MCA Approves agency to provide & Supervise for E-Voting

MCA vide its General Circular 21 dated May 2, 2011 -approves for appointment of agency for providing electronic platform for electronic voting under the Companies Act, 1956.

It is further reveals that: 

1. Agency to provide & supervise electronic platform for e-voting shall be duly approved by MCA.

2. At present NSDL & CDSL are identified to provide & supervise electronic platform for e- voting.

A copy of the Circular is enclosed 

Govt withdrawn exemption on service provided by CA, CS, CWA related to representation of client before any statutory authority

Notification No. 25 / 2006-Service Tax

           

G.S.R.   (E).- In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services falling under sub-clauses (s), (t) and (u) of clause (105) of section 65 of the Finance Act, provided or to be provided by a practicing chartered accountant, a practicing cost accountant and a practicing company secretary respectively, in his professional capacity, to a client, relating to representing the client before any statutory authority in the course of proceedings initiated under any law for the time being in force, by way of issue of notice, from the whole of service tax leviable thereon under section 66 of the said Finance Act.

F. No. 356/37/2006-TRU

LIMITS ENHANCED TO OBTAIN APPROVAL OF THE CENTRAL GOVERNEMENT FOR PAYMENT OF REMUNERATION TO OFFICE OR PLACE OF PROFIT UNDER SECTION 314 (1B) OF COMPANIES ACT 1956

LIMITS ENHANCED TO OBTAIN APPROVAL OF THE CENTRAL GOVERNEMENT FOR PAYMENT OF REMUNERATION TO OFFICE /PLACE OF PROFIT U/SECTION 314 (1B) OF CA 1956

The Ministry of Corporate Affairs has notified dated 6^th April 2011 enhancement in previous limit of Rs. Fifty thousand per month given under Rule 3 of Director’s Relative (Office or Place of Profit) Rules, 2003 to Rs. Two lakh fifty thousand per month for payment remuneration to relatives or partners of the directors of the Company falling under Section 314(1B) of the Companies Act 1956. By such notification, the amended rules may be called as Director’s Relative (Office or Place of Profit) Amendment Rules, 2011. 

The effect of notification shall require Companies to obtain prior consent of the Company by a Special Resolution and approval of the Central Government under Section 314(1B) of the Companies Act 1956 read with Director’s Relative (Office or Place of Profit) Amendment Rules, 2011, with respect to appointment of: 

1.   Partner or relative of a director or manager; or
2.   Firm in which such director or manager, or relative of either is a partner; or
3.  Private company of which such director or manager or relative of either is a director or  member, 

to any office or place of profit which carries a monthly remuneration exceeding Rs. Two lakh fifty thousand per month.

The notification also redefined the constitution of Selection Committee under Rule 7 of  Director’s Relative (Office or Place of Profit) Amendment Rules, 2011 for purpose of appointment of persons mentioned under Section 314 (1B) of the Act for Listed Companies, Unlisted Public Companies and Private Companies.

LIMITS ENHANCED FOR DISCLOSURE OF PARTICULARS OF EMPLOYEES UNDER 217(2A) OF COMPANIES ACT 1956

Dear Friends

As you aware Section 217 (2A) of the CA 1956 refers  the disclosure of particulars of employees who are earning specified amount as a salary from the company. In continuation of the reforms The Ministry of Corporate Affairs has vide notification dated 31^st March 2011 enhanced the limits for the purpose of disclosure of particulars of employees in Directors Report as requisite under Section 217 (2A) read with Companies (Particulars of Employees) Rules, 1975 from the existing limit of Rs. 24 lakh/ year/ Rs. 2 lakh per month to Rs. 60 lakh per year/ Rs. 5 lakh per month and by such notification also covers Government Companies for such disclosures. By such notification, the amended rules may be called as Companies (Particulars of Employees) Amendment Rules, 2011.

In short, following will be the effect of the notification shall require the Companies including Government Companies to include a statement showing the name of every specified employee of the Company in their Board Report pursuant to Section 217 (2A) of the Companies Act 1956 read with Companies (Particulars of Employees) Amendment Rules, 2011 which provides:

(i) If employed throughout the financial year, was in receipt of remuneration for that year which, in aggregate, was not less than Rs. Sixty Lakh for the year: or

(ii) If employed for a part of the financial year, was in receipt of remuneration for any part, of that year, at a rate which, in the aggregate was not less Rs. Five Lakh per month. 






