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Saturday 20 December 2014

THE COMPANIES (AMENDMENT) BILL, 2014

 The Companies (Amendment) Bill, 2014 has been passed by Lok Sabha. This bill brings out the amendments to clear the practical difficulties and to promote the Commerce & Industry. The key highlights of the Bill are as follows:

1.  It removes the minimum pai-up capital requirements for incorporating a private/public company;
2.  The requirement of having a Common Seal is being optional from mandatory, so the consequential requirements of use of the Common Seal have also been amended;

3. The Bill has prescribed the punishment/ consequences for acceptance of public deposit in non-compliance with the deposit provisions read with the rules under the Act. i.e.

(i)   The amount of deposit along with the interests due will have to be returned;
(ii)   In addition to the above, the Company shall be liable for a fine not less than Rs. 1 Crore but which may extend to Rs. 10 Crores;
(iii)  every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or
with both:

4.  The great relief provided is that no person shall be entitled to inspect or obtain copies of the resolutions filed under section 117 of the Act;

5.For declaring dividend previous year losses and depreciation shall first be set off against the profit of the current year;

6. Again the major practical difficulty has been removed in the benefit of the public that only the dividend un-paid or unclaimed for consecutive 7 years shall be transferred to IEPF and not the shares;

7.Enabling threshold limits for reporting of frauds by the auditors;

8.  Empowering Audit Committee to approve the related party transactions , as may be prescribed;

9.The exemptions for applicability of section 185 , earlier mentioned in rules, has been added to section itself;

10.  Special resolution being replaced by ordinary resolution for approval of related party transactions at places, also exempted related party transactions between holding and wholly owned subsidiary, where consolidated accounts shall be made and presented in general meeting for shareholders’ approval;

11. Bail restrictions to apply only for offence relating to fraud u/s 447;

12. winding up cases to be heard by 2-member Bench instead of a 3-member Bench;

13. Special Courts to try only offences carrying imprisonment of two years or more.

As the bill has been approved by Lok Sabha, it is hopeful to get the further approvals soon and became the amendment act. But the corporate world and the professionals are still waiting for the proposed privileges to private companies to get approved, the draft of which has already been circulated by the Ministry. Furthrer the said bill doesn’t refer to the biggest problem of approval of related party transactions in Closely held companies and the difficulties of loan to directors etc. i.e. companies having common directors.

~By Nikita Singh~

Wednesday 10 December 2014

498A: THE GLORIOUS CRIME???





photo by : http://www.freeclassifieds.in/classified-ad-41810.html

In recent past, I came out of theater with a thousand questions in my mind after watching “Daawat-E-Ishq”. Surely, all the girls are not “Gullu” who fall in love with the honesty of “Taru” and will have a happy ending by a proper married life. The movie not only raised the issue of 498A but with the same effort the evil of dowry was also raised. I give it a 10 on 10 to show both the sides of a coin to reflect how both the sex are getting dragged into the crime.

We all are more or less aware about the crime called “Dowry” and to protect the society from the same and similar crimes the law came in the form of “498A” of The Indian Penal Code. So, with the law came its use and misuse in the form of Needy and Greedy. Let’s read the most talked about or heard about section to be aware of the law:

Section 498A of The Indian Penal Code:

Husband or relative of husband of a woman subjecting her to cruelty.—Whoever, being the husband or the relative of the husband of a woman, subjects such woman to cruelty shall be pun­ished with imprisonment for a term which may extend to three years and shall also be liable to fine. Explanation.—For the purpose of this section, “cruelty” means:

(a) any wilful conduct which is of such a nature as is likely to drive the woman to commit suicide or to cause grave injury or danger to life, limb or health (whether mental or physical) of the woman; or

(b) harassment of the woman where such harassment is with a view to coercing her or any person related to her to meet any unlawful demand for any property or valuable security or is on account of failure by her or any person related to her to meet such demand.


Don’t raise your eyebrows on only plain reading of the section, the misuse is, the so called beloved newly married wife will go to the nearby police station lodging the complaint against the Husband, his mother, sister (mostly along with the husband the female members of the family and senior citizens are dragged, taking the advantage that no man will let the female members and senior citizens go to jail) on the basis of which the persons against whom the complaint has been lodged are arrested immediately, without sufficient investigation and put behind bars on a non-bailable term. Even if the complaint is fake, you shall be presumed guilty until you prove that you are innocent. Mostly in such false cases a handsome amount is asked to take the charges back and to go for a mutual divorce. Even the victims agrees to pay to save themselves from the harassment and damage to their social reputation, the main reason be mostly to protect the female members from the so called police –court-kachahari matters.

