MCA brings more clarity on guidelines for reserving the name of the Company

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The MCA has amended the Companies (Incorporation) Rules, 2014. In the revised Rule 8 for reservation of name of a company, the Ministry has elaborated the provision by inserting various illustrations. The Rule has been divided in to 2 parts – Rule 8A and Rule 8B. Rule 8A deals with the undesirable names and Rule 8B limits use of words such as Board, commission, National, Republic etc. only after obtaining previous approval of Government.

MCA has created a dedicated unit Central Registration Centre (CRC) to expedite the incorporation related activities including Name approval. Yet the stakeholders were facing difficulty in getting the name approved due to lack clarity in the Rules for selection of desired name. This amendment may bring relief to the stakeholders while choosing the name of a company. Revised Rules with detailed illustration will serve as ready-made guidance for both practicing professionals and CRC thereby further easing the incorporation process.

The MCA has amended the Companies (Incorporation) Rules, 2014. In the revised Rule 8 for reservation of name of a company, the Ministry has elaborated the provision by inserting various illustrations. The Rule has been divided in to 2 parts – Rule 8A and Rule 8B.

Rule 8A deals with the undesirable names and Rule 8B limits use of words such as Board, commission, National, Republic etc. only after obtaining previous approval of Central Government.

While considering the application related to name approval the following illustrations must be considered otherwise the names shall be considered as undesirable and will not be approved. Some of the illustrations have been discussed hereunder:

1. Name should not be identical to singular or plural form of existing company:

User of plural or singular form of the words will be considered as undesirable and such name wouldn’t be approved by authority on receipt of application for reservation of name of company. This can be better understood with the help of illustration as provided by MCA:

– For e.g. Green Technology Limited shall be considered same as Greens Technology Limited and Greens Technologies Limited.

2. Change in Tense would be considered as Similar Name:

The department will reject the application for reservation of name of the company if someone use different tense in name of the company such as:

– Ascend Solution ltd. is same as Ascended Solutions Ltd and Ascending Solutions Ltd.

3. Different use of phonetic spellings is treated as identical name:

Chemtech Ltd is same as Chemtec Ltd, Chemtek Ltd, Cemtek ltd, Kemtech Ltd and Kemteck Ltd.

4. Change in order of words of name and use of article before proposed name:

The application for reservation of name will not be considered if an applicant just changes the order of words or use of article before any name of the existing company for e.g.:

1. Ravi Builders and Contractors Ltd is same as Ravi Contractors and Builders Ltd

2. Congenial Tours Ltd is same as A Congenial Tours Ltd. and The Congenial Tours Ltd.

5. Variation in spelling of two name:

Name including slightly variation in spelling of existing company name would be considered as resembling name and department will reject the application for reserving a name of the company. For example,

– Color Technologies Ltd is similar as Colour Technologies Ltd.

6. Addition, deletion or modification of exiting name:

Addition, deletion or modification in any existing name of the company is not allowed and the concerned department will spare no time to reject the proposed name of the company. To instance,

1. Salvage Technologies Ltd is an existing name and it is same as Salvage Technologies Delhi Ltd. and Salvage Delhi Technologies Ltd.

2. Thunder Services Ltd is same as Thunder11 Services Ltd. and OneThunder Services Ltd.

7. Change in meaning either in Hindi or English:

Complete translation or transliteration or nay part of an existing name either in Hindi or English. For Example:

– National Electricity Corporation Ltd is same as Rashtriya Vidyut Nigam Ltd

8. Use of host name such as ‘www’ or a domain extension such as ‘net’, ‘org’, ‘dot’ or ‘com’ in one or both name: For Example

(i) Ultra Solutions Ltd. is same as Ultrasolutions.com Ltd.

(ii) Supreme Ultra Solutions Ltd. is not the same as Ultrasolutions.com Ltd.

