Current presentation covered the following Topics:

  • Filing of Details of Outstanding Loans with ROC – DPT-3
  • Filing of details of Due of MSME in MSME-1
  • KYC OF COMPANIES- E-Form ACTIVE

MANDATORY Reporting OF Outstanding Loan/Deposits TO ROC

MCA on 22nd January, 2019 has published Companies (Acceptance of Deposits) Amendment Rules, 2019. They shall come into effect from 22nd January, 2019.

2(1)(c) Deposit includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include –

  • any amount received from foreign Governments, foreign or international banks, multilateral financial institutions
  • any amount received from the Central Government or a State Government, or any amount received from any other source whose repayment is guaranteed by the Central Government or a State Government,
  • any amount received as a loan or facility from any banking companyor from the State Bank of India or any of its subsidiary banks or from a banking institution notified by the Central Government
  • any amount received as a loan or financial assistance from Public Financial Institutions 

♦ Private Limited Companies 

Companies Act, 2013 permitted Private Companies to Borrow From

  • Directors from its OWN Funds.
  • Relative of Directors its own Funds
  • Shareholders upto 100% of Paid up Share Capital + Free Reserves + Security Premium Account or Any No. of Amount if fulfill 3 conditions.

Table LIST OF PERSONS TO WHOM COMPANY CAN ACCEPT OR CAN’T ACCEPT THE LOAN

Loans from Conditions, if any:
1.) Shareholder: Member: Yes, can accept, but subject to the condition specified in deposit Rules
2.) Director/Relatives of Director Yes, can accept, but the director/relative will give a Declaration in writing that money is not given out of borrowed funds and company will disclose it in the Board’s report.
3.) Employee Yes, can accept up to the employee’s annual salary ( there should be a contract of employment with the company) in the nature of non- interest  bearing security deposit.
4.) Any other Individual Can’t accept because it is prohibited by the definition of Private Company.
5.) Proprietorship Firm ; Can’t accept because it can’t be director, Member or relative of Director.
6.) HUF Can’t accept because it can’t be director, Member or relative of Director.
7.) Partnership Firm Can’t accept because it can’t be director, Member or relative of Director.
8.) Any Company Yes, can accept, but also comply with Sec 179(3) wherein the conditions are specified for the lender
9.) Banks Yes, can accept
10.) Trust Yes, can accept, but loan received should be non- interest bearing.
11.) Outside India Yes, can accept, but subject to the provisions of the Foreign Exchange Management Act, 1999 and rules and regulations made there under.
12.) Govt. organization ( eg. SIDBI) Yes, can accept
13.) Any other Financial Institution which are not incorporated as Banks (eg. Religare, Fullerton, Barclays, Bajaj Finance).

Yes, can accept

 LATEST AMENDMENTS

Rule 16

Explanation Rule 16

New Rule 16A(3)
Existing Provisions Every Year

One Time Return

Every company to which deposit rules apply (means loan considered as deposit), shall on or before the 30th day of June, of every year, file with the Registrar, a return in Form DPT-3 mentioning the details of deposit. It is hereby clarified that Form DPT-3 shall be used for filing return of deposit or particulars not considered as deposit or both by every company other than Government Company Every Company other than Government Company shall file a onetime return of outstanding receipt of money or loan by a company but no considered as deposits

First Amendment:

By Amendment Rule, 2019: Rule 16A (3): Every Company other than Government Company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits, in term of clause (c) of sub-rule 1 of rule 2 from the 01st April, 2014 to 31st March, 2019 e-form DPT-3 within 90 days from 31st march, 2019 i.e. 29th June, 2019.”.

Form is available w.e.f. 01st May, 2019 and due date of filing of form shall be 29th June, 2019.

Outstanding Receipt of Money:

xii) any amount received in the course of, or for the purposes of, the business of the company,-

(a) as an advance for the supply of goods or provision of services accounted for in any manner whatsoever provided that such advance is appropriated against supply of goods or provision of services within a period of three hundred and sixty five days from the date of acceptance of such advance:

Provided that in case of any advance which is subject matter of any legal proceedings before any court of law, the said time limit of three hundred and sixty five days shall not apply:

(b) as advance, accounted for in any manner whatsoever, received in connection with consideration for an immovable property under an agreement or arrangement , provided that such advance is adjusted against such property in accordance with the terms of agreement or arrangement;

(c) as Security Deposit for the performance of the contract for supply of goods or provision of services;

(d) as advance received under long term projects for Supply of Capital Goods except those covered under item (b) above:

Note:

One Time Form:For purpose of Rule 16A, DPT-3 shall be filed onetime only.

Period of Filing:Company need to file this form within 30 days of 31st March 2019 (i.e. 29th June, 2019)

I. Which information are required to file according to Rule 16A in e-form DPT-3:-

As per New Rule 16A, Every Company has to file e-form DPT-3 with ROC containing following Information:

√ Every Outstanding Loan (Not Considered as Deposit)in Company as on 31st March, 2019.

√ Every outstanding receipt of money in Company as on 31st March, 2019.

Any loan received which falls under definition of deposit not required to mention while filing e-form DPT-3 under Rule 16A.

II. What is due date for filing of e-form DPT-3 in Rule 16A:-

Due date of Filing of e-form DPT-3 one time in rule 16A is 29th June, 2019. Because form required to file within 90 days from 31st March, 2019.

III. Outstanding Loan and outstanding receipt of money which period required to be report under this rule.

Outstanding receipt of Money and Loan from 1st April, 2014 to 31st March, 2019.

IV. Whether auditor certificate is required to attach in e-form DPT-3 filed for one time return?

Rule 16A(3) doesn’t not state about auditor certificate in complete rule. Therefore, it seems that there is no need to attach auditor certificate in one time Return of DPT-3.

However, it is always advisable to take certificate from the auditor of Company.

