The Companies Amendment Act, 2017 proposed to amend the definition of Associate Company with effect from the date of notification of section 2(i) of the Amendment Act.
UPDATE: Notification S.O. 1833(E) dated 7th May notified this amendment with effect from 7th May 2018
The Companies (Amendment) Act, 2017 has amended the definition of Debenture with an interesting and confusing way. We will discuss it hereunder.
Ministry of Corporate Affairs practically suspended right to be a Designated Partners (DP) for young promoters who want to promote a start-up limited liability partnership. Now, no outsider of corporate India may enter into dream life of corporate India through limited liability partnership route. He needs to promote a company to fulfil his dream.
Vide Notification S.O. 351(E) dated 23rd January 2018 Section 1 and 4 of the Companies (Amendment) Act, 2017 came into force on 26th January 2018. According to a draft notification placed on the website of Ministry of Corporate Affairs[i], Central Government appoints 9th February 2018 as the date on which 42 other sections and a major part of section 2 of the Companies (Amendment) Act, 2017 came into force.
UPDATE: The Notification S. O. 630(E) dated 9th February 2018 published in the Gazette of India on 12th February 2018 uploaded with the digital signature of publisher dated 16th February 2018.
Here is a bird’s eye view.
Posted in Chapter I - CA2013, Companies Act 2013
Every company must be a business organization. Being business organization, a company has business activities. In the Companies Act, 2013 “principal business activities” is a major reporting requirement. According to Section 92(1)(a), every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding its principal business activities. Section 185 as amended has reference to principal business activities as a major condition for a loan to directors and related concerns.
Interestingly, proposed to be a director is a legally valid official status, now. This is a period between two board meetings one proposing him to be a director of an existing company and second board meeting actually appointing him as director. This status comes into being on 26th January 2018 due to the amendment in the Companies (Appointment and qualification of Directors) Rules, 2014.
Posted in Chapter XI - CA2013, Companies Act 2013
Tagged Appointment of Director, Form DIR - 3
Happy Republic Day 2018!!
From this Republic Day 2018, company secretaries will start using this headline day to day in reference to the incorporation of companies in India. The government of India these days works keeping ist both eyes on world banks’ ease of doing a business index. Ease of starting and closing businesses are the prime focus. The Companies (Amendment) Act, 2017 notified on 3rd January 2018 primly aims to ease the incorporation of companies among other objects. Now, three rules are amended to facilitate to make incorporation a “child’s play”.
Among strike off companies waiting for revival considering it a lost opportunity where their revival orders from the National Company Law Tribunal comes after the expiry of the scheme. Condonation of Delay Scheme, 2018 essentially is about of condonation of delay in filing of annual accounts and annual returns by defaulting companies. The scheme is not for the revival of strike off companies nor imposes any restriction on normal route available for condonation of delay given under Section 460 of the Companies Act, 2013. A company failed to have the benefit of condonation of delay under the scheme may avail normal route. Let us discuss briefly.
Disqualification of directors certainly is a hot topic among professionals practising corporate laws. Irrespectively of popular perception, the list compiled and released by Ministry of Corporate Affairs does not confer any disqualification to any director. These directors were already disqualified. In a serious violation, many of these directors might have failed to communicate about their disqualification to companies appointing or reappointing them after the actual date of disqualification. Such failure has penal consequences. This blog post will discuss serious consequences of the failure of compliance with law and procedures after incurring disqualification by a director.
“Daag Achchhe haiN (Stains are good)” This must be a tagline of a politician or may of a Strike-off company. Congratulations to all strike-off companies with income tax proceedings. A circular issued by Central Board of Direct Taxes may bring back life to these strike-off companies. It is reported that on or before 4th January 2018, NCLT, vide its interim orders, directs 46 strike –off companies to be deemed to be restored to its original number and entitles petitioner, Income Tax Department to raise demand by serving notice in accordance with law.
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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On-demand, Index of Companies Law Posts as updated on 31st December 2017 is uploaded here: Index of Company Law Posts 2017
Posted in Chapter I - CA2013, Companies Act 2013
The Investor Education and Protection Fund (IEPF) educates investors and protect their interests. The Companies Act, 2013 brought provisions for transfer of shares of untraceable shareholders to the IEPF. The IEPF shall hold shares transferred to it as custodian and such transfer is not a statutory vesting of any property.
