MCA vide its notification dated 19th December, 2018 has notified the Companies (Incorporation) Fourth Amendment Rules, 2018 and the Companies (Registration of Charges) Second Amendment Rules, 2018 to align the said rules with the conjoining Companies (Amendment) Act, 2017 and Companies (Amendment) Ordinance, 2018. Both the aforementioned Rules shall come into force from the date of their publication in the Official Gazette.
This write up deals with the changes brought pursuant to the Companies (Incorporation) Fourth Amendment Rules, 2018 and the Companies (Registration of Charges) Second Amendment Rules, 2018 .
The Companies (Incorporation) Fourth Amendment Rules, 2018 (hereinafter referred to as “Incorporation Rules”) has been brought in force to lay down the procedure of making applications to the Regional Director for converting a public company into private company or change in the financial year of a company. Furthermore, the Incorporation Rules also lays down the format in which a director shall give the declaration prior to commencement of business that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making such declaration. The said Rules have been amended to align the provisions with that of the Companies (Amendment) Ordinance, 2018. While the Companies (Amendment) Ordinance, 2018 lays down the requirements, the Incorporation Rules lays down the procedure for meeting such requirements.
A summary of the provisions of the Rules alongwith the corresponding provisions envisaged in the Companies (Amendment) Ordinance, 2018 has been presented herein:
|SI No.||Topic||Companies (Amendment) Ordinance, 2018||Incorporation Rules|
Declaration at the time of commencement of business– Section 10(A)
A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2018 and having a share capital shall not commence any business or exercise any borrowing powers unless—
(a) a declaration is filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration.
The Incorporation Rules lay down the format for making the said declaration. The declaration must be made in Form No.- INC-20A and the contents of the said form shall be verified by a Company Secretary or a Chartered Accountant or a Cost Accountant in practice.
For companies pursuing objects, that require prior approval or registration with any sectoral regulators like Reserve Bank of India, Securities and Exchange Board of India etc.., the said registration and approval must also be attached with the declaration.
Application under section 2(41) for change in financial year
Provided that where a company or body corporate, which is a holding company or a subsidiary or associate company of a company incorporated outside India and is required to follow a different financial year for consolidation of its accounts outside India, the Central Government may, on an application made by that company or body corporate in such form and manner as may be prescribed, allow any period as its financial year, whether or not that period is a year.
Central Government shall delegate the power to the Regional Director for the purpose of giving effect to such change in financial year.
The application for approval of concerned Regional Director under sub-section (41) of section 2, shall be filed in e-Form No.RD-1 along with the fee as provided in the Companies (Registration offices and Fees) Rules, 2014.
The Rules also lay down the list of documents to be attached with the Application. The documents will inter alia include the grounds and reasons for application, copy of the minutes of the board meeting at which the resolution authorizing the change had been passed, giving details of the number of votes cast in favour and against such resolution, Power of Attorney, details of application made in the last five years etc.
The Regional Director, after examining the application, may call in for further information or give directions to re-submit the application in e-Form No.- RD GNL-5 within a period of 15 days from such direction. The order conveyed by the Regional Director shall be filed by the company with the Registrar in Form No.lNC-28 within thirty days from the date of receipt of the order alongwith fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.
Application under Section 14 for conversion of public company into private company
Provided further that any alteration having the effect of conversion of a public company into a private company shall not be valid unless it is approved by an order of the Central Government on an application made in such form and manner as may be prescribed.
Central Government shall delegate the power to the Regional Director for the purpose of giving effect to such conversion.
An application under the second proviso to sub-section (1) of section 14 for the conversion of a public company into a private company, shall, within sixty days from the date of passing of special resolution, be filed with Regional Director in e-Form No. RD-l along with the fee as provided in the Companies (Registration Offices and Fees) Rules,2014. The supporting documents to be submitted alongwith the application has been stated hereunder.
Documents to be attached with Application:
1. A draft copy of Memorandum of Association and Articles of Association , with proposed alterations including the alterations pursuant to sub-section (68) of section 2
2. A copy of the minutes of the general meeting at which the special resolution authorising such alteration was passed together with details ofvotes cast in favour and or against with names of dissenters;
3. copy of declaration by a key managerial personnel that the company limits the number of its members to two hundred and also stating that no deposit has been accepted by the company in violation of the Act and rules made thereunder
4. Board resolution or Power of Attorney dated not earlier than thirty days, as the case may be, authorising to file application for such conversion;
5. declaration by a key managerial personnel that there has been no non-compliance of sections 73 to 7 6A, 777 , 178,185,186 and 188 of the Act and rules made thereunder
6. declaration by a key managerial personnel that no resolution is pending to be filed in terms ofsub-section (3) of section 779 and also stating that the company was never listed in any of the Regional Stock Exchanges and if was so listed, all necessary procedures were complied with in full for complete delisting of the shares in accordance
Every application shall set out the following particulars:
1. the date of the Board meeting at which the proposal for alteration of Memorandum and Articles was approved
2. the date of the general meeting at which the proposed alteration was approved;
3. reason for conversion into a private company, effect ofsuch conversion on shareholders, creditors, debenture holders, deposit holders and other related parties
4. details of any conversion made within last five years and outcome thereof along with copy of order
5. details as to whether the company is registered under section 8
6. a list of creditors, debenture holders, drawn up to the latest practicable date preceding
Also, within 21 days before the date of filing the application, the Company must advertise in Form No.- INC-25A and serve by registered post, individual notice on each debentureholder and creditor of the Company. Also, notice must be served upon the Regional Director and the Registrar. Any re-submission must be made with fifteen days to the Regional Director in RD- GNL-5.
In case where no consensus is received for conversion within sixty days of filing the application while hearing or otherwise, the Regional Director shall reject the application within stipulated period of sixty days. The order conveyed by the Regional Director shall be filed by the company with the Registrar in Form No.lNC-28 within fifteen days from the date of receipt of approval along with fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.
MCA had vide its notification dated 05.07.2018 brought into force the Companies (Registration of Charges) Amendment Rules, 2018, wherein, a company or chargeholder has been given a total of 300 days to file the satisfaction of charge in e-form CHG-4. Pursuant to such amendment, the Companies (Registration of Charges) Second Amendment Rules, 2018 seeks to revise the e-form CHG-4 to align the same with the revised timeline. Accordingly, the said Rules puts forth the revised Form.