To support financing for start-ups, the Reserve Bank of India (RBI) on Thursday issued rules permitting these to raise external commercial borrowings (ECBs).
In a statement, RBI said the borrowing per start-up was capped at $3 million per financial year. It could be either in rupees or a convertible foreign currency or a combination of both.
The money could be used for any expenditure of the borrower’s business.
The statement also said the funds so raised would have a three-year maturity and could be raised through loans as well as convertible and non-convertible debentures.
RBI said, “Startups can tap lenders and investors only from countries that are members of the Financial Action Task Force.”
If the funds were in rupees, the non-resident lender would provide it through swaps or outright sale through domestic banks.
RBI also advised start-ups raising money through ECB to have a risk-management policy as these would be exposed to currency risks because of exchange-rate movements.
DIPP notifies 100% FDI in more financial services The commerce and industry ministry notified 100 percent foreign direct investment in ‘other financial services’ carried out by NBFCs.
The move will help attract foreign capital into the country. “The government has liberalised its FDI policy in Other Financial Services and non-banking finance companies (NBFCs), the DIPP said in a press note.
Other financial services will include activities which are regulated by any financial sector regulator – RBI, SEBI, IRDA, Pension Fund Regulatory and Development Authority, National Housing Bank “or any other financial sector regulator as may be notified by the government in this regard,” it said.
Such foreign investment would be subject to conditionalities, including minimum capitalisation norms, as specified by the concerned regulator or government agency, it said.
The press note, however, did not specify the sectors which have been opened up for automatic route. The present regulations on NBFCs stipulate that FDI would be allowed on automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalisation norms mentioned therein.
In the Budget 2016-17 Speech, Finance Minister Arun Jaitley had announced about this liberalisation.
Currently, 100 percent FDI through automatic route is permitted in 18 NBFC activities including merchant banking, under writing, portfolio management services, financial consultancy and stock broking. In 2015-16, foreign direct investment in India grew by 29 percent year-on-year to USD 40 billion.
In view of the In view of the requests received from various stakeholders, it has been decided to extended the last date for filing the Annual Returns, under the Companies Act, 2013.
Accordingly, due date for filing of e-Forms AOC 4, AOC – 4 (CFS), AOC -4 (XBRL) & MGT 7 have been extended till 29 th November, 2016 by MCA vide Circular dated 27 October, 2016.
In this regard, it may be noted that ICSI had, earlier, requested MCA for extension in dates of Annual filing vide its letter dated October 13, 2016, as below.
Shri Tapan Ray
Secretary to the Government of India
Ministry of Corporate Affairs
A-Wing, Shastri Bhawan
New Delhi 110001
Respected Sir,
Sub.:Extension for last date for Annual filing of form MGT-7 (Annual Return), Aoc-4 (financial statements) and AOC-4 CFS under Companies Act, 2013
We wish to draw your kind attention toward the provisions of Companies Act, 2013 which require filing of financial statements and Annual Return by every company with the Registrar within thirty days and sixty days respectively of the date of Annual General Meeting.
In this regard, we wish to submit that we are receiving requests from professionals for extension of last date for filing of annual forms due to the following reason:
Last date for Income Tax extended to October 17, 2016
Recently issued XBRL taxonomy is yet to get fully settled in the tools and with the users and also in the filing connected thereto.
XBRL taxonomy is still not available in respect of CSR
Festival season: Diwali is on 29th and 30th October, 2016 which is the last day for filing of financial statements.
Considering the above, we, hereby, submit that the last day for filing of these annual forms i.e. MGT-7, AOC-4, and AOC CFS be extended by one month.
Thanking you,
Your faithfully
(CS Mamta Binani) President
CC: Mr. Amardeep Singh Bhatia
Joint Secretary, MCA
A man is silhouetted against the logo of the World Bank at the main venue for the International Monetary Fund (IMF) and World Bank annual meeting in Tokyo October 10, 2012. REUTERS/Kim Kyung-Hoon
As the World Bank looks set to release its annual ranking of countries in the ease of doing business later this week, India expects to improve its position from last year’s 130 out of 189 economies. The optimism stems from the fact that, for a second straight year, the country expects its ranking in “getting electricity’’ to improve substantially on the back of some “remarkable work” done by states, a senior government official told FE.
Last year, India was placed at 70 of the 189 countries in “getting electricity”, compared with 99 in the previous year. This had helped the country improve its ranking in the overall ease of doing business by 4 notches.
The government also believes that its “targeted intervention” to improve performance in difficult parameters — including dealing with construction permits and enforcing contracts — where the country has been faring badly for years now will start to pay, the official said.
So while it will take some time to correct the course in certain legacy issues, especially in enforcing contracts, the DIPP believes the much-improved performance of states will be reflected in the country’s ranking for the years to come.
For instance, while only two states (Gujarat and Andhra Pradesh) had scored over 70% in a 98-point action plan for the ease of doing business — jointly decided by them and the Centre — last year, as many as 16 states have scored over 70% so far this year, that too on a 340-point action plan, showed the latest data by the Department of Industrial Policy and Promotion (DIPP). Importantly, 10 states have scored over 90% so far this year (Andhra Pradesh and Telangana top the charts in 2016, each scoring over 99%).