Here Auditor include Statutory Auditor of the Company.

V. Whether entity wise/ transaction wise reporting is mandatory in DPT-3 one time?

As per available e-form CONSOLIDATED amount of “Total amounts of outstanding money or loan received by a company but not considered as deposits in terms of rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules,2014 as specified in rule 16(A)(3)” required to mention in point no. 14 of e-form.

VI. Which figures shall be considered for calculation “Net Worth” in point No. 8?

As per language of e-form DPT -3 “Net Worth as per the latest audited balance sheet preceding the date of the return”.

Ground of Discussion:

As per Companies Act, 2013 Company have to circulate audited financials with share holders at the time of AGM. There is no provision which restricting the company to get audit till 30th June.

However, as per Rule 16 Every company….. file with the Registrar, a return in Form DPT-3……. furnish the information contained therein as on the 31st day of March of that year duly audited by the auditor of the company.

Therefore, one can opine that it is very clear by language of Law that figures of Net worth calculation should be audited by the Auditor of company as on 31st March of preceding financial year.

e.g. DPT-3 filed for 31st March, 2019 then audited net worth figure should be related to date 31st March, 2018.

Second Amendment:

By Amendment Rule, 2019: Explanation added in Rule 16 i.e. “It is hereby clarified that Form DPT-3 shall be used for filing return of deposit or particulars not considered as deposit or both by every company other than Government Company”.

VII. Which Companies are covered in rule 16 explanation:-

All the Companies required filing DPT-3 after publication of these rules

  • Small,
  • Non Small,
  • Private,
  • Public,
  • OPC etc

VIII. Which Companies are exempted in rule 16 explanation:-

Following Companies are exempted to file e-form DPT-3:

  • Banking Companies
  • Non Banking Financial Companies
  • Housing Finance Company
  • Government Company

IX. What is meaning of “Deposit or Particulars Not Considered as Deposit” as mentioned in explanation.

DEPOSIT: Whatever includes in definition of Deposit as per Companies Act and rules eg.

  • Acceptance of loan from public,
  • Acceptance of loan from shareholders by Public Limited Company.
  • Acceptance of Loan from Body Corporate etc

PARTICULAR NOT- CONSIDERED AS DEPOSIT:

Whatever loan exempted under deposit rules and sections 73 shall be considered as particular of non-considered as deposit. Eg

  • Loan from Director is exempted Deposit. However will be covered under this head.
  • Loan from Bank, Financial Institutions Etc.
  • Loan from Company not considered as deposit. However covered under above head etc.

X. After publication of these rules i.e. 22nd January, 2019. When the first time requirement of filing of DPT-3 shall be trigger for Companies.

Every Company has to file DPT-3 every year after end of financial year before 30th June mentioning details as on 31st March, 2019.

Particular of Transaction Whether DPT-3 Filed or Not
Secured / Unsecured Loan Received (Bank, Other Entity) YES
External Commercial Borrowing Received by Company YES
Loan Received from Holding / Subsidiary/ Associate Company YES
Loan Received from any other Company as (Inter Corporate Deposit) YES

XI. Which figures shall be considered for calculation “Net Worth” in point No. 8?

As per language of e-form DPT -3 “Net Worth as per the latest audited balance sheet preceding the date of the return”.

Ground of Discussion:

As per Companies Act, 2013 Company have to circulate audited financials with share holders at the time of AGM. There is no provision which restricting the company to get audit till 30th June.

However, as per Rule 16 Every company….. file with the Registrar, a return in Form DPT-3……. furnish the information contained therein as on the 31st day of March of that year duly audited by the auditor of the company.

Therefore, one can opine that it is very clear by language of Law that figures of Net worth calculation should be audited by the Auditor of company as on 31st March of preceding financial year.

e.g. DPT-3 filed for 31st March, 2019 then audited net worth figure should be related to date 31st March, 2018.

QUICK BITES:

XII. If a company not having any outstanding loan or outstanding receipt of money as on 31.03.2019. Whether company need to file e-form DPT-3 .

As per rule 16A DPT-3 Every Company other than Government Company shall file a onetime return of outstanding receipt of money or loan by a company but not considered as deposits.

Therefore, one can opine that in the above mentioned situation there is no need to file e-form DPT-3.

XIII. If some outstanding receipt of money or loan had become due before 01stApril, 2014, still continuing and outstanding in record of Company. Whether such outstanding loan or receipt required to report in DPT-3.

As per rule 16A DPT-3 required to file for each and every loan received by Company outstanding as on date of publication of these rules (22.01.2019).

Therefore, one can opine that such outstanding loan is required to report to ROC in e-form DPT-3

XIV. If Company received loan after 01st April, 2014 but such loan is not outstanding as on 31.03.2019 . Whether company need to report such loan in DPT-3.

As per language of Rule 16A, company has to report outstanding Loan and outstanding receipt of money to Roc in DPT-3. If Company has already paid Loan and such loan is not outstanding in record of Company. There is no need to inform such loan to ROC.

XV. If company doesn’t accept loan or doesn’t having any outstanding Loan. Whether need to file DPT-3,

If there is no outstanding Loan or company doesn’t accept any loan there is no need to file e-form DPT-3 with ROC.

XVI. Whether NBFC Company is required to file e-form DPT-3?

As per Rule 1(3) (3) These rules shall apply to a company other than –

(i) a banking company;

(ii) a non-banking financial company as defined in the Reserve Bank of India Act, 1934 (2 of 1934) registered with the Reserve Bank of India; 

(iii) a housing finance company registered with the National Housing Bank established under the National Housing Bank Act, 1987 (53 of 1987)

Therefore, Rules of Deposits are not applicable on NBFC Companies.

Therefore, one can say that requirement of filing of DPT-3 states under Rule 16. However, Rules are not applicable on NBFC Companies.

