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
MCA recently introduced the Companies (Filing of Documents and forms in XBRL) Rules 2015 dated 9th September 2015 for which I have yet to locate published copy in the Official Gazette. These rules shall come into force from the date of publication in Official Gazette. These rules have already discussed earlier here.
Note: AOC – 4 XBRL Version 1st October 2015 is being used for writing this post.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged AOC – 4 XBRL, Extensive Business Reporting Language, India, MCA, Ministry of corporate affairs, Registrar of Companies, the Companies (Filing of Documents and forms in XBRL) Rules 2015, The Companies Act 2013, XBRL
Recent amendment to the Companies (Accounts) Second Amendment Rules 2015 dated 4th September 2015 for which I have yet to locate published copy in the Official Gazette. This Amendment shall come into force from the date of publication in Official Gazette. By virtue of its Rule 12(1) is being substituted. According to substituted Rule, “Every company shall file the financial statements with Registrar together with Form AOC – 4 and the consolidated financial statement, if any with Form AOC – 4 CFS.” Original rule was discussed earlier here.
Earlier Form AOC – 4 is also proposed to be replaced with Form AOC – 4 and Form AOC – 4 CFS. In this post we will discuss Form AOC – 4.
Note: AOC – 4 Version 30th September 2015 is being used for writing this post. The post is long one but to avoid confusion, i opted not to split this post. Readers may read it segment wise.
Ministry of Corporate Affairs placed on its web site a DRAFT notification on 9th September 2015 which proposed the Companies (Filing of documents and forms in Extensive Business Reporting Language) Rules, 2015.
These rules shall come into force from the date of their publication in the Official Gazette.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Extensive Business Reporting Language, India, MCA, Ministry of corporate affairs, Registrar of Companies, The Companies (Filing of documents and forms in Extensive Business Reporting Language) Rules 2015, The Companies Act 2013, XBRL
Ministry of Corporate Affairs placed on its web site a DRAFT notification on 4th September 2015 which proposed certain exemption to government companies producing defence equipments including space research from certain Para of Schedule III of the Companies Act, 2013.
Ministry of Corporate Affairs placed on its web site a DRAFT notification on 4th September 2015 which proposed to amend the Companies (Accounts) Rules, 2015 with effect from date of publication of this notification in the official Gazette.
We will discuss here, provisions proposed to be amended by this notification:
Posted in Chapter IX - CA2013, Companies Act 2013
Tagged 2015, Accounting Standards, India, MCA, Ministry of corporate affairs, Registrar of Companies, The Companies (Accounts) Rules 2014, The Companies (Accounts) Second Amendment Rules 2015, the Companies (Indian Accounting Standards) Rules, The Companies Act 2013
Internal Audit is one most important tool for better Corporate Governance in any company. This is not a post – mortem like statutory audit, but may provide real time analysis and processing of transactions through watchful eyes.
According to Section 138 of the Companies Act, 2013 discussed earlier here, “Such class or classes of companies as may be prescribed shall be required to appoint an internal auditor, who shall either be a chartered accountant or a cost accountant, or such other professional as may be decided by the Board to conduct internal audit of the functions and activities of the company. The Central Government may, by rules, prescribe the manner and the intervals in which the internal audit shall be conducted and reported to the Board.”
As discussed earlier here according to Section 136, a copy of the financial statements, including consolidated financial statements, if any, auditor’s report and every other document required by law to be annexed or attached to the financial statements, which are to be laid before a company in its general meeting, shall be sent to every member of the company, to every trustee for the debenture-holder of any debentures issued by the company, and to all persons other than such member or trustee, being the person so entitled, not less than twenty-one days before the date of the meeting. [Section 136(1)]
Statement containing salient features of financial statements:
In the case of a listed company, the provisions of this section shall be deemed to be complied with, if the copies of the documents are made available for inspection at its registered office during working hours for a period of twenty-one days before the date of the meeting and a statement containing the salient features of such documents in the prescribed form or copies of the documents, as the company may deem fit, is sent to every member of the company and to every trustee for the holders of any debentures issued by the company not less than twenty-one days before the date of the meeting unless the shareholders ask for full financial statements. [First Proviso to Section 136(1)]
Rule 6 of the Companies (Accounts) Rules 2014 deals with consolidation of Accounts. This rule got its power from second proviso to sub – section (3) of Section 129.
According to Section 129(3), where a company has one or more subsidiaries, it shall, in addition to financial statements provided under sub-section (2), prepare a consolidated financial statement of the company and of all the subsidiaries in the same form and manner as that of its own which shall also be laid before the annual general meeting of the company along with the laying of its financial statement under sub-section (2).
Posted in Chapter IX - CA2013, Companies Act 2013, Governance and Responsibility
Tagged 2015, Accounting Standards, Consolidation of Accounts, India, MCA, Ministry of corporate affairs, Registrar of Companies, the Companies (Accounts) Amendment Rules 2014, The Companies (Accounts) Amendment Rules 2015, The Companies (Accounts) Rules 2014, the Companies (Indian Accounting Standards) Rules, The Companies Act 2013
In continuation of our earlier post dealing with Financial Statements and Boards’ Report, we will read Boards’ report of companies other than One Person Companies here.
Managerial Remuneration [Rule 5(1) of Managerial Remuneration Rules]:
Every listed company shall disclose in the Board’s report-
(i) the ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;
The expression “median” means the numerical value separating the higher half of a population from the lower half and the median of a finite list of numbers may be found by arranging all the observations from lowest value to highest value and picking the middle one. If there is an even number of observations, the median shall be the average of the two middle values.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Boards’ Report, Financial Statements, India, Managerial Remuneration, MCA, Ministry of corporate affairs, Particulars of employees, Registrar of Companies, The Companies (Accounts) Rules 2014, The Companies Act 2013
In continuation of our earlier post dealing with Financial Statements and Boards’ Report, we will read Boards’ report of companies other than One Person Companies here.
