Key Highlights of Companies Bill, 2013

  1. —  Uniform Financial Year for all the Companies i.e from April to March. (Exception where in approval from the National Company Law Tribunal have been granted).
  2. —   A Private Company can now have maximum of 200 members.
  3. —   Concept of One person Company have been introduced. (But the Company can only be incorporated as a Private Company).
  4. —   Object Clause of Memorandum of Association need not be divided into Main, Ancillary and Other Objects Clause.
  5. —   All types of securities are governed by Bill.
  6. —   The money raised by the Company through prospectus, cannot be used for any other purpose other than the purpose for which it was raised unless a special resolution have been passed and the said proposal is published by way of an advertisement. Otherwise an exit opportunity shall be provided to the existing shareholders of the Company.
  7. —  The prospectus has to be more detailed.
  8. —  If a Company, listed or unlisted, makes an offer to allot or invites subscription, or allots, or enters into an agreement to allot, securities to 50 or such higher number as may be prescribed, whether the payment for the securities has been received or not or whether the Company intends to list its securities or not on any recognized stock exchange in or outside India, the same shall be deemed to be an offer to the public and shall accordingly be governed by the provisions provided in this regard by the Securities And Exchange Board of India(SEBI). 
  9. —   There is no provision for issue of shares at a discount (other than issue of Sweat Equity Shares).
  10. —  The provisions of clause related to further issue of capital will now be applicable to all type of companies.
  11. —   Apart from existing shareholders, if the Company having share capital at any time proposes to increase its subscribed capital by issue of further shares, such shares may also be offered to employees by way of ESOP, subject to the approval of shareholders by way of Special Resolution. 
  12. —  Buyback provisions eased. Companies can buy back its shares even if it has defaulted in repayment of deposit or interest payable thereon, redemption of debentures or preference shares or payment of dividend to any shareholder or repayment of any term loan or interest payable thereon to any financial institution or bank, provided that such default has been remedied and three years have lapsed after such default ceased to subsist.  
  13. —  NBFCs not to be covered by the provisions relating to acceptance of deposits. They will be governed by the Reserve Bank of India rules on acceptance of deposits.
  14. —   Companies can accept deposits only from its members after seeking permission of its shareholders at a general meeting.  
  15. —  Certain public companies, as prescribed, can accept deposits from persons other than its members, subject to conditions such as credit rating.
  16. —   Bill provides for registering of all types of charges.
  17. —   Certification of Annual Return by practicing company secretary mandatory in case of companies with prescribed paid up capital and turnover.
  18. —   First annual general meeting of a company shall be held within nine months from the closure of its first financial year .
  19. —  Postal Ballot to be applicable on all Companies, whether listed or not.
  20. —  Every company has to follow the Secretarial Standards while preparing the minutes of board and general meeting.
  21. —   Listed companies required to file a return in a prescribed form with the Registrar regarding any change in the number of shares held by promoters and top 10 shareholders of such company, within 15 days of such change.
  22. —   Listed public companies to prepare a report, in the manner as may be prescribed, on each annual general meeting including the confirmation that meeting was convened, held and conducted as per the Act and the Rules made thereunder.
  23. —  Interim dividend declared by a Company in a current financial cannot exceed the average rate of dividend of the preceding three years if a company has incurred loss up to the end of the quarter immediately preceding the declaration of such dividend.
  24. —   Transferring of a fixed percentage of profits to reserve before declaration of dividend is not mandatory in the Bill.
  25. —   Financial Statements shall include Balance Sheet, Profit & Loss Account and Cash Flow Statement collectively.
  26. —   Provisions for re-opening or re-casting of the books of accounts of a company provided.
  27. —  The National Advisory Committee on Accounting Standards renamed as The National Financial Reporting Authority.
  28. —  The authority to advise on Auditing Standards and Accounting Standards.
  29. —  Every company is required at its first annual general meeting (AGM) to appoint an individual or a firm as an auditor. The auditor shall hold office from the conclusion of that meeting till the conclusion of its sixth AGM and thereafter till the conclusion of every sixth meeting. The appointment of the auditor is to be ratified at every AGM.
  30. —  Individual auditors are to be compulsorily rotated every 5 years and audit firm every 10 years in listed companies & certain other classes of companies, as may be prescribed.
  31. —   Prescribed class or classes of companies to have atleast one woman director.
  32. —   At least one director should be a person who has stayed in India for a total period of not less than 182 days in the previous calendar year.
  33. —  At least one-third of the total number of directors of a listed public company should be independent directors. Existing companies to get a transition period of one year to comply.
  34. —   Companies can have maximum of 15 directors.
  35. —  A person can hold directorship of up to 20 companies, of which not more than 10 can be public companies. The number 20 to include Private Companies aswell.
  36. —   A director can participate in a board meeting through video conferencing or other audio visual mode as may be prescribed.
  37. —  A notice of not less than 7 days in writing is required to call a board meeting. The notice of meeting to be given to all directors, whether he is in India or outside India by hand delivery post or electronic means.
  38. —   Every company with more than 1,000 shareholders, debenture-holders, deposit-holders and any other security holders at any time during a financial year shall constitute a Stakeholders Relationship Committee consisting of a chairperson who is a non-executive director and such other members as may be decided by the board.
  39. —  In a private company, an interested director cannot vote or take part in the discussion relating to any matter in which he is interested.
  40. —  The provisions related to inter-corporate loans and investments (section 372A of Companies Act, 1956) has been extended to include loans and investments to any person. 
  41. —  Loans can be given to a Director without seeking permission of the Central Government.
  42. —   No central government approval required for entering into any related party transactions.
  43. —   No approval of the central government required for appointment of any director or any other person to any office or place of profit in the company or its subsidiary.
  44. —  The Bill prohibits insider trading in the company. 
  45. —  The Bill provides provisions related to Corporate Social Responsibility (CSR).
  46. —  Provisions relating to the appointment of managing director/whole time director/manger to apply to a private company.
  47. —   The Bill provides for provision related to secretarial audit in certain prescribed class or classes of companies.
  48. —  The Bill prescribes the functions of a company secretary.
  49. —   The conditions under which the Registrar can remove the name of a company from his record have been changed.
  50. —  The Registrar of Companies has been empowered to file an application with the Tribunal for restoration of the name of a company where the company was struck off inadvertently or on the basis of the incorrect information.
  51. —  The manner of declaring a company sick and process of its revival and rehabilitation has been completely rationalized.
  52. —   Any document or returns required to be filed under this Bill, if not filed within prescribed time, have to be filed within a period of 270 days on payment of such additional fees as may be prescribed.
  53. —   New definition of Nidhi Company prescribed.
  54. —   The person to be appointed as President of the Tribunal shall be the judge of the High Court for atleast 5 years, as opposed to the Companies Act 1956, where no term has been prescribed for High Court Judge to be appointed as President; the only condition was that the person should be qualified for being a judge of high court.
  55. —  The National Company Law Appellate Tribunal shall now consist of a combination of technical and judicial members not exceeding 11, instead of 2 as provided in the Companies Act 1956.
  56. —  The Bill makes provision for cross border amalgamations between Indian companies and companies incorporated in the jurisdictions of such countries as may be notified from time to time by the central government.