It is crystal clear that NBFC Companies are not required to file e-form DPT-3 with ROC as per latest Deposit rules.

MANDATORY reporting of Specified Companies- MSME-1

MCA on 22nd January, 2019 has published “Specified Companies (Furnishing of information about payment to Micro and Small enterprise Suppliers) Order, 2019. They shall come into effect from 22nd January, 2019.

Extract of Act:

2. Every specified company shall file in MSME Form I details of all outstanding dues to Micro or small enterprises suppliers existing on the date of notification of this order within 30 days from the date of availability of form.

3. Every specified company shall file a return as per MSME Form I annexed to this Order, half Year as per details given below

S. No. Period Due Date
1.  Period April to September 31st October
2.  Period October to March 30th April

Amendment:

First we would like to clear that MSME form is required to file two times in Month May, 2019

1. First for one time return mentioning date as on 22nd January, 2019

2. Second for half yearly return mentioning data as on 31st March, 2019

I. Which Companies falls under MSME

The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under

Manufacturing Sector

Enterprises

Investment in plant & machinery

   Micro Enterprises  Does not exceed Rs. 25,00,000/- (Twenty Five Lakh)
 Small Enterprises  More than Twenty Five Lakh (25,00,000) rupees but does not exceed Five Crore Rupees (50,000,000)
 Medium Enterprises  More than Five Crore (50,000,000) rupees but does not exceed Ten Crore (100,000,000) rupees

Service Sector

Enterprises Investment in equipments
Micro Enterprises  Does not exceed Ten Lakh rupees (Rs. 1,000,000):
Small Enterprises  More than  Ten Lakh rupees(Rs. 1,000,000) but does not exceed Two Crore (20,000,000) rupees
Medium Enterprises  More than Two Crore (20,000,000)  rupees but does not exceed five core rupees (50,000,000)

II. Which are Specified Companies:-

Every Company “PUBLIC OR PRIVATE” if falls in below mentioned condition:

III. Which type of entities cover under Micro and Small entities?-

Micro and small Includes:

  • Proprietorship, Hindu Undivided Family,
  • Association of Persons, Co-Operative Society,
  • Partnership Firm, Company or
  • Undertaking

IV. Which form Specified Company required to file with ROC:-

Specified Companies are required to file returns with ROC in e-form MSME-1:

Two Type of Returns required filing by “Specified Companies” like:

  • One Time Return
  • Half Yearly Return

V. Which is due date of filing of “One Time Return”?

One time return required to file within 30 days of publication of these rules i.e. 30th May, 2019 (1st May, 2019 + 30 days)

VI. In “One Time Return” which type of information required to submit with ROC?

VII. Which is due date of filing of “Half Yearly Return”?

For Half year period ‘April to September’ 30st October

For half year period ‘October to March’ 30th April

 QUICK BITES:

VIII. If a Company falls in criteria of MSME, However not registered under MSME Act. Whether Company need to mention details of such MSME in their reporting?

As per language of Notification, If a Company registered under MSME Act and having a valid MSME certificate. Then only required to include in reporting while filing of MSME-1.

Therefore, one can opine that, Details of only registered MSME required filing with ROC in form MSME-1.

IX. If on 22.01.2019 (date of notification of rules) company doesn’t have any MSME register creditor. Whether Company need to file MSME-1 with NIL details.

As per language of Notification, if all the vendors/ creditors of Company are NON- MSME registered. In such case there is no need to file MSME-1.

X. Whether Udyog Aadhar Registration shall be considered as MSME Registrations.

As per MSME Act Udyog Aadhar is a way out to get registration of MSME. Therefore, such registration shall be considered as MSME Register.

XI.Whether there is any limit on amount of transaction with MSME?

As per MSME Act, 2006; Limit of amount doesn’t matter to check whether payment made in 45 days or not.

For an EG. If due amount is Rs. 100/- only and doesn’t made payment in 45 days. Specified Companies needs to report the same to ROC in e-form MSME-1.

XII. What are the Consequences on Company if its fails to file e-form MSME-1 within 30 days of notification?

Statutory Provisions Contained Under the Act:

Section 405: – Power of Central Government to Direct Companies to Furnish Information or Statistic

(1) The Central Government may, by order, require companies generally, or any class of companies, or any company, to furnish such information or statistics with regard to their or its constitution or working, and within such time, as may be specified in the order.

(4) If any company fails to comply with an order made under sub-section (1) or subsection (3), or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect, the company shall be punishable with fine which may extend to twenty-five thousand rupees and every officer of the company who is in default, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to three lakh rupees, or with both.

Therefore, one can opine that if company fails to file MSME-1 within 30 days then Penalty shall be as follow:

Penalty on Minimum Fine Fine can Extend Upto
Company Rs. 25,000/- Rs. 25,000/-
Officer in Default (KMP, Directors) Rs. 25,000/- Rs. 300,000/-

XIII. How to identify whether creditors entity falls under Micro and Small or not?-

For the purpose of reporting under MSME Form-1. Company should be aware that creditor’s entity is Micro or Small or not.

Therefore,

  • Company have to ask a declaration from the creditors whether they falls under Micro or small or not and whether as on date they meet criteria of MSME.
  • Company has to ask for copy of certificate of registration under MSME.

XIV. Whether Traders and Retailers can get registration under MSME?

As per our understanding of MSME Act, Only manufactures and service provides as mentioned above can get registration under MSME.

XV. If there is an agreement between MSME registered company and other company for payment with in any days more than 45 days e.g 60 days or 75 days? Whether Specified Company need to file e-for MSME-1 after expiry of 45 days?

As per section 15 of MSME Act, “in no case period agreed between supplier and buyer in writing shall exceed 45 days from day of acceptance.

