New Year GIFT for MNC law and audit firms

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Foreign law and accountancy firms now have a chance to operate in India on their own. On January 3, the ministry of commerce and industry amended a rule allowing such foreign firms to set up offices and advise clients from SEZs. The move will initially benefit Gujarat International Finance Tec-City (GIFT).

Current regulations so far do not permit multinational law firms to operate in the country. Indian law and accountancy firms were also not allowed to operate from any of the SEZs. That rule has now been amended which would benefit financial centres.

The notification, dated January 6 but issued on January 3, by the department of commerce allows foreign law and accountancy firms to be established in SEZs. The earlier version of the rule, prior to the amendment, had excluded legal services and accounting.

“This will be the big enabler for the legal and accounting firms to expand their services in multi-services SEZ with IFSC (International Finance Service Centre) and thereby export their services to various global players,” said Nitin Potdar, partner, J Sagar, a law firm. As of now, only GIFT is a multi-services SEZ with an IFSC in India.

“Until now, no foreign law firm could operate in India and not even Indian firms were allowed to provide their services in any of the SEZs. The new amendment allows not only Indian law or accountancy firms to set up a base in GIFT, but even multinationals can directly advise upon international disputes or arbitration by setting up a base there,” Dipesh Shah, head, IFSC at GIFT, told ET.

While many foreign professional services firms such as Deloitte, PwC, KPMG and EY are present in India, they cannot directly operate as auditors and require an Indian affiliate. This amendment does away with that requirement at least in the case of GIFT.

Many Indian law firms have been opposing the entry of multinational law firms in India for some time. Going ahead, many multinationals could set up base in India but they will only be able to advise on cross-border transactions or disputes. Some are also looking to quickly take advantage of this and set up base in GIFT.

“Allowing law firms in GIFT for arbitration or other work would work as a catalyst for economic activities in the country. We ourselves are in discussions to set up an office in GIFT,” said Nishith Desai, founder of law firm Nishith Desai Associates.

But the amendment does not permit foreign law firms to advise Indian clients on local businesses and regulations. Their advice and help would be strictly restricted to arbitrations fought in GIFT, international mergers and acquisitions, international taxation or any other advice for operations outside India.

Industry experts say some foreign law firms may consider partnerships with Indian firms under the arrangement. There could also be stiff competition as both Indian and foreign firms would compete for the same clients in GIFT.

“Many law firms may set up their base in GIFT but that would take some time. And I am a firm believer that it would only lead to betterment of all law firms,” said Desai.

Source: http://economictimes.indiatimes.com/articleshow/56529046.cms

MCA extends the due date of Annual filing of e-Forms till end November 2016

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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.

Source: MCA – General circular 12/2016

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

Annual Compliance to be made by Private Limited Company in India

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The annual mandatory compliances which a private limited company has to  follow are listed below:

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

Company Incorporation in India made simpler and more versatile

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MCA has taken another bold initiative in Government Process Re-engineering (GPR) and launched Simplified proforma for Incorporating Company Electronically (SPICe) e-Form.

Ministry of Corporate Affairs (MCA) has introduced a bold initiative in Company Incorporation so that registering a company and starting business, in India, is made simpler and speedier that your business can be started within the stipulated time frame, in line with international best practices.

 

MCA has launched SPICE (Simplified Proforma for Incorporating Company Electronically) w.e.f. 02.10.2016 for registering companies  in completely online form, vide Form INC-32.

 

This would be processed speedier as the e-MOA and e-AOA would have a faster review, by the approving authorities through the back office set up in this regard.

 

This would make setting up of business, in India, fairly simpler and more versatile, making way for “ease of doing business”.

The highlights of SPICE are:

  1. Simplified and completely Digital Form for Company Incorporation – Form INC-32
  1. Standard format of e-Memorandum of Association as per Companies Act, 2013 – Form INC 33
  1. Standard format of e-Articles of Association as per Companies Act, 2013 – Form INC 34
  1. Memorandum and Articles will now be filed as linked e-forms, except for Section 8  (not-for-profit companies)
  1. Provision to apply for Company Incorporation with a pre-approved Company Name vide INC -1, as well
  1. Mandatory DSCs of Subscribers and Witnesses in SPICe MOA and SPICe AOA 

7. Back Office productivity gains due to faster review of e-MOA and e-AOA by approving authorities.

As part of the initiative of ease of doing business in India, the Ministry of Corporate Affairs had earlier introduced e-filing of single Form INC-29 as alternative to INC 7, so that incorporating a company in India does not take too long a time. As further simplification of the process of registering companies, SPICE Form INC-32 is intended to make the whole process versatile for a new company to be registered on-line in India, under the Companies Act, 2013.

e-Filing of single Form INC-32

  • This form can be filed even after approval of name vide INC-1. This facility was not provided in INC-29.
  • Memorandum of Association (MOA) has been provided in Electronic Mode INC-33.
  • Article of Association (AOA) has been provided in Electronic Mode INC-34.
  • By new e-MOA & e-AOA, no need for physical signatures of Subscribers; Instead, Digital Signature Certificate (DSC) of Subscribers can be affixed on MOA & AOA.
  • By the new e-MOA & e-AOA, no need for physical signatures of Witness; Instead, Digital Signature Certificate (DSC) of Witness can be affixed on MOA & AOA.
  • Existing INC-29 and INC-7 will be phased out and SPICe will be the single, simplified versatile form to be filed on-line for incorporation of a company in India.

