independent directors - online test

MCA has vide amendment to the Companies (Appointment & Remuneration of Directors), Rules, 2014 mandated that all independent directors have to register themselves on an online link provided by the Indian Institute of Corporate Affairs (IICA). He has to apply online to register his name in a data bank provided by the IICA and that registration can be for 1 year, 5 years or lifetime. The independent director should ensure that his registration at the IICA portal is there as long as he is continuing to be an independent director. The registration at the portal should be done within 3 months of the commencement of this amendment, which is 22nd October, 2019. Therefore, the registration should be done on or before 21st January, 2020.

There is a renewal process also whereby the independent director concerned can renew his registration at this portal for a further period of 1 year, 5 years as the case may be within 30 days of the expiry of the first registration. Obviously, the renewal process is not applicable to those persons who have registered themselves for a lifetime basis at this portal.

Every independent director should also give a declaration of compliance of this rule alongwith their annual declaration of compliance as required u/s 149 of the companies act, 2013 ("the Act").

Every independent director should also pass an online proficiency self assessment test conducted by the IICA within a period of one year from the date from which his name is included in the data bank, or else his name will be removed from the data bank.

The companies should in their Directors' Report add a paragraph regarding opinion of the Board with regard to integrity, expertise and experience (including proficiency) of the independent directors appointed during the year. This provision has been made in an amendment to the Companies (Accounts) Rules, 2014. This amendment will come into force with effect from 1st December, 2019.
The explanation to this amendment clarifies that the proficiency is to be determined on the basis of the online proficiency test conducted by the IICA.

Passing marks for clearing this online proficiency test by the IICA is 60%. An individual can take any number of attempts in order to pass the test.

There are exceptions such as : those individuals who have served for not less than 10 years in any company or one or two companies put together either as a Director or as KMP in listed public companies and unlisted public companies having paid up capital of Rs.10 crores and above are not required to take the online proficiency test.

Individuals can also voluntarily apply to be included in the above said data bank and it includes persons not presently having a DIN also.

All this does not come free, so there shall be a reasonable fee to be charged from an individual whilst registering his name on the data bank, and also to the companies who refer to this data bank whilst selecting independent directors for their companies. There shall be no fees, however, for taking the online test. 

BEN-2 - extension of last date

MCA has issued a notification on 29th July, 2019 extending the last date for submission of BEN-2 form from 31st July, 2019 to 30th September, 2019.

Its good that MCA extended the last date because the form BEN-2 had too many complications, which the MCA was unable to understand and resolve. For eg. in one company, at the reporting company level, the member was a foreign company, but the ultimate holding was with a trust. So when we enter other body corporate as the member, we are unable to choose trustee as the SBO. This is an anomaly. This also shows the complexity of organisation structures created worldwide.

Secondly, the SBO id is not being pre-filled - so this is supposedly another technical issue, which I hope they sort it out soon.

This is a complicated form where the parties are totally reluctant to give out any information. In most cases the information has to come from abroad, which is taking a lot of time.

A copy of the notification can be found at the MCA site. 

web based DIR-3-KYC

MCA has vide its notification dated 25th June, 2019 amended the Companies (Appointment and Qualification of Directors), Rules, 2014 as follows:

1) a new system of web based DIR-3-KYC is being introduced. Basically it is for those directors who have already done the form based DIR-3-KYC once before.

2) Any Director who holds a DIN as on 31st March of a financial year shall be required to do the form based DIR-3-KYC on or before 30th September of the next financial year, i.e. those directors who were allotted DIN during the financial year 2018-19 will be required to do a one time form based DIR-3-KYC on or before 30th September, 2019. Once he has done a form based DIR-3-KYC, then he need not do the form based compliance again.  On second and subsequent attempts, it is to be a web based DIR-3-KYC compliance for that financial year. Again for the next year, he will have to do a web based DIR-3-KYC compliance.

3) All those directors who did the form based DIR-3-KYC last year, will be required to do the web based DIR-3-KYC this year.

4) Any director who wants to update his personal e-mail id or mobile no. then it has to be done via a form based DIR-3-KYC only.

