Among practitioners and followers of corporate law in India, the year 2019 brought a surprise in the form of Form INC – 22A. This was claimed to be a form to identify active companies and checking inactive companies. Unlike earlier attempt aim to boost the image of the country and government, this form lost its shine within few hours of its introduction. Unlike earlier, this form had no mention in government communications of success.
Tag Archives: Ministry of corporate affairs
Ministry of Corporate Affairs and Ministry of Micro, Small and Medium Enterprises came together to protect interests of micro, small and medium enterprises. We will discuss in this post two recent notifications issued by these ministries.
Law stated in this post is as on 20th December 2018.
With effect from 18th December 2018, conversion of a public company into a private company requires approval from the Central Government. Earlier such conversion requires approval from the National Company Law Tribunal. This change was made by the Company Amendment (Ordinance) 2018 with effect from 2nd November 2018 and the Companies (Incorporation) 4th Amendment Rules, 2018 with effect from 18th December 2018.
[The law stated in this post is valid from 27th July 2017 with an update made in this post with effect from 6th March 2019]
On 27th July 2017, Ministry of Corporate Affairs published a notification in Official Gazette of India amending the rules relating to shifting of registered office of a company from jurisdiction of its present registrar of companies to another registrar of companies. The Companies (Incorporation) Second Amendment Rules, 2017 came into effect from the date of publication. In this post, we will discuss the shifting of registered office of a company to another state or the union territory.
On 27th July 2017, Ministry of Corporate Affairs published a notification in Official Gazette of India amending the rules relating to shifting of registered office of a company from jurisdiction of its present registrar of companies to another registrar of companies. The Companies (Incorporation) Second Amendment Rules, 2017 came into effect from date of publication. In present post, we will discuss first aspect of such shifting of registered office – shifting within a state but from one registrar of companies to another registrar of companies.
The National Company Law Tribunal (Amendment) Rules, 2017 notified on 6th July 2017 which came into force in same date inserted Rule 87A the National Company Law Tribunal Rules, 2016. In this post, we will discuss newly inserted rules with brief background.
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.