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PCS Jitesh Gupta FCS, PGD-TL, MIMA, MBA, IP

PCS Jitesh Gupta FCS, PGD-TL, MIMA, MBA, IP. Presentation by:. TOPICS TO BE COVERED IN TODAY’S PRESENTATION. Latest Amendments under Companies Act, 2013 and other laws DIR-3 KYC Dematerialization of Securities of Unlisted Public Companies

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PCS Jitesh Gupta FCS, PGD-TL, MIMA, MBA, IP

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  1. PCS Jitesh Gupta • FCS, PGD-TL, MIMA, MBA, IP Presentation by:

  2. TOPICS TO BE COVERED IN TODAY’S PRESENTATION • Latest Amendments under Companies Act, 2013 and other laws • DIR-3 KYC • Dematerialization of Securities of Unlisted Public Companies • ACTIVE (Active Company Tagging Identities and Verification) • Companies (Incorporation) 2nd Amendment Rule 2019 • MSME (Micro, Small and Medium Enterprises) • Registered Valuer • DPT-3 • Banning of Unregulated Deposits • Significant Beneficial owner • Insolvency and Bankruptcy Code, 2016

  3. TYPES OF COMPANIES PUBLIC COMPANY PRIVATE COMPANY ONE PERSON COMPANY SMALL COMPANY LISTED COMPANY UNLISTED COMPANY SECTION 8 COMPANY GOVERNMENT COMPANY

  4. Private Company • Section 2(68) of Companies Act, 2013 : It means a company having a minimum paid-up share capital as may be prescribed, and which by its articles,— • (i) restricts the right to transfer its shares; • (ii) Except in case of One Person Company, limits the number of its members to two hundred: Provided that where two or more persons hold one or more shares in a company jointly, they shall, for the purposes of this clause, be treated as a single member: • Provided further that— • (A) Persons who are in the employment of the company; and • (B) Persons who, having been formerly in the employment of the company, were members of the company while in that employment and have continued to be members after the employment ceased, • Shall not be included in the number of members; and • (iii) prohibits any invitation to the public to subscribe for any securities of the company;

  5. Small Company A company, other than a public company,— (i) paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed and (ii) turnover as per profit and loss account for the immediately preceding financial year does not exceed two crore rupees or such higher amount as may be prescribed Provided that nothing in this clause shall apply to— (A) a holding company or a subsidiary company; (B) a company registered under section 8; or (C) a company or body corporate governed by any special Act; One Person Company A company which has only one person as a member;

  6. Public Company A company which— (a) is not a private company ; (b) has a minimum paid-up share capital, as may be prescribed Provided that a company which is a subsidiary of a company, not being a private company, shall be deemed to be public company for the purposes of this Act even where such subsidiary company continues to be a private company in its articles Unlisted Company Unlisted company means a company which does not have any of its securities listed. Listed Company Listed Company means a company which has any of its securities listed on any recognized stock exchange;

  7. Section 8 companyWhere it is proved to the satisfaction of the Central Government that a person or an association of persons proposed to be registered under this Act as a limited company—(a) Has in its objects the promotion of commerce, art, science, sports, education, research, social welfare, religion, charity, protection of environment or any such other object; (b)Intends to apply its profits, if any, or other income in promoting its objects; and (c) intends to prohibit the payment of any dividend to its members,the Central Government may, by licence issued in such manner as may be prescribed, and on such conditions as it deems fit, allow that person or association of persons to be registered as a limited company under this section without the addition to its name of the word "Limited", or as the case may be, the words "Private Limited" , and thereupon the Registrar shall, on application, in the prescribed form, register such person or association of persons as a company under this section.

  8. Government Company: Any company in which not less than fifty-one per cent of the paid-up share capital is held by the Central Government, or by any State Government or Governments, or partly by the Central Government and partly by one or more State Governments, and includes a company which is a subsidiary company of such a Government company;

  9. APPLICABILITY AND PURPOSE: 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. Purpose of new e-form DIR-3 KYC is to get update the exact data of the din holders. NOTIFIED ON: 5TH JULY, 2018 INCLUSION UNDER COMPANIES ACT: RULE 12A UNDER COMPANIES (APPOINTMENT AND QUALIFICATIONOF DIRECTORS) RULES, 2014 LAST DATE OF FILING: 30TH APRIL EVERY YEAR FEE FOR FILING: NIL LATE FEE OF FILING: RS 5,000

  10. 1) Active and unique email Id for OTP Verification • 2) Active and Unique Mobile No (not used by any other director) for OTP Verification • 3) Copy of Aadhaar Card, pan card, Driving License, Voter Id and Passport • 4) Permanent and Present Address Proof • 5) Digital signature of Director Concerned • 6) Certification from Practicing professional CONSEQUENCES OF NOT FILING OF DIR-3 KYC: DIN status shall be changed to ‘Deactivated due to non-filing of DIR-3 KYC by which he can not be appointed as Director in any other Company and He can’t mention his DIN on any document in relation to Company REQUIREMENTS FOR FILING THIS FORM:

