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MINISTRY OF CORPORATE AFFAIRS (MCA)

Circulars: Clarification regarding filing of Form DPT4 under Companies Act, 2013: MCA has issued circular no.27/2014 dated June 30, 2014 granting extension of 2 months upto 31-08-2014 without any additional fee in terms of Section 403 of the Act to enable the companies for filing of statement under Form DPT-4 with the Registrar. Clarification with regard to use of the words “Commodity Exchange’ in a company-reg: MCA has issued circular no.26/2014 dated June 27, 2014 clarifying that the use of the word "Commodity Exchange" may be allowed only where a "No Objection Certificate" from the Forward Markets Commission (FMC) is furnished by the applicant. The certificate from Forward Markets Commission will also be required in cases of companies registered with the words "Commodity Exchange' before the issue of this circular. Clarification on applicability of requirement for resident director MCA has issued circular no.25/2014 dated June 26, 2014 clarifying that the ‘residency requirement’ would be reckoned from the date of commencement of Section 149 of the Act i.e. 1st April, 2014, The first previous calendar year, for compliance with these provisions would, therefore, be Calendar year 2014. Therefore, on a proportionate basis, the number of days for which the director(s) would need to be resident in India, during Calendar year 2014, shall exceed 136 days. Regarding newly incorporated companies, it is clarified that companies incorporated between 1.4.2014 to 3O.9.2O14 should have a resident director either at the incorporation stage itself or within six months of their incorporation. Companies incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself. Clarification with regard to holding of shares in a fiduciary capacity by associate company under section 2(6) of the Companies Act, 2013: MCA has issued circular no.24/2014 dated June 25, 2014 clarifying that  shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013. Clarification relating to incorporation of a company i.e. company Incorporated outside India: MCA has issued circular no.23/2014 dated on 25th June, 2014 clarifying that there is no bar in the Companies Act, 2013 for a company incorporated outside India to incorporate a subsidiary either as a public company or a private company. An existing company, being a subsidiary of a company incorporated outside India, registered under the Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act, will continue as a private company or public company as the case may be, without any change in the incorporation status of such company. Clarification with regard to format of annual return applicable for Financial Year 2013-14 and fees to be charged by companies for allowing inspection of records MCA has issued circular no.22/2014 dated on 25th June, 2014 clarifying that Form MGT-7 shall not apply to annual returns in respect of companies whose Financial Year ended on or before 1st April, 2014 and for annual returns pertaining to earlier years. These companies can file their returns in relevant form applicable under Companies Act, 1956. Clarifications with regard to provisions of Corporate Social Responsibility under Section 135 of Companies Act,2013 MCA has issued circular no.21/2014 dated on 18th June, 2014 providing clarifications on provisions of Section 135 of Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as well as activities to be undertaken as per Schedule VII of Companies Act, 2013. An Annexure is also provided with the list of additional items to be included in Schedule VII or to be clarified as already being covered under Schedule VII of Companies Act, 2013. Clarification with regard to voting through electronic means: MCA has issued circular no.20/2014 dated on 17th June, 2014 providing clarification on voting through electronic means. The Circular states that due to lack of clarity on the compliance and procedural requirements, engagement of Depository Agencies, demand for poll/postal ballot facility and issues thereof, the compliance with the mandatory provisions for providing e-voting facility shall be deferred till 31st December, 2014. The ministry has also provided clarifications on issues with e-voting procedure. Clarification on Rules prescribed under the Companies Act, 2013- Matters relating to share capital and debentures: MCA has issued circular no.19/2014 dated on 12th June, 2014 providing clarification on matters relating to share capital and debentures. Share transfer Forms executed before 1st April, 2014- The Circular clarified that every valid Share Transfer Deed executed before 1st April, 2014 and submitted to the concerned company within the period prescribed under the provisions of the Companies Act, 1956 should be accepted by the Company for registration of transfers. Delegation of powers by Board under rule 6(2)(a)- The circular stated that the Board can delegate the powers to issue Duplicate Share Certificated to the Committee of Board subject to any regulations or conditions Filing of MGT-10-clarification : In continuation to circular no.6/2014 issued on 29th March, 2014, MCA has issued circular no.17/2014 dated on 11th June, 2014 stating that form MGT – 10 shall be physically filled, certified by a professional and file it along with other required enclosures as attachment with e-form GLN – 2. Clarification for filing of Form No. INC-27 for conversion of company from public to private under the provisions of Companies Act, 2013: MCA has issued circular no.18/2014 dated on 11th June, 2014 providing clarification regarding filing