5) The fee for the form based DIR-3-KYC or the web based DIR-3-KYC is NIL if it is done within the stipulated date. In case of any delay, then fees of Rs.5000/- will be applicable to both the form based DIR-3-KYC and the web based DIR-3-KYC.

The MCA notifications are available on the MCA site.

NFRA-1

MCA has deployed the form NFRA-1 on the site  https://nfra.gov.in/ 

This form is to be filed by the following entities:

(a) companies whose securities are listed on any stock exchange in India or outside India;

(b) unlisted public companies having paid-up capital of not less than rupees five hundred crores or having annual turnover of not less than rupees one thousand crores or having, in aggregate, outstanding loans, debentures and deposits of not less than rupees five hundred crores as on the 31st March of immediately preceding financial year;

(c) insurance companies, banking companies, companies engaged in the generation or supply of electricity, companies governed by any special Act for the time being in force or bodies corporate incorporated by an Act in accordance with clauses (b), (c), (d), (e) and (f) of sub-section (4) of section 1 of the Act;

(d) any body corporate or company or person, or any class of bodies corporate or companies or persons, on a reference made to the Authority by the Central Government in public interest; and

(e) a body corporate incorporated or registered outside India, which is a subsidiary or associate company of any company or body corporate incorporated or registered in India as referred to in clauses (a) to (d), if the income or networth of such subsidiary or associate company exceeds twenty per cent. of the consolidated income or consolidated networth of such company or the body corporate, as the case may be, referred to in clauses (a) to (d).

The form is required to be filed on or before 31st July, 2019. 

Class Action Suits

Section 245 of the companies act, 2013 is a new addition in the 2013 Act, which provides for a class action suit to be filed by such number of member(s)/ depositor(s) against the company. Vast powers have been given in the section against the company. The application under this section has to be made to the National company law tribunal (NCLT). But the Rules under this section which is in the National Company Law Tribunal Rules did not hitherto specify how many members/ depositors are required in order to file an application.

By an amendment to the NCLT Rules, the MCA has sorted that matter out.

So the class action suit can be brought by at least 5% of the total number of members in a company or 100 members, whichever is less.

Alternatively it can be bought by member or members holding not less than 5% of the issued share capital of the company in case of unlisted company and 2% in case of listed company.


In case of depositors, it is

5% of the total number of depositors or 100 depositors whichever is less OR

depositor or depositors to whom the company owes 5% of the total deposits of the company.

The copy of the notification can be found at the MCA site.

Strike off Rules

MCA has vide its notification dated 8th May, 2019 made some amendments to the rules governing strike off of companies. This is the Companies (Removal of Names of Companies from Register), Rules, 2016.

Well, first and foremost, they have doubled the fees for making an application for strike off from Rs.5000/- to Rs.10,000/-.

Secondly, they have clarified that all pending annual e-forms have to be filed by the company before making an application for strike off in form STK-2. Hitherto, this was not required and different ROCs interpreted it differently. This brings in uniformity. But MCA should have provided for closure of the companies without having to file the baggage annual e-forms. It will lead to huge cost to the company to file all delayed annual e-forms because the late fees is now Rs.100 per day from 1st July, 2018 onwards. It is not ease of doing business.

Thirdly if the company intends to file an STK-2 application after the MCA has initiated steps to close down the company, then also the company has to file all pending and overdue annual e-forms to make it upto date.

However, once the MCA has issued a notice to the company in form STK-7 after initiating closure action against the company as per above, then the company cannot file the form STK-2. Meaning once the action gets initiated at the MCA end, then the company cannot subvert it by filing a STK-2 application.

The accounts of the company which has to be attached to the form STK-2 is provided in form STK-8.

The copy of the notification is available at the MCA site. 

significant beneficial ownership

SEBI has vide its circular dated 12th March, 2019 modified its own circular dated 7th December, 2018 on the subject of significant beneficial ownership reporting guidelines. Basically they are aligning their regulations with those issued by MCA since MCA has modified its own guidelines in February, 2019. But the reporting format of SEBI is different from that of MCA, so I guess in case of listed companies they have to submit one format to SEBI while at the same other submit another set of format to the MCA.

