendment Rules 2015, The Companies (Incorporation) Rules 2014, The Companies Act 2013
Form INC-7 is required to be filed pursuant to Section 7 (1) of the Companies Act, 2013 and pursuant to Rule 10, 12, 14 and 15 of Companies (Incorporation) Rules, 2014. New version of this form came into force from 1st May 2015 by the Companies (Incorporation) Amendment Rules 2015. This replaced earlier version of Form INC – 7 discussed earlier here.
Form INC-7 deals with incorporation of a new company (other than OPC). This form is accompanied by supporting documents such as details of Directors/subscribers, the Memorandum of Association (MoA) and Articles of Association (AoA) and evidence of payment of stamp duty. Once the Form is processed and found complete, a company is registered and CIN is allocated.
The Form INC – 7 is not required where Integrated Incorporation Form INC – 29 was opted by applicant.
Form INC – 22 is required to be filed pursuant to Section 12 (2) & 12 (4) of the Companies Act, 2013 and Rule 25 and 27 of the Companies (Incorporation) Rules, 2014.
New version of this form came into force from 1st May 2015 by the Companies (Incorporation) Amendment Rules 2015. This replaced earlier version of Form INC – 22 discussed earlier here.
The company is required to furnish to the Registrar verification of its registered office in Form INC – 22 within a period of thirty days from the date of its incorporation. The company can also specify the address of registered office at the time of filing incorporation Forms. For this, the applicant shall upload Form INC-22 as linked form to Form INC-7. In case of One Person Company, the particulars of the registered office address can be filed in Form INC-2 only. Any change in situation of the registered office thereafter, the company is required to notify to Registrar in Form INC-22 within fifteen days of such change.
Form INC-29 deals with the single application for reservation of name, incorporation of a new company and/or application for allotment of DIN. This Form is accompanied by supporting documents including details of Directors & subscribers, MoA and AoA etc. Once the Form is processed and found complete, company would registered and CIN would be allocated. Also DINs gets issued to the proposed Directors who do not have a valid DIN. Maximum three Directors are allowed for using this integrated form for allotment of DIN while incorporating a company.
Select the type of proposed company under drop-down provided. Producer Company should be selected only in case company complies with the provisions of Part IXA of the Companies Act, 1956. Incorporation of a charitable company under section 8 and company defined under chapter XXI of the Companies Act, 2013 are not facilitated under this integrated incorporation form.
Posted in Chapter II - CA2013, Companies Act 2013
Tagged Companies Act 2013, Corporate Law, Ease of Doing Business, India, Integrated Incorporation Form, Ministry of corporate affairs, One Person Company, The Companies (Incorporation) Amendment Rules 2015, The Companies (Incorporation) Rules 2014, undisered names
At the time of writing this blog post, I have no information of publication of the Company (Incorporation) Rules, 2015 which seems to come into effect with effect from 1st May 2015 as Official MCA21 portal has issued all forms prescribed under these forms.
I have no words of advice on enforceability of these rules until copy of publication in official gazette. These Rules come into effect only after publication in official gazette. [Rule 1(1) of the Companies (Incorporation) Amendment Rules 2015]
Penalty:
In original Rule 5 discussed earlier here, penalty in relation to contravention of these rules by One Person Company or its officer was prescribed. Rule 5 of these rules is being deleted.
But penalty is still there. New Rule 7A is introduced for the purpose. I highlight effect in deletion of rule 5 and introduction of rule 7A here:
Posted in Chapter II - CA2013, Companies Act 2013
Tagged Companies Act 2013, Corporate Law, Ease of Doing Business, India, Indian Companies Act, Integrated Incorporation Form, Ministry of corporate affairs, One Person Company, The Companies (Incorporation) Amendment Rules 2015, The Companies (Incorporation) Rules 2014, Undesired Names
The Companies Amendment Bill 2014 has been introduced and passed in Lok Sabha recently. This blog post has intention to analyse proposed changes in the Companies Act 2013.
Most important massage, this amendment prepares a best case for drafting skill development programmes in India. I am reading here this Bill clause by clause. This will be a three part series and part 1 of 3 is present here.
To amend clauses (68), (71) of Section 2 and Section 11 of the said Act to omit the requirement for minimum paid-up share capital [Clause 2 and 4 of the Amendment Bill]:
Posted in Chapter I - CA2013, Chapter II - CA2013, Chapter V - CA2013, Chapter VII – CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Common Seal, Companies Act 2013, Corporate Law, deposits, India, Ministry of corporate affairs, Private Company, Public Company, Registrar of Companies, Resolution, The Companies Amendment Bill 2014
Section 18 of the Companies Act 2013 discussed earlier here talk about conversion of companies. In Rule 7 of the Companies (Incorporation) Rules 2014 list out formalities for conversion of a private company into a one person company.
A private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakhs rupees or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting. [Rule 7(1)]
We have discussed incorporation of Companies including non – profits under Section 8 of the Companies Act 2013 earlier here. But these companies may require to convert in a for profit company due to various region. There is a provision of conversion of non – profit company to a for profit company under the Rules 21 and 22 of the Companies (incorporation) Rules 2014.
A company registered under section 8 which intends to convert itself into a company of any other kind shall pass a special resolution at a general meeting for approving such conversion. [Rule 21(1)]
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