of form No. INC-27. With regard to the difficulties faced by the Stake holders while filing Form INC –27 for conversion of Public Companies to Private, the Ministry has clarified that, provisions of Section 31(1)(2A) of  Companies Act, 1956 shall remain in force until the corresponding provisions Companies Act, 2013 are notified. Applicability of PAN requirement for Foreign Nationals: In continuation to MCA circular No. 12/2014 dated  22nd May, 2014, MCA has issued circular no.16/2014 dated on 10th June, 2014 stating that a promoter or subscriber who is a Foreign national  and does not possess PAN, he/she shall give a declaration in the prescribed format as an attachment to Form INC-7 that he is not holding PAN. It has also been clarified that the in case of a Resident director of the proposed company he/she shall be required to submit PAN details at the time of incorporation. Clarification regarding maintaining register in new format : MCA has issued circular no.15/2014 dated on 9th June, 2014 providing clarification regarding maintaining register in new format [sub-section(9) of section 186]. As per the Circular, the registers maintained as per Sec. 372A of the Companies Act, 1956 may continue as per requirements under these provisions and the new format prescribed vide Form MBP – 2 shall be used for particulars entered in such register on and from 1.04.2014. Matters relating to appointment and qualification of Directors and Independent Directors: MCA has issued circular no. 14/2014 dated on 9th June, 2014 providing clarifications  on the rules prescribed under the Companies Act, 2013 with regard to the matters relating to appointment and qualifications of Directors and Independent Directors (ID).  The clarifications are on the following points:
  • Section 149(6)(c) regarding “pecuniary interest in certain transactions ”: In view of the provisions of section 188  which take away transactions in the ordinary course of business  at arms length price from the purview of related party transactions, an ‘ID’ will not be said to have “pecuniary relationship” under Section 149(6)© in cases where a transaction is entered into by an ID with the company concerned at par with any member of the general public and at the same price as is payable/paid by member of general public. Fee received by the ID from one or more companies for attending Board Meeting or committee meetings, reimbursement of expenses for participation and profit related commission approved by the members, in accordance with the provisions of the act from a company shall not amount to pecuniary interest  while considering his appointment in the holding company, subsidiary company  or associate company of such company.
  • Section 149- Appointment of IDs- Appointment of existing IDs under the new act, shall be made expressly under Section 149(10)/(11) read with schedule IV of the Act within 1year from 1st April, 2014, subject to the compliance with eligibility and other prescribed conditions.
  • Section 149(10)/(11) - Appointment of ‘IDs for less than 5 years” - ID can be appointed for a term less than five consecutive years. Appointment for a term ( 5yrs or less) is to be treated as one term.  No person can hold office of ‘ID’ for more than 2 consecutive terms. In case of a person completing two consecutive terms of less than 5 years, shall be eligible for appointment only after the expiry of the requisite cooling-off period of three years.
  • Appointment of ‘IDs’ through letter of appointment – Appointment of ‘ID’ under the new act would need to be formalized through a letter of allotment as per Schedule IV of the Act.
  NOTIFICATIONS Establishment of office of the ROC at Hyderabad having territorial jurisdiction in the whole State of Telengana: The Central Government on 13th June, 2014 established the office of the Registrar of Companies at Hyderabad having territorial jurisdiction in the whole state of Telengana for discharging the functions of the Registrar of Companies under the various provisions of the Companies Act, 2013 and appointed the Registrar of Companies, Hyderabad as Registrar of Companies for the purpose of registration of companies under the said Act in the State of Telengana. Establishment of office of the Official Liquidator at Hyderabad having territorial jurisdiction in the whole state of Telengana: The Central Government on 13th June, 2014 established the office of the Official Liquidator at Hyderabad having territorial jurisdiction for the purposes of the said Act for discharging the functions of the Official Liquidator in the whole State of Telengana and appoints the Official Liquidator at Hyderabad as Official Liquidator for the liquidation of companies under the Companies Act, 2013 in the State of Telengana. Commencement of provisions of sub sections (2) and (3) of section 74: MCA appointed 6th June, 2014 as the date on which the provisions of sub-sections (2) and (3) of Section 74 of the Companies Act, 2013 shall come into force. Rules The Companies (Acceptance of Deposits) Amendment Rules, 2014 The Central Government on 6th June, 2014 made the following rules to amend the Companies (Acceptance of Deposits) Rules, 2014, namely:-
    1. These rules may be called the Companies (Acceptance of Deposits) Amendment Rules, 2014.
    2. They shall come into force from the date of their publication in the Official Gazette.
  1. In the Companies (Acceptance of Deposits) Rules, 2014, in rule 5, in sub-rule (1), the following proviso shall be inserted, namely:- “Provided that the companies may accept the deposits without deposit insurance contract till the 31st March, 2015.”
Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2014: The Central Government on 9th June, 2014 made the following rules to amend the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, namely:
    1. These rules may be called the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2014.
    2. They shall come into force on the date of their publication in the Official Gazette.
  1. In the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 after rule 8, the following rule shall be inserted, namely: “8A. Appointment of Company Secretaries in companies not covered under rule 8.—A company other than a company covered under rule 8 which has a paid up share capital of five crore rupees or more shall have a whole-time company secretary.”
Companies (Meetings and Powers of Board) Amendment Rules, 2014. The Central Government on 12th June, 2014 made the following rules to amend the Companies (Meetings and Powers of Board) Rules, 2014, namely:
    1. These rules may be called the Companies (Meetings and Powers of Board) Amendment Rules, 2014.
    2. They shall come into force on the date of their publication in the Official Gazette.
  1. In the Companies (Meetings and Powers of Board) Rules, 2014, in rule 6, after the explanation, the following shall be inserted, namely:- “Provided that public companies covered under this rule which were not required to constitute Audit Committee under section 292A of the Companies Act, 1956 (1 of 1956) shall constitute their Audit Committee within one year from the commencement of these rules or appointment of independent directors by them, whichever is earlier : Provided further that public companies covered under this rule shall constitute their Nomination and Remuneration Committee within one year from the commencement of these rules or appointment of independent directors by them, whichever is earlier.”
The Companies(Declaration and Payment of Dividend) Amendment Rules, 2014: The Central Government on 12th June, 2014 made the Companies (Declaration and Payment of Dividend) Amendment Rules, 2014 to amend the Companies (Declaration and Payment of Dividend) Amendment Rules, 2014. In Companies (Declaration and Payment of Dividend) Rules, 2014, in rule 3, for sub-rule(5), the following sub rule shall be substituted namely: “(5) No company shall declare dividend unless carried over previous losses and depreciation not provided for in previous year  or years are set off against profit of the company of the current year”. The Companies (Share Capital and Debentures) Amendment Rules, 2014. The Central Government on 18th June, 2014 made the Companies (Share Capital and Debentures) Amendment Rules, 2014 to amend the Companies (Share Capital and Debentures) Rules, 2014. The Companies (Management and Administration) Amendment Rules, 2014 The Central Government on 23rd June, 2014 made Companies (Management and Administration) Amendment Rules, 2014 to amend the Companies (Management and Administration) Rules, 2014
    1. These rules may be called the Companies (Management and Administration) Amendment Rules, 2014.
    2. They shall come into force on the date of their publication in the Official Gazette.
  1. In the Companies (Management and Administration) Rules, 2014, in rule 20, (i) in sub-rule (1), the following shall be inserted, namely:- “Provided that the Company may provide the facility referred to in this sub-rule on or before the 1st day of January 2015.” (ii) in sub-rule (3), for the words “which opts to provide”, the words “which provides” shall be substituted.
The Companies (cost records and audit) Rules, 2014 The Central Government on 30th June, 2014 made The Companies (cost records and audit) Rules, 2014 which supersedes the earlier rules. The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2014 The Central Government on 30th June, 2014 made The Companies (Prospectus and Allotment of Securities) Amendment Rules, 2014 to amend The Companies (Prospectus and Allotment of Securities) Rules, 2014.
    1. These rules may be called the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2014.
    2. They shall come into force from the date of their publication in the Official Gazette.
  1. In the Companies (Prospectus and Allotment of Securities) Rules, 2014, in rule 14, in  sub-rule (2), in clause (a), after the second proviso, the following proviso shall be inserted,  namely:- “Provided also that in case of an offer or invitation for non-convertible debentures  Referred to in the second proviso, made within a period of six months from the date of  commencement of these rules, the special resolution referred to in the second proviso may be passed  within the said period of six months from the date of commencement of these rules.”
 
  • By CS P. Surya Prakash  0 Comments   

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