Form ADT-1

Under the Companies Act, 2013 appointment or re-appointment of auditors at a general meeting is required to be intimated to the Government within 15 days of their appointment as such. Until recently, this was required to be done in a form ADT-1 but this form was available only in PDF format, not as a form. So the PDF filled form was required to be attached to form GNL-1 and thereafter filed at the portal of the ministry of corporate affairs.

With effect from 20th October, 2014, the ministry has made the form ADT-1 applicable as a form to be filed and uploaded at the portal. The form requires as an attachment, the appointment letter given to the auditors, their consent letter for appointment and the resolution appointing them as auditors.

All this is required to be attached to the form ADT-1 and filed within 15 days from the date of appointment. Also to be noted that hitherto under the Companies Act, 1956 the compliance regarding filing the erstwhile form 23B was required to be done by the Auditors themselves, now it is the company's responsibility to file the same within the said period of 15 days.

The form ADT-1 is available at the MCA portal. 

Industrial Licence

The Ministry of Commerce and Industry vide its Department of Industrial Policy and Promotion has issued a Press Note no. 9 dated 20th October, 2014 wherein

1) the validity period of an industrial licence has been increased to 7 years;
2) annual capacity requirement in the Industrial Licence for defence items is being done away with; and
3) the licencee is allowed to sell defence items to govenment entities under the Ministry of Home Affairs without need of a prior approval from the Ministry of Defence. However for sale of such defence items to other entities shall require prior approval.

The Press Note can be found here

Company Law Settlement Scheme 2014

The Ministry of Corporate Affairs has announced a new Company Law Settlement Scheme 2014 to enable companies which have defaulted in filing their mandatory annual documents to file the same at reduced additional fees of 25% of the normal additional fees. The salient features of the Scheme are as follows:

1) The Scheme is open from 15th August, 2014 to 15th November, 2014
2) Applicable for filing of annual statutory documents like compliance certificate, audited financial statements, annual return and auditors appointment only.
3) Not applicable for other event based documents.
4) Companies can file the documents under respective forms 66, 23ac, 23aca, 20b, 21a and 23b by filing the same within the period. They have to pay the filing plus 25% of the additional filing fees payable.
5) The companies will have to file an immunity application in respect of these documents which were filed under the CLSS 2014. The e-immunity application will be required to be filed after the annual documents are taken on record or approved by the ROC. The e-immunity application counter will be open for a period of three months after the closure of the Scheme.
6) The designated authority will consider the e-immunity applications and pass the necessary orders;
7) Companies which have already been issued with show cause notices from MCA in respect of non filing of the documents, and which has filed an appeal in a competent court, will have to first withdraw the appeal before it will be allowed to file the documents under the CLSS 2014.
8) The disqualification of directors under section 164 of the Companies Act, 2013 will apply only to prospective defaults if the company files the necessary documents under the CLSS 2014.
9) CLSS 2014 will not apply to vanishing companies, striking off action companies under section 560 of the Companies Act, 1956 and companies which have filed for dormant status under section 455 of the Companies Act, 2013;

DEFAULTING INACTIVE COMPANIES:

1) Where the company is inactive, i.e. there is no business in it, they can also take advantage under the Scheme by either

(a) applying to get themselves declared as dormant companies by filing the necessary form at 25% of the normal fees applicable on the said form. OR
(b) apply for striking off their names from the Register of the MCA by filing the necessary form at 25% of the normal fees applicable on the said form.

EXTENSION OF THE SCHEME TO 15TH NOVEMBER, 2014

The Ministry of Corporate Affairs has vide its circular no. 40/2014 dated 15th October, 2014 extended the Company Law Settlement Scheme by another month to 15th November, 2014.

So, therefore, companies should avail of this opportunity and file the belated documents on or before 15th November, 2014.

 

Form DIR-3C

Ministry of Corporate Affairs has introduced a new form DIR-3C which essentially replaces form DIN-3 and which is for the purpose of intimating the DIN (Director Identification Numbers) to the government. For a long period of time, this form was not made available but now this form has been introduced. The DIN-2 from the Directors is required to be attached to this form. This is helpful to many companies who are still sleeping over MCA 21 filings right from 2006 onwards.

FDI in defence sector

FDI in defence sector has been allowed upto 49% of the equity of the investee, up from 26% as at present. Government of India vide Department of Industrial Policy & Promotion has issued Press Note no. 7/2014 dated 26th August, 2014 to this effect. This 49% is approval route from the Government.


Further this FDI limit of 49% will include all kinds of foreign investment i.e. FDI, FII, FPI, NRI, FVCI & QFIs.

Portfolio investment upto 24% is however allowed on automatic route.

The Government will consider FDI above 49% on a case by case basis.

