How to convert Partnership firm into LLP

Conversion of Partnership Firm into Limited Liability Partnership

In the era of Make in India, it is important to register your business first before kick start your business. There are many entrepreneurs who were unaware of the business structures to opt for in India, so they started with either a Proprietorship firm or partnership firm. Broadly, there are three business structures in India; One; Private Limited Company including One Person Company, Second; Public Limited Company and Third; Limited Liability Partnership (LLP).

LLP as the name suggests, it is limited liability Company while under Partnership, there is unlimited liability. It is advisable to start a LLP instead of Partnership for better business structure.

Now, many entrepreneurs who are already sailing in the boat of Partnership firm, good news for them that they can get their firm converted into LLP easily by following the below-mentioned procedure.

Step Number	Particulars	Form to be filed	Documents Required
1.	Obtain Digital Signature of any one Designated Partner	DSC application to be filed with Sify/ eMudhra	-         PAN Card -         Address Proof -         Photo to be affixed on the DSC Application Please note that the documents are required to be attested by banker or Gazetted Officer
2.	Obtain DIN (Director Identification Number)	eForm DIR 3	-         Self attested Pan Card -         Self attested Address Proof -         Recent Passport Size Photograph Information required is, Mobile Number, Email id and Educational Qualification
3.	File Name Application for LLP with the Registrar of Companies If the name of Partnership firm is already registered with the Registrar of Firms, then, you can attach a Proof to the form, and if you have registered Trademark against the applied name, then, also attach TM Acknowledgement	eForm 1LLP	- Copy of Trade Mark Registration/ acknowledgement of application for Trade Mark Registration/ authorization to use Trade Mark -Proof of No Objection from the existing Partners
4.	Application for Conversion After the name gets approved, conversion application can be filed with the Registrar of Companies	eForm 2 & eForm 17	-         Statement of consent of partners of the firm -         Statement of Assets and Liabilities of the firm duly certified as true and correct by Chartered Accountant in Practice -         Copy of Acknowledgement of latest Income Tax Return filed -         List of all Secured Creditors along with their consent for conversion -         Registered Office Proof -         Subscribers Sheet -         Details of LLP/ Comp[any in which Partner/ DP is Director/ Partner
5.	Filing LLP Agreement After issue of Certificate upon conversion of Firm into LLP, the LLP is required to file LLP Agreement covering the Roles & Responsibilities of Designated Partners/ Partners	eForm 3	-         LLP Agreement duly stamped signed and notarised by Public Notary LLP Agreement  required to be filed within 30 days of receiving Certificate of Incorporation
6.	Information to Registrar of Firms about conversion	Form 14	-         On issue of certificate of registration the new LLP thus formed shall within 15 days from the date of registration inform the concerned Registrar of Firms by filing Form 14 to be in physical form and submitted to Registrar of Firms

·        The limited liability partnership shall ensure that for a period of twelve months commencing not later than fourteen days after the date of registration, every official correspondence of the limited liability partnership bears the following :

§  a statement that it was, as from the date of registra­tion, converted from a firm into a limited liability partnership; and

§  the name and registration number, if applicable, of the firm from which it was converted.

For more updates, please contact CS Neha Seth at csnehaseth@gmail.com or call us at 9871903449

RBI proposes changes in timeframe for share issuance

RBI proposes changes in timeframe for share issuance

The Reserve Bank today came up with draft norms on timelines for issuance of shares on receipt of FDI and reporting the same to the central bank in an attempt to align provisions of the Foreign Exchange Management Act with the Companies Act, 2013.

As per draft norms, an investee company receiving FDI should issue shares within 60 days of receipt of foreign investment and file the report with the Reserve Bank. Timeline under FEMA is 180 days of the receipt of FDI.

The report needs to be filed with the Reserve Bank within 30 days of the receipt of the FDI and within 30 days of the issuance of shares. Under the proposed regulations, an investee company will be required to submit a certificate from a company secretary or chartered accountant to the effect that provisions of the Section 42 of the Companies Act, 2013, have been complied with.

As per the Section 42, an Indian company is required to issue shares within 60 days from the date of receipt of share application money, RBI said, adding that this provision is applicable to a company receiving share application money from foreign investors as well.

"In view of the specific and express provisions under the Companies Act, 2013, it was felt that there is no need to have a separate and different timeframe for these purposes in FEMA provisions," the central bank said and has sought public comments by February 22 on the draft. The draft also stipulates that delay in filing of report with RBI should attract a minimum penalty of Rs 5,000 and maximum Rs 5 lakh per month or part thereof for the first six months of delay and twice that rate thereafter. The RBI is also proposing to introduce similar penalty structure for other mandatory reporting requirements under FEMA.