Strange, and it goes under the name of "ease of doing business"

The SEBI circular can be found here

Responsible Business Conduct

PIB press release dated 13th March, 2019

Ministry of Corporate Affairs has revised the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011 (NVGs) and formulated the National Guidelines on Responsible Business Conduct (NGRBC). These guidelines urge businesses to actualise the principles in letter and spirit.

These principles are:

1.      Businesses should conduct and govern themselves with integrity in a manner that is Ethical, Transparent and Accountable.

2.      Businesses should provide goods and services in a manner that is sustainable and safe

3.      Businesses should respect and promote the well-being of all employees, including those in their value chains.

4.      Businesses should respect the interests of and be responsive to all their stakeholders.

5.      Businesses should respect and promote human rights.

6.      Businesses should respect and make efforts to protect and restore the environment.

7.      Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.

8.      Businesses should promote inclusive growth and equitable development.

9.      Businesses should engage with and provide value to their consumers in a responsible manner.

The Ministry of Corporate Affairs has been taking various initiatives for ensuring responsible business conduct by companies. As a first step towards mainstreaming the concept of business responsibility, the 'Voluntary Guidelines on Corporate Social Responsibility’ were issued in 2009. These guidelines were subsequently revised as 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011 (NVGS)’ after extensive consultations with business, academia, civil society organisations and the government. The NVGs were developed based on India’s socio-cultural context and priorities as well as global best practices.

There have been various national and international developments in the past decade that have nudged businesses to be sustainable and more responsible, prior most being the United Nations Guiding Principles on Business & Human Rights (UNGPs).  These became the key drivers for further revision of the guidelines. Some of these include the thrust of Companies Act, 2013 (Act) on businesses to be more mindful of their stakeholders.  The Act casts fiduciary duties on the Directors of a Company (S. 166) requiring them to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment. There was also a need to demonstrate more visibly India’s implementation of the UNGPs based on UNHRC’s ‘Protect, Respect & Remedy’ Framework and also make evident India’s commitment to Sustainable Development Goals (SDGs).

The Securities and Exchange Board of India (SEBI) through its ‘Listing Regulations’  in 2012 mandated the top 100 listed entities by market capitalisation to file Business Responsibility Reports (BRRs) from an environmental, social and governance perspective. These BRRs enabled business to demonstrate the adoption of the NVG principles and the attendant core elements with the intent of engaging businesses more meaningfully with their stakeholders going beyond regulatory financial compliance. This was extended to top 500 companies in FY 2015-16. This, for the first time, introduced voluntary sustainability reporting among companies in India which is still in a nascent stage.

In furtherance to updation of NVGs and formulation of the NGRBCs, the Ministry of Corporate Affairs has constituted the Committee on Business Responsibility Reporting (BRR) to develop BRR formats for listed and unlisted companies. Non-financial reporting is increasingly forming the basis for enhancing investor confidence in businesses and increasing their creditworthiness. The Committee is to develop comprehensive yet simple formats situating the various stakeholders at the center so as to not increase or duplicate reporting burden. The proposed formats are to reflect linkages to prevalent non-financial reporting formats, viz, Global Reporting Initiative (GRI), Integrated Reporting (IR) etc., and SDGs from a NGRBC perspective.

The Ministry of Corporate Affairs is also in the process of developing India’s National Action Plan on Business & Human Rights (NAP) in consultation with various Ministries and State Governments by 2020. A Zero Draft of India’s NAP demonstrating implementation of the three pillars of UNGPs has also been released and uploaded on the website of the Ministry.

company incorporation

MCA has vide its gazetted notification dated 6th March, 2019 amended the Companies (Incorporation) Rules, 2014 as follows:

1) Companies with authorised share capital of upto Rs.15 lakhs will to pay NIL fees to the MCA. This has been upped from Rs.10 lakhs previously.

2) Secondly, in case of shifting of the registered office from one state or union territory to another state, the newspaper advertisement regarding the shifting which is required to be given in form INC-26 need to be given in a vernacular newspaper with wide circulation in the state in which the registered office is situated. Earlier the word used was "widest", so its more of a drafting error which is being corrected.