Therefore one can opine that, agreement between supplier and buyer for payment after 45 days doesn’t have any effect in filing of MSME-1. Because as per MSME Act, supplier and buyer cannot decide day more than 45 days.

XVI. What are consequences for non filing of the MSME form?

As per section 16 of MSME Act, if buyer make

  • Delay in payment more than 45 days or
  • Delay in payment from agreed term or
  • Delay in 15 days payment where no term agreed

In such case buyer is liable to pay compound interest with monthly restes to the supplier on that amount from the appointed day, at three times of the bank rate notified by RBI.

Therefore one can opine that, consequences nonpayment within above mentioned specified time buyer liable to make payment of heavy interest.

COMPANIES AMENDMENT (Ordinance), 2018

The Ordinance has been promulgated based on the Report of Committee Constituted to Review Offences and suggested Corporate Governance Reforms.

IMPACT OF ORDINANCE

√ Enlarging the jurisdiction of Regional Director.

√ Re-categorized of “Fine as Penalty”

√ De-clogging the NCLT

√ Corporate Governance relating Reforms.

PURPOSE OF AMENDMENTS

√ Simplification of Compliances and doing away with unnecessary procedures.

√ Lesser regulatory interference and greater self-regulation

√ Clarity in the provisions of the Act.

√ Encouragement for Startups

√ Strengthen Corporate Governance Standard

Ordinance

A. Definition:

Substitution of First Proviso of Section 2 Clause 41: “Financial Year”

As per Companies Act, in case of Indian company having Holding/ Subsidiary/ Associate Company situated outside india, it is allowed the change the financial year as per such company with the approval of Tribunal (i.e. NCLT).

By ordinance, 2018: Power of Tribunal has been transferred to Central Government. Therefore, after notification of ordinance financial of Company can be changed with approval of Central Government.

Companies (Incorporation) Fourth Amendment Rules, 2018: Dated: 18th December, 2018

Power of Central Government has been transferred to “Regional Director”. Application to Regional Director shall be File in e-form RD-1.

Following documents shall be required to attach in RD-1:

  • Reason for Change in Financial Year
  • Minutes of Board Meeting
  • Power of Attorney or Memorandum of Appearance

Order shall be file in e-form INC-28 with Registrar of Companies within 30 days of date of receipt of order.

B. Declaration of commencement of Business:

New Section 10A inserted after Section 10:

As per 10A, a company incorporated after ordinance shall not commence its business or exercise any borrowing powers unless-

  • A declaration is filed by the directors in e-form Form No. INC-20A within 180 days from date of incorporation of company with ROC that ‘every subscriber to the MOA has paid the value of the shares agreed to be taken by him”.
  • Issue of Share Certificate: Every company shall deliver the certificates of all securities allotted, transferred or transmitted. Within a period of two months from the date of incorporation, in the case of subscribers to the memorandum;

C. Maintenance of Registered office of Company:

Addition of Sub – Section (9) after Section 12 Sub Section 8:

As per Section 12(1) A company shall, within thirty days of its incorporation and at all times thereafter, have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it.

By ordinance, 2018:  Registrar may do physical verification of the Registered office of Company and if any default is found to be made in complying with provision of Section 12(1) (extract mentioned above). ROC may, initiate action for removal of name of Company (Strike off)

Compliance as per Section 12:

Every company shall—

(a) paint or affix its name, and the address of its registered office, in a conspicuous position, in legible letters, and

(b) if the characters employed therefore are not those of the language or of one of the languages in general use in that locality, also in the characters of that language or of one of those languages;

D. Duty to Register Charge:

Section Involved:     Section 77 Duty to Register Charge

i. BEFORE ORDINANCE: As per Section 77 of Companies Act, 2013, Company have to create charge with the Registrar within 30 days of creation of Charge.

Provided that the Registrar may, on an application by the company, allow such registration to be made within a period of Three Hundred Days of such creation on payment of such additional fees as may be prescribed:

Condonation: Provided further that if registration is not made within a period of three hundred days of such creation, “the company shall seek extension of time in accordance with section 87”

ii. AFTER ORDINANCE: As per Section 77 of Companies Act, 2013, Company have to create charge with the Registrar within 30 daysof creation of Charge.

Provided that the Registrar may, on an application by the company, allow such registration to be made within a period of Sixty Days of such creation on payment of such additional fees as may be prescribed

In place of Condonation: Provided further that if the registration is not made within the period specified—

The Registrar may, on an application, allow such registration to be made within a further period of Sixty Days after payment of such ADVALOREM fees as may be prescribed

i. If Charge is created after date of Ordinance i.e. 02.11.2018 in such case what shall be time period for filing of form for registration of charge with ROC.

If charge is created after 02.11.2018 in such case following shall be period for filing of charge form with ROC.

STAGE PARTICULAR TIME PERIOD Days FEES
i.  Registration of Charge with ROC Within 30 days of Creation 0+30 Normal Fees
ii.  If Fails to file with in 30, days within a period of 60 days of such creation 0+30+30

= 60

Normal Fees +
Additional Fees
iii.  If Fails to file with in 60, days Registrar may, on an application, allow such registration to be made within a further period of sixty days 0+30+30+60

= 120

Normal Fees +
Additional Fees +Advalorem Fees

ii. If Charge is satisfied before/ after date of Ordinance i.e. 02.11.2018 in such case what shall be time period for filing of form for satisfaction of charge of charge with ROC.

If charge is satisfied even before or after 02.11.2018 in such case following shall be period for filing of e-form CHG-4 for satisfaction of charge with ROC.

STAGE PARTICULAR TIME PERIOD Days FEES
i.  Satisfaction of Charge with ROC Within 30 days of Satisfaction 0+30

= 30

Normal Fees
ii.  If Fails to file with in 30, days within a period of 300 days of such satisfaction 0+30+270

= 300

Normal Fees +
Additional Fees
iii.  If Fails to file with in 300, days Filing of form with RD for satisfaction of Charge 0+30+270+—-

= ——

Normal Fees +
Additional Fees +Condonation fees

Note: Provisions for Condonation of delay in satisfaction of charge is still there in act even after ordinance.