9. Word or expression which can be used only after obtaining previous approval of Central Government are given below:

(a) Board;

(b) Commission;

(c) Authority;

(d) Undertaking;

(e) National;

(f) Union;

(g) Central;

(h) Federal;

(i) Republic;

(j) President;

(k) Rashtrapati;

(l) Small Scale Industries;

(m) Khadi and Village Industries Corporation;

(n) Financial Corporation and the like;

(o) Municipal;

(p) Panchayat;

(q) Development Authority;

(r) Prime Minister or Chief Minister;

(s) Minister;

(t) Nation;

(u) Forest corporation;

(v) Development Scheme;

(w) Statute or Statutory;

(x) Court or Judiciary;

(y) Governor;

(z) the use of word Scheme with the name of Government (s), State, India, Bharat or any Government authority or in any manner resembling with the schemes launched by Central, State or local Governments and authorities; and

(za) Bureau

 

DIR-3-DIN eKYC annual filing deadline extended to 30th June of next financial year

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MCA extends due date of DIR -3 / E-KYC of Directors

 

 

MINISTRY OF CORPORATE AFFAIRS

NOTIFICATION

New Delhi, 30th April, 2019

 

MCA has notified that the Deadline for Annual Filing of Form DIR 3 ((KYC of Directors) has been Extended from 30 April to 30 June, of the immediately next financial year, i.e. the due date for filing of DIR 3 (KYC of Directors) for Financial Year 2018-19 has been extended from 30 April 2019 to 30 June 2019.

G.S.R.-(E).- In exercise of the powers conferred by the second proviso to sub-section (1), sub-section (4), clause (f) of sub-section (6) of section 149, sub-sections (3) and (a) of section 150, section 151, sub-section (5) of section 152, section 153, section 154, section 157, section 160, sub-section (1) of section 158 and section 170 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 (Appointment and Qualification of Directors) Rules, 2014, namely: –

1. (1) These rules may be called the Companies (Appointment and Qualification of Directors) Amendment Rules, 2019.

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

2. In the Companies (Appointment and Qualification of Directors) Rules, 2014, in rule 12A, for the words and figures “on or before 30th, April of immediate next financial year”, the words and figures “on or before 30th June of immediate next financial year” shall be substituted.

[F. N o. 1/22/2013-CL-V]

(K.V.R. Murty)
Joint Secretary to the Government of India

Note: – The principal notification was published in the Gazette of India, Extraordinary, Part II, section 3, sub-section (i) vide number G.S.R. 259(E) dated the 31st March, 2014 and subsequently amended vide the following notifications:-

Read the MCA – Notification here

MCA Extends Due date of filing form INC 22A (ACTIVE) till 15th June 2019

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A non-compliant company would not be able to amend its capital structure or carry out any merger or amalgamation.

The Government of India, through the Ministry of Corporate Affairs, has made it mandatory for to file ACTIVE eForm or INC-22A.  The due date for filing INC-22A was 25th April 2019.

There have been representations made to the MCA for Form INC-22A due date extension.

News coming that government has extended the deadline of filing form INC 22A (ACTIVE) to June 15, gives companies more time to comply, with a provision aimed at spotting shell companies.

The disclosure requirement, which came into effect from February, makes it mandatory for registered companies to upload pictures of their business premises and at least one director.

The last date for filing FORM INC 22A (ACTIVE),which was Thursday, April 25 is now extended till 15th June 2019.

Ministry of Corporate Affairs have received many representations from industry associations for Extension of the Due date with many companies yet to comply thereafter Ministry of Corporate Affairs decided to Extend the Due date of form INC 22A.

Startups have, in particular, pointed out that many of them operate out of homes or shared premises or office suites.

The government had launched a crackdown on shell companies as part of the anti-black money drive and these norms were follow-up measures to establish existence of registered entities. Names of thousands of shell companies were struck off as part of this drive.

This new electronic form INC 22A, which is also known as e-Form ACTIVE (Active Company Tagging Identities and Verification), was notified as part of the Companies (Incorporation) Amendment Rules, 2019 in February.