  11. Companies (prospectus and Allotment of securities) third amendment rule, 2018

  12. MINISTRY of Corporate Affairs Notification ON UNLISTED PUBLIC COMPANIES INCLUSION UNDER COMPANIES ACT 2013: - Rule 9A has been added to Companies (Prospectus and Allotment of Securities) Rules, 2014 DATED 10th September, 2018

  13. ABOUT THE AMENDMENT: • Unlisted Public Company shall: • Issue the securities only in dematerialized form after 02nd October 2018; and • Facilitate dematerialization of all its existing securities • Every holder of securities who • intends to transfer such securities on or after 2nd October 2018 shall get such securities dematerialized before the transfer; or • subscribes to any security on or after 2nd October 2018 shall ensure that all his existing securities are held in dematerialized form before such subscription • The audit report provided under regulation 55A of the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996 shall be submitted by the unlisted public company on a half-yearly basis to the Registrar under whose jurisdiction the registered office of the company is situated.

  14. EXEMPTED • A Nidhi company • A government company • A wholly owned subsidiary • Private Companies APPLICABILITY: Every Unlisted Public Company having Share Capital • BENEFITS OF DEMATERIALIZATION : • 1) The risks pertaining to physical certificates like loss, theft, forgery and damage are eliminated completely with a DEMAT account. • 2) The lack of paperwork enables quicker transactions and higher efficiency in trading. • 3) There is no need for stamp duty for transfer of securities; this brings down the cost of transaction significantly. • 4) Loan against securities which are held in a DEMAT account is available by offering them as a collateral to the lender. • 5) Trading has become more convenient.

  15. MINISTRY of Corporate Affairs Notification on e Form ACTIVE DATED: 21st February 2019 INCLUSION UNDER COMPANIES ACT 2013: -Rule 25A has been added under Companies(incorporation) Rules, 2014. E FORM: INC 22A

  16. COMPANIES ELIGIBLE Every company (this means every company has to file this form irrespective of its constitution status) incorporated on or before the 31st December 2017 shall file Form INC 22A to provide particulars of the company relating to Registered Office, Directors of the Company, Auditors of the company and Annual filing Status of the Company

  17. RESTRICTED • Companies who has not done Annual Filing for the year ending March 2018. • Companies, whose directors KYC has not been filed • EXEMPTED • Companies under Strike off or Liquidation by the registrar • Companies under merger or Amalgamation

  18. REQUIREMENT AS PER THE E FORM ACTIVE • Latitude & Longitude of the Registered Office of the company • Active EMAIL Id of the company as OTP will come on such EMAIL ID • Details of no. of director/s and also, SRN of MGT-14 if Maximum Number of Directors are beyond limits prescribed in Companies Act, 2013 • Details of statutory auditor/S • Details of cost auditor/S (if any) • Details of KMP

  19. Photographs of inside office with sitting of at least one Director and outside office also • Digital Signature of Director who is present in photograph mentioned above and Digital Signature of one KMP if Company has KMP otherwise Digital Signature of Other Director • SRN no. of Annual Filing forms of 2017-18 • Certification of Form from Practicing Professional

  20. CONSEQUENCES OF NOT FILING E FORM ACTIVE • The company shall be marked as “ACTIVE- non-complaint” thereupon till the default subsist. • The “ACTIVE- non-complaint” companies be restrained from filing the following forms: • SH-07 (Increase in Authorized Capital), • PAS-03 (Allotment of Shares), • DIR-12 (Changes in Director except Cessation), • INC-22 (Change in Registered Office) • INC-28 (Amalgamation & Demerger) • Physical Verification of Registered Office by the Concerned Registrar of companies

  21. Companies (Incorporation) 2nd Amendment Rule 2019 • DATE OF NOTIFICATION: • 6TH March, 2019

  22. RULE 30(5)-The companies (Incorporation) Rules, 2014 The company shall, not more than thirty days before thedate of filing the application in Form No. INC.23 – • Advertise in the Form No.INC.26 in the vernacular newspaper in the principal vernacular language in the district and in English language in an English newspaper with the wide circulation in the State in which the registered office of the company is situated: Provided that a copy of advertisement shall be served on the Central Government immediately on its publication.

