Category Archives: Chapter IX – CA2013

ACCOUNTS OF COMPANIES

REPORT ON CORPORATE SOCIAL RESPONSIBILITY

Posted on February 19, 2022 | Leave a comment

Form CSR – 2, notified vide GSR 107(E) on 11 February 2022, is on our desk to fill and file. If you have missed the information overflow, the last date for filing the same for the financial year ended on 31 March 2021 is 31 March 2022. I am not sure of the mechanism, but it may be an attachment of Form GNL – 2.

It seems next year onward; this will be an addendum, not the attachment, to Form AOC – 4/ AoC – 4 XBRL/ AoC – 4 NBFC (Ind AS).

Notification GSR 107(E) on 11 February 2022

We cannot wait but to prepare the data to fill for all of our valuable clients – every company covered under the provisions of sub-section (1) to section 135. Please refer to the newly inserted Rule 12(1B) of the Companies (Accounts) Rules, 2014.

List of Documents for support:

  • Copies of Audited Balance Sheet of last three financial years;
  • Form AOC – 4/ AoC – 4 XBRL/ AoC – 4 NBFC (Ind AS) filed for the financial year [referred hereinafter as AOC-4];
  • Form MGT – 7 filed for the financial year;
  • Paid Challan for Form AOC – 4/ AoC – 4 XBRL/ AoC – 4 NBFC (Ind AS) filed for the financial year [referred hereinafter as Challan];
  • Latest Board Resolution constituting CSR Committee;
  • Constitution of CSR Committee;
  • Minutes of CSR Committee Meetings held during the financial year [FY 2020-21;
  • Company Website with Compliance menu and CSR Tab thereunder;
  • Impact Assessment Report of each CSR Project;
  • CSR Ledger and CSR Bank Account Statement for the financial year;
  • Bank Statement of Unspent CSR Account for previous three financial years;
  • Annual Action Plan CSR for the last financial year; and
  • The Implementation Reports for each of the CSR Projects as on 31 March of the financial year with minutes of the CSR Committee meeting considering the same [For all projects completed during the last financial year or ongoing as on 31 March of the financial year].

Information to Fill:

The net worth, turnover, and net profit data should be the same as Form AOC – 4 filed for the financial year.

Meeting details of the CSR Committee should confirm the details from the latest Board Resolution constituting the CSR Committee and Minutes of the meeting of CSR Committee held during last Financial Year.

The Impact assessment report should be on your desk for confirmation and on the company’s website at least before you fill out the Form. The weblink should be in working condition. I am not sure if the link’s implication got broken in the future. Therefore, it is advisable to attach the report with the Form.

The set-off amount should be taken from the balance sheet or confirmed by your auditor.

The company should confirm CSR obligation with audited balance sheets of the last three financial years.

Details of each (A) Ongoing project started in previous years completed in Financial year, (B) Ongoing project started in previous years still not completed in Financial year and (C) project initiated and completed during the Financial Year:

  • Project ID;
  • Item number from Schedule VII – CSR Schedule;
  • Name of Project;
  • Local Area – Yes/No;
  • Location of the Project – State and district
  • Project duration in months;
  • Amount spent during the financial year;
  • Mode of implementation – direct or indirect;
  • Name and CSR Registration Number of the Implementation Agency;
  • Amount paid on administrative overhead
  • Amount spent on impact assessment
  • Total amount spent during the year
  • Amount spent more than the obligation;
  • Amount unspent; and
  • Amount transferred to the Scheduled Fund.

Details of Unspent Fund for the financial year:

  • Details of the amount transferred to Unspent CSR Account; and
  • Details of the amount transferred to Scheduled Funds.

Details of the amount spent in the financial year from the unspent fund of previous three financial years

  • Year-wise amount transferred to Unspent CSR Fund;
  • Year-wise balance of the amount transferred to Unspent CSR Fund;
  • Amount spent in the financial year;
  • Amount transferred to Scheduled Fund; and
  • Year-wise Remaining amount for the year.

Initial Impact assessment of CSR-2

The Form is my hate of first sight due to the complication of data required. Please get the filled Form vatted by a qualified professional, including auditors. In addition, the Form is so demanding it will be easier to transfer your social responsibility amount to the Government pet funds listed in Schedule VII.

