Corporate Updates – 09-11-2017

MCA – IBBI:

MCA has notified the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2017 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Third Amendment)Regulations, 2017 both shall come into force on the date of their publication in the Official Gazette. A resolution plan shall disclose details of the resolution applicant and other connected persons to enable the Committee of Creditors to assess credibility of such applicant and other connected persons to take a prudent decision while considering the resolution plan for its approval. The resolution plan shall disclose the details in respect of the resolution applicant, persons who are promoters or in management or control of the resolution applicant; persons who will be promoters or in management or control of the business of the corporate debtor during the implementation of the resolution plan; and their holding companies, subsidiary companies, associate companies and related parties, if any. It shall disclose details of convictions, pending criminal proceedings, disqualifications under the Companies Act, 2013, orders or directions issued by SEBI, categorization as a willful defaulter, etc..

FCRA:

The Union Ministry of Home Affairs has made it mandatory for all Non Governmental Organisations (NGO’s) to register with Niti Aayog’s portal NGO Darpan, if they want to receive orhope to receive foreign funding. The notice states that in order to receive money under the Foreign Contribution Regulation Act, 2010, NGOs must obtain a Unique Darpan Identification Number from the portal. Registration will involve providing contact details as well as PAN and Aadhaar numbers of the organisation’s key functionaries. The deadline for registration has not been specified. Further, MHA has made it clear that availing FCRA online services such as uploading annual returns (in online Form FC 4) or changes (in online Form FC 6) will require Unique Darpan Identification Number. NGO-Darpan (NGO Mirror) is a platform that provides space for interface between Voluntary Organisations / NGOs and key Government Ministries / Departments / Government Bodies

News from NIRC of ICSI

NIRC of ICSI is organising Rajasthan State Conference on the theme Corporate Laws – Reforms And Ease of Doing Business on Saturday, the 11th November, 2017 (9.30 AM to 5.30 PM) at Hotel Hilton, 42 Geejgarh House, Hawa Sadak, Jaipur – 302006. Fees : Rs.750/- (For Members/Students/Others); Free Corporate Members of NIRC (Delhi & Chapters). PCH – 4.

Corporate Updates – 07-11-2017

MCA:

MCA has notified the revised Annual Filing Forms i.e Form AOC-4 (Form for filing financial statement and other documents with the Registrar), Form AOC-4 XBRL (Form for filing financial statement in XBRL (Non-Ind AS) and other documents with the Registrar) are being revised and are likely to be notified on 7th November 2017 including therein demonetization related changes. Stakeholders are advised to download the latest version before filing these forms w.e.f. 8th November 2017. Form- wise date of last version change is available at on the website of MCA.

MCA:

MCA has release a press release stating that based on the massive drive undertaken by the Ministry in the recent past, around 2.24 lakh companies have been struck-off till date for remaining inactive for a period of two (2) years or more. Further, over 3,000 disqualified Directors are Directors in more than 20 companies each, which is beyond the limit prescribed under the Law; To address the criminality angle, the Director, Additional Director or Assistant Director of SFIO have been recently authorized to arrest any person believed to be guilty of any fraud punishable under the Act. Steps are underway for setting-up National Financial Reporting Authority (NFRA), an independent body, to test check Financial Statements, prescribe Accounting Standards and take disciplinary action against errant professionals;. A separate initiative is underway to develop a State-of-the-Art software application to put in place an ‘Early Warning System’ (EWS) to strengthen the Regulatory Mechanism. Moreover with a view to check the problem of Dummy Directors, action is underway to seed DIN with PAN and Aadhaar at the stage of DIN application through biometric matching for new applications. The same may be extended to legacy data in due course.