The Recent order of Delhi court discussed these rules in details. The High Court order that It is imperative that the Central Government gives publicity to the transfer of shares, by virtue of the provisions (not of individual companies) to inform the public, and ensures a simple, as well as compact form with the attendant procedure, is notified, for reclaiming them.
Now, this post discusses some practical issues may be faced by innocent investors residing far interior places while reclaiming their shares.
These are few cases where either investor or company needs awareness, education or clarity. The Government need an early step to retain the faith of investors and companies in the IEPF. The government should focus on the user-friendly website of MCA and IEPF.
My friend Gaurav Pingle pointed out in his article, the High Court in above-mentioned order has clarified that the shareholder continues to retain ‘title’ of the shares but loses ‘agency’. However, the Court has also stated that the company is relieved from the responsibility of holding shares or reflecting it in its list of shareholders. This needs some fine tuning in law.
Posted in Chapter VIII - CA2013, Companies Act 2013
Conversion from a private company to public company is not news and has no legal hurdle also. On the other hand, a decision to convert itself into a public company is always big news. According to the second proviso to subsection (1) of Section 14 of the Companies Act, 2013, “any alteration having the effect of conversion of a public company into a private company shall not take effect except with the approval of the Tribunal which shall make such order as it may deem fit.”
Like Olympics, world cups and leap year, another thing sure to happen is some party talk around rechristening the ICSI. Usually, this informally happens just before leap year for a single reason already in public. This event occasionally gets formal. There are similar reasons used every time for acceptance and refusal of the exercise. Most company secretaries with humble backgrounds have an issue with term “secretary” and other with restrictive term “company”.
When an applicant files a form for incorporation of a company, we need to select the designation and category of first directors in incorporation Form 32 (popularly called Spice) or wherever company appoints a director. There are four different categories of directors. We will discuss confusion regarding these categories of directors.
Posted in Chapter II - CA2013, Chapter XI - CA2013, Companies Act 2013
Tagged Additional Director, Alternate Director, chairman, chairperson, Director, Executive Director, Independent Director, Managing Dir, Managing Director, Nominee Director, Non - executive director, Professional Director, Promoter Director, Small shareholders’ Director, Whole – time Director
I love ICSI National Conventions for knowledge, networking and new places. This was the turn of Southern India regional office of the Institute of Company Secretaries of India to host this yearly event. ICSI National Convention 2017 was held in Kazhakoottam (कष़ऽक्कूट्टम), a suburb of state capital Thiruvananthapuram. This time about 1200 attained the National Convention which is claimed to be the second highest turnaround for ICSI National Convention. This high turnaround certainly puts pressure on organizers but attendance in technical sessions was reduced to less than 50% of total delegates, thanks to Kerala and Kerala Tourism. Kerala Tourism is one of most proactive state tourism department/company in India.
After the list of disqualified directors made public by Government of India, Many companies facing “no director on board” or “board below the quorum” situations. In last post here, we discussed the first situation. Now, we will discuss the second one.
“Disqualified directors are not directors in any Company”, this is fact under Section 164 and 167. In another word, A Company with all directors disqualified under Section 164 and 167 has no director at all. Such companies need new a set of directors immediately. The Companies Act, 2013 presume two situations where a company may be without Directors. We will discuss these two situations here.
Posted in Chapter XI - CA2013, Companies Act 2013
Tagged Appointment of Director, Back-end appointment of Directors, back-end insertion of director, Board without Directors, Disqualification of Directors, Full Board Disqualificatin, Full Board Resignation, Full Board vacation, Vacation of Office of Director
Before being launched a pilot project on 26th January 2016, central registration of companies was under consideration since long. However, The Central Government under the able leadership of Prime Minister Narendra Modi launched it silently and suddenly as a pilot project for the setting of Central Registry for Companies in India. Presently, central registry looks after only two functions: (a) Name Approval and (b) Company Incorporation.
Posted in Chapter II - CA2013, Companies Act 2013
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