The government is pretending to promote and protect the MSME Sector. A Company with a turnover of less than 100 Crore and investment in plant and machinery of less than 20 is an MSME company. Good numbers of MSME companies are CSR companies. These companies do not have an efficient mechanism to undertake and implement CSR projects. With the present detailed Form, we are opening gates for tax assessment like monitoring social contribution. With the implementation of burdensome Form, we are forcing MSMEs to transfer funds to certain government-sponsored funds. These funds have doubtful answerability towards constitutional auditors (CAG) and constitutional stakeholders (the parliament).

Tax terrorism must be an ancient term by now. Social services are not voluntary anymore but increasingly subject to regulatory control and reporting.

In continuation of my earlier appeals, I beg ease of doing CSR. Please believe in your people and corporate citizens. But unfortunately, the compliance, reporting, monitoring and prosecution cost will be higher than possible leakage. Therefore, society will not get benefits from being overburdened.

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Posted in Chapter IX - CA2013, Companies Act 2013

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Small and Medium Sized Company

Posted on June 26, 2021 | Leave a comment

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 CompanySmall and Medium Sized CompanyMicro Small and Medium Enterprise
Paid up CapitalTurnoverInvestment in Plant and Machinery
TurnoverBorrowing —

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.

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Posted in Chapter II - CA2013, Chapter IX - CA2013, Companies Act 2013

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RETROSPECTIVE CSR

Posted on May 29, 2020 | Leave a comment

Indian laws are interesting phenomena incrementally so in recent years. It is like the king’s wishes. If king pronounces a desire it will be treated as law and will of God. Procedure to convert that desire formally to the law may be complied with in a due course. Any donation made by a company till 26th May 2020 was not legally a CSR contribution except under ages-old pre-democracy principle of king’s wishes. Now, due course of law-making granted king’s wishes its due legal status retrospectively.

Schedule VII of the Companies Act, 2013 which list out items which might be considered as CSR may be amended without parliamentary node by way of Notification issued by concerned Joint Sectary of the Ministry of Corporate Affairs. Practically it requires official approval from concern Minister. Mere wishes of the Minister or even of the whole cabinet are not enough to change a legal position.

In the present case, Prime Minister announced a new but controversial fund almost parallel to existing and well settled “Prime Minister’s National Relief Fund”. New fund is named as the “Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)”.

The major difference in both PM funds is the audit – previous one is to be audited by a constitutional authority – Comptroller and Auditor General of Indian (CAG) which place its audit report to Public through the Parliament of India – called as the temple of Indian Democracy by the present prime minister. On the other hand, newer one is to be audited by a Chartered Accountant firm of choice of the fund and the audit report shall largely be a private affair of the fund. Hopefully, the second one shall be made public under federal transparency law called the Right of Information Act, 2005. However, nothing is clear as of now.

As soon as Prime Minister of India announced this Fund and requested contribution to this fund as part of Corporate Social Responsibility, money starts pouring into this fund. But where was the law? No due diligence was made either by the Government at the time of acceptance of the Fund as CSR nor by contributors. India particularly Corporate India has a long history of pleasing the ruling king then the compliance of the law. This was one fit case.

Soon, auditors of the contributing companies start raising queries. A national but silent whistle was blowing which was a wakeup call for the Government.

Now the notification read as under:

  1. (the number is actually missing, a familiar typo) In Schedule VII, item (viii), after the words “Prime Minister’s National Relief Fund”, the words “or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)” shall be inserted.

  2. This notification shall be deemed to have come into force on 28th March 2020.

What it actually convey? No company contributing to the fund since 28th March 2020 till 26th May 2020 is good in legal interpretation. These companies receive no proper legal advice despite hiring big law firms. They actually do not care about the written law as they understand and believe the king’s wishes are law after all.

No, I have no issue with the king’s wishes as long as it gives a positive result to the society and the Nation. Read paragraphs hereinabove in a lighter tone and just for legal understanding only. We all know this was actually a hard time for Ministers and Secretaries working on various relief packages. It was appreciable work when a good number of government officers was working from home.

Take inspiration and stay at home as far as possible. Work from Home is a buzz word.