Corporate Updates – 06-11-2017

RBI:

RBI has Introduce Legal Entity Identifier Code for large corporate borrowers. The Legal Entity Identifier (LEI) code is conceived as a key measure to improve the quality and accuracy of financial data systems for better risk management post the Global Financial Crisis. LEI is a 20-digit unique code to identify parties to financial transactions worldwide. It has been decided that the banks shall advise their existing large corporate borrowers having total exposures of ₹ 50 crore and above to obtain LEI and borrowers who do not obtain LEI as per the schedule are not to be granted renewal / enhancement of credit facilities. A separate roadmap for borrowers having exposure between ₹ 5 crore and upto ₹ 50 crore would be issued in due course. Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF). After obtaining LEI code, banks shall also ensure that borrowers renew the codes as per GLEIF guidelines. These directions are issued under Section 21 and Section 35(A) of the Banking Regulation Act, 1949.

CBDT

CBDT has issued clarification on Cash sale of agricultural produce by cultivators /agriculturist on the basis of representations received from the stakeholders regarding applicability of income-tax provision to cash sale of agricultural produce by cultivators / agriculturists to traders. It is clarified that cash sale of the agricultural produce by its cultivator to the trader for an amount less than Rs 2 Lakh will neither result in any disallowance of expenditure under section 40A (3) of the Act in the case of trader nor attract prohibition under section 269ST of the Act in the case of the cultivator and shall not require the cultivator to quote his PAN/ or furnish Form No.60.

REVIVAL OF COMPANIES UNDER SECTION 252 OF THE COMPANIES ACT, 2013

REVIVAL OF COMPANIES under Section 252 of the Companies Act, 2013

 ~ By CS Manish Gupta, manish@rmgcs.com

The Registrar of Companies (ROC) all across India have initiated the process to close all those Companies which are not complying with the provisions of the Companies Act, 2013 particularly w.r.t filing of Annual Returns and Balance Sheet.

As per the provisions of section 248(1) of Companies Act, 2013 w.r.t power of Registrar to remove name of the company from register of companies, all ROC’s across India have issued show cause notices to the Companies falling u/s 248(1)(c). An opportunity was given to all such companies & their directors to respond to the said notice within 30 days and ROC was empowered to take action against the Company and its Directors in case of any failure to comply.

ROC office has removed the name / struck off almost 100,000 (One Lakh) Companies from its record. List of Companies struck off from record’s of ROC are available on MCA portal.

Consequently all such Companies shall stand dissolved and it shall on and from the date mentioned in the notice by the concerned Registrar of Companies, Ministry of Corporate Affairs, Government of India shall cease to operate as a Company (i.e. it is not a legal entity any more) and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date.

As the name of all such companies are available in public domain, following can be the possible Consequences:

  • Bank’s might freeze all banking transaction with immediate effect for all such Companies. 
  • The working companies and / or companies having some immovable assets, will be the most impacted.
  • All existing Directors of these Companies shall continue to be liable for all liabilities under Section 248 (7) of the Companies Act, 2013.

Revival of Companies – Legal Background

Provisions with regard to the Revival of Companies or restoration of Name of Companies are provided under Section 252 of the Companies Act, 2013 read with the National Company Law Tribunal (Amendment) Rules, 2017. The relevant extract of the provisions are as under:

“Section 252(3): If a Company, or any member or creditor or workman thereof feels aggrieved by the company having its name struck off from the register of companies, the Tribunal on an application made by the company, member, creditor or workman before the expiry of twenty years from the publication in the Official Gazette of the notice under sub-section(5) of section 248 may, if satisfied that the company was, at the time of its name being struck off, carrying on business or in operation or otherwise it is just that the name of the company be restored to the register of companiesorder the name of the company to be restored to the register of companies, and the Tribunal may, by the order, give such other directions and make such provisions as deemed just for placing the company and all other persons in the same position as nearly as may be as if the name of the company had not been struck off from the register of companies.”