Appointment of Foreign Citizen as Whole Time Director

Appointment Of Foreign Citizen as Managing Director, Whole-time Director Or Manager

 Section 196 of Companies Act, 2016

·        No Company shall appoint or employ at the same time a managing director, whole-time director and a manager.

·        No Company shall appoint or re-appoint any person as its managing director , whole-time director or manager for a term exceeding five years at a time:

Provided that no re-appointment shall be made earlier than one year before the expiry of                                                          his term

·         No company shall appoint or continue the employment of any person as managing                                            director, whole-time director or manager who-

(a) is below the of 21 years or has attained the age of70 years:

     Provided that appointment of a person who has attained the age of seventy years may be made by passing a special resolution in which case the explanatory statement annexed to the notice of such motion shall indicate the justification of appointing such person;

(b) is an undischarged insolvent or has at any time been adjudged as an insolvent;

(c) has at any time suspended payment to his creditors or makers, or has at any time made, a composition with them; or

(d) has at any time being convicted by court of an offence and sentenced for a period of more than six months.

·         Subject to the provision of section 197 and schedule V,  a managing director, whole-time director or manager shall be appointed and the terms and condition of such appointment and remuneration payable be approved by the board of directors at a meeting which shall be subject to approval by a resolution at the next general meeting of the company and by the central government in case of such appointment is at variance to the conditions specified in that schedule:

Provided that notice convening board or general meeting for considering such appointment shall include the terms and condition of such appointment , remuneration payable and such other matters including interest ,of a director or directors in such appointments , if any:

Provided further that a return in the prescribed form shall be filled within sixty days of such appointment with the registrar.

·         Subject to the provision of this act, where an appointment of a managing director, whole-time director or manager is not approved by the company at a general meeting , any act done by him before such approval shall not be deemed to be invalid.

Rule 3 of Companies ( Appointment & Remuneration of Managerial Personnel) Rules , 2014

A company shall file a return of appointment of a managing director , whole time director or manager, chief Executive Officer (CEO), Company Secretary and Chief Financial Officer (CFO), within 60 days of the appointment, with the registrar in Form No. MR.1 along with such fee as prescribed under Companies (Registration Offices and Fees) Rules, 2014.

Part 1 of the Schedule V to the Companies Act,2013

Apart from this, Part 1 of the Schedule V contains certain conditions, which must be satisfied by a person to be eligible for appointment as managing director/whole-time director/manager without the approval of Central Government. Part 1 of the Schedule V reads:

No person shall be eligible for appointment as a managing director or a whole-time director or a manager (hereinafter referred to as managerial person) of a company, unless he satisfies a following conditions, namely:

·         He had not been sentenced to imprisonment for any period, or to a fine exceeding Rs. 1,000, for the conviction of an offence under any of the following 16 acts, namely Indian Stamp Act; Central Excise Act; IDRA; Prevention of Food Alteration Act; Essential Commodities Act; Companies Act; SCRA; Wealth Tax Act; Income Tax Act; Customs Act; Competition Act; FEMA; SICA; SEBI Act; FT(D & R) Act; and Prevention of Money Laundering Act, 2002 :

Provided that where the Central Government has given its approval to the appointment of a person convicted, no further approval of that person , if he had not been convicted subsequent to such approval; 

·         He had not been detained for any period under the conservation of Foreign Exchange and Prevention of Smuggling Activities, 1974:

Provided that where the Central Government has given its approval to the appointment of a person detained, no further approval of the Central Government shall be necessary for the subsequent appointment of that person, if he had not been so detained subsequent to such approval;

·         He has completed the age of 21 years but has not attained the age of 70 years. 

However , a person who has attained the age of 70 years can be appointed as the managerial person without the approval of the Central Government; provided his appointment is approved by a special resolution passed by the company in general meeting;

·         Where he is a managerial person in more than one company, he draws remuneration from one or both companies, provided that the total remuneration drawn from the companies does not exceed the higher maximum limit admissible from any of the companies of which he is a managerial person;

·         He is resident in India. Here, resident in India includes a person who has been staying in India for a continuous period of not less than 12 months immediately preceding the date of his appointment as a managerial person and who has come to stay in India------

(i)  for taking up employment in India; or

(ii) for carrying on a business or vocation in India.

It may be noted that this condition shall not apply to that companies in Special Economic Zones.

What are the compliances if in case a Foreign citizen is being appointed as Whole Time Director?

Central Government approval is required.

eForm MR 2 is required to be filed. eForm MR 2 is Form of application to the Central Government for approval of appointment or reappointment and remuneration or increase in remuneration or waiver for excess or over payment to managing director or whole time director or manager and commission or remuneration to directors

Take note that application seeking approval shall be made to CG within a period of Ninety days from the date of such appointment.

It is mandatory that the foreign Citizen is having valid DIN. The Foreign Citizen must have valid Passport as Identity Proof.

Meetings to be held in this compliance;

-          Board Meeting

-          Remuneration & Nomination Committee Meeting

-          Shareholders Meeting

Apart from eForm MR 2, eForm MGT 14 is also required to be filed to file the Special Resolution.

Attachments to eForm MR 2 in case you are appointing Whole Time Director as a Foreign Citizen;

-          Certified true copy of the resolution of Board of directors

-          Copy of the resolution of nomination and remuneration committee

-          Certified true copy of resolution of shareholder(s) along with notice

-          Certificate from the auditor or company secretary

-          Newspaper clipping in which notices are issued

-          Copy of employment visa/ passport, in case the proposed appointee is a foreign citizen.

-          Copies of educational or professional qualification certificate

-          Projections of the Turnover and net profits for next three years

-          Full and proper justification in favor of the proposal

Govt fees for filing eForm MR 2 would range from Rs. 2000 to Rs. 20,000 depending upon the Authorised Share capital of the company       

For more details, contact CS Neha Seth at 9871903449 or csnehaseth@gmail.com 

Name availability will be centralised across India at Manesar.

News on MCA. From 27th January the name availability will be centralised across India at Manesar. Means the name availability will not be done by respective RoC's. Info is that name Availability applications will be disposed of within 24 hours. Also news is that the activity of the company need not be there in the proposed name applied for.

The Ministry of Corporate Affairs has amended Companies (Incorporation) Rules, 2014. These rules may be called the Companies (Incorporation) Amendment Rules, 2016. They shall come into force from 26th day of January, 2016. 

Amendment:

(1) In the Companies (Incorporation) Rules, 2014 (herein after referred to as the principal rules), in rule 8,- 

(i) in sub-rule (2) 

(a) sub-clause (ii) of clause (b) shall be omitted; 

(b) sub-clause (x) of clause (b) shall be omitted; and 

(c) sub-clause (xvii) of clause (b) shall be omitted. 

(ii) sub-rule (3) shall be omitted. 

(iii) sub-rule (a) shall be omitted. 

(2) In the principal rules, for Rule 9 the following shall be substituted namely: - 

"9. Reservation of name - An application for the reservation of a name shall be made in Form No. INC.1  along with the fee as provided in the Companies (Registration oIfices and fees) Rules, 2014 which may be approved or rejected, as the case may be, by the Registrar, Central Registration Centre."

(3) In the principal rules, in rule 36, in sub-rule(12),- 

(i) after sub-clause (b), the following shall be inserted.- 

'(ba) After the resubmission of the documents and on completion of second opportunity, if the registrar still finds that the documents are defective or incomplete, he shall give third opportunity to remove such defects or deficiencies;' 

Provided that the total period for re-submission of documents shall not exceed a total period of thirty days. (ii) in sub-clause (c), for the words'two opportunities', the words 'three opportunities' shall be substituted.

The Central Government hereby establishes a Central Registration Centre (CRC) having territorial jurisdiction all over India, for discharging or carrying out the function of processing and disposal of applications for reservation of names under the provisions of the said Act. The CRC shall function under the administrative control of Registrar of Companies, Delhi (ROC Delhi), who shall act as the Registrar of the CRC until a separate Registrar is appointed to the CRC. The CRC shall process applications for reservation of name i.e., e-Form No. INC-1 filed along with the prescribed fee as provided in the Companies (Registration of Offices and Fees) Rules, 2014. Processing and approval of name or names proposed in e-Form No. lNC-29 shall continue to be done by the respective Registrar of Companies having jurisdiction over incorporation of companies under the Companies Act,2013 as per the provisions of the Act and the rules made thereunder. The CRC shall be located at Indian institute of Corporate Affairs (llCA), Plot No. 6,7, 8, Sector 5, lMT Manesar, District Gurgaon (Haryana), Pin Code- 722050. This notification shall come into force from 26th January,2016. 

For further clarification, please contact CS Neha Seth at 9871903449 or at csnehaseth@gmail.com

GST Law 2016

GST LAW MODEL 2016 (DRAFT) released by Govt.

The report of Sub Committee II (Empowered Committee of State Finance Ministers) on model GST law has been released encompassing the draft Central and State GST Act 2016.

The 130 page report has been divided into 14 parts, 130 sections, 3 schedules, and GST valuation (Determination of the value of supply of Goods and Services) Rules 2016.

The report encompasses the provisions on the following-

1. Definitions of 77 terms

2. Meaning and scope of supply

3. Classes and Powers of Officers under the Act

4. Time of supply of Goods and Services

5. Identifying the nature of Supply - i.e. interstate or intrastate

6. Place of supply of goods and services

7. Value of taxable supply

8. Manner of taking Input Tax credit and utilisation thereof

9. Remission of tax on supplies found deficient in quantity

10. Recovery of tax not paid or short paid or erroneously refunded

11. Interest on delayed payment of tax

12. Refund of tax and interest on delayed refund

13. Registration- Amendment, Cancellation, Revocation

14. Accounts and Records- Tax Invoice, Credit and Debit Notes, other records including period of retention

15. Furnishing details of inward and outward supplies

16. Payment of tax, penalty, interest and other amounts

17. Offences and penalties

For more details, contact CS Neha Seth at 9871903449 or email us at csnehaseth@gmail.com

Guidelines for Fast Track Exit for defunct or inoperational companies

There are a number of companies, which are registered under the Companies Act, 1956, but due to various reasons they are inoperative since incorporation or commenced business but became inoperative or defunct later on.

Such companies may be desirous of getting their names strike off from the Register of Companies maintained by Registrar of Companies.
In order to give an opportunity for fast track exit by a defunct company, for getting its name struck off from the register of companies, the Ministry has decided to modify the existing route and has prescribed the Fast Track Exit Guidelines. The Guidelines for “Fast Track Exit mode” for defunct
companies under section 560 of the Companies Act, 1956

Eligibility Criteria:
A.
- Company applying for FTE (Fast Track Exit) Scheme, has nil assets and nil liabilities and
- has not commenced any business activity or operations since incorporation
OR
- is not carrying over any business activity or operation for last one year before making application for striking off

B. Check Status of your company at MCA. If its active or Dormant Status, you can apply for FTE
C. If you are Government Company, then, also you can apply for FTE, but take NOC from Ministry or concerned department

The companies which cannot apply for FTE are;
- Listed Companies
- Delisted companies
- Section 25 companies as per CA 1956 (Now called Section 8 Company)
- Vanishing Companies
- companies against which prosecution for a noncompoundable
offence is pending in court
- company having secured loan
- company having management dispute
- company in respect of which filing of documents have been
stayed by court or Company Law Board (CLB) or Central
Government or any other competent authority
- company having dues towards income tax or sales tax or
central excise or banks and financial institutions or any other
Central Government or State Government Departments or
authorities or any local authorities.

For filing application for FTE, Government fees is Rs. 5000/-

What if the Directors information is not there in the database of Directors maintained by the Ministry?
In this case, the application shall be accompanied by certificate from a Chartered Accountant in whole time practice or Company Secretary in whole time practice or Cost Accountant in whole time practice alongwith their membership number, certifying that the applicants are present directors of the company. In such cases, the applicants shall not be asked to file Form 32 and Form DIN 3.

For more details, contact CS Neha Seth at csnehaseth@gmail.com or call us at 9871903449

Appointment of Compliance Officer in Listed Company mandatory

SEBI UPDATE

Compliance Officer:

A listed entity shall appoint a qualified Company Secretary as the Compliance Officer.
It is mandatory for listed entity to Appoint Company Secretary as Compliance Officer.

Roles & Responsibility of Compliance Officer:

1.       Coordinator: Co-ordination with and Reporting to following below mention with respect to compliance with rules, Regulations and other directives of these authorities in manner as specified from time to time:
·         Board of Directors
·         Recognize Stock     Exchange

2.       Ensuring conformity with the regulatory provisionsapplicable to the Listed Entity in letter and spirit.

3.       Correctness of Information, Statements and Reports filed by the Listed Entity: Ensuring that the correct procedures have been followed that would result in the Correctness, Authenticity and Comprehensiveness of the Information, Statements and Reports filed by the Listed Entity under these regulations.

4.       Grievance Redressal Division: Monitoring email address of Grievance Redressal division as designated by the listed entity for the purpose of registering complaints by investors.

Non-applicability of provision of Compliance Officer:

 The requirements of this regulation shall not be applicable in the case of units issued by mutual funds which are listed on recognized stock exchange(s).

But same shall be governed by the provisions of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996