MCA circular as above can be found at here 

Adjudication of Penalties

MCA has vide its notification dated 19th February, 2019 amended the Rule 3 of Companies (Adjudication of Penalties), Rules, 2014. This rule has emanated from section 454 of the Companies Act, 2013 

Section 454 gives powers to the central government to impose penalties on the companies and officers in default for any non compliance of the Act or Rules. 

The salient feature of the new Rule 3 is as follows:

1) central government can appoint officers not below the rank of Registrar as adjudicating officers to adjudge the penalties under the Act;
2) Before adjudging penalty, notice is required to be given to the company/ officer in default;
3) Time period to be given for reply - not less than 15 days and not more than 30 days;
4) Notice to clearly indicate the nature of non compliance, pointing out the relevant penal provisions and the maximum penalty which can be levied;
5) Reply to the notice to be filed in electronic mode only within the time prescribed;
6) Period for reply can be extended by another 15 days for sufficient reasons given;
7) On receipt of reply, if the adjudicating officer feels that physical presence is required, then he shall issue a notice within 10 days of receiving the reply and fix a date for making physical appearance;
8) Physical appearance can be made personally or through authorised representative;
9) If the person has, in his reply, indicated that he would like to make oral representation, then the adjudicating officer shall given him time accordingly;
 10) On the hearing date, the party shall be given a reasonable opportunity of being heard and thereafter the AO shall pass an order recording the reasons in writing;
11) The order shall also be for adjournment of the hearing to another date;
12) The AO may also require the person concerned to submit his reply to certain matters relevant to ascertain the default;
13) The AO shall pass an order within 30 days of the reply received from the person, where no physical appearance is required. Where physical appearance was done, then the period is 90 days from the date of the notice;
14) Every order shall be duly dated and signed and shall clearly state the reasons why physical appearance was required;
15) Copy of the order shall be sent to the company, officer in default, central government and uploaded on the website of the ministry;
16) The AO shall have powers to summon and enforce attendance of any person acquainted with the facts and circumstance of the case;
17) The AO shall also have the powers to order evidence or produce any document which he feels could be relevant to the case;
18) If any person fails or neglects to reply or refuses to appear before the AO, the AO can pass an order imposing a penalty on the said person after recording his reasons in writing;
19) While adjudging quantum of penalty, the adjudicating officer shall have due regard to the following factors, namely:-

(a) size of the company;

(b) nature of business carried on by the company;

(c) injury to public interest;

(d) nature of the default;

(e) repetition of the default;

(f) the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default; and

(g) the amount of loss caused to an investor or group of investors or creditors as a result of the default:

20) Penalty can never be less than the minimum penalty imposed under the relevant section of the Act;

21) In case a fixed sum has been prescribed as penalty under the Act, then the AO will impose that fixed sum as a penalty 

22) Penalty has to be paid through the MCA portal;

MCA e-form ACTIVE

MCA has vide notification dated 21st February, 2019 amended the Companies Incorporation Rules by introducing a new e-form ACTIVE (INC-22A). 

Salient features are 

1) this amendment shall come into force from 25th February, 2019;

2) all companies incorporated before 31st December, 2017 are required to file this form;

3) particulars of the company and its registered office is captured in this form;

4) companies which have not filed its financials (AOC-4) or annual return (MGT-7) or both are restricted from filing this form unless it is under management dispute and ROC has recorded the same;

5)  companies which have been struck off or under process of strike off or under liquidation or amalgamation or dissolution are exempt from filing this e-form;

6) last date for filing is 25th April, 2019 - there is no fees upto 25th April after that it will be Rs.10,000 per form;

7) if the filing is not done by the said date, then it shall be marked as "ACTIVE non compliant" in the MCA portal and shall be liable to action u/s 12(9) of the Companies Act, 2013;

8) if the company is ACTIVE non compliant after the said date, then the following event based forms will not be allowed to be filed by the company -

SH-7 change in authorised share capital

PAS-3 - change in paid up share capital

DIR-12 - change in Directors, except cessation 

INC-22 - change in registered office

INC-28 - amalgamation, de-merger etc. 