Procedure to be followed for filing an application with NCLT:

Detailed procedure of filing an application for restoration of Company, which has been struck off from the records of the ROC, has been provided in Section 252(3) read with rule 87A of National Company Law Tribunal (Amendment) Rules, 2017. These Rules were notified on 05-07-2017. The procedure which is required to be followed is as under:

  1. According to the provisions of Section 252(3) of Companies Act, 2013, Company, any member, creditor or workmen can file applicationin NCLT for restoration of name of Company in the records of the ROC.
  1. An application / appeal shall be filed in Form No. NCLT – 9 (on Legal Paper) with NCLT Bench having jurisdiction as per the Registered Office Address of the Company.
  1. Applicant has to serve an advance copy of the application on the Registrar of Companies (Speed Post + Physical Submission through a covering letter as well) and on such other persons as the Tribunal may direct, not less than 14 days before the date fixed for hearing of the application.
  1. An application must be accompanied with the following documents:
  1. a) Detailed reasons for such restoration along with the evidence and proofs;
  2. b) Affidavit verifying the petition, duly notorized;
  3. c) Demand Draft in favour of “Pay & Accounts Officer, Ministry of Corporate Affairs, New Delhi”for payment of fee of Rs. 1,000/- (Rupees One Thousand Only);
  4. d) Copy of MOA & AOA;
  5. e) Copy of Notice as issued by the concerned ROC for striking off of the Company;
  6. f) Copy of Board Resolution for restoration of Name, Filing of an Application with NCLT, Authorisation in favour of any director and appointment of Professional to appear on behalf of the Company;
  7. g) Memorandum of appearance with copy of the Board Resolution or the vakalatnama, as the case may be;
  8. h) Latest audited financials;
  9. i) Proof of service of application on ROC;
  10. i) Any other documents in support of the case.
  1. Upon hearing the appeal or the application or any adjourned hearing thereof, the Tribunal may pass appropriate order, as it deems fit. Where the Tribunal makes an order restoring the name of a company in the register of companies, the order shall direct that-
  1. a) the appellant or applicant shall deliver a certified copy to the Registrar of Companies within thirty days from the date of the order;
  2. b) on such delivery, the Registrar of Companies do, in his official name and seal, publish the order in the Official Gazette;
  3. c) the appellant or applicant do pay to the Registrar of Companies his costs of, and occasioned by, the appeal or application, unless the Tribunal directs otherwise; and
  4. d) the company shall file pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013 and rules made thereunder within such time as may be directed by the Tribunal.
  1. On getting the order for Restoration of the Name, Company shall file the copy of order with the concerned Registrar of Companies with in a period of 30 days from the date of the order in Form INC – 28.
  1. The Registrar of Companies do, in his official name and seal, publish the order in the Official Gazette after restoration of the name of the Company in his records.
  1. As per the directions of the NCLT in Point 5(d), the company shall file all pending financial statements and annual returns with the Registrar and comply with the requirements of the Companies Act, 2013.

In the recent past NCLT has decided various cases filed by the Companies under the provisions of erstwhile Section 560(6) of the Companies Act, 1956. Hon’ble NCLT Benches in some of the cases have granted approval of restoration of name, have rejected few applications and have also imposed cost for restoration in some of the cases. Sharing citation with gist of the decisions given by NCLT benches in this regard:

  1. R.A.P. Garments Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 24thApril, 2017 C.P. No. 461/2014 –NCLT Special Bench, New Delhi.     

The Hon’ble tribunal states that the company is a running company and that it will be seriously prejudiced if not restored in the registrar of Registrar of Companies, the petition is allowed subject to certain conditions, i.e the petitioner company shall file all pending returns in 30 days of restoration and to Rs. 5 Lakh to ROC to defray costs and expenses.

  1. Hamilton Estates Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 19th April, 2017 C.P. No. 56/2016 – Before NCLT, New Delhi

The Hon’ble tribunal states that the respondent (ROC) has failed to satisfy the Bench that all prerequisite steps as provided in Section 560(1), (2) & (3) have been taken before striking off the name of the Company. The name of the Company allowed to be restored in the registrar of Registrar of Companies, the petition is allowed subject to payment of Rs. 25,000/- to Prime Minister Relief Fund. 