Particulars of Contracts or Arrangements [Rule 8(2) of Accounts Rules read with Section 134(3)(h)]:
The Report of the Board shall contain the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the Form AOC-2.
As discussed earlier here and here, Section 188 lists out certain transaction restricted to be entered into with related parties.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov, Governance and Responsibility
Tagged Boards’ Report, Conservation of Energy, CSR Reporting, Evaluation of Boards Performance, Financial Statements, Foreign Exchange, India, MCA, Ministry of corporate affairs, Registrar of Companies, Technology Absorption, The Companies (Accounts) Rules 2014, The Companies Act 2013
In continuation of our earlier post dealing with Financial Statements and Boards’ Report, we will read Boards’ report of companies other than One Person Companies here.
Preparation of Boards’ Report:
The Board’s Report shall be prepared based on the stand alone financial statements of the company and the report shall contain a separate section wherein a report on the performance and financial position of each of the subsidiaries, associates and joint venture companies included in the consolidated financial statement is presented. [Rule 8(1) of Accounts Rules]
Section 134 of the Companies Act 2013 enumerates provisions related to with Financial Statements and Boards’ Reports. Rule 8 to Rule 12 of the Companies (Accounts) Rules 2014 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also deals with Boards’ Report.
Penalty for Contravention of Section 134:
If a company contravenes the provisions of section 134, the company shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees, or with both. [Section 134(8)]
As we have discussed earlier here, Section 129(3) discuss about consolidation of accounts.
Where a company has any subsidiary, the company shall prepare a consolidated financial statement of the company and of all subsidiaries in the same form and manner as that of its own. The consolidated financial statement shall also be laid before the annual general meeting along with own financial statement.
The company shall also attach along with its financial statement, a separate statement containing the salient features of the financial statement of its subsidiaries.
Under this section, the word subsidiary shall include associate company and joint venture.
Form of Statement containing salient features of financial statements of subsidiaries [Rule 5]
According to Second Proviso to Section 129(3) discussed earlier here, where a company has any subsidiary, the company shall prepare a consolidated financial statement of the company and of all subsidiaries in the same form and manner as that of its own. The consolidated financial statement shall also be laid before the annual general meeting along with own financial statement.
Posted in Chapter IX - CA2013, Companies Act 2013, CorpGov
Tagged 2015, Accounting Standards, Consolidation of Accounts, India, MCA, Ministry of corporate affairs, Registrar of Companies, the Companies (Accounts) Amendment Rules 2014, The Companies (Accounts) Amendment Rules 2015, The Companies (Accounts) Rules 2014, the Companies (Indian Accounting Standards) Rules, The Companies Act 2013
The Companies (Accounts) Rules 2014 came into force from 1st April 2014. These rules first time recognised electronic mode for keeping of books of account.
Notice of address at which books of account are to be maintained [Rule 2A]:
As we discussed earlier here according to Section 128 of the Companies Act 2013, every company shall prepare and keep at its registered office books of accounts and other relevant books and papers and financial statement for every financial year. These books must give a true and fair view of the state of affairs of the company and its branch offices. These books must explain the transactions effected both at the registered office and its branches. These books shall be kept on actual basis and double entry system of accounting.
These books or some of these books may be kept at a place other than registered office at the decision of the Board of Directors after filing with the Registrar of Companies a notice in writing giving full address of that place.
This is a comical situation under soap opera script but it must have been a practical situation in India. And yes, many dealers of “company retail market” face this situation daily. Sellers want a cut off point beyond which they do not want any liability for any single moment and buyer will take charge on very next moment after the resignation of seller. This cut – off point on time scale is a possible legal defence from all past or future sins. Under Companies Act 1956, dealers has no fine tuned pressure to create such cut – off point because there was no possibility of submission of resignation by resigning directors. Filing a return of resignation of outgoing directors, under earlier law, was duty and responsibility of incumbent directors. They have to appoint at least one new director first (if not legally required two/three, in broad sense) before resigning. During those golden days, dealers usually prepare documents in such a way time to give effect of resignation was mentioned in minutes and seconds in resignation letters. Same was also true for appointment. Thereafter, within legal thirty days, dealers ensure filing of all required documents and forms with registrar of companies. Hence, all laws complied, happy ending.
Schedule II of the Companies Act, 2013 deals with provision related to “useful life to compute depreciation”. This is second schedule of this Act which was amended before it may come into force in its original form.
A Notification published in Official gazette on 31st March 2014 amended the schedule with effect from 1st April 2014. These amendments were:
Thereafter amended Schedule came into in force with effect from 1st April 2014.
As we discussed in last post here, government bringing changes in CSR law frequently. With all these development nightmare of CSR may become tax seems to be true soon. In this post, we are discussing General Circulars issued by Government in relation to CSR during first year. There are three circulars General Circular 21/2014 dated 18th June 2014, 36/2014 dated 17th September 2014 and 01/2015 dated 3rd February 2015.
General Circular 21/2014 enumerates following rules for interpretation of CSR Schedule VII of the Companies Act 2013:
This is being said in corporate sector, the companies Act 2013 is being treated by government and corporate as CSR law. The schedule related to corporate social responsibility has been amended since its being come into force.
Original CSR Schedule read as under:
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AishMGhrana 