mca circulars rationale and implications cs suresh thakur desai m.a.,ll.b. d.b.m.fcs
TRANSCRIPT
MCA Circularsrationale and implications
CS Suresh Thakur Desai M.A.,LL.B. D.B.M.FCS
12/05/2011 The Companies which have not filed their statutory Annual Reports (ie. Balance Sheet, Profit & Loss Account Accounts and Annual Returns) with the Registrar of Companies, they would not to be allowed to file their other forms except the following forms till the companies has filed its updated Statutory Annual Accounts/ Annual Return in MCA – 21 system:Form 32,Form 20BForm 21A,Form DIN 3,Form 21Form 1AA,Form 62,Form 23AC & ACAFurther implication of default in filing Annual documents:
Directors of theses companies will not be allowed to sign any document for filing with MCA 21 systemCompany Secretaries and Auditors of these companies will also not be allowed to sign and certify the filing with MCA – 21 system; and it is not clear whether this applies only in respect of such companies or in respect of their other clients also. To take action against the defaulting companies in co-ordination with RBI and SEBI
20/04/2011
The Simplified procedure as mentioned in the General Circular 16/2011 issued by Ministry of Corporate Affairs simpler procedures shall be adopted for the amalgamation of GovernmentCompanies under section 396 of the Companies Act, 1956 as mentioned in the Circular
Effective from April 20,2011
Cost Audit
MCA has issued Notifications containing First Time Industry Specific Cost Audit Order (instead of Company specific) for companies covered under 14 industries. Copies of the same are attached. The main features of the Orders are as under: Category -1: In case of following industries:o Bulk Drugso Formulationso Fertilizerso Sugaro Industrial Alcoholo Electricity Industryo Petroleum Industryo Telecommunications
Cost Audit is applicable to the following companies:(i) Companies having Net Worth exceeding Rupees Five Crores(ii) Companies having Turnover exceeding Rupees Twenty Crores(iii) Companies whose equity or debt securities are listed or in the process of listing on any stock exchange in or outside India . Category -2 In case of following industries:o Cemento Tyres & Tubeso Steel Plantso Steel Tubes and Pipeso Papero Insecticides Cost Audit is applicable to the following companies:(i) Companies having Turnover exceeding Rupees One Hundred Crores(ii) Companies whose equity or debt securities are listed or in the process of listing on any stock exchange in or outside India .
Revised procedure for appointment of Cost Auditors
07/04/2011 PAN of the existing Indian Applicant is mandatory field in DIN eform – 1. All the existing DIN holders which have not furnished their PAN earlier at the time of obtaining DIN, are required to furnish their PAN by filing DIN- 4 eform by 31st May, 2011
Came into effect on April 7,2011
6/04/2011 In the Directors’ Relatives (Office or Place of Profit) Rules, 2003, (‘the said rules’), in Rule 3, for the figures “50,000” the figures “2,50,000” are substituted . In the said Rules, sub-rule (7) of rule 4, the following rule has been substituted:'The selection and appointment of a relative of a director holding office or place of profit in the company shall be approved by adopting the same procedure applicable to non- relatives :Provided that, in the case of listed public Companies, the selection of director for holding place of office or profit in the company shall have to be also approved by a Selection Committee.
EXPLANATION- For the purpose of this sub-rule, the expression "Selection Committee" means a committee, the majority of which shall consist of independent directors and an expert in the respective field from outside the company Provided that in case of unlisted companies, independent directors are notnecessary but outside experts should be thee in the Selection Committee:Provided further that in the case of private companies, independent directorsand outside experts are not necessary
31/03/2011
In the Companies (Particulars of Employees) Rules, 1975 (hereinafter referred as the said rules), in rule 1A, in clause (a), for the words "rupees twenty- four lakhs”, the words " sixty lakh rupees " shall be substituted; in clause (b), for the words " rupees two lakhs", the words "five lakh rupees" shall be substituted. In the first proviso to rule 2 of the said rules,-
for the words “particular of employees of companies” the words “particulars of Government Companies and Companies” shall be substituted
b) for the words “rupees twenty- four Lakhs per financial year or rupees two lakhs per month”, the words “sixty lakh rupees per financial year or five lakh rupees per month” shall be substituted
New rule applicable in respect of all the Board reportssigned after April. 1, 2011 irrespective of the accounting year to which they relate
31/03/2011 Filing of Balance Sheet and profit and Loss Account in eXtensible Business Reporting Applicable to all companies listed in India and their subsidiaries, having a paid up capital of Rs. 5 Crores and above or a Turnover of Rs. 100 crores or above, excluding banking companies, insurance companies, power companies, Non Banking Financial Companies (NBFCs) and overseas subsidiaries of these companies
Ministry of Corporate Affairs (MCA) has come out with an Exposure Draft on XBRL taxonomy for Commercial and Industrial (C&I) entities for filing their Balance Sheet and Profit and Loss Account visit the site for details
Applicable for the Financial year ending on 31st March, 2012 other than listed company.
