Under a process of #EaseOfDoingBusiness concept of the government and further to the necessities of the #CorporateIndia, the current government found to be thoughtful and often come with various new policies and also amendments in existing policies and laws. Ministry of Corporate Affairs (MCA) has issued several amendments in certain rules made under Companies Act, 2013 on May 07 2018. Article made an attempt to analyses important changes in a brief. Relevant Notifications can be checked on below links:-

Title Notification No. Date
Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018 G.S.R. ….. (E) 07/05/2018
Companies (Registration Offices and Fees) Second Amendment Rules, 2018 G.S.R. ……. (E) 07/05/2018
Companies (Meetings of Board and its Powers) Amendment Rules, 2018 G.S.R. 429 (E) 07/05/2018
Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018 G.S.R. 430 (E) 07/05/2018
Companies (Audit and Auditors) Amendment Rules, 2018 amending Rule 3,9,10A & 14 G.S.R. 432(E) 07/05/2018
Companies (Specification of Definition Details) Amendment Rules 2018 G.S.R. ___(E) 07/05/2018
MCA Notifies applicability of few more provisions of Companies (Amendment) Act, 2017 wef 07th May, 2018 S.O. 1833(E) 07/05/2018

In addition to above MCA has also issued Companies (Share Capital and Debentures) 2nd Amendment Rules, 2018 but due to some clerical errors they posted earlier notification dated 10th April 2018 on its website instead of new notification dated 07.05.2018, which is expected to be released today.

We have tried to make a little pool of the whole cluster. The brief understanding of them is as follows:

Companies (Prospectus and Allotment of Securities) Amendment Rules, 2018

Existing Provision Provision Description Amendment
Rule 3 Information to be stated in the Prospectus Omitted
Rule 4 Reports to be set out in the Prospectus
Rule 5 Other matter and reports to be set out in the Prospectus
Rule 6 Period for which information to be provided in certain cases

Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018

Existing Provision Provision Description Amendment
Rule 5 Qualification of Independent Directors to be read as Rule 5 (1)
Insertion of Rule 5 (2) as follows:

None of the relatives of an independent director, for the purpose of sub clause (ii) and (iii) of clause (d) of sub section (6) of Section 149-

(i) is indebted to the company, its holding, subsidiary of associate company or their promoters, or directors; or

(ii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company

for an amount of fifty lakhs rupees, at any time during two immediately preceding financial years or during the current financial year.

Rule 16 Copy of resignation of director to be forwarded by him Where a director resigns from his office, he shall may within a period of thirty days from the date of resignation, forward to the Registrar a copy of his resignation along with reasons for the resignation in Form DIR 11 along with the fees as provided in the Companies (Registration Offices and Fees) Rules, 2014.

Companies (Meetings of Board and its Powers) Amendment Rules, 2018

Existing Provision Provision Description Amendment
Rule 4 Matters to be dealt with in a meeting through video conferencing or other audio visual means Following proviso shall be inserted:

Provided that where there is quorum presence in a meeting through physical of directors, any other director may participate conferencing through video or other audio visual means.

Rule 6 Committees of the Board The Board of Directors of every listed Public (inserted through this amendment) and following classes of Companies shall constitute an Audit Committee and a Nomination and Remuneration Committee of the Board-

Remarks: Companies, not being public company i.e. Private Limited Company, Banks, PSUs, Government Body etc., whose debt instruments are listed on the stock exchange need not to form such committees.

Rule 13 Special Resolution Substitution of the rule as follows:

A resolution passed at a general meeting in terms of (3) of section 186 to give any loan or guarantee or investment or providing any security or the acquisition under sub section (2) of Section 186 shall specify the total amount up to which the Board of Directors are authorized to give such loans or guarantee or investment or providing any security or make such acquisition:

provided that the company shall disclose to the members in financial statement the full particulars in accordance with the provisions of sub section (4) of Section 186.