Aishwarya Mohan Gahrana

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Posted in Chapter IX - CA2013, Companies Act 2013

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COMPLIANCE BY INDEPENDENT DIRECTORS

Posted on November 1, 2019 | 3 comments

In the last post PROFICIENT INDEPENDENT DIRECTORS, we discussed the introduction of “proficiency self – assessment test” by the Ministry of Corporate Affairs. The Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019 gives teeth to the Companies (Creation and Maintenance of database of Independent Directors) Rules, 2019. We, in this post, will discuss the Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019. More power is given by the Companies (Accounts) Amendment Rules, 2019.

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Posted in Chapter IX - CA2013, Chapter XI - CA2013, Companies Act 2013

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APPLICABILITY FORM NFRA – 1

Posted on July 26, 2019 | Leave a comment

To file or not to file NFRA – 1 still a puzzle. It seems thumb rule, if you as body corporate file Form ADT-1, do not file NFRA – 1. We will try to understand the NFRA Rules, 2018, NFRA FAQs and the Form NFRA – 1.

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Posted in Chapter IX - CA2013, Chapter X - CA2013, Companies Act 2013

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Donation to National funds

Posted on March 22, 2019 | Leave a comment

Corporate Social Responsibility becomes a bureaucratic and political method of harassment for Indian companies. It was introduced under “comply or explain” regime but now companies start receiving notices for not complying even if there is an explanation. Without any significant exception, authorities are finding explanations offered by companies inadequate. Recent reports suggest, CSR will virtually be a “comply or deferred comply” regime soon. Now, all critics of law backed voluntary corporate social responsibility now stand correct. Indian companies are facing “voluntarily compulsory” Corporate Social Responsibility, “Transparently Opaque” Electoral Bonds, “politely requested” political donations, as an extension of “extortionist” taxation system.

Before criticizing me for writing a hardcore anti-establishment post at this time of the general election, please check voting pattern of parties inside the parliament and tell me the difference of opinion among political parties on such legal loot. All are the same.

When I last checked Schedule VII of the Companies Act, 2013 as amended four times before being in present form, donation seems to be the best method of corporate social (ir)responsibility. Else a company may choose to fund a project established either by a well-connected politician, bureaucrat, businessperson or goon.

Present Schedule VII of the Companies Act, 2013 recommends the following funds –

  1. Swach Bharat Kosh;
  2. Clean Ganga Fund;
  3. Prime Minister’s National Relief Fund; and
  4. Any other fund set up by the central govt. for socio-economic development and relief and welfare of the scheduled caste, tribes, other backward classes, minorities and women.

Making a donation to these government funds are safe as it requires no planning, no responsibility, no social engagement, no notice, no worries, no explanation.

However, the concept of asking fund is nothing new.

Section 181 of the Act permits a company to contribute to Bona Fide and Charitable Funds etc.

Section 183 of the Act permits a company to contribute to the National Defence Fund or any other Fund approved by the Central Government for the purpose of national defence. I am happy to note in even in this hyper-nationalist and super patriotic time such donation to defence funds are not qualified to be a Corporate Social Responsibility.

Indian companies also permitted to make one more type of donation. This is under The Companies (Donations to National Funds) Act, 1951 (Act 54 of the year 1951). This forgotten Nehru era law came into force on 17th October 1951 and still operative with an objective to enable companies to make donations to national funds.

The Companies (Donations to National Funds) Act, 1951 has only one operative Section. Section 4 of this Act[1] permits Indian companies to donate to –

  1. the Gandhi National Memorial Fund;
  2. the Sardar Vallabhbhai National Memorial Fund;
  3. any other Fund established for a charitable purpose which by reason of its national importance has been approved by the Central Government for the purposes of this section.

It seems nothing was yet notified any other approved fund.

There is another law passed by the state of Gujarat referring to the Gandhi National Memorial Fund (Local Authorities Donations) Act, 1953. There is little information about this fund. Some source suggested that with an amount of $130 million it was once “perhaps the largest, spontaneous, mass monetary contribution to the memory of a single individual in the history of the world.

Sardar Vallabhbhai National Memorial Fund seems to have the same fate now. We have a great statue in the name of the great leader.