  23. The application for allotment of Director Identification Number upto three Directors, reservation of a name, incorporation of company and appointment of Directors of the proposed for One Person Company, private company, public company and a company falling under section 8 of the Act. Shall be filed in [FORM No. INC-32] (SPICe),. with the Registrar, within whose jurisdiction the registered office of the company is proposed to be situated along with the fee of rupees five hundred in addition to the registration fee as specified in the Companies (Registration of Offices and Fees) Rules. 2014. Rule 38(2)The Companies(Incorporation) Rules, 2014:

  24. Provided that where an applicant has applied for reservation of a name under Rule 9 and which has been approved therein, he may fill the reserved name as proposed name of the company • Provided further that in case of companies incorporated, with effect from the 26th day of January, 2018, with a nominal capital of less than or equal to rupees fifteen lakhs or in respect of companies not having a share capital whose number of members as stated in the articles of association does not exceed twenty, fee on INC-32 (SPICe) shall not be applicable]

  25. COMPANIES (AMENDMENT) ORDINANCE, 2019

  26. INSIGHT TO THE ORDINANCE DATE OF NOTIFICATION 14th JANUARY, 2019 INCLUSION UNDER COMPANIES ACT, 2013 SECTION10A Commencement of business etc.

  27. Section 10A: Commencement of business etc. (1) A company incorporated after the commencement of the Companies (Amendment) Ordinance, 2019 and having a share capital shall not commence any business or exercise any borrowing powers unless— (a) A declaration is to be filed by a director within a period of one hundred and eighty days of the date of incorporation of the company in such form and verified in such manner as may be prescribed, with the Registrar that every subscriber to the memorandum has paid the value of the shares agreed to be taken by him on the date of making of such declaration; and b) The company has filed with the Registrar a verification of its registered office as provided in sub-­section (2) of section 12.

  28. (2) If any default is made in complying with the requirements of this section, the company shall be liable to a penalty of Rs. 50,000 and every officer who is in default shall be liable to a penalty of Rs. 1,000 for each day during which such default continues but not exceeding an amount of Rs 1,00,000 (3) Where no declaration has been filed with the Registrar under clause (a) of sub-section (1) within a period of one hundred and eighty days of the date of incorporation of the company and the Registrar has reasonable cause to believe that the company is not carrying on any business or operations, he may, without prejudice to the provisions of sub-section (2), initiate action for the removal of the name of the company from the register of companies under Chapter XVIII

  29. CHARGE AMENDMENT The Ordinance seeks to reduce the timeline of 300 days available under the first proviso to Section 77(1) depending upon the timing of the creation of a charge by a company. In terms of the Ordinance, IN CASE OF CHARGES CREATED BEFORE THE commencement of the Companies (Amendment) Ordinance, 2019, it should be filed within a period of three hundred days of such creation and if not filed in such period then the registration of the charge shall be made within six months from the date of commencement of the Companies (Amendment) Ordinance, 2019, on payment of such additional fees as may be prescribed and different fees may be prescribed for different classes of companies.

  30. And In case of charges CREATED AFTER THE COMMENCEMENT OF THE COMPANIES (AMENDMENT) ORDINANCE, 2019, it should be filed within a period of sixty days of such creation, on payment of such additional fees as may be prescribed and if not filed in such period then the Registrar may, on an application, allow such registration to be made within a further period of sixty days after payment of such ad-valorem fees as may be prescribed

  31. MINISTRY of Corporate Affairs Notification on MSME DATED: 2ND November 2018 and further on 22nd January 2019 FORM: MSME FORM I (form is not available for filing yet) APPLICABILITY :Specified Companies means All companies who get supplies of good and service from micro or small enterprises and whose payment to micro or small enterprise suppliers exceeds forty five days from the date of acceptance or deemed acceptance of the goods or services) shall file Form MSME 1 to furnish details of all outstanding dues to Micro or small enterprises suppliers existing on the date of notification of this order.

  32. NOTIFICATION NO 18 of 2O13 GOVERNING PROVISION: - Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 NON-APPLICABILITY: Companies dealing with Medium Enterprises are not covered here. PURPOSE: With a view to assess the overall financial health of MSME sector and the promptness of payments to MSME.

  33. BENEFITS OF REGISTRATION AS A MSME 1.Collateral Free loans from banks: The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the GOI to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises. 2. A hefty 50% subsidy on  Patent registration Enterprises that have MSME Registration Certificate can avail 50% subsidy for patent registration by making application to respective ministry.

  34. 3. 1% exemption on interest rate on overdraft Enterprises that have MSME Registration can avail benefit of 1% exemption on interest rate on OD as mentioned in the scheme (this is bank dependent). 4. Eligible for Industrial Promotion subsidy Enterprises that have MSME Registration are eligible for Industrial Promotion Subsidy as may be prescribed by the government in this behalf. 5. Concession in electricity bills: Enterprises that have MSME Registration Certificate can avail Concession on electricity bill by making application to electricity department along with MSME Registration Certificate.

