NEW SECTION 8 COMPANY TO OBTAIN LICENSE VIA INTEGRATED FORM INC-32

Incorporation of a section 8 company was not an easy job, because you need to obtain the license via form INC-12 and Certificate of Incorporation via form INC-32 within just 20 days of getting name approval. Most of the times there were chances that you obtain your license after 20 days of name approval.

So to curb such issues the Ministry of Corporate Affairs (“MCA”), has further amended the Companies (Incorporation) Rules, 2014 and introduced the Companies (Incorporation) Sixth Amendment Rules, 2019 to be effective from 15^th August, 2019.

Now you can obtain both “License under Section 8” and “Certificate of Incorporation” (only for newly incorporated companies) via form INC-32 i.e. SPICe, so no need of filing 2 different forms for License and COI.

THE AMENDMENTS ARE:

In Sub-Rule 1 – A person or an association of persons (hereinafter referred to in this rule as “the proposed company”), desirous of incorporating a company with limited liability under sub-section (1) of section 8 without the addition to its name of the word “Limited”, or as the case may be, the words “Private Limited”, shall make an application in Form INC-32 (SPICe) along with the fee as provided in the Companies (Registration offices and fees) Rules, 2014 to the Registrar for a license under sub-section (1) of section 8.

In Sub-Rule 3 – The requirement to submit the draft Memorandum has been abolished, now company has to file final memorandum of association while obtaining license.

AUTHOR’S NOTE:

THE MANNER OF OBTAINING LICENSE FOR SECTION 8 COMPANY

PARTICULARS	LICENSE TO BE OBTAINED VIA
Newly incorporated company	INC-32 (SPICe)
Existing Company	INC-12
PARTICULARS	CERTIFICATE OF INCORPORATION TO BE OBTAINED VIA
Newly incorporated company	INC-32 (SPICe)

Further to this attachments required in INC-32 (SPICe) has been amendment by addition of following 2 attachments:

1)    Declaration in Form No. INC-14

2)    Declaration in Form No. INC-15

So this is how, the government of India is towards EASE OF DOING BUSINESS, by introduction of new modes to establish your company be it Ngo or normal Private Limited company.

Source: http://www.mca.gov.in/Ministry/pdf/Rules_07062019.pdf

Now file ADT 1 in place of GNL 2: New clarification by MCA

Good news for the companies who have appointed their statutory auditors through eForm GNL 2 during the initial days of enactment of Companies Act 2013. Now the companies can easily file eForm 22A for verification of their registered office after filing ADT 1 for the said period.

After receiving representations from companies and stakeholders, MCA decided to grant relaxation of fee for filing e-form no. ADT-1, particularly form ADT-1 filed through GNL-2 during the period from 01/04/2014 to 20/10/2014 for appointment of Auditor for the period from 01/04/2014 to 31/03/2019 due to non-availability of e-form ADT-1 during the said period.

Accordingly, the matter has been examined by MCA and it is here by clarified that companies which had filed form no. ADT-1 through GNL-2 as an attachment (by selecting ‘others’) during the period from 01/04/2014 to 20/10/2014 may file e-form no. ADT-1 for appointment of Auditor for the period upto 31/03/2019 without fee, till 15.06.2019 (since fee had been paid for filing GNL-2 for the same purpose) and thereafter fee and additional fee shall be applicable as per the Companies (Registration of Office and Fees) Rules, 2014.

http://www.mca.gov.in/Ministry/pdf/GeneralCircular13052019.pdf

Striking off the small company: New rules dated 8th May 2019

MCA has notified the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2019

Notification Date: 8^th May 2019

Effective date: 10^th May 2019

Refer Article No. 01 January 2017 https://csnehasethassociates.blogspot.com/2017/01/fast-track-exit-of-company-inoperative.html

Earlier	Now
Government fees for filing eForm STK 2 was Rs. 5000	Now, Revised Government fees for filing eForm STK 2 is Rs. 10000 w.e.f 10th May 2019
Earlier to this amendment, it was only two eligibility criteria i.e.; 1)    The company should be small company 2)    Only those small companies to apply for striking off which have; -       failed to commence its business within one year of its incorporation; OR -      is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455	Now, in addition to earlier eligibility criteria, it is mandatory to file overdue Annual Returns in eForm AOC 4 and eForm MGT 7 upto the end of FY in which the company ceases to carry on its business operations
In cases where striking off application has been filed after the Registrar has initiated action against the company and its directors and removed their names from register	It is now mandatory to first file overdue Annual Returns before filing eForm STK 2
Earlier to the amendment, Statement of Accounts was given by any CA be it Auditor or any other qualified Chartered Accountant in its own format	Now, format has been prescribed by MCA in STK 8. STK 8 is all about details of Assets and Liabilities not older than 30 days from the date of submission of STK 2