Now, read some of the related facts used in judgment given by Honorable Supreme Court of India in the matter of ARNESH KUMAR Vs STATE OF BIHAR & ANR.  dated 2nd July, 2014:

“There is phenomenal increase in matrimonial disputes in recent years. The institution of marriage is greatly revered in this country. Section 498-A of the IPC was introduced with avowed object to combat the menace of harassment to a woman at the hands of her husband and his relatives. The fact that Section 498-A is a cognizable and non-bailable offence has lent it a dubious place of pride amongst the provisions that are used as weapons rather than shield by disgruntled wives. The simplest way to harass is to get the husband and his relatives arrested under this provision. In a quite number of cases, bed-ridden grand-fathers and grand-mothers of the husbands, their sisters living abroad for decades are arrested. “Crime in India 2012 Statistics” published by National Crime Records Bureau, Ministry of Home Affairs shows arrest of 1,97,762 persons all over India during the year 2012 for offence under Section 498-A of the IPC, 9.4% more than the year 2011. Nearly a quarter of those arrested under this provision in 2012 were women i.e. 47,951 which depicts that mothers and sisters of the husbands were liberally included in their arrest net. Its share is 6% out of the total persons arrested under the crimes committed under Indian Penal Code. It accounts for 4.5% of total crimes committed under different sections of penal code, more than any other crimes excepting theft and hurt. The rate of charge-sheeting in cases under Section 498A, IPC is as high as 93.6%, while the conviction rate is only 15%, which is lowest across all heads. As many as 3,72,706 cases are pending trial of which on current estimate, nearly 3,17,000 are likely to result in acquittal.”

The difference between the dowry and the 498A is the demand of dowry is made before marriage in 90% of the cases and we have a choice in our hand to say a clear “NO” to it. Which means the society needs to say “NO” for the marriages where dowry is demanded, but what about 498A? It starts with a happy marriage, where the boy and his family go for an actual marriage but the girl and her family goes for a so called “Glorious Crime of Marriage” to earn some easy money.

Following are some of the steps which you can use to protect yourself from 498A if you are planning to get married and you are MALE:

1.      Do proper background checkup of the prospective bride.
2.      Check her and her families back ground, like if she has a sister, what is her marital status, if divorcee the reasons and all.
3.      Specially, if they have recently shifted to the home, you have been taken to meet them, check from where they belong to, where they were living earlier and the checks on native place.
4.      If the spending of the family is more than their income, stay away.
5.      If even before marriage, the girl have so many emotional things to tell you, like how much she loves you, how good a wife she will turn to be, how much respect she is going to give your parents, what a bad past she has but faced that bravely etc
6.      If you are going for a second marriage and the girl is also a divorcee, better to check what charges she has made up for his ex-husband and not only read the court orders.
7.      If the girl has a full-fledged relationship, might be some close relative too and a frequent visitor to her family or her town, give a deeper thought or investigate/enquire deep down to the root or time to probe further.
8.      If the girl has a close lawyer/matrimony consultant friend specially a male, who might help her in finding the prospective groom/divorce case, think twice.
9.      If you are going for a marriage from some matrimonial site, better to hire a detective agency side by side for the short listed girls, it may cost you a few thousand rupees but it may save a fortune too.
10.  Check the birth certificate/ marksheets etc. of the girl in original.

In short and simple, I will sum-up 498A as a “Sword with double sharp edge”/ Do-Dhari-Talwar. It is very useful for the one who are being victims of the crime of “Dowry and harassment” but the real question is in how many genuine cases the wife was able to prove the misdeed, as of the facts the one who shall be sheltered under the law, has mostly been deprived by the delayed justice, as well said justice delayed is justice denied. On the other hand the greedy, who is making money by misuse of it, by charging the groom and his family under the fake cases are not only making some easy money, but also the person and his family charged by the fake case are drained mentally, physically and financially. Ironical fact of this legal provision is the sisters/mothers and other female relatives of the groom are treated as criminals but the wife and her family even when the fake charges are proved get released easily.

The law shall provide equality for all, else soon the proverb that the Women is weaker section of society will turn as Men is weaker section of society. I personally plea for such a law, which protect the rights, provide equality and also include strict provisions for those who misuse the law and play with it for their personal benefits.


~By Nikita Singh~

Thursday 17 July 2014

CLARIFICATION ON RELATED PARTY TRANSACTIONS


Ministry of Corporate Affairs has issued clarification on transactions/ matters following under section 188 (Related Party Transactions).

It has clarified that:

1. For non-voting by the interested shareholder: The shareholders who are related party for the contract or arrangement for which resolution is proposed/ to be passed. Only those shareholders cant vote on the matter.