  1. M. G. Power System Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 18th May, 2017 C.P. No. 47/2015 – Before NCLT, New Delhi

The Hon’ble NCLT has allowed the petition, even ROC has contended that the petitioner company has not filed its statutory returns and other documents since incorporation. Thus, its giving rise to the reasonable belief that the company was not operational.  The Hon’ble NCLT states that it would be just and proper to order restoration of the name of Company in the register of the ROC The petitioner company was directed to file all pending returns in 30 days of restoration and to deposit Rs. 25,000/-  to Prime Minister Relief Fund.

  1. Akash Ganga Builders Private Limited V/s Registrar of Companies, NCT of Delhi & Haryana Dated 30th June, 2017 C.P. No. 935/2015 – Before NCLT, Principal Bench     

The Hon’ble Principal Bench of NCLT has dismissed the petition on the ground that the name of the Company was struck off because the Company had not raised its capital upto Rs. 1 Lakh as provided in the provisions of the Companies Act, 2013, however the Company has prayed that it is because of non filing of returns. Petition dismissed with the cost of Rs. 10,000/- to be paid to the Central Government.

  1. Arvind Jain, Rajesh Jain, Rajnish Jain vs. Akarshan Hotel Pvt. Ltd & Registrar Of Companies, NCT of Delhi & Haryana Dated 27th June, 2017 C.P. No. 636/2016 – Before NCLT, Principal Bench

The present application for restoration was filed by the Directors & Shareholders of the Company who have brought this Company in the year 1997, however as per the last filed returns which was for the year 1991, there were different directors and shareholders and after that no document is being filed with the ROC. The petition was dismissed with a cost of Rs. 10,000/- on the ground that applicant failed to prove that they are the directors and shareholders of the Company.

Conclusion

The Companies Act provides exhaustive measures for the revival of companies and the NCLT is vested with powers to take all necessary measures for the revival of companies. One has to see the grounds, facts and to collect certain documents before filing any such application or appeal for revival of Company. As the time limit prescribed under the provisions for making an application is 20 years, applicant can choose to file the said application after arranging all such documents. It is always better to delay then getting the same rejected on ground of some discrepancy in the application. Although, it will be tough for the working companies whose name are being struck off by the ROC but I am personally looking at it as an opportunity for our Practising Company Secretaries, as they will be getting a fair opportunity to appear and present their cases before the various benches of NCLT.

Corporate Updates – 03-11-2017

MCA:

In order to provide ease for doing business to stakeholders, MCA is making continuous efforts to simplify incorporation related process. MCA will soon be dispensing with the requirement of separately uploading Forms 49 A& 49B after filing Spice e-forms. Accordingly, With effect from 6P.M. of 4th November 2017, stakeholders will NOT be required to upload signed 49A/49B using “Submit application for PAN/TAN” service, in respect of any fresh SPICe submission or Resubmission cases. PAN and TAN will continue to be issued as before based on the details submitted in the SPICe form itself.

CBDT:

CBDT has notified the amendments to the Income-tax Rules, 1962. These rules may be called the Income-tax (Twenty-fourth Amendment) Rules, 2017. Information and documents to be kept and maintained under proviso to sub-section (1) of section 92D and to be furnished in terms of sub-section (4) of section 92D. Further, every person, being a constituent entity of an international group having the prescribed value of international transactions, keep and maintain the information and documents of the international group, namely:- A list of all entities of the international group along with their addresses and a chart depicting the legal status of the constituent entity and ownership structure of the entire international group.

