Category Archives: CorpGov

Out of Sahara Blues


Finally government tries to come out of Sahara Blues. Government earlier was in pressure to put corporate governance in place among private companies and tried well. Thereafter, industry lobby (read as vested interests among “promoters” and “professionals”) started pleaded mercy for all “otherwise honest players”.

Government initiated it journey with exemption notifications and now bring this amendment rules.

The Companies (Audit and Auditors) Second Amendment Rules, 2017 is interesting in more than one way. Statistically, this exemption will benefit only selected big players among private companies in India and their auditors.

Section 139(2) of the Companies Act, 2013 reads, “No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint—

(a) an individual as auditor for more than one term of five consecutive years; and

(b) an audit firm as auditor for more than two terms of five consecutive years.”

Rule 5 of the Companies (Audit and Auditors) Rules 2014 before present amendments reads, “for the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies:-

(a) all unlisted public companies having paid up share capital of rupees ten crore or more;

(b) all private limited companies having paid up share capital of rupees twenty crore or more;

(c) all companies having paid up share capital of below threshold limit mentioned in (a) and (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees fifty crores or more.”

Now, the Companies (Audit and Auditors) Second Amendment Rules, 2017, amend clause (b) of rule 5. The amendment rules reads, “in the Companies (Audit and Auditors) Rules, 2014, in rule 5, in clause (b), for the word “twenty”, the word “fifty” shall be substituted.

This amendment rules increase threshold limit for rotation of auditors for private companies by a good 150%.

As number of companies and auditors is not much, it may not affect stakeholders significantly but our commitment towards corporate governance.

 

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Removal of Auditor Appointment Difficulty


Government of India has removed a dozen difficulties from the Companies Act, 2013. Yes, the Companies (Removal of Difficulties) Third Order, 2016 is twelfth order in Removal of difficulties series of Orders in these three years.

In this post we will discuss this Removal of Difficulties Order.

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Key Management Persons for Insurance Companies


On 18th May 2016 Insurance Regulatory and Development Authority of India issued revised guidelines on corporate governance for insurance companies. In earlier post we discussed these guidelines in brief. In this post, we will briefly discuss, Key Management Persons for insurance companies as mentioned in these guidelines.

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Board Committees for Insurance Companies


On 18th May 2016 Insurance Regulatory and Development Authority of India issued revised guidelines on corporate governance for insurance companies. In last post we discussed these guidelines in brief. In this post, we will briefly discuss, Board Committees for insurance companies as mentioned in these guidelines.

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CORPORATE GOVERNANCE GUIDELINES FOR INSURANCE COMPANIES


On 18th May 2016 Insurance Regulatory and Development Authority of India issued revised guidelines on corporate governance for insurance companies. These Guidelines are applicable from finance year 2016 – 17 except a relief later on granted in respect of auditor. In this post, we will briefly discuss these revised guidelines.

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Notification of Sections Relevant for NCLT


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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RELAXATION OF ADDITIONAL FEES AND EXTENSION OF LAST DATE OF FILING


Compliance of Indian corporate law is a big issue for its stakeholders. Successive government here talk about ease of doing business and do mammoth task to achieve it with confusion related to directions.

The Companies Act, 2013 followed by end numbers of Companies Rules and their amendment rules was not enough; Ministry of Corporate Affairs launched V2R2 through its high profile contractor Infosys. Now, we have another circular to get some “ease of doing relaxation”. We will discuss short term circular here.

General Circular 03/2016 dated 12th April 2016 aims to Relaxation of additional fees and extension of last date of filing of various e-Forms under the Companies Act, 2013. The circular read as under:

“This ministry has launched V2R2 on 28th March, 2016, downtime was given to Infosys from 25th March 2016 to 27th March, 2016, since the launch of the system, a number of stakeholders have faced issues and representations have been received from stakeholders to resolve the issue including, for allowing waiver of additional till the new system stabilizes.

In view of the above, it has been decided to relax the additional fee payable on e- forms which are due for filing by companies between 25th March 2016 to 30th April 2016 as one time waiver of additional fee and it is also clarified to stakeholders if such due e – forms are filed after 10.05.2016, no such relaxation shall be allowed.

This issues with the approval of the competent authority.”

This circular has many communications to its stakeholders. Most read is, “Forms due for filing during period between 25th March, 2016 to 30th April, 2016 may be filed without additional fee till 10th May 2016”.

The circular contain other interpretation and information:

  • Ministry launched V2R2 system and replacing earlier filing system. A simple Google search suggests it as a system developed by IBM.
  • Downtime allowed to Infosys was from 25th March 2016 to 27th March, 2016.
  • Among other representations, for allowing waiver of additional till the new system stabilizes, was one and prominent.
  • Ministry seems to take no blame on itself.
  • System may take more time which may not be before 30th April 2016.
  • System may have practical trial for first 10 days in month of May.
  • Heavy filing may be there in May second half and thereafter  plan accordingly.
  • Start up India can wait as presently MCA is on trial for it.

It is advisable, not to file any document related to companies without assuming own risk.

This circular does not talk about Limited Liability Companies, to keep trying and assume own risk. 

I have just a request with government (please read bureaucracy, Not PM Modi), please understand compliance calendar of stakeholders. December to February may be best time to experiment.

Please note: This blog invite readers to share their comments, suggestions, hardship, queries and everything in comment section. This blog post is not a professional advice but just a knowledge sharing initiative for mutual discussion.