MCA VPD Service

The Ministry of Corporate Affairs on 24/04/2019 has announced the following on their homepage “VPD service will be unavailable from 8:00AM to 08:00PM IST on 24th – 25th Apr 2019 for system maintenance. Stakeholders are requested to plan accordingly.”

VPD Service means View Public Documents Service which can be accessed from http://www.mca.gov.in/mcafoportal/viewPublicDocumentsFilter.do

With VPD Service being taken down on the same last date for filing of INC22A ACTIVE eForm, there are more chances for the due date being extended for INC-22A filing.

Representation from ICSI

The Institute of Companies Secretaries of India has made a representation to the Ministry of Corporate Affairs on 22nd April 2019. In the letter, the Institute explains the difficulty faced by certain stakeholders while filing Form INC22A-ACTIVE as below:

  • The Auditors’ details not getting prefilled in certain cases.
  • Compliance by dormant companies.
  • Companies in management disputes.
  • Issues faced by corporates having a different financial year.

As the difficulties are still unresolved as on 22nd April 2019, the ICSI has requested the MCA to extend the due date for filing of Form INC-22A.

A non-compliant company would not be able to amend its Capital Structure, Change in Directorship or carry out any Merger or Amalgamation, as per the various provisions listed below:

  • Changes in authorized capital (Form SH-07)
  • Changes in paid-up capital (Form PAS-03)
  • Changes in Director (Form DIR-12) (cessation would be allowed).
  • Changes in Registered Office (Form INC-22)
  • Amalgamation or Merger (INC-28)

If the form is filed within the due date, there is no fee, while late filing will attract a fine of Rs 10,000.

Read the Official Notification from MCA

Filing of e-Form DIR 3 for KYC of Directors mandatory, on Annual Basis – MCA

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MCA latest message on e-form DIR-3 KYC filings on Annual Basis made mandatory

MCA’s Clarification on filing of e Form DIR – 3 KYC, annually, by all Directors holding DIN

The Ministry of Corporate Affairs (MCA) has on 13th April, 2019, given the clarification with regards to filling of e-Form DIR – 3 KYC by all Directors holding DIN that all DIN holders are required to file the DIR-3 KYC form every year, so that they are aware of and confirm the data & information as available in the MCA21 system.

With the objective of making the form more user friendly, the form is presently being modified to enable pre-filling of data & information so that annual filings can be done by DIN holders in a simple and user friendly manner. The revised form, which will be shortly deployed, can be filed without any fee within a period of 30 days from the date of deployment.

Hence, now all DIN holders have to complete their KYC, annually by filling e-form DIR 3 KYC every year before 30th April of immediate next financial year.

However, as the form is presently being modified to enable pre-filling of data & information, the time limit for filling e-form DIR 3 KYC for FY 2018-19 has been extended and it can be filed without any fee within a period of 30 days from the date of deployment of the Form on the MCA website. Once the form is deployed on the MCA website, it will be notified to all stakeholders.

As per rule 12A of the Companies (Appointment and Qualification of Directors) Rules 2014,

“every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall, submit e-form DIR-3-KYC to the Central Government on or before 30th April of immediate next financial year. Provided that every individual who has already been allotted a Director Identification Number (DIN) as at 31st March, 2018, shall submit e-form DIR-3 KYC on or before 5th October,2018.”

However, the DIR-3 KYC e-form presently available on the portal does not cater for the following:

(i) Filing on annual basis, and

(ii) Filing in respect of DINs allotted post 31 March 2018.

It presently caters only to those individuals who were allotted DINs as on 31st March 2018 and whose DINs have been marked as ‘Deactivated due to non-filing of DIR-3 KYC’.

Stakeholders may please note that DIN holders are required to file the DIR-3 KYC form every year, so that they are aware of and confirm the data & information as available in the MCA21 system.