E. Disqualification of Director– Section 164:

Addition of clause (h) in Section 164(1)

As per Section 165, No person, after the commencement of this Act, shall hold office as a director, including any alternate directorship, in more than twenty companies at the same time.

By ordinance, 2018: If default made in Section 165, then director shall be considered as disqualified under Section 164. “Breach in Maximum no of Directorships to be a Ground for Disqualification.”

F. Compounding of Offence– Section  441:

As per Act, (b) where the maximum amount of fine which may be imposed for such offence does not exceed five lakh rupees, by the Regional Director or any officer authorised by the Central Government, (Power of RD to compound offence punishable upto Rs. 500,000/-)

By ordinance, 2018:  where the maximum amount of fine which may be imposed for such offence does not exceed Twenty five lakh rupees, by the Regional Director or any officer authorised by the Central Government, (Power of RD to compound offence punishable increased upto Rs. 2,500,000/-)

G. Re categorized of default: 

Fine

Penalty

As per Oxford Dictionary As per Oxford Dictionary
Fine is “a sum of money exacted as a penalty by a court of law or other authority.” Penalty is “a punishment imposed for breaking a law, rule, or contract.”

In General words, Fine imposed when any application/ petition filed with any court (like: NCLT, High Court) and penalty imposed when company made any non compliance and authority directly can impose penalty on them.

Quick Bites:

iii. Many people having doubt whether ‘Additional Fees’ paid on filing of form is penalty or fine?

As per Rule 12 of The Companies (The Registered offices and Fees) Rules, 2014.

Additional fees is only a fees paid by Company for filing of form it Is neither Fine nor Penalty.

Example: Section 92- Annual Return

Sub section 4: States about filing of Annual Return and additional fees in case of non filing with in prescribed period of 60 days from AGM.

Sub Section 5: States about fine in case of company fails to file annual return within time prescribed under sub section 4.

Therefore, one can observe that for one form Annual Return MGT-7 Company is paying additional fees and fine both in case company make any non compliance for filing of same.

Therefore, Additional fees is neither fine nor penalty.

There are as many as 16 sections amended via Ordinance, whereby the punishment for non-compliance to be levied under the Companies Act, 2013 is re-categorized from “FINE” to “PENALTY”

S. No. Section

Section Description

1. 53(3) Prohibition of Issue of shares at a discount
2. 64(2) Notice to be given to Registrar for alteration of share capital
3. 92(5) Annual Return
4. 102(5) Statement to be annexed to Notice
5. 105 Proxies
6. 117(2) Resolutions and Agreements to be filed
7. 121(3) Report on annual general meeting
8. 137(3) Copy of financial statement to be filed with Registrar
9. 140(3) Removal, resignation of auditor and giving of special notice
10. 157(2) Company to inform Director Identification Number to Registrar
11. 159 Punishment for Contravention – in respect of DIN
12. 165(6) Number of Directorships
13. 191(5) Payment to Director for Loss of Office
14. 197(15) Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits
15. 203(5) Appointment of Key Managerial Personnel
16. 238(3) Registration of the offer of scheme involving transfer of shares

Example- Discussion on one of above section:

iv. Section 117(2) – Resolutions and Agreements to be Filed: As per this section Companies are required to file e-form MGT-14 with ROC for passing of resolutions mentioned u/s 117(3) within 30 days of passing of resolution.

S. No.

Fine

Penalty

Company Company shall be punishable with FINE which shall not be less than 5,00,000 rupees but which may extend to 25,00,000 rupees Liable to PENALTY of 1,00,000 rupees and incase of continuing failure futher penalty of 500 rupees for each day upto maximum 25,00,000 rupees
Director punishable with FINE which shall not be less than 1,00,000 rupees but which may extend to 5,00,000. PENALTY of 50,000 and Incase of continuing failure with further penalty of 500 rupees for each day up to 5,00,000

 Thus, before ordinance section 117(2) states about Fine and after ordinance section states about Penalty.

Therefore, before ordinance default can be make good by petition in NCLT by filing compounding application Suo Moto or after receipt of notice form ROC/ MCA.

And, After Ordinance ROC may start levying penalty by issuing ‘Show Cause Notice’ without any petition to NCLT or any other authorities.

H. Conversion of Public Company into Private Limited Company:

Substitution of Provisos of Section 14 Sub section 1:

As per Section 14(1)- for conversion of Public Company into Private Limited Company approval of Tribunal is required.

By ordinance, 2018: Power of Tribunal has been transferred to Central Government. Therefore, after notification of ordinance Public Company can be converting into Private Company with approval of Central Government.

Power of Central Government has been transferred to Regional Director.

E-Form- Active

ACTIVE COMPANY TAGGING IDENTITIES AND VERIFICATION

MCA on 21st February, 2019, came out with draft of Companies (Incorporation) Amendment Rules, 2019.

Every Company incorporated on or before 31st December, 2017 shall file Particular of Company and Registered Office in e-form Active (i.e. e-form INC-22A) on or before 25.04.2019.

NOTE:

If Company has not filed its due Financial Statement (AOC-4) or Annual Return (MGT-7) or both with ROC. Such Company shall not allow filing e-form ACTIVE.

Therefore, Companies are required to complete its Annual Filing before filing of e-form Active (i.e. 22A).

A. If Company incorporated on or after 01st January, 2018. Then whether Companies need to file this form INC-22A?

As per Amendment Rules, Only companies incorporated on or before 31st December, 2017 are required to file e-form 22A.

Therefore, one can opine that Companies Incorporated on or after 1st January, 2018 not required to file e-form 22A.