Companies (Registration Offices and Fees) Second Amendment Rules, 2018

Existing Provision Provision Description Amendment
Rule 10 (3) Procedure on receipt of any application or form or document electronically Following proviso shall be substituted:

“Provided that Registrar shall allow fifteen days’ time for resubmission of a name through web service – RUN for rectification of defects, if any.”

Annexure Table of Fees Substitution

– For sub item (B) Following table of fees shall be applicable for delay in filing of the forms other than for increase in Nominal Share Capital or forms under Section 92 / 137 of the Act

Period of delay Forms including charge documents
Upto 15 days (Section 139 & 157) One time
More than 15 days and upto 30 days (Section 139 & 157 ) and 30 days in remaining forms 2 times of normal filing fees
More than 30 days upto 60 days 4 times of normal filing fees
More than 60 days upto 90 days 6 times of normal filing fees
More than 90 days upto 180 days 10 times of normal filing fees
More than 180 days 12 times of normal filing fees

In case of belated filing of forms or documents which were due to filing under Companies Act, 1956 or Companies Act, 2013, the fee payable at the time of actual filing shall be applicable.

– After ( c ) the following shall be inserted:

(d) Forms under section 92 (Annual Return) or 137 (Copy of financial statements to be filed with Registrar) :

(i) In case the period within which a document required to be submitted under Section 92 or Section 137 of the Act expires after 30/06/2018 the additional fee mentioned in the table shall be payable:-

Period of delay Additional Fees Payable
Delay beyond period provided under Section 92(4) of the Act INR 100/- per day
Delay beyond period provided under Section 137(1) of the Act INR 100/- per day

(ii) In all other cases where the belated returns or the balance sheet/ financial statement which were due to filing under Companies Act, 1956 or Companies Act, 2013, the fee payable at the time of actual filing shall be applicable:

Period of Delay Additional Fees payable upto 30/06/2018
Upto 15 days (Section 139 & 157) One time Plus INR 100/- per day from 01/07/2018
More than 15 days and upto 30 days (Section 139 & 157 ) and 30 days in remaining forms 2 times of normal filing fees
More than 30 days upto 60 days 4 times of normal filing fees
More than 60 days upto 90 days 6 times of normal filing fees
More than 90 days upto 180 days 10 times of normal filing fees
More than 180 days 12 times of normal filing fees

Note:

– Revised financial statements or board’s report are also covered under the said provision.

– In case of belated filing of forms or documents which were due to filing under Companies Act, 1956 or Companies Act, 2013, the fee payable at the time of actual filing shall be applicable

Companies (Specification of Definition Details) Amendment Rules 2018

Existing Provision Provision Description Amendment
Rule (2) (1) (r) Total Share Capital Omitted

Companies (Audit and Auditors) Amendment Rules, 2018 amending

Existing Provision Description of Provision Amendment
Rule 3 Manner and procedure of selection of Auditors a) Explanation shall be omitted

b) Proviso to sub rule 7 shall be omitted (no ratification at every AGM is required for Auditor appointed for five years)

Rule 9 Liability to devolve on concerned partners only Omitted
Rule 10A Internal Financial Control Systems Substitution as follows:

“adequate internal financial control system” as “internal financial controls with reference to financial statements”

Rule 14 Remuneration of Cost Auditor Substitution as follows:

a) in clause (a) of sub clause (i) the words “who is a cost accountant in practice” as “who is cost accountant”

b) in clause (b) the words “who is a cost accountant in practice” as “who is cost accountant”

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2 responses to “Analysis of Notifications issued by Ministry of Corporate Affairs on 07th May 2018”

  1. K.Balasubramanian says:

    very nice. Amendments relating to appointment of Independent directors u/s-149(2) and extension of loan or guarantee u/s-186 could have been elaborated. Very nice article, concisely delineated.

    • CS Miraj Dave says:

      Thank you for such a detailed appreciation. These kind of comments keep us motivating to contribute more and more.

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