MCA amends strike-off rules – Mandatory filing of overdue Financial Statements, before striking-off of companies

Strike Off of Companies
A company cannot file a strike-off application unless it has filed overdue financial statements and overdue annual returns.

The Ministry of Corporate Affairs (MCA) has notified an amendment to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

The amendment provides more clarity on the filing requirements of overdue financials before applying for strike-off.

As per the amended norms, a company cannot file a strike-off application unless it has filed overdue financial statements under section 137 and overdue annual returns under section 92, up to the end of the financial year in which the company ceased to carry out its business operations.

Previously, the MCA had removed the requirement for up-to-date financial results and annual returns, vide the amendment introducing the Centre for Processing Accelerated Corporate Exit.

However, this requirement has now been reintroduced. The present amendment shall be effective from 10.05.2023.

Annual Filing (i.e. AOC-4 and MGT-7) is required to be filed before applying for Strike off.

As per the amendment made in rule 4 in May 2019 and amendment made on May 2023 “no application in Form No. STK-2 shall be filed by a company unless it has filed overdue returns in Form No. AOC-4 (Financial Statement) or AOC-4 XBRL, as the case may be, and Form No. MGT-7 (Annual Return), up to the end of the financial year in which the company ceased to carry its business operations”

Therefore, after amendment in Rule 4 w.e.f. 08th May, 2019 read with notification dated 10th May 2023, annual filing of AOC-4 and MGT-7 is mandatory up to the end of the financial year in which the company ceased to carry its business operations. In other words, Company is required to file AOC-4 and MGT-7 up to financial year till company carries its business and operations.

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, the 10th May, 2023

G.S.R. 354(E).—In exercise of the powers conferred by sub-sections (1), (2) and (4) of section 248 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, namely:-

  1. Short title and commencement.- (1) These rules may be called the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2023.

(2) They shall come into force on the date of their publication in the Official Gazette.

  1. In the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (hereafter referred to as the principal rules), in rule 4, in sub-rule (1), the following provisos shall be inserted, namely: –

“Provided that the company shall not file an application unless it has filed overdue financial statements under section 137 and overdue annual returns under section 92, up to the end of the financial year in which the company ceased to carry its business operations:

Provided further that in case a company intends to file the application after the action under subsection (1) of section 248 has been initiated by the Registrar, it shall file all pending financial statements under section 137 and all pending annual returns under section 92, before filing the application:

Provided also that once notice under sub-section (5) of section 248 has been issued by the Registrar for publication pursuant to the action initiated under sub-section (1) of section 248, a company shall not be allowed to file the application under this sub-rule.”.

[F. No. 1/28/2013-CL-V(Part-III)]

MANOJ PANDEY, Jt. Secy.

Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3 of Subsection (i), vide number G.S.R. 1174(E), dated the 26th December, 2016 and amended, vide Notification numbers G.S.R 355(E), dated the 12th April, 2017, G.S.R 350(E), dated the 8th May, 2019, G.S.R 420(E), dated the 29th June, 2020, G.S.R. 436(E), dated the 9th June, 2022 G.S.R. 658(E), dated the 24th August, 2022 and G.S.R. 298(E), dated 17th April, 2023.

MCA relaxes additional fees in filing of Annual Financial Statement under the Companies Act, 20l3

Extension of last date to file e-forms AOC-4, AOC-4 CFS, AOC-4 XBRL, AOC-4 Non-XBRL and MGT-7/7A for the FY 2020-21 to 31.12.2021
On October 29, 2021, the Ministry of Corporate Affairs (MCA) has announced the relaxation in levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4, AOC-4 XBRL AOC-4 Non-XBRL and MGT-7 / MGT-7A for the financial year ended on March 31, 2021 under the Companies Act, 2013.
 
It has been decided no additional fees shall be levied upto 31st December 2021 for the filing of e-forms  in respect of the financial year ended on 31.03.2021.

 

During the said period, only normal fees shall be payable for the filing of the aforementioned e-forms.

Keeping in view of various requests received from stakeholders regarding relaxation on levy of additional fees for annual financial statement filings required to be done for the financial year ended on 31.03.2021, it has been decided that no additional fees shall be levied upto 31.12.2021 for the filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL and MGT-7/MGT-7A in respect of the financial year ended on 31.03.2021. During the said period, only normal fees shall be payable for the filing of the aforementioned e-forms.

Further to the extension of time for holding of Annual General Meeting (AGM) for the financial year ended on 31/03/2021, granted by MCA on 23 rd September, 2021 by two months, this relaxation is now announced by MCA to facilitate the filing of Annual Financial Statements by the stake holders.

Source: General Circular No 17_29102021

SEBI extends deadlines for filing financial results for Indian listed firms due to COVID-19

SEBI made multiple relaxations for Indian firms, including market intermediaries and depositories, in terms of filing of financial details, disclosure on fund utilization and updating client records

The Securities and Exchange Board of India (SEBI), on Thursday, relaxed the deadline for listed Indian firms to announce their financial results in the wake of surging covid-19 cases in the so-called second wave of the pandemic in the country.

SEBI made multiple relaxations for Indian firms, including market intermediaries and depositories, in terms of filing of financial details, disclosure on fund utilization and updating client records.

In a circular, SEBI said listed Indian companies, which are currently required to announce their quarterly financial results within 45 days from the end of the quarter or by 15 May, 2021, are now allowed to file their March quarter results for fiscal 2021 by 30 June.

The deadline for filing annual audited financial results too has been extended by the markets regulator. Currently all companies are required to file their audited financials within 60 days from the end of the financial year, i.e. by 30 May. This deadline has been extended till 30 June, 2021 by SEBI.

“SEBI is in receipt of representations from listed entities, professional bodies, industry associations, market participants etc. requesting extension of timelines for various filings and relaxation from certain compliance obligations under the LODR (listing obligations and disclosure regulations) norms due to ongoing second wave of the CoVID-19 pandemic and restrictions imposed by various state governments,” said SEBI in its circular.

So far, 170-odd listed companies in India have announced their financial results for the March quarter and fiscal year 2021.

SEBI has also extended the deadline for companies to file their annual secretarial compliance report by a month till 30 June, 2021.

Also, the deadline for submitting the statement of deviation or variation in use of funds (along with the financial results) has been extended by a month till 30 June, 2021.

Source:SEBI Circular dated 29 April, 2021

Companies get relaxation for Annual Filings of 2019-20 upto 15/02/2021 without additional fees.

MCA relaxes levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AOC-4 Non-XBRL for the financial year ended on 31.03.2020 under the Companies Act, 2013

Keeping in view of various requests received from stakeholders regarding relaxation on levy of additional fees for annual financial statement filings required to be done for the financial year ended on 31.03.2020, it has been decided that no additional fees shall be levied upto 15.02.2021 for the filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AQC-4 Non-XBRL in respect of the financial year ended on 31.03.2020.

During the said period, only normal fees shall be payable for the filing of the aforementioned e-forms.

Earlier, the Annual General Meeting for adoption of the Audited Financial Statements, Directors Report and Auditors’ Report was extended by 3 months from September 30 to December 30, 2020.

Accordingly, the companies were required file Audited Financial Statements before January 31st, 2021.

This has now been further relaxed for another 15 days up to February 15, 2021, for filing of the eForms with Ministry of Corporate affairs (MCA).

Read the MCA Circular for waiver of Additional Fees

RBI removes Cooling Period for Bank Branch Audit for CAs

The RBI notified Rotation Policy instead of Cooling Period for Bank Branch Audit for CAs.

The Reserve Bank of India (RBI) notified the change in norms on eligibility, empanelment, the appointment of Statutory Branch Auditors in Public Sector Banks from years 2020-21 onwards.


The RBI notified Rotation Policy instead of Cooling Period for Bank Branch Audit for CAs. In other words, the concept of compulsory rest for two years for audit firms located in the specified centres, after completion of four years of continuous branch audit, followed till Financial Year 2019-20 has been done away with.

Instead, the branch auditors across all the centres of the country, on completion of four years of continuous branch audit, will be subjected to the policy of rotation i.e. they may be considered for appointment as SBAs of any other PSB.

However, the audit firms will not be eligible to be re-appointed as SBAs, in the same bank where they completed their audit assignment prior to rest/rotation, at least for one cycle of four years.

The RBI further notified the change on norms for selection of branches of Public Sector Banks (PSBs) for Statutory Audit.

Firstly, statutory branch audit of PSBs should be carried out so as to cover 90% of all funded and 90% of all non-funded credit exposures of a bank.

The selection of branches for statutory audit shall include a representative cross section of rural/semi-urban/urban and metropolitan branches, predominantly including branches which are not subjected to concurrent audit.