2. Transaction arising out of amalgamation and reconstruction under the Companies Act, 1956 shall not attract provisions of section 188 of CA, 2013.

3. Contracts entered into by the Companies in compliance under provisions of section 297 of the CA, 1956 shall not need further fresh approvals, until there are any modifications to those contracts.

http://www.mca.gov.in/Ministry/pdf/Circular_No_30_17072014.pdf

Tuesday 1 July 2014

The Companies (cost records and audit) Rules, 2014

Dear Professionals,

The much awaited The Companies (cost records and audit) Rules, 2014 has been notified. For applicability of cost record Companies has broadly classified into four categories i.e.

(A) Companies engaged in the production of following goods in strategic sectors.

(B) companies engaged in an industry regulated by a Sectoral Regulator or a Ministry or Department of Central Government.


(C) Companies operating in areas involving public interest
(D) Companies (including foreign companies other than those having only liaison offices) engaged in the production, import and supply or trading




each category has specified the  sub-categories or the specified activities. Limits based on paid-up capital and/or turnover and networth is defined for maintenance of cost records.

The said rules has also specified the companies which need to get their cost records audited by the Cost Auditors.


Please go through the following link to check the  The Companies (cost records and audit) Rules, 2014 and to have check the rules:


http://www.mca.gov.in/Ministry/pdf/rules_2_30062014.pdf

Wednesday 25 June 2014

Annual Return Format for Financial Year ended on or before 31st March, 2014

MCA has issued clarification on applicability of Annual Return format for the financial year ended on 31/03/2014.

As per the clarification for the F.Y. ended before 01/04/2014 format of Annual Return shall be as per Companies Act, 1956 and not format as per MGT - 7.

MCA has further clarified that untill a fee is specified in the AOA of the company for inspection of documents as per rule 14(2) & rule 16 of the Companies (Management & Administration) Rules, 214, inspection could be allowed without levy of fee.
Please click the below link for copy of clarification by MCA:

www.mca.gov.in/Ministry/pdf/General_Circular_22_2014.pdf

Wednesday 11 June 2014

RESOLUTIONS TO BE FILED WITH THE ROC




As per the new act not only the special resolutions or resolutions specified under section 192 of the Companies Act, 1956 but also the resolutions passed by the Board of both public as well as private companies shall be filed with the respective ROC within 30 days of passing of such resolution. Followings are the resolutions to be filed:

Section 117 read with the Companies (Management and Administration) Rules, 2014 :

(a) special resolutions;

(b) resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions;

(c) any resolution of the Board of Directors of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;

(d) resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by a specified majority or otherwise in some particular manner;
 
and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members;

(e) resolutions passed by a company according consent to the exercise by its Board of Directors of any of the powers under clause (a) and clause (c) of sub-section (1) of section 180;

i.e.

Section 180(1)(a)

to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings.

Section 180(1)(c)

to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the ordinary course of business:

Provided that the acceptance by a banking company, in the ordinary course of its business, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise, shall not be deemed to be a borrowing of monies by the banking company within the meaning of this clause.

(f) resolutions requiring a company to be wound up voluntarily passed in pursuance of section 304;

(g) resolutions passed in pursuance of sub-section (3) of section 179; 

i.e.:

Section 179(3

The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:—
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another
company;
(k) any other matter which may be prescribed.

In addition to the above, as per the Companies (Meetings of Board and its Powers) Rules, 2014 following powers of the Board shall be excersied by passing a resolution:

 (1) to make political contributions;

(2) to appoint or remove key managerial personnel (KMP);
(3) to take note of appointment(s) or removal(s) of one level below the Key Management Personnel;
(4) to appoint internal auditors and secretarial auditor;
(5) to take note of the disclosure of director’s interest and shareholding;
(6) to buy, sell investments held by the company (other than trade investments), constituting five percent or more of the paid up share capital and free reserves of the investee company;
(7) to invite or accept or renew public deposits and related matters;
(8) to review or change the terms and conditions of public deposit;
(9) to approve quarterly, half yearly and annual financial statements or financial results as the case may be.

 (h) any other resolution or agreement as may be prescribed and placed in the public domain.

All the above resolutions shall be filed with the ROC in e-form MGT – 14 within 30 days of passing of said resolutions.