There are other conditions such as

(a) the sector is subject to license and therefore licensing will be done by DIPP in liaison with Ministry of Defence;
(b) Applicant should be an Indian company owned and controlled by resident Indian citizens;
(c) Management of the company should be in Indian hands including the Managing Director/ CEO should be Indians;
(d) Chief Security Officer should be an Indian citizen;
(e) Full particulars of Directors/ CEO should be furnished alongwith the application;
(f) Preference will be given to OEMs or design establishments and companies having good track record in the past with the Armed Forces;
(g) There is no minimum capitalization requirement for the FDI;
(h) No purchase guarantee will be given by the Ministry of Defence;
(i) The company should also have maintenance and life cycle support facility for the product being manufactured in India along with the manufacturing facility;
(j) Import of equipment for pre-production activity including prototype will be permitted;
(k) Adequate safety and security procedures need to be put in place by the licensee;
(l) Standards and testing procedures for the equipment will have to be provided to the Government under appropriate confidentiality clause. The nominated quality assurance agency will do the inspection and audit of the Quality assurance procedures of the licensee. Self certification would be allowed on a case to case basis;
(m) Purchase preference and price preference might be given to the public sector enterprises in the sector;
(n) Arms and ammunition manufactured under license will be sold only to the Ministry of Defence or units under the ministry of home affairs. It cannot be sold in the private market. Export would be permitted subject to the guidelines.
(o) Non lethal weapons would be permitted to sold to persons other the MOD or MOHA subject to obtaining necessary permissions;
(p) The company would need to set up a verifiable system of removal of items from out of their factory. Violation of these provisions may lead to cancellation of the licence.
(q) All application to be made to the Foreign Investment Promotion Board (FIPB). Proposals upto 49% involving investment in excess of Rs.1200 crores (Rs.12,000 million) will be sent to the Cabinet Committee on Economic Affairs (CCEA) for clearance.
(r) For proposals beyond 49% approval will be sought from the Cabinet Committee on Security (CCS). Proposals beyond 49% and involving investment exceeding above limits will not require CCEA clearance if it has been cleared by the CCS.
(s) Government decision on the FDI will be communicated normally within a period of 10 weeks from the date of acknowledgement of the application.
(t) For proposals beyond 49% the application should be made by Indian company or foreign investor but the management need not be in Indian hands and it is not necessary to have Managing Director or CEO as Indian.

A copy of the press release can be found here



 

FDI in Railway sector

The Government of India has opened up railway infrastructure for domestic as well as foreign investors. Department of Industrial Policy & Promotion (DIPP) press note no. 8 dated 27th August, 2014 has been issued by the government opening up the rail infrastructure for investment by the private sector. The following activities has been opened up for FDI.

Construction, operation, maintenance of

(i) Suburban corridor projects through PPP;
(ii) High speed train projects;
(iii) Dedicated freight lines;
(iv) Rolling stock including train sets, and locomotives/ coaches manufacturing and maintenance facilities
(v) Railway electrification;
(vi) Signalling systems;
(vii) Freight terminals
(viii) Passenger terminals
(ix) Infrastructure in industrial park pertaining to railway line/ sidings including electrified railway lines and connectivities to main railway lines, and
(x) mass rapid transit systems.

100% FDI is allowed automatic basis but FDI beyond 49% of the equity of the investee company in sensitive areas will be put forth to the Cabinet Committee on Security for consideration on a case by case basis.

They have not allowed FDI or private investment in maintenance of railway stations or platforms and that is much needed because the existing infrastructure for maintenance and upkeep of the railway stations and platforms is not at all adequate, especially from the point of view of facilities to the passengers. I thought they should have allowed private investment in online and offline bookings as well because the IRCTC site as we know is totally unreliable.


A copy of the DIPP press note can be found here



 

Hyderabad Half Marathon - flyovers too many

Honestly when i reached the 18km mark at the recently held Airtel Hyderabad Half marathon on Sunday, 24th August, 2014 little did i expect to see a queue of runners all walking up the last flyover. That was indeed the last flyover on the route and although there was one very short incline thereafter also, but that was a major climb over for the day.

Hyderabad half marathon starts at Necklace road adjacent to the the Hussain Sagar Lake and finishes at Gadchibowli stadium. It is a point to point route unlike the out and back route that most half marathons prefer for some reason, this route has been made a point to point one. It has three flyovers i.e. immediately at the start with only 100 or 200 metres into the race and then one at 2 kms which is a long undulating one which seemingly never ends and once you get down from that 2nd flyover, then there are a series of undulations provided by the natural topography of Hyderabad. Most of the route passes through commercial areas of Hyderabad, which is why  you rarely get any cheering crowd from the local population. For all that matters, the local residents may be asleep blissfully unaware that a marathon event is taking place in their city.

The route is tough but the weather made it tougher that day because sun arose early itself at 6.30 a.m. and it was ahead of us i.e. hitting us in the face until 14 kms when we turned left and the sun mercifully was behind us. At that stage only i.e. at 14 kms on the left side road, there was some welcome breeze for a change. The saving grace was the railings put up by Hyderabad Metro Rail for construction purposes which was acting like a barricade and thereby providing some shade.

Otherwise the water and medical station were aplenty, well stocked, well distributed with lots of volunteers knowing their job and also acting as a cheering brigade. The finishing line was inside the stadium for it was a bit of a boost for many runners to be finishing in olympic style, but i would preferred an out and back route because one gets lots of cheering from the returning runners and also the finishing point being far too away from the centre of the city, trudging back to the city becomes a bore!!

Arrangements at the stadium was good, medals properly handed over, the refreshments handed over at the ground itself though it was a bit chaotic at the stadium with so many runners lying about in various stages of distress or agony.

But in leaving i thought having a natural undulating topography would have been a sufficient route, but adding that flyover at 18 kms mark was a bad mistake!!