The latest ranking of the World Bank takes into account reforms done up to the end of May, except in case of taxation.
The performance in access to electricity has been impressive, the official said. For instance, in Mumbai, the time required for getting a new electricity connection has been reduced to an average of around 15 days from 67 days earlier. The number of procedures involved has been cut down to just 3 from 7. Similarly, in Delhi, people can get connections in just 15 days now from as many as 140 days a few years earlier. The number of document required has been reduced to just 2 from 7 earlier. Access to electricity is crucial as it also has bearing on performance in some other aspects of the ease of doing business.
In “dealing with construction permits”, where the country was ranked at 183 of the 189 countries, the performance has improved. For instance, in Delhi and Mumbai, common online application form has been adopted for seeking construction permits. People don’t have to get no-objection certificates from anyone, as municipal corporations will get these certificates for them online. Earlier, some 18 no-objection certificates from different departments were required to be obtained by individuals for getting construction permits.
Also, in a metro like Delhi which has traditionally fared badly in handling construction permits, the documents required for this purpose has now been cut to just 14 from 39 earlier. Nine departments involved in the process of the sanction of buildings have been integrated online. The drawing of the construction plan is “auto-checked” by a software and no site inspection is necessary. Reforms on this parameter have been even quicker in other parts of the country.
On enforcing contracts in which India was placed at 178, the government has decided to set up commercial courts in a big way after the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill was signed into a law on January 1.
Although the exact data on the formation of such courts are yet to be compiled precisely, roughly a dozen such courts are learnt to have been set up, especially in Delhi, Mumbai, Gujarat and Himachal Pradesh, to settle high-value business disputes.
All pending suits and applications on commercial disputes involving a claim of Rs 1 crore or more in high courts and civil courts will be transferred to the relevant commercial division or courts. The decision to set up such courts is in sync with the Narendra Modi government’s aim of making India a global arbitration hub. The government plans to introduce e-summon system and efforts are on to expedite the process of getting a verdict, said the official.
To boost cross-border trade, the number of documents required for trade has been restricted to just 2-3 from as many as a dozen in certain cases earlier. Importantly, the finance ministry is learnt to have sanctioned Rs 2,500 crore for the upgrade of the IT and some other systems of the Customs departments.
As many as 2.5 crore salaried taxpayers will now receive SMS alerts from the Income Tax department regarding their quarterly TDS deductions.
Finance Minister Arun Jaitley on Monday launched the SMS alert service for Tax Deducted at Source (TDS) for salaried class and the CBDT will soon offer this facility on a monthly basis.
Briefing reporters about the facility, Jaitley said salaried class cannot afford to pay tax twice or indulge in litigations and hence they should be kept updated about their TDS deductions.
“Hence taxpayers will benefit if they receive information through use of technology. So they can match the office salary slip and the SMS and at the end of the fiscal he will be clear about any possible tax dues,” Jaitley said.
He asked the CBDT to work towards making the grievance redressal system for TDS mismatch online so that there is no interface between the taxpayer and the tax department.
Jaitley said e-Nivaran is working well for taxpayers and the CBDT is taking several tax payer friendly initiative.
The CBDT will soon extend this SMS facility to another 4.4 crore non-salaried taxpayers.
“The frequency of SMS alerts will be increased, once the process for filing TDS returns is streamlined to receive such information on a real time basis,” the CBDT said.
CBDT chairperson Rani Singh Nair said the tax department is encouraging people to register their mobile number on the e-filing website.
She said a taxpayer will initially receive a welcome message from the CBDT informing him about the facility and after that each assessee would be sent messages informing them about their respective TDS deductions.
The new step is an effort by the I-T department to directly communicate deposit of tax deducted through SMS alerts to salaried taxpayers. In case of a mismatch, they can contact their deductor for necessary correction.
Besides, SMS alerts will also be sent to deductors who have either failed to deposit taxes deducted to e-file their TDS returns by the due date.
The annual mandatory compliances which a private limited company has to follow are listed below:
Appointment of Auditor
The Statutory Auditor of the company shall be appointed for the 5 (Five) years and e-Form ADT-1 shall be filed for 5-year appointment. After that, in every year AGM, Shareholders shall ratify the Auditor, though there is no need to file e-Form ADT-1. The first Auditor of a company shall be appointed within one month from the date of incorporation of the Company.
Statutory Audit of Accounts
Every Company shall prepare its Accounts and get the same audited by a Chartered Accountant at the end of the Financial Year compulsorily. The Audit Report and the Audited Financial Statements shall be attached for the purpose of filing it with the Registrar.
Filing of Annual Return (e-Form MGT-7)
Every Private Limited Company is required to file its Annual Return within 60 days of holding of Annual General Meeting. Annual Return will be for the period 1st April to 31st March. There shall be attached the list of shareholders, as annexure to the e-Form MGT-7.