MCA, vide General Circular No. 23 dated 3rd May, 2011 has clarified that the said notification shall be applicable to all Directors' Reports under section 217 of the Companies Act, 1956 approved by the Board of Directors on or after 1.4.2011, irrespective of the accounting year of the annual account, being approved by the Board.

Notification is enclosed 

happy learning

Green Initiatives in Corporate Sector and in the Corporate Governance

1. The Ministry of Corporate Affairs has taken a “Green Initiative in the Corporate Sector ” by allowing paperless compliances by the Companies after considering sections 2, 4, 5, and 81 of the Information Technology Act, 2000 for legal validity of compliances under Companies Act through electronic mode. It is hereby clarified that a company would have complied with Section 53 of the Companies Act, if the service of document has been made through electronic mode provided the company has obtained e-mail addresses of its members for sending the notice/documents through e­mail by giving an advance opportunity to every shareholders to register their e­mail address and changes therein from time to time with the company. A copy of the MCA Circular No. 17/2011 is attached for your reference.  
2. Ministry also has permitted the Company to send financial accounts to thru email id of its Members. It s most welcome initiatives by the MCA, which will save printing cost, time and most important is to an Earth. A copy of the Circular No. 18/2011 is attached for your reference.

Simplified Procedure for amalgamation of Government Companies U/s 396 of the Companies Act, 1956.

The Ministry of Corporate Affairs have been dealing with the amalgamation of  Government Companies in the Public Interest under section 396 of the Companies Act, 1956  by following the procedures prescribed under Companies (Court) Rules, 1959 which are  applicable to amalgamation under Sections 391-394 of the Companies Act, 1956.  Without  prejudice to the generality of Section 396, it has now been decided that, in appropriate  cases,  simpler procedures shall be adopted for the amalgamation of Government  Companies under section 396 of the Companies Act, 1956  as  attached herewith.

Appointment of Cost Auditor by Companies

Summary of Circular:-

1.  Appointment of Cost Auditor will not require prior approval from Central Government.

2.  Appointment of Cost Auditor -First Point of Reference is  Audit Committee ( AC)

3. Companies where Audit Committee (AC)  not required by Law, Board of Directors (BOD) be the first point of reference.

4.  AC / BOD to ensure such appointment is free from disqualifications U/S 233B(5) & 224 (3) & (4) of Companies Act.

5. Compliance from Cost Auditor  & AC  , on non-violation of limits  U/S 224 (1-B).

6. AC / BOD to obtain Certificate from Cost Auditor certifying its Independence.

7. Company to File Form 23C by 90 days of start of financial year along with:-

a. B oard Resolution for Appointment of Cost Auditor

b. Certificate from Cost Auditor  -Compliance U/s 224 (1-B)

8.  E-form approved by Central Govt (CG) by 30 days. If not approved to be resubmitted as per details requested.

9.  Company to issue formal letter of appointment to Cost Auditor approved by Board within 30 days of approval of E-Form.

10. Cost Auditor to file E-Form ( Yet to be Developed by MCA) to MCA  for such appointment.

11. Disclosure by Companies in Annual Report about Cost Auditor, Due & Actual date of filing of Cost Audit Report.

12. Contravention of provisions of this Circular:-

a.  Company :- Punishable U/S 642(2)  / 209 (5) & (7) / 233B(11) of Companies Act 1956.

b.  Cost Auditor :- Fine  extended to Rs. 5000/-

Certification of e-forms under the Companies Act,1956 by the Practicing professionals

Ministry of Corporate Affairs has been steadily progressing towards total electronic filing and approval regime.  Objective is to do away with human intervention in MCA approvals to the maximum extent possible

Ministry of Corporate Affairs has entrusted practicing professionals registered as Members of the professional bodies namely, ICAI, ICSI & ICWAI with the responsibility of ensuring  integrity of documents filed by them with MCA in electronic mode.  Professionals  are now to be responsible for submitting /certifying documents (to be signed digitally by them) and system would accept most of these documents online without approval by Registrar of Companies or other officers of the Ministry.

However, to ensure that the data integrity is maintained at all times, there will be checking of such submissions to guard against fraudulent filing.  In addition to the penal actions against the companies  and  their officers in default for furnishing incorrect or false information in the documents as provided under the Companies Act, 1956, action would also be taken on receipt of any complaint, anonymous or otherwise, against such professionals in the following manner..........