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Company Law Settlement Scheme, 2010

The Ministry of Corporate Affairs has come out again with the much awaited Company Law Settlement Scheme in exercise of its powers under Section 611(2) and 637B (b) of the Companies Act, 1956 “Company Law Settlement Scheme, 2010.

Under the scheme an opportunity is given to the defaulting companies to make their default good by filing belated documents and to become regular compliant in future.

Reliefs provided in scheme are:

  1. Condoning the delay in filing documents with the Registrar.
  2. Granting immunity from prosecution and
  3. Charging additional fee of 25 percent of actual additional fee payable for filing belated documents under the Companies Act,1956 and the rules made there under.

Defaulting company shall mean a company registered under the Companies Act, 1956 and a foreign company falling under section 591 of the Act, which has made a default in filing of documents on the due date(s) specified under the Companies Act, 1956 and rules made there under;

The scheme is valid from 30th May, 2010 to 31st August, 2010.

The Scheme shall not apply to following:

  1. Filing of documents for incorporation or establishment of place of business in India
  2. Where specific order for condonation of delay or prior approval under the provisions of the Companies Act, 1956 is to be obtained from the Company Law Board or the Central Government or Court or any other Competent Authority is required.
  3. Companies against which action under sub-section (5) of section 560 of the Act has been initiated by the Registrar of Companies
  4. Any defaulting private company or public company which has not increased its paid capital up to the threshold limit of rupees one lakh and rupees five lakh respectively as provided in sub section (3) and (4) of section 3 of the Companies Act, 1956.