CPUs/LPUs/and other centralised hubs, by whatever nomenclature called, would be included for branch audit every year.

The selection of branches shall be finalised by each PSB with the consent of their Statutory Central Auditor/s. Secondly, in respect of those branches, which are subject to concurrent audit by chartered accountants and not selected for branch audit, LFARs and other certifications done by concurrent auditors will be submitted to the Managing Director & CEO of the bank.

The banks in turn will consolidate/compile all such LFARs and other certifications submitted by the Concurrent Auditors and submit to Statutory Central Auditor/s as an internal document of the bank.

The RBI notified the change in the procedure for appointment of Statutory Branch Auditors.

Firstly, the list of eligible auditors/audit firms will be prepared by the Institute of Chartered Accountants of India (ICAI) as per the norms prescribed by RBI.

Secondly, the list will be subjected to scrutiny by RBI for identifying the continuing and rested firms and excluding audit firms who have been denied audit.

Thirdly, RBI will, thereafter, forward the final list of all eligible auditors/audit firms to PSBs for selection of the required number of branch auditors/audit firms.

Banks will be required to clearly advise the selected audit firms that each audit firm can take up audit assignments (branch audit) in one PSB only. The audit firm should give its consent in writing for consideration of appointment in the bank concerned for the particular year and the subsequent continuing years.

Fourthly, the consent given by an audit firm is irrevocable and no request from audit firms for changing the bank, after giving its consent will be entertained.

Fifthly, after the selection of branch auditors, PSBs will be required to recommend the names of both continuing and selected branch auditors to RBI for seeking its prior approval before their actual appointment, as per statutory requirement.

The RBI while elaboration on the change in general guidelines applicable to appointment of Statutory Branch Auditors stated that SBAs will have a maximum tenure of four years in a particular bank.

The appointment of SBAs will be made on an annual basis, subject to their fulfilling the eligibility norms prescribed by RBI from time to time, and also subject to their suitability.

“While allotting branches, banks are required to select auditors/audit firms which are in close proximity to their offices/branches. Banks are also required to have a suitable mix of various categories of auditors / audit firms while selecting the branch auditors keeping in view the size of the branches to be audited.

Banks are advised to allot branches, to the extent possible, to the audit firms taking into consideration their category and audit experience in such a way that specialised and larger branches are audited by bigger/experienced audit firms,” the RBI said.

The audit firms retiring as Statutory Central Auditors from a PSB shall not be eligible to be appointed as SBAs of the same PSB during the prescribed cooling period for SCAs from that particular PSB.

The RBI notified change in the eligibility norms for the empanelment of audit firms to be appointed as Statutory Branch Auditors in PSBs.

Read the original RBI Notification: Norms on eligibility, empanelment and appointment of Statutory Branch Auditors in Public Sector Banks from the year 2020-21 and onwards

Finance Ministry extends due date for filing of Income Tax Returns for FY 2019-2020

1. Due Date for Taxpayers (having Tax Audit) - Extended to 31st Jan, 2021 2. Due Date for Taxpayers (Not having Tax Audit) - Extended to 31st Dec, 2020 3. Due Date For Taxpayers (Under TP) - Extended to 31st Jan, 2021 4. Due Date of Deposit Self Assessment Tax (Only if up to Rs. 1 lakh) - Extended to 31st Jan,2021 5. Due Date of Furnishing Audit Report by CA - Extended to 31st Dec, 2020
1. Due Date for Taxpayers (having Tax Audit) – Extended to 31st Jan, 2021 2. Due Date for Taxpayers (Not having Tax Audit) – Extended to 31st Dec, 2020 3. Due Date For Taxpayers (Under TP) – Extended to 31st Jan, 2021 4. Due Date of Deposit Self Assessment Tax (Only if up to Rs. 1 lakh) – Extended to 31st Jan,2021 5. Due Date of Furnishing Audit Report by CA – Extended to 31st Dec, 2020

The income tax return (ITR) filing deadline for FY 2019-20 has been extended to December 31, 2020, for most individual taxpayers, from the earlier deadline of November 30, 2020. This the second time the tax filing deadline for FY20 has been extended.

As per the government’s press release issued on October 24, 2020, “In order to provide more time to taxpayers for furnishing of their ITR, it has been decided to further extend the due date for furnishing of Income-Tax Returns as under:

The due date for furnishing of income tax returns for these individual taxpayers [for whom the due date (i.e. before the extension by the said notification dated June 24, 2020 as per the Act was 31st July, 2020] has been extended to 31st December, 2020.