B. What is due date for e-form 22A?

Due date for filling of e-form 22A is 15th June, 2019.

C. Consequences if Company fails to file e-form 22A till 25th April, 2019?

There are two types of consequences:

1. After 15th June, 2019 if any Company will file e-form 22A. Company have to pay Fees of Rs. 10,000/-.

2. Status of Company in Master Data shall be changed as “Active- Non Compliant” w.e.f. 26th April, 2019.

3. Barred of Filing of Forms:Once status of Company changes as ‘Active Non-Compliant” It will be restricted to file following below mentioned forms:

    • Sh-7 (Increase in Authorized Capital)
    • PAS-3 (Allotment of Shares)
    • DIR-12 (Appointment and Resignation of Director (Except Cessation))
    • INC-22 (Change in Registered Office)
    • INC-28 (For purpose of Amalgamation or de-merger)

4. Action by ROC: Company shall be liable for action under Section 12(9). ROC may remove the name of Company from its record.

D. Companies which are exempted to file e-form INC-22A (e-form Active)?

  • Struck off Companies (Whether by ROC or sue motto)
  • Companies under process of Strike off
  • Companies under amalgamation
  • Companies Dissolved

E. If Company is under Management Dispute due to this not able to file Financial Statement or Annual Return. Whether allowed to file e-form Active.

If there is any management dispute and company has informed the same to ROC. In such case even without completion of Annual Filing (AOC-4 or MGT: 7) Companies are allowed to file e-form ACTIVE.

Features of e-form INC-22A (ACTIVE)–

I. Initial Details Required to Mention in e-form 22A:

  • Name and Registered Office of Company
  • Latitude & Longitude of (RO)
  • Mail ID & OTP Verification

F. Whether any OTP shall be generate to file e-form INC-22A.

Whatever email ID or Mobile No. of Company mentioned in e-form 22A shall receive OTP.That OTP is mandatory to file form 22A.

G. Address Proof of Registered Office.

Photo of Registered Office

  • Showing external building and
  • Inside Building
  • Inside office also showing therein atleast one director/KMP who has affixed his/her DSC on e-form 22A.

H. Details of DIRECTORS required being mention in e-form 22A.

  • Serial No DIN
  • Name of Director Status of DIN

NOTE:

Company has to ensure that DIN of Directors are Active. DIN are not De-activated due to non-filing of DIR-3KYC or Disqualified u/s 164(2)

I. Details of AUDITORS (Statutory / Cost) required being mention in e-form 22A.

  • Category PAN
  • Name of Auditor/ Firm Membership No.
  • Period of Account for which appointed

J. Information about KMP:

> Details of MD/CEO/ WTD (DIN/ PAN, Name, Designation)

> Details of Company Secretary

> Details of CFO

K. One more important Information:

> SRN of AOC-4 and MGT-7 filed for Financial Year 2017-18

L. How many Registered Office can be at a single Place?

As per Companies Act any no. of Companies can have registered office on same address.

Demetralization of Securities” of Public Limited Company

The Ministry of Corporate Affairs in its drive to enhance transparency, investor protection and corporate governance, has notified Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 on 10th September 2018 effective from 02nd October, 2018.:-

A. Dematerialization:

Dematerialization is the process of converting Physical Securities into electronic format. It should be related to Listing of securities. A Shareholder intending to dematerialize its securities needs to open a Demat account with Depository Participant. Investor Deface and surrenders his Physical Securities and in turn gets Electronic Shares in his Demat Account:

B. Benefit of Dematerialization:

  • Elimination of risk of duplication, theft, fraud and loss with respect to physical share certificates.
  • Exemption from payment of stamp duty on transfer.
  • Ease in transfer and pledge of securities.

C. Applicability:

Every unlisted public company with effect from 02 October 2018 shall-

  • Issue its securities only in dematerialized form; and
  • Ensure dematerialization of all its existing securities

D. Major Impact on Company:

I. After 02.10.2018, Unlisted Company has to ensure that entire holding of securities of its Promoters, Directors, Key Managerial personnel is in dematerialized Form, otherwise company shall not be able to do followings:

  • Issue of securities;
  • Buy-back of securities;
  • Issue of bonus shares; and
  • Rights issue

II. After 02.10.2018, all new issue of securities or transfer of securities shall be only in Dematerialize form.

iii. Impact on Security Holders (Transfer / subscription of Securities):

Rule 3 of the amendment specifies that every holder of Securities who intends to transfer securities or who intends to subscribe to any securities of an unlisted public company has to make sure that all their existing Securities are held in dematerialised form before such transfer or subscription to the Securities;

A. Compliance Requirement by Public Company:

After amendment w.e.f. 02nd October, 2018, Public Companies must have to compliance with the following below mentioned compliances:

A. Make timely payment of Fees (admission as well as annual).

B. Maintenance of Security deposit of 2 years’ Fees, as per agreement executed with the followings:

    • Depository;
    • Registrar to an issue;
    • Share Transfer Agent

C. Comply with the regulations, guidelines or circulars, if any issued by the Securities and Exchange Board or Depository from time to time.

D. Most Important: Reconciliation of Share Capital Audit Report provided under regulation 55A of the SEBI (Depositories and Participants) Regulations, 1996 to be submitted on a half-yearly basis to the registrar, under whose jurisdiction the registered office of the company is situated.

B. Legislative Requirement (Regulation 55A):

Under provision of Regulation 55A of the SEBI (Depositories and Participants) Regulations, 1996, listed companies are required to submit

  • Reconciliation of Share Capital Audit Report on a Half Yearly basis to the stock exchanges audited by a qualified chartered accountant or a practicing company secretary, for the purpose of reconciliation of share capital held in depositories and in physical form with the issued / listed capital.
  • The Reconciliation of Share Capital Audit Report is required to be submitted to the stock Exchange within 30 days from the end of the Half Year.”