This Act is now a law in a legal coma due to a need for political correctness and corporate irresponsibility of few time donations.

I am referring to such a history of legally backed corporate donations to national funds to prove my point. This is the worst method to be socially responsible.

{Note – bura na mano holi hai – take it easy on Indian festival Holi}

[1] Section 4 of this Act read as under –

Any company may, notwithstanding anything contained in the Companies Act or in any other law for the time being in force regulating the affairs thereof, and notwithstanding that the memorandum or articles of association of the company do not enable it so to do, by an extraordinary resolution passed in accordance with the provisions contained in section 81 of the Companies Act, authorise the making of donations to the Gandhi National Memorial Fund or the Sardar Vallabhbhai National Memorial Fund, or to any other Fund established for a charitable purpose which by reason of its national importance has been approved by the Central Government for the purposes of this section.

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Posted in Chapter IX - CA2013, Companies Act 2013

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CHALLENGES TO BE FACED BY NEW COUNCILS

Posted on December 14, 2018 | Leave a comment

My fellow members of the Institute of Company Secretaries of India (ICSI) may be going to a booth for voting while reading this post. Similarly, members of the Institute of Chartered Accountants of India (ICAI) just concluded their voting last week. These two elections are crucial for the future for these two eminent professions in India, which impact most on financial and non-financial reporting, disclosures and transparency in the working of Corporate India.  Admit or not, these two institutes are facing a crucial issue of survival.

National Financial Reporting Authority – NFRA is already here to oversee accounting standards, auditing standards and quality of services provided by Chartered Accountants. The law establishing the National Financial Reporting Authority – NFRA was incorporate in the statute by Man Mohan Singh Government. Soon thereafter, Chartered Accountants communities made its hue and cry about this law.  There was news of some success for them. Soon after demonetization, Prime Minister Narendra Modi raised a question on quality of services, ethics and values of Chartered Accountants in a much-hyped program organized by ICAI itself. Demonetization failure made it clear that Modi Government will enforce provisions given in the statute for the establishment of NFRA. Finally, it is enforced recently in a slight tone down version. This tone down is, unfortunately, not a face-saving for the Institute of Chartered Accountants of India. There is a reasonable apprehension that, irrespective of the party in power, there may be some efforts to extend the application of these provisions to other auditors like company secretaries. Soon to be elected councils of both institutes will certainly draw a plan to take on such an eventuality.

The second challenge for government and to some extent for these self-regulatory statutory institutes is to create completion in regulations and quality standards. The Insolvency and Bankruptcy Code, 2016 created a super insolvency regulator the Insolvency and Bankruptcy Board of India with three professional regulators competing with each other. There are suggestions to create such competing professional regulators for auditing bodies – Institute of Chartered Accountants of India, Institute of Cost Accountants of India and Institute of Company Secretaries of India. Will NFRA be the super audit regulator or these three professional bodies be super-regulator for their specific domain? How will they deal with the challenge? Do their members care?

Another challenge is a proposal for a council with representation from all stakeholders (appointed by Government not just elected representatives of regulated professionals). Recently, the Medical Council of India saw drastic changes. Unfortunately, all self-regulatory statutory bodies BCI, MCI, ICAI, ICAI (CMA), ICSI and others have a poor record for their professional duty to regulate their respective profession. Their image is not of statutory regulatory bodies but of a trade union. This is at sharp contrast with other statutory regulatory bodies like Securities and Exchange Board of India (SEBI) which regulates brokers, advisors and many other market professionals; Insurance Regulatory and Development Authority (IRDA) which regulates Actuaries, Undertakers and other insurance professionals; and Reserve Bank of India (RBI) which regulators bankers and other financial advisors. The difference lies in their top management – their council or governing board. Will self-regulatory statutory bodies like ICAI and ICSI develop themselves as true professional regulators or be remain downgraded to be a trade union?

Recently, we saw these self-regulatory statutory bodies took advice from big and powerful advisory firms and companies. Some of these firms and companies have a multinational and national presence. Unfortunately, their powerhouses directly and indirectly influence councils of these self regulatory statutory bodies. This need urgent attention and introduction of organizational governance akin to corporate governance and independency norms.