Read in details here

Allotment of Director Identification Number (DIN) under Companies Act, 1956

MCA vide their General Circular no 11/2011 dated 7th April 2011 make mandatory to furnish the PAN number for allotment of DIN. In case of all the exiting DIN holders who have not furnished their PAN earlier at the time of obtaining the DIN, are require to furnish their PAN by filing DIN-4 by 31st May 2011.

Read detail here

Filing of Balance Sheet and profit and Loss Account in eXtensible Business Reporting Language (XBRL) mode.

The ministry of corporate affairs (MCA), Government of India (GoI) has resolved to implement Extensible Business Reporting Language (XBRL) for all companies in India from 2011, reports Financial Express.

The following class of  companies have to file the  Financial Statements in XBRL Form only from the year 2010-2011 :- 

(i) All companies listed in India and their subsidiaries, including overseas subsidiaries; 

(ii) All companies having a   paid up capital of Rs. 5 Crore and above or a Turnover  of  Rs 100 crore or above . 

Currently, the top 100 companies are already using the XBRL format for financial reporting. In US, the house had approved legislation to follow XBRL for government firms which have used the tax payer money for bailout.

The XBRL is an electronic format for communication of business and financial data that allows the users of financial information to electronically retrieve data with greater assurance of accuracy. According to experts, while XBRL would involve some initial conversion costs for companies, the long-term benefits for investors and the capital markets would be significant.

This would only involve initial conversion cost but keeping in mind the long term benefits, it is a good move.” The ministry would be working with the accounting regulator, Institute of Chartered Accountants of India for the application of the reporting language to the MCA 21 database.”

The companies which are converging with the IFRS from Apr. 1, 2011 will have to incur an additional cost of complying with the advanced reporting language tool, XBRL.

XBRL would be advantageous to all those who gather business data, including governments, regulators, stock exchanges, financial information companies, economic agencies and the likes and those who produce or use it including accountants, auditors, company managers, financial analysts, investors and creditors. XBRL can also immediately confirm the financial data, highlighting errors and gaps which can immediately be addressed. It also helps the user in selecting and processing the data for re-use. ICAI constituted the XBRL group in 2007 for undertaking the development and promotion of XBRL in India.

Read in details further

Prosecution of Directors

One of the disincentives that operate against directors, particularly non-executive directors, is that they are often susceptible to prosecution for offences committed by the company that it not within their knowledge. Occasionally, innocent directors have been subject to victimization by requiring to answer allegations that are often frivolous in nature. This concern has now been addressed, at least partially, by a Circular issued on March 25, 2011 by the Ministry of Corporate Affairs to all Regional Directors, Registrars of Companies (ROC) and Official Liquidators. The Circular relates primarily to independent directors and nominee directors, who are not in charge of the day-to-day affairs of the company. It calls upon the ROC to take extra care in examining the cases where such directors are identified as "officers in default" for the purposes of actions to be taken under the relevant penal provisions of the Companies Act. The Circular further states: No such Directors as indicated above shall be held liable for any act of omission or commission by the company or by any officers of the company which constitute a breach or violation of any provision of the Companies Act, 1956, and which occurred without his knowledge attributable through Board process and without his consent or connivance or where he has acted diligently in the Board process. The Board process includes meeting of any committee of the Board and any information which the Director was authorised to receive as Director of the Board as per the decision of the Board. The Circular imposes greater obligations on the ROC to verify relevant information and records before initiating prosecution against independent or nominee directors. These include the status of the director and timing of resignation relative to the commission of the offence by the company. Special provisions have been made for identification of the appropriate "officer in default" in connection with violation of the provisions relating to accounting and financial statements. In sum, the Circular moves away from the erstwhile regime where ROC could potentially adopt a trigger-happy approach while initiating criminal prosecution of directors to one where the ROC is compelled to exercise "proper application of mind". This is a welcome move as it prevents harassment of innocent directors who have been kept in the dark by managements. The Circular, however, does not go as far as proposals discussed in the context of the Companies Bill, 2009 that call for complete immunity to independent directors from prosecution. By conferring discretion on the ROC (to be exercised in an informed manner), the Circular adopts a principles-based approached by avoiding the rigidity involved in complete immunity. This would continue to spur non-executive directors to perform their role diligently, but at the same time protect them against prosecution risks in the event of their innocence.

Read in details here

Filing statutory Applications u/Section 294AA of the Companies Act,1956

Appointment of Sole Selling Agents 

Filing statutory Applications u/Section 294AA of the Companies Act,1956.