~By Nikita Singh~

Friday 9 May 2014

CONVERSION OF PRIVATE COMPANY INTO ONE PERSON COMPANY

(1) A private company other than a company registered under section 8 of the Act having paid up share capital of fifty lakhs rupees or less or average annual turnover during the relevant period is two crore rupees or less may convert itself into one person company by passing a special resolution in the general meeting.
(2) Before passing such resolution, the company shall obtain No objection in writing from
members and creditors.
3) The company shall file copy of the special resolution with the Registrar of Companies within thirty days from the date of passing such resolution in Form No. MGT.14.
(4) The company shall file an application in Form No.INC.6 for its conversion into One Person Company along with fees as provided in in the Companies (Registration offices and fees) Rules, 2014, by attaching the following documents, namely
(i) The directors of the company shall give a declaration by way of affidavit duly sworn in confirming that all members and creditors of the company have given their consent for conversion, the paid up share capital company is fifty lakhs rupees or less or average annual turnover is less than two crores rupees, as the case may be;
(ii) the list of members and list of creditors;
(iii) the latest Audited Balance Sheet and the Profit and Loss Account; and
(iv) the copy of No Objection letter of secured creditors.
(5) On being satisfied and complied with requirements stated herein the Registrar shall issue the certificate.

Monday 5 May 2014

ONE PERSON COMPANY UNDER COMPANIES ACT, 2013

One Person Company (OPC):  means a company which has only one person as a member.

  •   An OPC will be a private company for the provisions of this act.

Formation/ Registration:


  •  No. of Members: One Member. the memorandum of One Person Company shall indicate the name of the other person, with his prior written consent, who shall, in the event of the subscriber’s death or his incapacity to contract become the member of the company and the written consent of such person shall also be filed with the Registrar at the time of incorporation of the One Person Company along with its memorandum and articles.

          (1) Only a natural person who is an Indian citizen and resident in India-
(a) shall be eligible to incorporate a One Person Company;
(b) shall be a nominee for the sole member of a One Person Company.

         (2) No person shall be eligible to incorporate more than a One Person Company or become
           nominee in more than one such company.

  •  Name: “One Person Company” shall be mentioned in brackets below the name of such company, wherever its name is printed, affixed or engraved.

Meetings:

 Annual General Meeting/General Meeting:

  • An OPC need not to call AGM, any business which need to be transacted at AGM or any general meeting as per the provisions of the Companies Act, 2013, shall be accepted to be duly transacted in case of OPC, if the resolution is communicated by the member to the company and entered in the minutes-book required to be maintained under section 118 and signed and dated by the member and such date shall be deemed to be the date of the meeting for all the purposes under this Act.


  Board Meeting:

  • where there is only one director on the Board of Director of a One Person Company, any business which is required to be transacted at the meeting of the Board of Directors of a company, it shall be sufficient if, in case of such One Person Company, the resolution by such director is entered in the minutes-book, and signed and dated by such director and such date shall be deemed to be the date of the meeting of the Board of Directors.
  • One Person Company shall be deemed to have complied with the provisions of this section if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than ninety days. The provisions with respect of quorum shall not be applicable on OPC, where there is only one director on Board.

Financial Statement & Board Report:

  •  Singing of Financial Statement:  In case of OPC financial Statement shall be signed by one Director before it is given to auditors for their report.
  • Board Report: The report of the Board of Directors to be attached to the financial statement shall, in case of a One Person Company, mean a report containing explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
  • Filing: One Person Company shall file a copy of the financial statements duly adopted by its member, along with all the documents which are required to be attached to such financial statements, within one hundred eighty days from the closure of the financial year

Director:

  • At least one director in case of OPC and maximum of 15 directors.
  • Until the directors are duly appointed and in case of a One Person Company an individual being member shall be deemed to be its first director until the director or directors are duly appointed by the member.
  
Contracts by One Person Company:


  • Where One Person Company limited by shares or by guarantee enters into a contract with the sole member of the company who is also the director of the company, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in a memorandum or are recorded in the minutes of the first meeting of the Board of Directors of the company held next after entering into contract
     Provided that nothing in this sub-section shall apply to contracts entered into by the company in   the ordinary course of its business.

  • The company shall inform the Registrar about every contract entered into by the company and recorded in the minutes of the meeting of its Board of Directors as mentioned above, within a period of fifteen days of the date of approval by the Board of Directors.

Mandatory Conversion into Private/Public Company:

  • Where the paid up share capital of an One Person Company exceeds fifty lakh rupees or its average annual turnover during the relevant period exceeds two crore rupees, it shall cease to be entitled to continue as a One Person Company.
  • Such One Person Company shall be required to convert itself, within six months of the date on which its paid up share capital is increased beyond fifty lakh rupees or the last day of the relevant period during which its average annual turnover exceeds two crore rupees as the case may be, into either a private company with minimum of two members and two directors or a public company with at least of seven members and three directors

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