C. Exemption dematerlize securities (22.01.2019)

This rule shall not apply to an unlisted public company which is:—

(a) A Nidhi;

(b) A Government company or

(c) A wholly owned subsidiary

MOST IMPORTANT QUESTION – IMPACTS

Therefore, one can opine that

  • In case Company fails to apply for ISIN or fails to file half yearly audit company is liable for consequences under Section 450.
  • If shareholders fails to convert shares in Demat they are liable for consequences i.e. not able to transfer of shares not able to subscribe shares.

QUICK BITES

M. Whether Company required applying separate ISIN for each type of Security?

Yes, PUC required applying for separate ISIN for each type of Security.

N. Share holders don’t intent to transfer shares Or Company doesn’t intent to issue new Securities, still it’s required to apply ISIN and has to file?

Irrespective of fact whether shareholder intent to convert or not, it is responsibility of Company to apply for ISIN and have to file half year audit Return.

O. What is due date of submission of half yearly Audit Report with ROC?

Due date of submission of Reconciliation of Share Capital Audit Report is within 30 days of closure of Half Year i.e. 30th April, 2019 for the half year ended 31.03.2019.

P. What is due date of submission of half yearly Audit Report with ROC?

Due date of submission of Reconciliation of Share Capital Audit Report is within 30 days of closure of Half Year i.e. 30th April, 2019 for the half year ended 31.03.2019.

Q. Whether return in 55A needs to file even company has not applied for ISIN or demat it shares?

It doesn’t concern whether company applied for ISIN or not, but company need to file this form with ROC. Otherwise it will be non compliance on part of Company.

NATIONAL FINANCIAL

REPORTING AUTHOIRTY

MCA vide its notification dated 13th November 2018 notified National Financial Reporting Authority (NFRA) Rules 2018.

A. Functions of NFRA:

  • Recommend CG on formulation of AS and SA
  • Monitor and enforce compliance of AS and SA
  • Oversee quality of services rendered by professionals in context of above and suggest improvement measures
  • It has also been given the power to investigate matters of professional misconduct by chartered accountants or CA firms, impose penalty and debar the CA or firm for up to 10 years.

The ICAI will continue to exercise these powers over small companies. The NFRA will have jurisdiction over listed companies and large, unlisted companies.

Function and Duties Actionable and Power of Authority
To recommend accounting standards and auditing standards for approval by the Central Government. Before recommending accounting standards and auditing standards for approval by the Central Government, the Authority shall:

a. Receive recommendations from ICAI on proposals for new accounting standards or auditing standards or for amendments to existing one;

b. to seek additional information from ICAI on the recommendations received.

Authority shall mandatorily consider their recommendations but may or may not accept.

To monitor and enforce compliance with accounting and auditing standards To monitor and enforce the compliance with the accounting standards the Authority may review the financial statements of any company or body corporate governed, for which it may issue written notice to such company/body corporate or its auditor directing to provide further information, explanation or any relevant documents within the time prescribed.

To monitor and enforce compliance with auditing standards following actions may be taken by the Authority:

1. Review working papers, audit plan and other documents and communication related to audit

2. Evaluate the quality control system, documentation system of the auditor.

3. Testing the audit supervisory and quality control procedures of the auditor.

4. Require the auditor to submit a report on its governance practices and internal processes designed to promote audit quality, protect its reputation and reduce risks including risk of failure of the auditor and may take such action on the report as may be necessary.

Further, following common action may be taken by the authority:

a) Require personal presence of officers of the company/body corporate and its auditors for seeking further information and explanation.

b) Where the Authority finds or has reason to believe that any accounting standard has or may have been violated, it take further course of investigation or enforcement action through its concerned Division.

c) The Authority shall publish its findings relating to non-compliances on its website and in such other manner as it considers fit, unless it has reasons not to do so in the public interest and it records the reasons in writing.

d) The Authority shall not publish proprietary or confidential information, unless it has reasons to do so in the public interest and it records the reasons in writing.

e) The Authority may send a separate report containing proprietary or confidential information to the Central Government for its information.

Overseeing the quality of service and suggesting measures for improvement 1. Authority may direct the auditor to take measures for improvement of audit quality and specify detailed plan with time-limits.

2. Auditor shall make the required improvements and submit a detailed report.

3. The Authority shall monitor the improvements made by the auditor and take such action as it deems fit depending on the progress made by the auditor.

4. The Authority may refer the case to Quality Review Board constituted under the Chartered Accountants Act, 1949 and seek any other information required.

Duty to investigate Authority shall forward the following matter to its division dealing with enforcement for carrying out investigation and other action:

1. Matters of professional or other misconduct under section 132(4) received from Central Government.

2. Matters of professional or other misconduct undertaken suomoto

3. Matter undertaken on the basis of its compliance or oversight activities.

Note:

a. lf, during the investigation, the Authority has evidence to believe that any company/body corporate has not complied with the requirements under the Act or rules which involves or may involve fraud amounting to rupees one crore or more, it shall report its findings to the Central Government.

b. No other institute or body except the Authority has the power to initiate any proceedings against any such matters of misconduct.