9) if the company files the form after 26th April, 2019 then it shall be required to pay a fee of Rs.10,000/-. Only then the company will be marked as ACTIVE COMPLIANT;

10) new form INC-22A has been introduced;

11) form requires details of the company name, registered office address, e-mail id, no. of directors, list of directors, details of statutory auditors, cost auditors, if any, details of MD, CEO, WTD, company secretary, CFO & challan nos. of e-forms AOC-4 & MGT-7 for FY 2017-18.
12) geo tagging of the registered office required so latitude and longitude to be given;

13) e-mail id is with OTP, so there will be a validation process 

14) in the attachment, mandatory attachment is a photograph of the registered office, showing the external building, inside office and also showing at least one Director/ KMP who has affixed his DSC to the form. The photograph of the exterior of the office should show the name plate of the company with CIN and GSTIN
15) further, the DSC of at least two Directors is required to be affixed in the form. 

MSME Return

The Ministry of Micro, Small & Medium Enterprises had vide its notification dated 2nd November, 2018 directed that all companies who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services shall submit a half yearly return to the Ministry of Corporate Affairs stating inter alia the amount of payments due and the reasons for the delay.

So this MSMED notification was to be regulated by the MCA.

Now MCA has vide its order dated 22nd January, 2019 effectuated this notification of MSMED. MCA has gazetted an order called Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers), Order, 2019.

The Order states that every "specified company" shall file in MSME Form 1 details of all outstanding dues to micro or small enterprise suppliers existing on the date of notification of this order i.e. on 22nd January, 2019 within 30 days from the date of publication of this notification i.e. within 21st February, 2019. 

The Order further states that every "specified company" shall file a half yearly return for the period April to September by 31st October and for the period October to March by 30th April, every year. 

So ONE immediate compliance of outstanding micro and small suppliers within 30 days and TWO half yearly returns every year.

What is "Specified company" is not clarified in any of the notification but it is safe to assume that it means that all companies who supplies of goods or services from micro or small enterprises.  

deposits rules - amendment

MCA has vide its notification dated 22nd January, 2019 amended the Companies (Acceptance of Deposits), Rules, 2014. The salient features of the amendments are as follows:

1) Any amount received by a company from Real Estate Investment Trusts will be treated as exempt deposits as per amendment to 2(1)(c)(xviii);

2) In Rule 16, an explanation has been added which says that form DPT-3 shall be used for filing return of deposit or particulars of transaction not considered as deposit, or both, by every company, other than government company.

This means that particulars of exempted deposits such as unsecured loans from directors, their relatives, shareholders (within the limit), inter-corporate borrowings etc. all need to be reported in this format.

Further, fail to understand why government companies are exempted from this requirement. If the government is serious about corporate governance, then in my view even government companies should have been asked to comply.

Rule 16 pertains to a return of deposits to be filed with the Registrar in form DPT-3.

3) Rule 16A has been amended by inserting a sub-rule (3), which states that every company, other than a government company,  shall file a one time return of outstanding receipt of money or loan by a company but not considered as deposits, from 1st April, 2014 to the date of the notification of this amendment i.e. 22nd January, 2019 in form DPT-3 within 90 days from the date of publication of this notification alongwith fees.

Rule 16A pertains to disclosures in the financial statements and Rule 16 pertains to return of deposits. Unable to comprehend why this amendment has been carried out in Rule 16A rather than Rule 16 which is the correct rule for this subject matter, which is yet another return. Especially when they have made an amendment to Rule 16 giving an explanation as above, amendment of this item in the Rule 16 would have been apt. Another feature I have observed is the bad drafting in the sub-rule (3). They have mentioned "outstanding receipt of money or loan by a company" it should have been "outstanding receipt of money or loan received by a company."

It is also not clear, "outstanding" as on what date - 22nd January, 2019 or the last audited financial year ended date i.e. 31st March, 2018.

It is also not clear whether this one time return is required to be audited by the auditors of the company as normally DPT-3 is required to be so audited if filed every financial year.

Here also unable to comprehend why the government companies are exempt from this requirement. Frankly, if the Indian government is serious about corporate governance then they should make an example out of  the government companies in asking them to comply equally with non government companies.