With the objective of making the form more user friendly, the form is presently being modified to enable pre-filling of data & information so that annual filings can be done by DIN holders in a simple and user friendly manner.

The revised form, which will be shortly deployed, can be filed without any fee within a period of 30 days from the date of deployment.

Accordingly, DIN holders who had filed DIR-3 KYC form earlier and complied with the said provisions may kindly await the deployment of the modified form for fulfilling their compliance requirements.

MCA Circular on filing of DIR3 KYC on Annual Basis

All Active Companies to submit “Active Company Tagging Identities and Verification” Form_INC-22A before 26th Apr 2019

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Inactive Companies, Vanishing Companies, Shell Companies, Multiple Companies registered under the same address and Companies without proper Registered Offices operating have all been a problem with the Indian regulatory framework which have significantly hampered the ability of the MCA to strike out against errant Companies

In one master stroke, the MCA has introduced a new rule where Companies have to tag and identify themselves as being ACTIVE. It is interesting and reassuring to note that the parameters prescribed in the form for such identification are super comprehensive to establish existence as well as the level of key compliances. With such kind of Big Data with the MCA, errant promoters need to get ready for some difficult situations.

The Ministry of Corporate Affairs has amended Section 469 of the Companies Act, 2013.

The Amended Rules are :

These rules may be called the Companies (Incorporation) Amendment Rules, 2019.
These rules will come into force with effect from 25th February 2019.
The form needed to file for Companies (Incorporation) Amendment Rules, 2019 is e- Form ACTIVE (FORM NO. INC.22A).

The FAQ’s below will help you to appreciate this new rule better

1. What is the new rule introduced in the context of the Companies Act 2013 ?

A rule pertaining to Active Company Tagging Identities and Verification has been incorporated as Rule 25A in the Companies (lncorporation) Rules, 2014 and is available on http://www.mca.gov.in/Ministry/pdf/CompaniesIncorporationAmendmentRules_21022019.pdf

2. What does this Rule mean ?

This rule means that all Companies have to fill out a Form called “e-form ACTIVE”

3. What is the expansion of the term ACTIVE ?

Active Company Tagging Identities and Verification

4. What is the effective date of the said rules ?

They shall come into force with effect from 25th February, 2019

5. Which Companies are expected to file the above form ?

All Companies incorporated on or before 31 Dec 2017 are required to file this form

6. By when is this form needed to be filed ?

This form is required to be filed on or before 25.04.2019

7. What are the main contents of this Form ?

The main contents are the details of Registered Office, Directors, Statutory Auditors, Cost Auditors and Key Managerial Personnel

8. Which are the companies which will be unable to file the above mentioned form?

Any company which has not filed its due financial statements under section 137 or due annual returns under section 92 or both with the Registrar shall be restricted from filing e-Form-ACTIVE, unless such company is under management dispute and the Registrar has recorded the same on the register

9. Which are the companies which need not have to file the above mentioned form?

Companies which have been struck off or are under process of striking off or under liquidation or amalgamated or dissolved, as recorded in the register, shall not be required to file e Form ACTIVE

10. What are the consequences of non-filing the said forms?

In case a company file the said form, the Company shall be marked as “ACTlVE-non-compliant” on or after 26th April, 2019 and shall be liable for action under sub-section (9) of section 12 of the Act

Sec 12(9) :

If the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may cause a physical verification of the registered office of the company in such manner as may be prescribed and if any default is found to be made in complying with the requirements of sub-section (1), he may without prejudice to the provisions of sub-section (8), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII.

11. In case a Company fails to meet the target date, then what are the consequences if there is going to be a delayed filing?