Our major challenges are from inside but one growing challenge is to regulate multinational firms coming to India. India cannot stop them from coming under WTO regulation. We have one clue to govern them from IBBI regulations. We can ask foreign professional to be part of some firms which are governed under Indian regulations. I should clearly say Big – 4 should be governed by these self regulatory statutory bodies. If not, these self regulatory statutory bodies may be scrapped, sooner than later.

Is India prepared?

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Posted in Chapter IX - CA2013, Chapter X - CA2013, Companies Act 2013

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National Financial Reporting Authority (NFRA) and its Powers

Posted on November 30, 2018 | Leave a comment

Section 132 of the Companies Act, 2013 is the point of debate and hope for corporate governance. It paves way for constitution of National Financial Reporting Authority – a super-regulator for statutory auditors – Chartered Accountants. Optimists see it as predecessor of a future super-regulator for self regulatory statutory professional organizations – Institute of Chartered Accountants of India regulating chartered accountants and statutory auditors, Institute of Cost Accountants of India (earlier Institute of Cost and Works Accountants of India) regulating cost and management accountants and cost auditors, and Institute of Company Secretaries of India regulating company secretaries and secretarial auditors. We earlier discussed the provision of Section 132 earlier here.

In this post, we will discuss Section 132 and the National Financial Reporting Authority Rules, 2018 as on 13th November 2018.

In an earlier post here, we discussed Duties of NFRA under Section 132 and the National Financial Reporting Authority Rules, 2018 as on 13th November 2018. In this post, we will discuss powers of NFRA to investigate and disciplinary proceeding as on 13th November 2018.

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Posted in Chapter IX - CA2013, Chapter X - CA2013, Companies Act 2013

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National Financial Reporting Authority (NFRA) and its Duties

Posted on November 23, 2018 | 1 comment

Section 132 of the Companies Act, 2013 is the point of debate and hope for corporate governance. It paves way for constitution of National Financial Reporting Authority – a super-regulatory for statutory auditors – Chartered Accountants. Optimists see it as predecessor of a future super-regulator for self regulatory statutory professional organizations – Institute of Chartered Accountants of India regulating chartered accountants and statutory auditors, Institute of Cost Accountants of India (earlier Institute of Cost and Works Accountants of India) regulating cost and management accountants and cost auditors, and Institute of Company Secretaries of India regulating company secretaries and secretarial auditors. We earlier discussed the provision of original Section 132 earlier here.

In this post, we will discuss Duties of NFRA under Section 132 and the National Financial Reporting Authority Rules, 2018 as on 13th November 2018. Powers of NFRA to investigate and disciplinary proceeding shall be discussed in next post.

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Posted in Chapter IX - CA2013, Chapter X - CA2013, Companies Act 2013

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Serious Penal Consequence of late Annual Filing – landmine ahead

Posted on October 26, 2018 | Leave a comment

[The law stated in this post is effective from the 7th day of May 2018]

There is a perception that filing of financial statements and other documents with additional fee absolve the company from consequences under section 92, section 137 and conditional exemption given to certain companies by certain notifications issued by the Ministry of Corporate Affairs.

This is also a general view of the companies that any extension granted for the filing of the financial statements and other documents without additional fee grant immunity to the companies from its liabilities under mentioned provisions.

I beg to differ, conditionally.

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Posted in Chapter IX - CA2013, Chapter VII – CA2013, Companies Act 2013

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Board report for OPC and Small Companies

Posted on August 24, 2018 | Leave a comment

This was a long-standing demand to have less compliance for one person and small companies. Rule 8A introduced with effect from 31st July 2018 by the Companies (Accounts) Amendment Rules 2018. Let us discuss.

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Copies of Financial Statements – post 9th February 2018

Posted on March 30, 2018 | Leave a comment

The Companies Amendment Act, 2017 read with notification dated 9th February 2018 amended law related to the rights of a member to copies of audited financial statements under Section 136 of the Companies Act, 2013. Section 136, in its original form, as applicable from 1st April 2014 until 8th February 2018. We shall discuss amended section 136 here.