Corporate Updates – 02-11-2017

CBDT

CBDT extends due date for filing Income Tax Returns and Tax Audit Reports upto 7th November, 2017. On consideration of representations from various stakeholders for further extension of ‘due date’, being 30th September 2017 for those liable to file returns by 30.09.2017 and to facilitate ease of compliance by the taxpayers, CBDT has further extended the ‘due-date’ for filing Income Tax Returns and various reports of audit prescribed under the Income-tax Act,1961 pertaining to AY 2017-18 from 31st October, 2017 to 7th November, 2017 for all such taxpayers.

Ease of Doing

India’s has made a historic jump of 30 ranks in the World Bank’s Doing Business Report, 2018. India’s rank has risen to 100 in the latest report compared to 130 in the Doing Business Report, 2017. Historic jump in ‘Ease of Doing Business’ rankings is the outcome of the all-round & multi-sectoral reform push of Team India. Easier business environment is leading to historic opportunities for our entrepreneurs, particularly MSME sector & bringing more prosperity. Over the last 3 years we have seen a spirit of positive competition among states towards making business easier. It is worth noting that various initiatives were taken in the past couple of years to improve this ranking starting from the incorporation of companies and going upto the registration process and compliance’s thereafter.

Corporate Updates – 31-10-2017

CBEC – GST:

CBEC has again extended the last date for filing of GSTR – 2 for the month of July, 2017 to 30th November, 2017. The last date for filing of GSTR-2 for the month of July, 2017 was 31st October, 2017 and authorities have approved the extension of filing of GSTR- 2 for July, 2017 to 30th November, 2017, for facilitation of businesses and all taxpayers. Accordingly, the last date for filing of GSTR-3 for the month of July, 2017 also stands extended to 11th December, 2017 (the deadline was 10th November, 2017). This will facilitate about 30.81 lakh taxpayers for filing GSTR-2 for the month of July, 2017.

THE CONTRACT LABOUR (REGULATION AND ABOLITION) HARYANA AMENDMENT ACT, 2016

The Haryana Government, Law and Legislative Department has notified the Contract Labour (Regulation and Abolition) Haryana Amendment Act, 2016, in its application to the State of Haryana. The amendment is carried to change the applicability of the main legislation i.e The Contract Labour (Regulation and Abolition) Act, 1970 in the state of Haryana. After the amendment the provisions are applicable to every establishment in which Fifty (earlier twenty) or more workmen are employed or were employed on any day of the preceding twelve months as contract labour and to every contractor who employs or who employed on any day of the preceding twelve months Fifty (earlier twenty) or more workmen. Further proviso has been added to Registration clause that the appropriate Government may by notification in the Official Gazette, impose such further conditions, as may be deemed necessary, at the time of registration of an establishment for the proper administration of the Act and for prevention of misuse of employment of contract Labour.

Corporate Updates – 30-10-2017

MCA:

MCA has released the much awaited circular on Relaxation of additional fee and extension of last date of filing of AOC-4 and AOC-4 (XBRLnon-IndAS) under the Companies Act, 2013. The MCA has already extended the date of filing of AOC-4 (XBRL E-forms using Ind AS) for the financial Year 2016-2017 without additional fee till 31.03.2018. MCA has granted extension of time for filing of financial statements for the financial year ended 31.03.2017 in e-forms AOC-4 and AOC 4 (XBVRL non –IndAS) and the corresponding AOC-4 CFC e-forms upto 28.11.2017 without levying additional fee.

CBDT:

As Section 286 of the Income-tax Act, 1961 (‘the Act’) requires for furnishing of a Country-by-Country report (CbCR) in respect of an international group by its constituent or parent entity. The ‘due date’ for furnishing the Country-by-Country Report is the date specified under section 139(1) for furnishing the return of income for the relevant accounting year. FY 2016-17 will be the first reporting year for furnishing of CbCR. As the rules for furnishing of CbCR are also still under consideration. The Central Board of Direct Taxes, in respect of all assessees, has extended the ‘due date’prescribed therein for furnishing of report in respect of international group for reporting accounting year 2016-17 to 31st March, 2018.

