CS Aditi Jhunjhunwala
“We’re all human and we all goof. Do things that may be wrong, but do something.” This expression goes well with our Ministry of Corporate Affairs (MCA), who in its attempt for speedy implementation of the Companies Act, 2013 (the Act) and its allied rules committed errors and omissions, some of it being apparent on the face while others creep at the time of specific implementation by the companies. One such slip is in case of filing with respect to section 63 of the Act.
Section 63 deals with issue of bonus shares by a company. Clause (b) to sub-section (2) of Section 63 read with Rule 12 (6) of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (the Rules) requires a company to pass shareholder’s resolution for the purpose of capitalising its profits or reserves, amongst other conditions prescribed under the sub-section.
Form no. PAS 3 deals with return of allotment of securities and therefore, allotment pursuant to issue of bonus shares under section 63 will require filing under PAS 3. The section read with the rules nowhere requires that the shareholder’s resolution will be a special resolution, however, on perusal of the form under point 5 (e), we find that the date of “special resolution” is required. Further, such special resolution shall also be attached to the form. The blunder is now very apparent that the provision of law does not require any special resolution, but surprisingly form PAS 3 suggests that special resolution shall be passed. Can the information filing document at all override the law? What if a company has already passed the ordinary resolution and only at the time of filing the form, company finds that there is requirement of “special resolution” by the form. Not only the form, but also the help kit contains similar guidance. What should the companies do under such circumstances? Either the company passes a special resolution at the inception itself or attached a note to the form with respect to the anomaly. Since, law is very clear on the passing of ordinary resolution, therefore, there should at all be no need to pass a special resolution at all.
Such clerical issues leading to big corporate blunders will continue to occur unless the department gives a serious re-look at the provisions and takes immediate steps for necessary rectification. Overall, MCA seems to make the process much more complicated than needed.