So another one time return to be filed by all the companies in India along with the requisite fees. So an added one time compliance like the KYC one which came in August- September, 2018. This form DPT-3 to be filed within 90 days i.e. on or before 21st April, 2019. Its going to be mayhem in India Inc. because the 2nd round of KYC compliance will start from 1st April, 2019 onwards and that will run for a month and then this compliance will simultaneously run in April 2019. Knowing the tendency and propensity of companies to sleep until the last minute, its going to be mayhem in April, 2019

So much for ease of doing business in India.

filing of resolutions

MCA has amended section 117(2) of the Companies Act, 2013 vide Companies Ordinance 2019 which has been gazetted on 12th January, 2019.

The amended section 117(2) reads as follows:

"(2) If any company fails to file the resolution or agreement under sub-section (1) before the expiry of the period specified therein, such company shall be liable to a penalty of Rs.100,000 and in case of continuing failure, with a further penalty of Rs.500 for each day after the first during which such failure continues subject to a maximum of Rs.25 lakhs and every officer of the company including the liquidator of the company, if any, shall be liable to a penalty of Rs.50,000/- and in case of continuing failure, with a further penalty of Rs.500 for each day after the first during which such failure continues subject to a maximum of Rs.5 lakhs."

What has changed is that earlier the phrase was "shall be punishable with fine", now it is replaced with "shall be liable to penalty". There must be some implications for this change.

Earlier the penalty on the company was ranging from Rs.1 lakh to Rs.25 lakhs, now it is fixed as Rs.100,000/-. The provision of continuing failure penalty has been brought in, which was not there earlier.

Similarly, the penalty for the officer in default was ranging from Rs.50,000/- to Rs.5 lakhs, but now it has been fixed at Rs.50,000/- and here also the continuing failure provision has been introduced.

Section 117 pertains to filing of special resolutions and agreements which is required for key important matters such as special resolutions passed in general meetings, Board resolution for appointment, re-appointment, or renewal of appointment or variation in terms of appointment of managing director. Resolution which requires the company to be would up voluntarily and resolutions passed in pursuance to section 179(3) - these are Board resolutions for important items such as borrowings, buy-back, issue of securities, making calls on shareholders, investment, grant loans or give guarantee or provide security in respect of loans, approve financial statement & Board report, diversify the business, amalgamation, merger, reconstruction, take over etc.

These resolutions are filed in form MGT-14 and the normal time for filing the same is 30 days from the date of passing the resolutions.  

annual return

MCA has vide the Companies Ordinance 2019 which has been gazetted on 12th January, 2019 amended section 92 as follows:

Section 92 pertains to annual return to be filed by every company in India. This is one of the two mandatory annual filings to be done by every company in India. It is required to be filed within 60 days from the date of the annual general meeting or where no AGM is held, within 60 days from the last date on which AGM should have been held. It contains details of the Directors, shareholders, debt, managerial remuneration, share transfers, board meetings, general meetings, etc.

Section 92(5) is the penalty section, which has been modified. The amended section 92(5) states as follows:

"If a company fails to file its annual return under sub-section (4) before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to penalty of Rs.50,000/- and in case of continuing failure, with a further penalty of Rs.100 per day during which the failure continues, subject to maximum of Rs.500,000/-."

What has changed is that earlier the company was subject to a penalty of not less than Rs.50,000/- but which may extend to Rs.500,000/- and every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to 6 months OR fine of Rs.50,000/- which may extend to Rs.5000,000/- or with both.

So the imprisonment has been removed and penalty for both the company and officer in default has been made common i.e. Rs.50,000/-. Penalty for continuing failure has been added, which was not there hitherto.

registration of charges

MCA has made changes to section 77 of the Companies Act, 2013 vide the Companies Ordinance, 2019 which has been gazetted on 12th January, 2019.

Earlier section 77 allowed charges to be filed within 300 days of its creation. Now that 300 days period has been reduced to 60 days. Under the old Companies Act, 1956, the charges were required to be filed within 30 days of its creation failing which the matter has to be settled by filing a extension of time application to the then Company Law Board.

Under the Companies Act, 2013 when it was first enacted, this period was enhanced to 300 days as a measure of ease of doing business.

Now again it has been reduced to 60 days from the date of its first creation.