Annual Return shall be digitally signed by a Director and the Company Secretary; or where there is no Company Secretary by a Company Secretary in Practice.
If paid up capital of the company is more than Rs. 10 crore or turnover is more than Rs. 50 crore, a copy of e-Form MGT-8 (Certificate by Practicing Professional) is required to be annexed in e-Form MGT-7.
Filing of Financial Statements (e-Form AOC-4)
Every Private Limited Company is required to file its Balance Sheet along with statement of Profit and Loss Account and Directors’ Report in this e-Form AOC-4, within 30 days of holding of Annual General Meeting.
Holding Annual General Meeting (AGM)
It is mandatory for every Private Limited Company to hold an Annual General Meeting of the shareholders in every Calendar Year. Companies are required to hold their AGM within a period of six months, from the date of closing of the Financial Year.
Holding of Board Meeting
Every Company shall hold a minimum number of FOUR meetings of its Board of Directors every year in such a manner that maximum gap between two meetings should not be more than 120 (One hundred twenty) days. Company should hold at least 1 (one) Board Meeting every quarter of calendar year.
Preparation of Directors’ Report
Directors’ Report shall be prepared with a mention of all the information required under Section 134 of the Companies Act, 2013. Board’s report and any annexures thereto shall be signed by the ‘Chairperson’ authorized by the board or at least by two directors.
The above are the minimum annual compliances for a Private Limited Company in India – essentially, having minimum of 4 board meeting in a year, having an annual general meeting and having the audited accounts and filing e-Forms MGT-7, AOC-4 and ADT-1 with Ministry of Corporate Affairs.
Non-Compliance
If a Company fails to comply with the rules and regulations of the Companies Act, then the Company and every officer who is in default shall be punishable with fine for the period for which default continues.
If there is delay in any filing, then additional fees is required to be paid, which keeps on increasing as the time period of non-compliance increases.
Other event-based filing with e-Form MGT-14
Besides Annual Filings, there are various other compliances to be made as and when any event takes place in the Company. The instances of such events are:
Change in Authorised or Paid up Capital of the Company. – e-Form SH-7
Allotment of new shares or transfer of shares – e-Form PAS-3
Amendment of Objects Clause of Memorandum of Association
Change of situation of the Registered Office – e-Form INC 22 / e-Form INC 23
Giving Loans to other Companies.
Giving Loans to Directors
Appointment of Managing or whole time Director and payment of remuneration.
Availing of Term Loan / Working Capital or enhancement of WC limits from banks or institutions.
Raising of Private Equity or going for IPO.
Appointment or change of the Statutory Auditors of the Company.
Different forms are required to be filed with the Registrar for all such events, with e-filing of resolutions and agreements to the Registrar in e-Form MGT-14, within specified time periods. In case, the same is not done, additional fees or penalty might be levied. Hence, it is necessary that such compliances are met on time.
Foreign venture capital entities can now invest in unlisted Indian companies without Reserve Bank of India approval.
The venture capital firm will, however, have to be registered with market regulator SEBI. The investment can be made in an Indian company in 10 specific sectors or in any start-up.
The central bank on Thursday amended the regulations governing foreign venture capital investors (FVCI) in order to further liberalise and rationalise the investment regime and to give a fillip to foreign investment in start-ups.
According to the RBI, the 10 sectors in which SEBI-registered FVCIs can invest without its nod are: biotechnology, IT, nanotechnology, seed research and development, discovery of new chemical entities in pharmaceutical sector, dairy industry, poultry industry, production of bio-fuels, hotel-cum-convention centres with over 3,000 seating capacity, and infrastructure sector. FVCIs can also invest in equity, equity-linked instruments or debt instruments issued by an Indian ‘start-up’ irrespective of the sector in which it is engaged. The RBI said a start-up will mean an entity (private limited company, registered partnership firm or a limited liability partnership) incorporated or registered in India not prior to five years, with an annual turnover not exceeding Rs. 25 crore in any preceding financial year.
These start-ups should be working towards innovation, development, deployment or commercialisation of new products, processes or services driven by technology or intellectual property and satisfying certain conditions as given in the Foreign Exchange Management Regulations, 2016.
The RBI also said FVCIs can invest in units of a venture capital fund (VCF) or a Category-I alternative investment fund (AIF) or units of a scheme/fund set up by a VCF or by a Category-I AIF.
In a circular issued to banks authorised to deal in foreign exchange, the RBI said: “In order to further liberalise and rationalise the investment regime for FVCIs and to give a fillip to foreign investment in the start-ups, the extant regulatory provisions have been reviewed, in consultation with the Government of India.”
The consideration for all investments by an FVCI can be paid out of inward remittance from abroad through normal banking channels or out of sale/maturity proceeds of or income generated from investment already made. There will be no restriction on transfer of any security/instrument held by the FVCI to any person resident in or outside India.
To support financing for start-ups, the Reserve Bank of India (RBI) on Thursday issued rules permitting these to raise external commercial borrowings (ECBs).