Consequence 1 : The following event based forms cannot be filed

(i) SH-07 (Change in Authorized Capital);

(ii) PAS-03 (Change in Paid-up Capital);

(iii) DIR- 12 (Changes in Director except cessation);

(iv) INC-22 (Change in Registered Office;

(v) INC-28 (Amalgamation, de-merger)

12. In which case a company will be unable to file form INC-22A?

In the following situations, the company will be unable to file the form INC-22A:

i. DIN of any director is de-activated due to non-filing of DIR-3KYC.

ii. Any Director is disqualified under Section 167.

iii. Annual filing for the financial year 2017-18 is not done.

iv. Company has not appointed CS (Company Secretary) if paid up capital is 5 crores or more

v. KMP is not appointed as per the requirements of the Companies Act, 2013

vi. The Statutory Auditor is not appointed as per Section 139 of the Companies Act, 2013

To file the form INC-22A. companies are required to remove the above-mentioned non-compliances.

Consequence 2 : Penalty for delayed filing

Where a company files “e-Form ACTIVE”, on or after 26th April’ 2019, the company shall be marked as “ACTIVE Compliant”, only on payment of fee of ten thousand rupees.

The Companies (Amendment) Ordinance, 2019 – highlights

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The Companies (Amendment) Ordinance, 2019 was promulgated on January 12, 2019.

It repeals and replaces the Companies (Amendment) Ordinance, 2018 promulgated on November 2, 2018.

The 2019 Ordinance amends several provisions in the Companies Act, 2013 relating to penalties, among others.

 

Key Highlights –

  • Commencement of business – Declaration by the Director: The Ordinance states that a company may not commence business, unless it (i) files a declaration within 180 days of incorporation, confirming that every subscriber to the Memorandum of the company has paid the value of shares agreed to be taken by him, and (ii) files a verification of its registered office address with the Registrar of Companies within 30 days of incorporation.  If a company fails to comply with these provisions and is found not to be carrying out any business, the name of the Company may be removed from the Register of Companies.

Any default in complying with the said will invite a fine of INR 50,000 to be paid by the company.

 

  • Removal of a Company’s name from the register – If the Registrar has enough reason to believe that a company is not carrying on business then he, after a physical verification of the registered office, can remove the company’s name from the register of companies. The ROC can strike off a company if the address of Registered Office is bogus or an incomplete/ improper address.

 

  • Issue of shares at a discount: The Act prohibits a company from issuing shares at a discount, except in certain cases.  On failure to comply, the company is liable to pay a fine between one lakh rupees and five lakh rupees every officer in default may be punished with imprisonment up to six months or fine between one lakh rupees and five lakh rupees.  The Ordinance changes this to remove imprisonment for officers as a punishment.

 

  • Further, the company and every officer in default will be liable to pay a penalty equal to the amount raised by the issue of shares at a discount or five lakh rupees, whichever is lower. The company will also be liable to refund the money received with interest at 12% per annum from the date of issue of the shares.

 

  • Alteration of Articles – After this amendment, any conversion of a Public Company to a Private Company will not be valid unless approved by an order of the Central Government. Previously, the power to issue such an order was with the Tribunal.

 

  • Registration of charges: The Act requires companies to register charges (such as mortgages) on their property within 30 days of creation of charge.  The Registrar may permit the registration within 300 days of creation.
  • The Ordinance changes this to permit registration of charges: (i) within 300 days if the charge is created before the Ordinance, or (ii) within 60 days if the charge is created after the Ordinance. If the charge under the first category is not registered within 300 days, it must be completed within six months from the date of the Ordinance.  If the charge under the second category is not registered within 60 days, the Registrar may grant another 60 days for registration.

 

  • Annual Return:  Annual Return should be filed within 60 days from the date of the AGM, failure to this, penalty of Rs. 100 per day to Company + directors maximum Rs. 5 Lakh apart from ROC delay charges is applicable.

 

  • Penalty of Rs. 5 lakhs to Company secretary certifying wrong Annual Return.

 

  • Annual Financial Statement: Filing of Balance sheet with ROC within time limit- failure is costly for Company + Directors both. Penalty of Rs.100 per day + Rs. 1 lakh to Company + Director each.