How the Scheme will function

  • The defaulting company shall pay statutory filing fees as prescribed under the Companies Act and rules made there under along with an additional fee of 25 percent of the actual additional fee standardized under sub-section (2) of Section 611 of the companies Act, 1956,payable on the date of filing of each belated document;
  • The application for seeking immunity in respect of belated documents shall be made electronically in the Prescribed Form.

E- form 23AC can be filled in without getting SRN of form 23B

The Ministry of Corporate Affairs (Ministry) has revised e-form 23AC effective from 28th September 2008 wherein filling in SRN of 23B was made compulsory. In many a cases, it was reported by our members that SRN of form 23B was not available which ultimately resisted to file e-form 23AC required to be filed pursuant to section 220 of the Companies Act, 1956 by the Companies.

The matter was represented by the Institute of Company Secretaries of India before the Ministry. We are pleased to inform you that the Ministry has revised the Instruction Kit in respect of Point No. 10(e) of e-form 23AC which states that:

“Enter the SRN of Form 23B filed in relation to the appointment of the auditor who has audited the attached balance sheet, if available. If the SRN of Form 23B is not available or in case information by auditor to ROC in Form 23B is not required to be filed, you may enter Z99999999”

Accordingly, in case you don’t get SRN of Form 23B, please enter Z99999999 and proceed filing of e-form 23AC.

Courtesy: icsi.edu

Setting Up a Branch Office in India

Foreign companies who are engaged in manufacturing and trading activities outside India are allowed, by Indian law, to set up branch offices in India for the following purposes:

  • Export/Import of goods
  • Rendering professional or consultancy services
  • Carrying out research work, in which the parent company is engaged.
  • Promoting technical or financial collaborations between Indian companies and parent or overseas group company.
  • Representing the parent company in India and acting as buying/selling agents in India.
  • Rendering services in Information Technology and development of software in India.
  • Rendering technical support to the products supplied by the parent/ group companies.
  • Foreign airline/shipping Company.

The branch office is not allowed to carry out manufacturing activities on its own but is permitted to subcontract these to an Indian manufacturer.

Branch offices, which are established with the approval of RBI, may remit part of the profit of the branch outside India, after deducting applicable Indian taxes and subject to RBI guidelines. Permission for setting up branch offices is granted by the Reserve Bank of India (RBI).

For obtaining approval from RBI and to register with the Registrar of Companies, the following documents are required for opening a branch in India:

  • A copy of Board Resolution for opening Branches in India. (Notary and consulate by Indian embassy)
  • A copy of Certificate of incorporation of your company abroad
  • A copy of Memorandum of the company.
  • List of Directors/Key Persons of the company
  • List of Branches in other countries if any
  • Brief profile of the business activity
  • Proposed address of the branch in India.

All the documents are required in duplicate.

New guideline issued by the RBI

Is it necessary to register the Sole Proprietorship firm in India?

No.

There is no formal registration is required for a sole proprietorship. You simply have to open a bank account with the name & style you want to work. But if you are liable for state VAT or service tax registration, then you have to obtain VAT and/or service tax registration. Further, for sole proprietorship, no separate income tax PAN is required. The PAN of the proprietor will be the PAN of the firm and proprietor will have to file income tax return in his personal name.

Now after announcement of KYC norms by RBI, it is mandatory to have at least two registration in the name of sole proprietorship firm. So now you have to submit two documentary proof for the name of sole proprietorship firm. Normally owner can get registration under shop & establishment act and under service tax or VAT.

 

Visit our new website: www.mukeshraj.com

 

Procedure for Incorporation of a Private Limited Company in India

  1. Apply for DIN (Director Identification Number) if the directors of
    the proposed company do not have this number earlier. Every director has
    one unique DIN for all companies.

    Documents Required for approval of DIN:

    • Identity proof
    • Address proof
    • One passport size photo of each of the proposed
      directors.

    Apply for the DIN here

  2. Apply for Digital Signature (Class 2), if none of the proposed director
    already have it.

    Documents Required: Identity and address proof of the proposed
    director.

  3. Apply for the availability of the name in Form 1A (Suggest 3-4 names for the new company)
  4. Draft a memorandum and article of association for the new company
  5. Get stamping for State Duty
  6. File the documents for Company Registration (Form 1, Form 18, Form 32, Power of attorney)
  7. Get the Registration Certificate

We can help you in all these steps. For more details visit here – http://www.mukeshraj.com/how-to-open-company-in-india.html