Read earlier posts:

Integrated e-Form INC-29 for Company Incorporation and Ease of doing business

Incorporation of Companies under Companies Act, 2013 – Procedure

Source: http://www.mca.gov.in/Ministry/pdf/SPICEPress%20Release_03102016.pdf

Online biz firms to give contact details on their portals

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Companies which conduct online business will now have to provide on their websites details about their registration with the government, as well as information about persons to be contacted for grievances.

The government’s move to introduce the requirement comes against the backdrop of instances where people have been duped by way of fraudulent activities, including through online platforms. Tweaking the rules for incorporation of companies, the government has also put in place stricter conditions for conversion of unlimited liability companies into a company limited by shares or guarantee.

The corporate affairs ministry has amended the rules for incorporating a company under the Companies Act, 2013.

Now, “every company which has a website for conducting online business or otherwise, shall disclose/publish its name, address of its registered office, the Corporate Identity Number (CIN), telephone number, fax number, if any, e-mail and the name of the person who may be contacted in the case of any queries or grievances on the landing/home page of the said website”. CIN is the unique number allotted to an entity after getting registered under the Companies Act.

As for conversion of an unlimited liability company into a firm company limited by shares or guarantee, the ministry has made the norms stricter.

Under the amended rules, after conversion, name of the company should not be changed for one year and it will also not be allowed to give dividend unless past debt and liabilities are cleared.

In this regard, the ministry said “past debts, liabilities, obligations or contracts do not include secured debts due to banks and financial institutions”.

The Corporate Affairs Ministry, which is implementing the Companies Act, has already effected a number of changes to various rules under this legislation as part of larger efforts to protect investor interests as well as improve ease of doing business.

Most provisions of the Companies Act, 2013, came into effect from April 1.

Source: http://www.business-standard.com/article/companies/online-biz-firms-to-give-contact-details-on-their-portals-116080100026_1.html

Company Law Tribunal benches ‘will be fully functional’ in next few days

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All the 11 benches of the newly constituted National Company Law Tribunal (NCLT) will be fully functional in the next “couple of days”, a top Corporate Affairs Ministry (MCA) official said.

Infrastructure is ready in all the 10 cities where the NCLT benches are being set up. The human resources aspect has also been taken care of and adequate steps are being taken to start work immediately.

To begin with, NCLT will handle all pending cases before the Company Law Board and other matters not assigned to any other Court, the official said.

“There will be no transition problem for existing CLB cases,” the official added.

As on date, as many as eight members have joined NCLT, out of approved 25 members. “The remaining members are expected to join in the next few days. They will be posted in various benches,” the official said.

The MCA has also planned a 10-day colloquium in July for the NCLT members, the official added. Asked about the status of cases before High Courts (company cases), the MCA official said the High Court will be the second stage of transfer.

“We will let the CLB cases transition to stabilise for some time and then, in discussion with NCLT Chairman, decide on the High Courts related matter,” the official said.

The creation of NCLT from June 1 is expected to speed up delivery of justice in corporate cases. Sai Venkateshwaran, Partner and Head, Accounting Advisory Services, KPMG in India, hailed the MCA move to set up NCLT and NCLAT.

“We can expect to see the new Companies Act become a reality in its entirety in the coming months,” Venkateshwaran said. The time required for setting up of the NCLT and NCLAT was one of the key reasons for the Companies Act 2013 not being fully operationalised, he said.

However, with the setting up of these tribunals, the way has been paved for operationalising most of the remaining parts of the Companies Act 2013, he added. .

Meanwhile, the Company Law Board hearing in the Financial Technologies’ Board removal case did not take place on Thursday as the CLB stood dissolved on May 31 by virtue of the government move to set up NCLT from June 1.

Indications are that an NCLT bench will hear this matter in the coming days, sources said.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/company-law-tribunal-benches-will-be-fully-functional-in-next-few-days/article8688161.ece

Corporate Affairs Ministry again extends statutory filing deadline amid MCA21 woes

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Extending the deadline for the third time, Corporate Affairs Ministry has now given time till July 7 for companies to submit their statutory filings as issues related to MCA21 portal are yet to be fully resolved.

MCA21 is used for making electronic filings under the Companies Act and is managed by Infosys  for the ministry.

The upgraded system went live in the last week of March and stakeholders have been facing issues in using the portal.

The Ministry has extended the filing deadline for the third time in less than two months.

Initially, the extension was till May 10 and later the deadline was fixed for June 10.

Giving more time, the Ministry has extended the time limit for making the requisite filings under the companies law to July 10.

“…keeping in view, requests received from various stakeholders, it has been decided to extend the period for which the one time waiver of additional fees is applicable to all e-forms which are due for filing by companies between March 25 to June 30, 2016 as well as extend the last date for filing such documents and availing the benefit of waiver to July 7, 2016,” it said in a communication dated May 31.

While the communication does not mention anything about MCA21, Ministry officials expect to resolve the issues related to the portal soon.

On April 6, an Infosys spokesperson had said it was working with the Ministry to resolve the “minor teething problems” related to MCA21.

The portal is designed to fully automate all processes related to enforcement and compliance of legal requirements under the Companies Act.

Meanwhile, the Ministry has also extended the time limit for submitting Form 11 of LLP in respect of 2015-16 financial year without any additional fees to June 30.

Form 11 is for filing annual returns LLPs.

Source: http://economictimes.indiatimes.com/articleshow/52556624.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst