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Corporate law Update- January, 2019

You need not worry or make yourselves sleepless about the World; It will go on without you

-Swami Vivekanada

Monthly Update Journal

Dear Sir/Madam,

Happy New year to you!. It’s been more than a month since I wrote an update letter to you. There is so much to share with you this time. Hope you will read it and give me your feedback.

Since the introduction of Companies Act, 2013, managing the compliance of a company is nonetheless than a roller coaster ride. In contrast to its predecessor, this act came with lot of “ifs and buts” by giving ample room to bureaucracy to flux their muscles and show their strength. There are many untimely and complex compliance requirements coming out of the blue which is snatching the peaceful time of Companies, professionals and all its stakeholders. The intention of all these exercises may be for good but the way in which it is being implemented is bit suffocating.

Filing of annual returns.

The honey moon period for filing the annual returns of the company such as AOC-4, MGT 7, Secretarial Audit report etc is now over and penalty clause for the non-compliance is up and running. Those who have not yet filed their returns for the FY 17-18 are now facing Rs. 100/- per day penalty and further delay may result in getting show cause notice from the Ministry of Corporate Affairs, followed by prosecution of the Directors and the company. Many of the ROC offices had already started issuing notices to the non-complaint companies. You are requested to reconfirm the status of the filings of your companies and ensure your peace of mind.

One-time intimation of outstanding receipt of money or loan.

The Ministry had come up with a new amendment to the Companies (Acceptance of Deposit)Rules, 2019, wherein which it is mandated on all companies , except Government Companies, to file an one time return of outstanding receipt of money or loan by a company from 01.04.2014 to 22.01.2019 but not considered as deposits, within 90 days from the date of notification of the rules. ie 90 days from 22nd January, 2019.

As per the amendment all the companies have to intimate the details of the outstanding receipt of money or loan with respect to the following transactions.

a. Any grant received from Central Government or State Government.

b. Loan from any bank or cooperative society

c. Any amount received from any public financial institutions

d. Inter corporate loans

e. Share application money pending allotment

f. Amount raised through issuance of bonds or debentures

g. Any security deposit received from employees of the company.

h. Any amount received from any trust.

i. Any amount received by the company as advance for the supply of the goods or services which is not appropriated against the goods or services within 300 days of the acceptance of advance(Advance from client or customers beyond 300 days)

j. Security deposit accepted for performance of a contract.

k. Any advance received under long term projects for supply of capital goods.

l. Any amount received for providing future services(Annual maintenance contracts or warranty services)

m. Loan from promoters by way of unsecured loans within the specified limit

n. Loan from directors or their relatives.

It is very important to identify the outstanding money with respect to the aforementioned transactions as on 22nd January, 2019 and file the returns with ROC within the due date. For the purpose a provisional balance sheet may be drawn out and handover to us for further proceedings.

Intimation of amount due to Micro and Small Enterprises.

This is another major initiative of the Ministry of Corporate Affairs to support the Micro and Small Enterprises. The Central Government vide notification number S.O. 5622(E), dated the 2nd November, 2018 has directed that all companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 to file a half yearly return stating the (1) the amount of payment due; and (2) the reasons for delay. This return is to be filed within 30 days from the date of notification, ie 22nd January, 2019.

National Financial Reporting Authority Rules, 2018.

As per the notified rules, it is mandatory for the following class of companies and body corporate to file the NFRA-1 , with regard to the particulars of their auditors

a. Listed Companies.

b. Unlisted Public Companies (Limits in Turn over/ paid up capital specified)

c. Insurance, banking and companies engaged in generation or supply of electricity.

d. Body corporate or company or person specified by Central Government in public interest

e. Associate or subsidiary of the class of companies mentioned above, which is incorporated outside India.

4th Quarter of Financial Year 2018-19

We are in the last spell of this financial year and have only 2 more months to close the financial year. In 4th quarter there is no much regulatory compliance matters to be placed before the board meetings. However, being the year end you may place the 9 months’ financial performance report before the board meeting for its review. Please make sure that the 120 days’ gap is not exceeded from the date of last board meeting while fixing the date of the next board meeting.

Wishing you all a very happy compliance period ahead!

BIJOY.P.PULIPRA  Insolvency Professional |IBBI-IPA 02/IP- N00607/11864| Company Secretary | F 7475 | CP 7144 | ||

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