Disciplinary proceedings Where the Authority believes that sufficient cause exists to take actions permissible under Section 132(4) of the Act, it shall refer the matter to the concerned division, which shall cause a show-cause notice to the auditor in the manner prescribed and the necessary order shall be passed.
Miscellaneous functions of Authority 1. Maintain details of particulars of auditors appointed in the companies and bodies corporate governed by the authority

2. Promote awareness in relation to the compliance of accounting standards and auditing standards

3. Perform such other functions and duties as may be necessary or incidental to the aforesaid functions and duties

B. Companies cover under NFRA:

a) All Listed Companies/ Listed Body Corporate;

Body Corporate: body corporate” or “corporation” includes a company incorporated outside India,

b) Unlisted Public Companies with 

– Paid up Capital or Loans > = INR 500 crores OR 

– Turnover > = INR 1000 crores OR 

– Outstanding Loan, Debentures and Deposit >= INR 500 crores

**Above Limits shall be check on as on the 31st March of immediately preceding financial year;

  • Banking Companies
  • Insurance
  • Electricity Companies
  • Special Act Companies

c) Body corporate; or Company; or Person on a reference made by CG in public interest.

d) Certain specific foreign Subsidiaries/Associates of Indian Companies

**NOTE: Once a Company falls under the above limits under NFRA, will be covered by NFRA for 3 More years. 

C. Companies Not cover under NFRA:

Considering the provisions of applicability of the Rules, following companies shall not be governed by the Authority:

1. Private Companies (unless referred by Central Government to the Authority in public interest); and

2. Unlisted public companies with paid-up capital or turnover or aggregate of loans, debentures and deposits below the limit stated under Rule 3(1)

D. Compliance Requirements:

Existing body corporate: Initial One Time Disclosure 

Every existing Body Corporate, other than a company, governed by these rules, shall inform the Authority within Thirty Days of The Commencement Of These Rules, in Form NFRA-1, the particulars of the auditor as on the date of commencement of these rules.

  • Everybody corporate shall within 15 days of appointment of an auditor, inform the Authority about the particulars of the auditors appointed by the body corporate, inform NFRA-1;

Note: Indian Cos. are exempted from this requirement.

  • Annual return Every auditor referred to in rule 3 shall file a return with the Authority on or before 30th April every year in such form as may be specified by the Central Government 
S. NO.
FORM NAME
PURPOSE OF THE FORM
INFO UPTO
DUE DATE
ROC FEES
ADDITIONAL ROC FEES
EXEMPTION
1
DPT-3
Reporting of Outstanding  Sum of Loans
Details of outstanding Loan / receipt of money as on 31.03.2019
90 Days
(i.e. 29/06/2019)
As per normal fees under rules
Normal Additional Fees
1. Government Co.
2. Companies not accepting any loan or not having any O/S loan
3. NBFC
4. Housing Finance
5. Banking Company
2
DPT-3  (Yearly)
Reporting of Outstanding Sum of Loans
Details of outstanding Loan/ receipt of money as on 31st March of the Previous Financial Year
30th June of every Financial Year
As per normal fees under rules
Normal Additional Fees
1. Government Co.
2. Companies not accepting any loan or not having any O/S loan
3. NBFC
4. Housing Finance
5. Banking Company
3
MSME-1 (Initial Return)
Submission of Details of Outstanding dues Beyond 45 Days to MSME
Every Outstanding Dues to MSME more than 45 days as on 22.01.2019
30/05/2019
As per normal fees rules
Normal Additional Fees
Companies with No O/S dues to MSMEs or such O/S Dues are for not more than 45 Days
4
MSME-1 (Half Yearly)
Submission of Details of Outstanding dues to MSME along with the reasons for delay
First Half
(1st  April to 30th  September)
Second Half (1st  October to 31st  March)
· 30th October
·  30th April (every Year)
 For half year ended 31.03.2019 due date is 30/05/2019
As per normal fees rules
Normal Additional Fees
Companies with No O/S dues to MSMEs or such O/S Dues are for not more than 45 Days
5
DIR-3 KYC
Updation of Details of DIN Holders
Applicable on all the persons having din at the end of financial year
30/06/2019
Upto Due Date=NIL
Not yet prescribed for this year
6
NFRA-1 (One Time)
Filing of the Particulars of the Auditors
30 Days from the date of availability of form on MCA
As per normal fees rules
Normal Additional Fees
1. Pvt. Co.
2. Unlisted Public Co. not falling under prescribed Limits
7
NFRA- 1(Annual)
Filing of the Particulars of the Auditors
On or Before 30th April of every year
As per normal fees rules
Normal Additional Fees
1. Pvt. Co.
2. Unlisted Public Co. not falling under prescribed Limits
8
BEN-1
Reporting by SBO
Interest as on date of filing of form.
Within 90 Days of Notification (i.e. 09/02/2019)  on or before 10/05/2019
As per normal fees rules
Normal Additional Fees
9
BEN-2
Filing by Company after Receipt of BEN-1
Information as per BEN-1
Within 30 days of receipt of BEN-1
As per normal fees rules
Normal Additional Fees
10
INC-20A
Declaration of Commencement of Business
Details of the receipt of Subscription Amount
Within 180 Days from the date of Incorporation
As per normal fees rules
Normal Additional Fees
11
GNL-2 (55A)
Reconciliation of Share Capital Certificates
Half Yearly, i.e. 31st March  & 30th September
30 Days from the end of Half Year i.e.
30th April &
30th October
As per normal fees rules
Normal Additional Fees
12
INC-22A (ACTIVE)
Filing of the Particulars of the KYC of Companies
Every Company Incorporated before 31/12/2017
15/06/2019
Upto Due Date=NIL
10,000
1. Struck off Companies
2. Companies under process of Struck off
3. Company under amalgamation
12A
AOC-4(If pending)
Financial Statements
31/03/2018
Before filing of INC-22A
As per normal fees rules
Normal Additional Fees
   12B
MGT-7(If pending)
Annual Return
31/03/2018
Before filing of INC-22A
As per normal fees rules
Normal Additional Fees
   12C
 
 
ADT-1(If pending)
Appointment or re-appointment of Statutory Auditor
Before filing of INC-22A
As per normal fees rules
Normal Additional Fees

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One Comment

  1. gopal says:

    We want to file DPT-3 but loan issue by bank dec-18. Therefore any penalty pay by us or only pay normal fee, if yes what penalty deposited by us or any why to save the penalty

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