18/03/2011 With effect from 1st May, 2011, the powers are delegated to Registrar of Companies for incorporating companies u/s 25
Power of granting approval under section 25 of the Act is now delegated to ROC from May 1, 2011
1
2.
3.
4.
Words
Corporation, corp, corpn, corp
international, Globe, Global, World, Overseas, Universe, Universal, Continent, Continental, Inter Continental, AsiaticAsia, Asian being the first word of the name
If any of the words at (2) above is used within the name (with or without bracketsHindustan, India, Indo, Indian, Bharat, Bharatvarsh, Bhartiya or any other country’s name being first word of the name
Requirement of Minimum
Authorised Capital as on the date
Rs.5 Crore
Rs 1 crore
Rs 50 lakhs
Rs 50 Lakhs
Required authorized
capital (in Rs.) after the proposed
notification from MCA
Rs. 25 crore
Rs 5 crore
Rs2 crore
Rs. 2 crore
Sl no
words Requirement of Minimum Authorised Capital as on the date
Required authorized capital (in Rs.) after the notification from MCA
5 If any of the words at (4) above is used within the name (with or without brackets)
Rs 5 lakhs Rs 25 lakhs
6 Industries/ Udyog Rs 1 crore Rs 5 crore
7 Enterprises, Products, Business, Manufacturing, Venture.
Rs 10 Lakhs Rs 50 Lakhs
04/03/2011
No physical submission of DIN documents The application can also be submitted online by the applicant himself using his DSC. Where the DIN 1 is verified by the Practising professional(CS/CA/ CWA) the DIN will be approved by the system immediately online In other cases the DIN cell will examine the application and same shall be disposed of within one or two days.
Effective fromfrom 27th March, 2011
08/02/2011
The Central Government hereby directs that provisions of Section 212 shall not apply in relation to subsidiaries of those companies which fulfill the prescribed conditions mentioned in the said circular dated 8th February, 2011 issued by Ministry of Corporate Affairs
Shall be applicable in respect of balance sheet and profit and loss accounts prepared regarding the financial year ending on or after the 31st March, 2011
General Circular No. 27 /2011 dated May 20, 2011
The Circular relies on the provisions of the Information Technology Act 2000 [the IT Act] which is enacted inter alia toThe Circular defines “electronic mode” to mean video conferencing facility i.e. audio-visual electronic communication facility (VCF) employed which enables all persons participating in that meeting to communicate concurrently with each other without intermediary and to participate effectively in the meeting provide for legal recognition of electronic records2 The Circular clarifies that shareholders of a company may participate in a General Meeting under the provisions of the Act through electronic mode. Participation by members through VCF will not be counted towards quorum
For holding General Meeting through electronic mode, a company shall comply with the following in addition to compliance required under the Act: 1. Notice of the General Meetings should inform shareholders regarding availability of participation through VCF and details for accessing VCF. 2. Chairman of the General Meeting and Secretary shall assume the following responsibilities i.e.: a. Safeguarding the integrity of the meeting via video conferencing; b. Ensuring proper video conference equipment / facilities; c. Preparing minutes of the meeting;
d. Ensuring that only concerned shareholder or proxy to a shareholder is attending the meeting through VCF; e. If a statement of a participant in the meeting via VCF is interrupted or garbled, the Chairman or Secretary shall request for a repeat or reiteration, and if need be, the Chairman or Secretary shall repeat what he heard the participant was saying for confirmation or correction.
3. In order to provide larger participation and for cost reduction, listed companies may provide VCF for such meetings in at least 5 places in India. Such places should be top 5 states / union territories based on maximum number of members or at least 1,000 members, whichever is more, residing as per the address registered with the depositories. 4. In order to have secured electronic platform for capturing accurate electronic voting process, the agencies duly approved by MCA viz. National Securities Depository Limited, Central Depository Services (India) Limited should be appointed, subject to such agencies completing necessary certification.