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Condonation of Delay Scheme 2018

Posted on January 2, 2018 | 2 comments

Every Indian wants action against others who are not in compliance with law and disregard law of land. Same time, Ministry of Corporate Affairs was forced to introduce the condonation of Delay Scheme, 2018 within 1140 days (roughly 3 years) from the conclusion of earlier such scheme. Between these two schemes, the name of lakhs of companies was removed from Registry and list of Directors 3,09,614 disqualified directors released to the public domain because of such non – compliance. With fear of legal actions, corporate India and professional India welcome this scheme with critics. The strong analysis ahead.

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Posted in Chapter IX - CA2013, Chapter VI - CA2013, Chapter XI - CA2013, Companies Act 2013

Remedies for disqualified directors of strike – off companies

Posted on September 8, 2017 | 25 comments

Compliance way or Confine way! The Government made it clear. Directors who were on a long-term picnic after removal of names of their “shell companies” are now offered sleepless nights. I appreciate.

Ministry of Corporate Affairs issued two important lists in this regard –

  1. List Of Directors Associated With Struck Off Companies U/S 248
  2. List Of Disqualified Directors U/S 164 (2)(A)

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Posted in Chapter IX - CA2013, Chapter XI - CA2013, Chapter XVIII - CA2013, Chapter XXIX - CA2013, Companies Act 2013

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Amendment in Registration Offices and Fees Rules

Posted on November 11, 2016 | Leave a comment

Ministry of corporate came out with minor but significant decision in the Companies (Registration Offices and Fees) Rules, 2014 by way of the Companies (Registration Offices and Fees) 2nd Amendment Rules, 2016.

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Posted in Chapter IX - CA2013, Chapter XI - CA2013, Chapter XXIV - CA2013, Companies Act 2013

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Cost auditor appointment query

Posted on August 26, 2016 | 1 comment

According to Section 148 (3) of CA 2013 and Cost audit Rules 2014, cost auditor shall be appointed by the Board.

According to Section 148(3) of CA2013 and Audit and Auditor Rules, 2014 Remuneration shall be determined by the Members (in general meeting).

Now, according to Contract Act, 1872 (or in common law) this contract of appointment of cost auditor completes at General Meeting only that too on passing on resolution.

Query 1 – should we call it as “approval/ratification of remuneration or cost auditor” or “appointment of cost auditor” in general meeting? Unlikely but interesting situation will be where in members in general meeting does not ratify remuneration or modify the remuneration.

First case, no contract and second case counter offer. Further interesting, shall cost auditor bound to accept modified remuneration or not?

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Posted in Chapter IX - CA2013, Truth of Our Time

Amendment in Companies Accounts rules, 2016

Posted on August 2, 2016 | 1 comment

Ministry of Corporate Affairs came with amendment to the Companies (Accounts) Rules, 2014, last month. These rules has been published in official gazette on 27th July 2016 and came into force on that date. In this post, we will discuss these amendments in this blog post.

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Notification of Sections Relevant for NCLT

Posted on June 2, 2016 | 2 comments

Yesterday late evening, I posted here about press release issued by Ministry of Corporate Affairs. Soon thereafter, two files uploaded on Official Gazette website with two notifications in each. In earlier post here today, we discussed establishment and jurisdiction of various NCLT benches.

In this post, we will have a bird’s eye view on Sections notified on 1st June 2016 related to NCLT.

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Posted in Chapter I - CA2013, Chapter II - CA2013, Chapter IX - CA2013, Chapter VI - CA2013, Chapter VII – CA2013, Chapter XI - CA2013, Chapter XIV - CA2013, Chapter XV - CA2013, Chapter XXVII - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility

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AMENDMENT: Administration of CSR

Posted on May 26, 2016 | 3 comments

In a post earlier here, we discussed provisions of Section 135 read with rule 4 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 regarding Administration of Corporate Social Responsibility Policy. Sub – rule (2) of rule 4 allow board of directors of a company to choose among various options, a better option to administer the CSR Policy. This rule 4(2) was slightly amended by the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2015. We discussed those amendment rules earlier here.

Now, a gazetted notification published on 23rd May 2016 in Official Gazette of India, which came into force from same date; amend sub – rule (2) of rule 4.

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Posted in Chapter IX - CA2013, Companies Act 2013, CSR, Governance and Responsibility

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