An application submitted under section 294AA of the Companies Act, 1956 should be in accordance with the Companies (Appointment of Sole Agents) Rules, 1975 and be accompanied by the following:-

• A copy each of certified copies of Board of Directors resolution/and special Resolution by members approving the proposal to appoint Sole Selling Agent and the terms and conditions of appointment.
• A copy of previous approval obtained from the Central Government in respect of appointment of the Sole Selling Agents for earlier period, if any.
• A certified copy of the Marketing/Sole Selling Agency Agreement proposed to be entered into with the Sole Selling Agent.
• Percentage of shares held by the applicant company, its directors and their relatives in the Sole Selling Agent/profit sharing ratio, if the proposed Sole Selling Agent is a partnership firm.
• Percentage of shares held by the Sole Selling Agents, its directors and their relatives in the applicant company/their profit-sharing ratio.
• Justification for variation, if any, of rate(s) of commission for earlier appointment and those proposed (in case of reappointment).s

Filing statutory applications u/Section 58A(8) of the Companies Act, 1956

Filing statutory applications u/Section 58A(8) of the Companies Act, 1956

Accepting Deposits etc. 

An application submitted under section 58A (8) of the Companies Act, 1956 should be in accordance with the Companies (Application for Extension of Time or Exemption under sub-Section (8) of section 58A) Rules, 1979 and be accompanied by the following:-

• Original newspaper clippings of the public Notices published in English and vernacular language of the region in which registered office of the company is situated in the manner specified in Form 2 appended to the Rules.
• Certified copy of Resolution of the Board of Directors approving the proposal of the company.
• Copy of previous approval/order, if any, obtained under section 58(A) from the Central Government granting exemption/extension of time during last ten years.
• Certificates from the statutory Auditors:
  • to the effect that the company has not contravened any other provisions of section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 except those for which the application is submitted.
  • To the effect that the deposits held by the company are within limits and that no contravention of the provisions of section 58A of the Companies Act, 1956 and the Companies (Acceptance of Deposits) Rules, 1975 exists at present.
• Deposit position of the company as at 31st March during the current year and the past two years showing the details as under:-
• One copy each of the advertisement issued in newspapers pursuant to Rule 4 of the Companies (Acceptance of Deposits) Rules,1975.

Companies (Name Availability) Rules, 2011

In exercise of the power conferred by clause (a) of sub-section (1) of section 642 read with sections 20 and 21 of the Companies Act, 1956 (1 of 1956), the Central Government has made following rules:

(i)These Rules may be called "Companies (Name Availability) Rules, 2011";

(ii) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.

Please visit the rules in details here 

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Payment of MCA fees –electronic mode only

Ministry has reviewed the processes involved in delivery of important services to stakeholders, with a view to identify and improve the components causing delay in disposal of applications. Payment confirmation is found to be a major bottleneck in delivery of services in respect of offline payment made by physical challans .It was found that often there was a delay in confirmation of payments by physical challans, as banks have been given a reporting time of ‘T’+3 days, as per payment procedure approved by C&AG,‘T’ being the transaction date. 

This leads to delay in creation of work item for disposal of an application/e-form, leading to inconvenience of stakeholders. On the other hand, it was found that wherever fees were paid online in the system, the work item was created faster and the approvals were speedier as banks are following’  T’+1 for reporting online payments. 

In the interest of stakeholders, with a view to improving service delivery time, Ministry has decided to accept payments of value upto Rs.50,000, for MCA 21 services ,only in electronic mode w.e.f 27th March, 2011.

For the payments of value above Rs. 50,000, stakeholders would have the option to either make

the payment in electronic mode, or paper challan. However such payments would also be made in electronic mode w.e.f .1st October’2011. 

General Circular - dated 09.03.2011

DIN PROCESS – SIMPLIFIED – REG.

 DIN PROCESS – SIMPLIFIED – REG.

Ministry’s has re-examined the process of allotment of Directors Identification Number (DIN) to be obtained u/s 266B of the Companies Act, 1956.  The present process is cumbersome and time consuming. 

In order to speed up and simplify the process to obtain a DIN, the below mentioned procedure have been recommended.

  

1. Application for DIN will be made on eForm ; No physical submission of documents shall be accepted and for this purpose  Scanned documentsalong with verification by the applicant will be attached with the eForm. Only online fee payment will be allowed i.e. No challan payment  

2. The application can also be submitted online  by the applicant himself  using his DSC. 

3. DIN   1   eForm   can   be  digitally signed by the professional who shall also confirm that he has verified  the particulars of the Applicant given in the application.