 

  • Resignation of Auditor: The Return must be filed by the resigning Auditor within 30 days, failure to which the resigning Auditor is liable for penalty of Rs. 50,000 plus Rs. 500 per day.

 

  • Disqualification of Directors: A director can not become director in more than 20 companies. If he continues, he becomes disqualified now.

 

  • Company Secretary: Appointment of Company Secretary on the payroll (Private Companies having paid-up capital Rs. 5 crores & above) is mandatory. Default is now very costly- penalty increased substantially.

 

  • ROC may strike off a company if subscribers have not paid initial share capital after incorporation of a Company within 6 months.

 

  • Financial Year: The Indian subsidiary or associate or holding company of the foreign company may be allowed to follow any period as its financial period on an application made by such company if it is required for consolidation of its financials with the foreign company. Also the such period may or may not be one year.

 

  • Change in approving authority: Under the Act, change in period of financial year for a company associated with a foreign company, has to be approved by the National Company Law Tribunal.  Similarly, any alteration in the incorporation document of a public company which has the effect of converting it to a private company, has to be approved by the Tribunal.  Under the Ordinance, these powers have been transferred to central government.

 

  • Declaration of beneficial ownership: If a person holds beneficial interest of at least 25% shares in a company or exercises significant influence or control over the company, he is required to make a declaration of his interest. Under the Act, failure to declare this interest is punishable with a fine between one lakh rupees and ten lakh rupees, along with a continuing fine for every day of default.  The Ordinance provides that such person may either be fined, or imprisoned for up to one year, or both.

 

  • Resolutions and agreements to be filed – If the company fails to file a resolution and agreement before the specified time, the company shall be liable to pay INR 1,00,000 as penalty and in case of a continuing failure it will be extended further by INR 500 per day subject to a maximum penalty of 25 lakhs. For any officer who is liable, the penalty is of INR 50,000, and in case of a continuing failure it will be extended further by INR 500 per day subject to a maximum penalty of 5 lakhs.

 

  • Penalties in different sections – In section 191, the penalty is increased from a minimum of INR 25,000 to a minimum of one lakh rupees. In section 441, The maximum limit is increased from 5 lakh rupees to 25 lakh rupees.

 

Read the Ordinance Text  Companies-Amendment-Ordinance-2019

MCA extends Annual Return due date upto 31 Dec. 2018

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MCA extends due date for Filings of Financial Statements & Annual Return up to 31.12.2018

Keeping in view the requests received from various stakeholders seeking extension of time for filing of financial statements for the financial year ended 31.03.2018 on account of various factors, it has been decided to relax the additional fees payable by companies on e-forms AOC-4, AOC (CFS) AOC-4 XBRL and e- Form MGT-7 upto 31.12.2018 wherever additional fee is applicable.

 

General Circular No. 10/2018

F.No. 01/34/2013 CL-V
Government of India
Ministry of Corporate Affairs

5th Floor, ‘A’ Wing, Shastri Bhawan,
Dr. Rajendra Prasad Road, New Delhi-1

Dated: 29.10.2018

To
 All Regional Directors,
 All Registrar of Companies, All Stakeholders.

Subject: Relaxation of additional fees and extension of last date of in filing of forms MGT-7 (Annual Return) and AOC-4 (Financial Statements) under the Companies Act, 2013– – reg.

Keeping in view the requests received from various stakeholders seeking extension of time for filing of financial statements for the financial year ended 31.03.2018 on account of various factors , it has been decided to relax the additional fees payable by companies on e-forms AOC-4, AOC (CFS) A0C-4 XBRL and e- Form MGT-7 upto 31.12.2018, wherever additional fee is applicable.

2. This issues with the approval of the competent authority.

Yours faithfully,

(KMS Narayanan)

Assistant Director (policy)

011-23387263

For the original circular, please read:  MCA General Circular No. 10/2018 dt. 29 Oct. 2018