  35. 6. Protection against delayed payments If any micro or small enterprise that has MSME registration, supplies any goods or services, then the buyer is required to make payment on or before the date agreed upon between the buyer and the micro or small enterprise. In case there is no payment date on the agreement, then the buyer is required to make payment within fifteen days of acceptance of goods or services. Further, in any case, a payment due to a micro or small enterprise cannot exceed forty-five days from the day of acceptance or the day of deemed acceptance. In case of failure by the buyer to make payment on time, the buyer is required to pay compound interest with monthly interest rests to the supplier on that amount from the agreed date of payment or fifteen days of acceptance of goods or service. The penal interest chargeable for delayed payment to a MSME enterprise is three times of the bank rate notified by the Reserve Bank of India.

  36. 7. Reimbursement of ISO Certification charges Enterprises that have MSME Registration Certificate can claim reimbursement of ISO Certification expenses by making application to respective authority. 8.Market assistance from the government and Export Promotion: The Government of India organizes several exchange programs, craft fairs, exhibitions, and trade-related events internationally. Being categorized as a micro, small or medium enterprise gives access to all of these platforms for international cooperation on trade-related aspects with different countries and fosters new business connections. The government also incentivizes export of goods and services by MSMEs by way of subsidies, tax exemption, and technical support.

  37. FORM FILING • Total outstanding amount due • Reasons for the delay of payment and documents evidencing the same • Digital signature of Director • Particulars of the supplier as required. DETAILS REQUIRED

  38. Section 405 (4) of the Companies Act, 2013  FINE On Company Fine up to Rs. 25,000 Officer in default Fine: minimum 25,000 which may extend up to 3,00,000 OR Imprisonment – up to 6 Months OR Both

  39. PURPOSE OF VALUATION : • We have to understand why valuation and respective valuers are required. • There are two reasons: • Legislative or Regulatory for example certain Section/Provision in Company Act, Income Tax Act, SEBI & RBI etc. • Decision Making Buy or sale of business, Merger, Amalgamation, Acquisition or determination of fair market value etc.

  40. INSIGHTS TO THE NOTIFICATION DATE OF NOTIFICATION: 18TH OCT, 2017 • PURPOSE OF THE NOTIFICATION • 1. To make uniformity in valuation process & outcome • 2. To make the professional working in disciplined manner.

  41. INCLUSION UNDER COMPANIES ACT, 2013 Section 247 Valuation by Registered Valuers The valuation with respect to the Following any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities Shall be valued by a person having prescribe qualification and registered as valuer under the provision of the Act. Appointment by audit committee or in its absence by the Board of Directors of that company.

  42. Eligibility For Registered Valuers (1) A person shall be eligible to be a registered valuer if he- (a)Is a valuer member of a registered valuers organization; Explanation.- For the purposes of this clause, "a valuer member" is a member of a registered valuers organization who possesses the requisite educational qualifications and experience for being registered as a valuer; (b)Is recommended by the registered valuers organization of which he is a valuer member for registration as a valuer; (c)Has passed the valuation examination under rule 5 within three years preceding the date of making an application for registration under rule 6; (d)Possesses the qualifications and experience as specified in rule 4;

  43. (e)Is not a minor; (f)Has not been declared to be of unsound mind; g)Is not an undischarged bankrupt, or has not applied to be adjudicated as a bankrupt; (h)Is a person resident in India; (i)Has not been convicted by any competent court for an offence punishable with imprisonment for a term exceeding six months or for an offence involving moral turpitude, and a period of five years has not elapsed from the date of expiry of the sentence: Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of seven years or more, he shall not be eligible to be registered;

  44. (j) Has not been levied a penalty under section 271J of Income-tax Act, 1961 (43 of 1961) and time limit for filing appeal before Commissioner of Income-tax (Appeals) or Income-tax Appellate Tribunal, as the case may be has expired, or such penalty has been confirmed by Income-tax Appellate Tribunal, and five years have not elapsed after levy of such penalty; and (k)Is a fit and proper person:

  45. QUALIFICATIONS AND EXPERIENCE • An individual shall have the following qualifications and experience to be eligible for registration: - • Post-graduate degree or post-graduate diploma, in the specified discipline, from a University or Institute established, recognized or incorporated by law in India and at least three years of experience in the specified discipline thereafter; or • A bachelor’s degree or equivalent, in the specified discipline, from a University or Institute established, recognized or incorporated by law in India and at least five years of experience in the specified discipline thereafter; or • Membership of a professional institute established by an Act of Parliament enacted for the purpose of regulation of a profession with at least three years' experience after such membership and having qualification mentioned at clause above

  46. CLASSIFICATION OF ASSETS: All assets and Liabilities have been classified in three categories along with their specified domain professionals.

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