Corporate Updates – 27-10-2017

MCA:

MCA has finally issued a circular for Relaxation of additional fees and extension of last date of filing of AOC-4 XBRL E-Forms using Ind AS under the Companies Act, 2013. The extension is granted to all companies which are required to prepare their financial statements in accordance with the Companies (Indian Accounting Standards) Rules, 2015 for the financial year 2016-2017 are required to submit their statements only in XBRL format. As the development of tools necessary for deployment of the taxonomy for XBRL filing is expected to be completed by 28-02-2018, it is therefor decided to extend the last date for filing of AOC – 4 XBRL for such companies for the financial year 2016-17 without additional fees till 31st March, 2018. The filing should be made by these companies only when the IndAS taxonomy is deployed by the MCA.

MCA – IBBI:

MCA has issued clarification regarding approval of resolution plans under Section 30 and 31 of the Insolvency & Bankruptcy Code, 2016. MCA has provided clarity, that the resolution plans under the Insolvency and Bankruptcy Code does not require approval of the shareholders. The clarification comes against the backdrop of concerns in certain quarters about the possibility of promoters of a company blocking insolvency resolution process under the existing provisions of the Code. As Resolution process is taken up only after it is approved by the National Company Law Tribunal (NCLT), the adjudicating authority, a resolution plan approved by the adjudicating authority shall be binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan. It is further clarified that approval of shareholders of the company for a particular action required in the resolution plan is deemed to have been given by the adjudicating authority.

News from NIRC of ICSI

NIRC of ICSI will be organising a Seminar on the theme "Commercial Contracts : Negotiation, Drafting and Litigations" on Saturday, the 28th October, 2017 from 10.00 AM onwards at Hotel Piccadily, Janakpuri District Centre Complex, Near Janak Puri West Metro Station, New Delhi-110058. Fees : Rs.1,600/- per delegate inclusive of GST (Rs.1000/- for students) ; FREE for Corporate Members of NIRC. PCH – 4.

Corporate Updates – 26-10-2017

MCA:

MCA has issued the Companies (Removal of Difficulties) 2nd Order, 2017, whereby it has amended, Sub-Section (1) of Section 247 of the Companies Act, 2013. The Companies (Registered Valuers and Valuation) Rules, 2017 as recently notified, there will be number of organizations dealing with various assets, such as land and building, machinery and equipment having separate set of valuers for valuation; And unless these different organisations are recognised, it would be difficult to ensure the required level of regulation for the valuers by registering them directly with the central Government. Therefore, in Section 247(1), for the words, "a person having such qualifications and experience and registered as a valuer in such a manner, on such terms and conditions as may be prescribed", the words "a person having such qualifications and experience, registered as a valuer and being a member of an organisation recognised in such a manner, on such terms and conditions as may be prescribed" shall be substituted.

CBEC – GST

CBEC has issued a press release to Waive off late fee on filing of GSTR-3B for August and September, 2017. In view of the difficulties being faced during the return filing process and in order to further facilitate taxpayers, the competent authority has decided to waive the late fee on filing of GSTR- 3B for the months of August and September, 2017. The necessary software changes are being carried out in the IT system. Electronic cash ledger of the taxpayers who have already paid the late fee on filing of GSTR-3B either for the month of August or September, 2017 or those who pay such fee before the necessary changes are carried out in the IT system will be credited with the amount of late fee so paid by them. The enabling notifications are being issued shortly.

News from NIRC of ICSI

NIRC of ICSI will be organising a Seminar on the theme "Commercial Contracts : Negotiation, Drafting and Litigations" on Saturday, the 28th October, 2017 from 10.00 AM onwards at Hotel Piccadily, Janakpuri District Centre Complex, Near Janak Puri West Metro Station, New Delhi-110058. Fees : Rs.1,600/- per delegate inclusive of GST (Rs.1000/- for students) ; FREE for Corporate Members of NIRC. PCH – 4.