Clarification dated May 23Sections 108 A to 108 I of the Companies Act will not have any legal forceCircular no 29 of 2011“ In order to cut timeliness and another step towards “Green Initiative “ all the certificates and letters issued by the Registrar of Companies shall be issued in electronic form under the Digital signature after June 30, 2011
Sending Annual Reports by Emaili) Allowing service of Documents including Balance Sheets and
Auditors report etc through e-mail addresses :In order to reduce cost of posting and speedy delivery of documents, service of documents through electronic mode has been permitted under section 53 of the Companies Act, 1956 in place of service of document under certificate of posting.For this companies have
after fulfilling certain basic conditions being:-Grant of advance opportunity to members to register and change their e-mail id with the company from time to time.Complete display of documents on company website and the advertisement to such to be issued in AdvertisementIn case any member has not registered his mail id, procedure specified u/s 53 to be followed for sending documentsPhysical copies to be made available to members insisting for the same.
Voting in General Meeting of Companies through electronic mode : In order to havesecured electronic platform for capturing accurate electronic processes, Central Depository Services (India) Ltd (CDSL) and National Securities Depositories Limited (NSDL) are being given approval by the Ministry of Corporate Affairs to provide their electronic platform for capturing accurate electronic voting in General meetings of the company
Improvements in process in MCA21 to help stakeholders / corporates1.Introduction of Refund ProcessEarlier there was no process in MCA21 for refund of fees wrongly paid by the stakeholder while availing various services at MCA 21. Now the Ministry has introduced process of refund of statutory fees paid for certain services.The refund of MCA21 fees is available in the following cases:a)Multiple Payments; b) Incorrect Payments & c) Excess PaymentRefund process is not applicable for certain services/ eForms like Public Inspection of documents, Request for Certified Copies, Payment for transfer deeds, Stamp duty fee (D series SRN), IEPF Payment, STP Forms, DIN eForm, etc.The refund form is to be filed within the stipulated time period. Also, there shall be deduction in the amount to be refunded based on time period within which refund eForm is filed. The following is the time slab for filing refund form and the corresponding deduction in refund amount:
Time within which refund application is made is 0-90 days, the default value for deduction is 2.5%; for 91-180 days it is 5%; 181- 270 days it is 7.5%; for 271-365 days its 10% ans for more than 365 days its 25% respectively. Filing of refund form shall not be allowed after expiry of 1095 days of filing of the original request. For all earlier cases, (i.e. cases filed before introduction of refund process), the time limit shall be considered from the date on which the refund process is introduced i.e. from 01/05/2011.2.Removal of Prioritizing by MCA officersEarlier while processing a eforms by the MCA , there was a facility available to officers to mark a work item as urgent to bypass the First in First Out (FIFO) processing. However, in order to bring in more transparency, this functionality has been stopped. The work items will be processed in the order of their filings only.
3.Automatic approval for Form 2, Form 3 regarding return of allotment of shares, Form 18 for change of registered office and for 32 for change in directors details to be processed under STP mode (Straight through processing)(a)Form 2 and Form 3 have been made as STP (Straight Through Process) form and are not required to be processed by RoC.(b)Form 18 filed for existing company for change in registered office where there is no change in State or RoC has been made as STP form and is not required to be processed by RoC user.(c)Similarly Form 32 filed by an existing company for change in directors has also been made as a STP form.Now the form is process and taken on record without intervention of ROC it will save time for approving the form and immediately available for public inspection.
MCA in exercise of its powers under 2(7)(c) of the Companies Act 1956. vide its notification dated 23rd may,2011 has notified that LLP, which is a Body Corporate as per the LLP Act 2008, shall not be treated as Body Corporate, for the purpose of section 226(3)(a) of the Companies Act 1956, As section 2(7)(c) empowers, the Central Government to notify, notify that a Body Corporate, will not be recognized as Body Corporate for the purpose of the Companies Act 1956.Section 226 (3) of the Companies Act 1956 provides for the disqualification for appointment of auditor of a company and as per clause (a) of this sub section, a body corporate cannot be appointed as Auditor. The MCA by its aforesaid notification has taken LLP out of the purview of the Body Corporate under this sub section and therefore, LLP can be appointed as the Auditor of the company.
LLP can be appointed as an Auditor