The due date for furnishing of Income Tax Returns for the taxpayers (including their partners) who are required to get their accounts audited [for whom the due date (i.e. before the extension by the said notification dated June 24, 2020) as per the Act is 31st October, 2020] has been extended to 31st January, 2021.

The due date for furnishing of Income Tax Returns for the taxpayers who are required to furnish report in respect of international/specified domestic transactions [for whom the due date (i.e. before the extension by the said notification dated June 24, 2020) as per the Act is 30th November, 2020] has been extended to 31st January, 2021.

Consequently, the date for furnishing of various audit reports under the Act including tax audit report and report in respect of international/specified domestic transaction has also been extended to 31st December, 2020, said the government press release issued today.

Further, relief is provided to the small and middle class taxpayers in the matter of payment of self-assessment tax, the due date for payment of self-assessment tax date is hereby again being extended. Accordingly, the due date for payment of self-assessment tax for taxpayers whose self-assessment tax liability is up to Rs. 1 lakh has been extended to 31st January, 2021 for the taxpayers whose accounts are required to be audited and to 31st December, 2020 for the taxpayers whose accounts are not required to be audited.”

Source: Press Release

RBI releases Long Form Audit Report (LFAR)

The overall objective of the LFAR should be to identify and assess the gaps and vulnerable areas in the business operations, risk management, compliance and the efficacy of internal audit and provide an independent opinion on the same to the Board of the bank and provide their observations

The Reserve Bank on Saturday came up with revised long format audit report (LFAR) norms with a view to improving efficacy of internal audit and risk management systems.

 

The LFAR, which applies to statutory central auditors (SCA) and branch auditors of banks, has been updated keeping in view the large scale changes in the size, complexities, business model and risks in the banking operations, the RBI said.

 

RBI/2020-21/33
Ref.No.DOS.CO.PPG./SEC.01/11.01.005/2020-21

September 05, 2020

To:

The Chairman / Managing Director / Chief Executive Officer
All Scheduled Commercial Banks (Excluding RRBs)
All Local Area Banks
All Small Finance Banks and
All Payment Banks

Madam /Dear Sir,

Long Form Audit Report (LFAR) – Review

Please refer to RBI circular No. DBS.CO.PP.BC.11/11.01.005/2001-2002 dated April 17, 2002 on revision of Long Form Audit Report (LFAR).

2. Keeping in view the large scale changes in the size, complexities, business model and risks in the banking operations, a review of the LFAR formats, in consultation with the stakeholders, including the Institute of Chartered Accountants of India (ICAI), was undertaken and it has been decided to make the following changes.

3. The format of LFAR, as mentioned below, have been revised:

  1. Annex I for Statutory Central Auditors (SCA)
  2. Annex II for Branch Auditors
  3. An Appendix as part of Annex II for the specialized branches and
  4. Annex III on Large / Irregular / Critical accounts for branch auditors.

The revised formats are enclosed.

4. The revised LFAR formats are required to be put into operation for the period covering FY 2020-21 and onwards. The mandate and scope of the audit will be as per this format and if the SCA feels the need of any material additions, etc., this may be done by giving specific justification by the SCA and with the prior intimation of the bank’s Audit Committee of Board (ACB).

5. Regarding other operational issues relating to submission of LFAR, we further advise as under:

  1. Timely receipt of LFARs from the auditors should be ensured;
  2. The LFAR on the bank, after due examination, should be placed before the ACB / Local Advisory Board of the bank indicating the action taken/proposed to be taken for rectification of the irregularities, if any, mentioned therein; and
  3. A copy each of the LFAR (i.e. for the bank / all Indian Offices of foreign bank as a whole) and the relative agenda note, together with the Board’s views or directions, should be forwarded to the concerned Senior Supervisory Manager (SSM) in the Department of Supervision, Reserve Bank of India within 60 days of submission of the LFAR by the statutory auditors.

6. The LFAR format and other instructions issued vide RBI circular No. DBS.CO.PP.BC.11/11.01.005/2001-2002 dated April 17, 2002 stand repealed.

7. Please acknowledge receipt.

Yours faithfully,

(Ajay Kumar Choudhary)
Chief General Manager

Encl: Annex I and II and III