If the charges are created before the Companies Act Ordinance 2019 then still the charges can be filed within 300 days, but if the charges are created after the Ordinance has come into force, i.e. 12th January, 2019, then 60 days is the time limit. Even for the 60 days, there will be additional filing fees after 30 days.

If the registration is not made within 300 days under the old provision, then it can still be made within 6 months of the Ordinance coming into force with additional filing fees being paid. This means that the government has given sufficient time for filing of the charges, if the charges were created before the Ordinance came into force - 300 days + 6 months after the ordinance

If the charges are created after the Ordinance has come into force and still the form is not filed within 60 days, then on application further 60 days is given, but here the additional fees will be on ad valorem basis. The ad valorem basis will be prescribed by the government.

appointment of KMP

Section 203(5) of the Companies Act, 2013 has been amended vide Companies Ordinance, 2019 as follows:

Section 203(5) after amendment reads as follows:

"If any company makes a default in complying with the provisions of this section, such company shall be liable to a penalty of Rs.500,000 and every director and KMP of the company who is in default, shall be liable to a penalty of Rs.50,000 and where default is a continuing one, with a further penalty of Rs.1000/- per day after the first day, during which such default continues but not exceeding Rs.500,000/-.

The earlier section mentioned penalty of not less than Rs.100,000 on the company, but which may extend to Rs.500,000/- Now it is one figure of Rs.500,000/- All other provisions are the same except the wordings earlier was "shall be punishable with fine" has been replaced with  "shall be liable to penalty".

Unable to comprehend the meaning of this phrase change.

Section 203 pertains to appointment of managing director, CEO or manager, company secretary and chief financial officer in certain specified companies. The specifications are contained in Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 wherein it is stated that every listed company and every public company having paid up share capital of Rs.10 crore or more shall have whole-time key managerial personnel. It also applies to private company having paid up share capital of Rs.5 crores or more and they are required to appoint whole time company secretary.

form NFRA-1

MCA has vide its notification dated 13th December, 2018 extended the last date for filing of form NFRA-1. The new date is 30 days from the date on which the form is deployed on the website of the ministry.

Form NFRA-1 is a new form for giving particulars of auditors of listed companies as per the new NFRA regulations. NFRA will be regulator of the auditors of the listed companies, for the time being. Later on it might extend to auditors of other unlisted big companies as well.

Ostensibly the form is not ready at the MCA side which is why they have extended the last date. This has happened with other forms also such as BEN-1, BEN-2 and the form for intimating commencement of business. One would have thought that MCA should do all its homework before introducing new regulations or changes in the existing regulations. Shows MCA in poor light in this regard.

http://www.mca.gov.in/Ministry/pdf/NoticeAndCirculars_13122018.pdf

Significant Beneficial Ownership

https://www.sebi.gov.in/legal/circulars/dec-2018/disclosure-of-significant-beneficial-ownership-in-the-shareholding-pattern_41245.html

SEBI has now come out with a circular as per the above link to ask for details of significant beneficial ownership to be provided by companies as part of their quarterly shareholding pattern disclosure under LODR. It will become effective from quarter ended 31st March, 2019.

So this is apart from the BEN1, BEN2 under the Companies Act, 2013 which I believe is not yet notified.

Of course, SEBI regulations will apply to the listed companies only so the listed companies will have to file dual disclosures at the stock exchanges and also with the MCA. So much for "ease of doing business".

Cost Audit Report

Under Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014 every company which is covered under these Rules, is required to furnish to the Central Govt., a copy of the Cost Audit Report, within 30 days of the receipt of the cost audit report by the company, in XBRL format in form CRA4. The cost auditor is required to furnish his report to the company within a period of 180 days from the closure of the financial year to which it pertains and the Board of Directors of the company is required to examine the same. This is provided in Rule 6(5) ibid.

Now vide an amendment to the aforesaid Rules,  where a company has got an extension of time to hold AGM, then the company may file the cost audit report in form CRA4 within the extended time for filing the financial statements.

A proviso has been added to Rule 6(6) as follows:

"Provided that the companies which have got extension of time for holding AGM under section 96(1) of the companies act, 2013 may file form CRA4 within the extended period of filing financial statements under section 137 of the companies act, 2013."