Tag Archives: India

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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Ease to surrender DIN


Now, Ministry of Corporate Affairs introduced relatively easy and online e – form for surrendering director identification.

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RETINA SIGNATURE – REPLACING DIGITAL SIGNATURES


Bye – Bye Digital Signature Certificates!!

Inter – ministerial task force on secured authentication of legal documents actively discussing retina signatures which next logical step after introduction of biometric identification system in India. Indian mainstream media undermined these reports amid its stir on recent development in Uttar Pradesh.

Under critically proactive leadership of Prime Minister Narendra Modi an inter-ministerial task force was formed just after demonetization to consider digital cash, digital contracts and digitization of legal and court documents. The task force includes highly places officers of Ministry of Finance, Ministry of Law & Justice, Ministry of Information Technology, Unique Identification Authority of India, Ministry of Health & Family welfare. Highly placed sources suggest that a prime intelligence agency of nation is also involved and getting help from an agency of a friendly foreign nation.

Retina signature is a unique technique developed by a research group consist of countries premier medical colleges and information technology universities. This is quite advance technique user shall sign just showing his retina to camera attached to his laptop, mobile or desktop. This futuristic system shall replace token based digital signature certificate and can be used anytime anywhere by anybody. Though, it will be restricted presently for human need, this technique is so advance that it can be even be used by advance animals using their retina. Retina signature will eradicate need for renewal of digital signature certificates. This technology provides lifelong free signatures subject to good health and maintenance of retina. Any kind of file type may be signed using retina signature.

Retina is third and inner coat of eye which is a light-sensitive layer of tissue. The unique structure of the blood vessels in the retina has been used for biometric identification. Changes in the retinal microcirculation are seen with aging, exposure to air pollution and may indicate cardiovascular diseases such as hypertension and atherosclerosis.

In proposed methodology, a user shall place his eyes before camera of his mobile or laptop when a document to be signed should be opened before him on same device. It is also possible to sign a documents placed in another device. The retina signature shall capture bio-metrics of retina, system time, internet protocol address and geo-positioning of signatory. Once, signed there shall be no removal of signature from the documents shall be possible unless authorized by competent authority, which shall be a civil judge.

As usual, human right activists are planning to oppose the move. Activists argue that scrupulous elements and police authorities may get retina signature using force and other means. However, government authority denies any such possibilities. The task force working on modalities to make it happened in case blind, mentally challenged and otherwise unhealthy people.

A copy of relevant study document may be assessed here on or after 1st April.

 

Company Name with India


I receive a question on Quora which may interest readers of this Blog. The question is –

What is the procedure for inclusion of word ‘INDIA’ in the name of company?

My reply is as under –

Law related name of a company is governed with Section 4 of the Companies Act 2013 read with Rule 8. Under present law, there restriction related to inclusion of word “India” has been removed with effect from 1st April 2014.

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AMENDMENT: Administration of CSR


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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Amendment in Buyback Law


The Ministry of Corporate Affairs bring out two draft notifications to be published in Official Gazette of India to amend the Act by a draft order under proviso to Section 68(2)(d) and by a draft amendment in the Companies (Share Capital and Debentures) Rules, 2014.

Post Buyback Debt – Equity Ratio:

As we discussed earlier here, Section 68(2)(d) read as under:

“The ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves:

Provided that the Central Government may, by order, notify a higher ratio of the debt to capital and free reserves for a class or classes of companies;”

Now draft notification read as under:

In exercise of the powers conferred under the proviso to clause (d) of sub-section (2) of section 68 of the Companies Act, 2013, the Central Government has notified that –

The debt to capital and free reserves ratio shall be 6:1 for government companies within the meaning of clause (45) of Section 2 of the Companies Act, 2013 which carry on Non Banking Finance Institution activities and Housing Finance activities.

This order give effect that for all companies post buyback Debt Equity Ratio shall be 2:1 except government companies which are Non banking Finance companies or Housing Finance companies.

Unaudited Accounts limited reviewed:

As we discussed earlier here, Rule 17(1)(n)(iii) of the companies (Share Capital and Debentures) Rules, 2014 read as under:

“That the audited accounts on the basis of which calculation with reference to buy back is done is not more than six months old from the date of offer document;”

The draft of the companies (Share Capital and Debentures) Amendment Rules 2016 insert following proviso to this sub – clause:

“Provided that where the audited accounts are more than six months old, the calculations with reference to buy back shall be on the basis of un-audited accounts not older than six months from the date of offer document which are subjected to limited review by the auditors of the company.”

This is a removal of practical difficulty. Due to present clause, for practical purpose buyback resolution is possible only within six month from date of audited annual account. Now, buyback resolution may be possible any time on the basis of unaudited accounts limited reviewed by the auditors of the company.

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.

Reflection of Political Brotherhood in Law


When followers of two major Indian Political parties are using abusive language for mothers and others of opponent, their “leaders united” is working for their brotherhood causes silently, continuously and legally. One of the most popular narrative from both political side on social media claims, media do not show “their” truth. Here, we will discuss one aspect of this year’s budget unreported in conventional media.

We have discussed two year earlier here on 31st March 2014 Foreign Donation to political parties.

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