4. Where the DIN 1 is verified by the professional, the DIN will be approved by the system immediately online. 

5. In other cases the DIN cell will examine the application and same shall be disposed of within one or two days.

6. Companies (Directors Identification Number) Rules, 2006 are being amended on the above lines. 

7. Penal action against the applicant and professional certifying  the DIN application in case of false information / certification as per provisions of section 628 of the Act will be taken in addition to action for professional misconduct and revocation of DIN, allotted on false information

8. The above procedures is expected to enable allotment of DIN on the same day.

9. The above procedures applies to filing of DIN 4 intimating changes in particulars of Directors.

A notification to notify the aforesaid procedure is being issued.  After issue of necessary notification, the applicant/professionals/DIN Cell are advised to follow the notified procedures for allotment of DIN

Process of incorporation of Companies (Form-1) and establishment of principal place of business in India by Foreign Companies (Form-44) – Procedure simplified.

Dear All


1. Only Form-1 shall be approved by the RoC Office.  Form 18 and 32 shall be processed by the system online.


2. There shall be one more category, i.e., Incorporation Forms ( Form 1A, Form 37, 39, 44 and 68) which will have the highest priority for approval.


3. Average time taken for incorporation of company should be reduced to one (1) day only.


4. A Notification to notify minor changes in e-forms 18 and 32 to enable them to be taken on record through STP mode for aforesaid procedure is being issued separately

PAYMENT OF COMMISSION TO NON-WTD THE COMPANY U/S 309(4)(b)

MCA, vide General Circular No. 4/2011 dated 4th March, 2011, has decided that a Company shall not require approval of the central government for making payment of remuneration by way of commission to its non-whole time directors in addition to the sitting fee if the total commission to be paid to all these non-whole time directors does not exceed 1% of the net profit of the company if it has whole time director(s) or 3% of the net profit of the company if it does not have a managing director or whole time director(s).

A copy of the General Circular No. 4/2011 dated 4th March, 2011 is attached herewith or you may visit the following link to get the Circular:-http://www.mca.gov.in/Ministry/pdf/Circular_4-2011_4mar2011.pdf

MCA NOTIFIES SECTION 5,6,20,29, 30 & 31 OF COMPETITION ACT,W.E.F. JUNE 01, 2011

MINISTRY OF CORPORATE AFFAIRS NOTIFIES SECTION 5,6,20,29, 30 & 31 OF COMPETITION ACT, 2002 WITH EFFECT FROM JUNE 01, 2011

The Ministry of Corporate Affairs has notified long awaited Sections 5, 6, 20, 29, 30 & 31 of the Competition Act 2002 with effect from June 01, 2011

Section 5 deals with Combination (threshold limits).

Section 6 deals with Regulation of Combinations

Section 20 deals with Inquiry into Combination by Commission

Section 29 deals with procedure for investigation of combination

Section 30 deals with procedure in case of notice under Section 6(2)

Section 31 deals with orders of the commission on certain combinations

Highlights of the notifications

Ø  The notification exempts an enterprise, whose control, shares, voting rights or assets are being acquired has assets of the value of not more than Rs. 250 crores or turnover of not more than Rs. 750 crores,  from the provisions of section 5 of the Competition Act  2002  for a period of five years.

Ø  The notification exempts   the ‘Group’ exercising less than fifty per cent of voting rights in other enterprise, from the provisions of section 5 of the Competition Act 2002 for a period of five years.

Ø  The notification enhances the value of assets and the value of turnover, by fifty per cent for the purposes of section 5 of the Competition Act 2002 on the basis of the wholesale price index.

The draft Regulations are available at the link 

http://www.cci.gov.in/images/media/Regulations/DraftCombinationRegulation.pdf

The notification of these provisions will open opportunities for Company Secretaries in Practice. The Competition Act, 2002 authorises Company Secretaries in practice to appear before Competition Commission of India and Competition Appellate Tribunal. Besides, there are a number of concepts, terms such as value of assets, turnover, determination of market, relevant market, geographic market which will require active professional involvement and advice.

Charms

Schedule XIII of the Companies Act, 1956 being amended – Unlisted companies shall not require Government approval for managerial remuneration where they have no profits

Dear Friend!

Schedule XIII of the Companies Act is being amended to provide that unlisted companies (which are not subsidiaries of listed companies) shall not require Government approval for managerial remuneration in cases where they have no profits/inadequate profits, provided they meet the other conditions stipulated in the Schedule. Details available at the link http://pib.nic.in/newsite/erelease.aspx?relid=69674