Form DPT-3 and MSME Form I now available from today i.e. 01st May, 2019

Kind Attention companies:

The most awaited forms now available on MCA Portal from 01st May, 2019:

1.	One time Return for disclosure of details of outstanding money or loan received by a company but not considered as deposits	Form DPT-3
2.	Half yearly return in respect of outstanding payments to MSME	MSME form I

So, as per clarifications issued by MCA earlier on the aforesaid forms, Companies needs to file said returns by 30th May, 2019 (within 30 days from the deployment of form on MCA portal).

ACTIVE COMPLIANCE: Ease of Doing Business or Difficulty of Doing Business

COMPLIANCE and STRICT ENFORCEMENT are the key.. If back doors are open, then everyone will flee..

The Government of India in its process of promoting startups has digitized the whole process starting from Incorporation of Company to Winding Up and certain other compliances in between, but as the number of compliances are increasing day by day the corporate sector is confused w.r.t the concept of “EASE OF DOING BUSINESS”,

Here, we wish to clear this very concept of “EASE OF DOING BUSINESS”, ease of doing business does not really means ‘Less Compliances’, but it means ‘Easy Compliances’, if we take examples of various scams that are country is going through like “Vijay Mallya Scam”, “Modi Scam”, we can see that they occurred only because of negligence on part of banking system, lenient verification and checking’s before giving huge amount of loans, and now to ignore such issues in future would only give birth to more of these scams!!

With introduction of compliances such as ACTIVE and/or DIR-3KYC, the Ministry is just making sure that the Company or its Director(s) are real and thus making it more beneficial for the concerned public because dealing with fake corporate would only lead you to “SCAMS”,

Moreover if we go through the forms for ACTIVE filling and/or KYC; it’s evident that the filling process is much easier, attachments are less and time taken is also minimized, the forms being on STP mode gets approved in seconds and the best part being professional certification (to track down the professional in case of any fraud) on these forms, and ZERO Govt Fees!, so how is this compliance DIFFICULT?

Let’s just go through the questions people generally come across for ACTIVE Compliance:

1.    What is ACTIVE Compliance ?

It’s basically a Registered Office verification done to make sure that the company or its directors are not fake, because this requires the photo of company premises with one of its director (internal and external).

2.    Which company required to file ?

Every company that was incorporated on or before 31st December, 2017

3.    Last date to file?

25th April, 2019

4.    Effects of non filling.

You shall be debarred from filing any other form for your company, and   

5.    Practical Difficulties in filling form ACTIVE.

·         Clicking of photos with company board at Registered office, one director and latitude and longitude clearly visible

·         Updated filings of the company like form ADT-1, Annual Filings and others

·         Receiving OTP on the registered Email ID

·         DSC of both two (02) Directors

6.    How to resolve the photo issue?

·    Step 1 Download “Notecam lite" application from Google Playstore or App Store in your mobile phone or request the client to download the same

·         Step 2 Open the Application and allow GPS while it ask for

·     Step 3 On the Right side of Photo ,you will get the details of longitude and latitude.

·         Step 4 Click and Save the Photo

·        Step 5 Convert the photo to PDF and upload the same in the form Inc 22A. ( ACTIVE Form)

·    Step 6 Mention in respective columns the details of latitude and longitude asked in the form

In your android or Iphone, we have to the following .

·         Step 1 You can check longitude and latitude by clicking info of the photograph.

You can Just click photo by keeping location on.

Then keep that photo for record.

Another Alternative Method

Please install my location app in the mobile. Save it and attach to form this shows building n it  nearby area and also longitude and latitude.

Download GPS Camera from play store and while clicking the photo turn on the GPS and give access of the same to the App the photo will automatically show you the longitude and latitude

So we think that the concept of Ease of Doing Business is clear, also make sure to file the form as soon as possible only limited days left or otherwise bear heavy penalty of Rs. 10,000

How independent director come to know about any irregularities or misconduct in working of the company except from purview of fin. Results. Can any share insight on this.

How independent director come to know about any irregularities or misconduct in working of the company except from purview of fin. Results.

Can any share insight on this.                 

You might have view that in India only promoter runs the company, so how can independent director show his independence and share his unbiased views over working of company to the public at large....

Definition of Independent Director as per Companies Act.

“Independent director” as per Section 2 (47) of the Companies Act, 2013 means an independent director referred to in sub-section (6) of section 149 which further states that an independent director in relation to a company, means a director other than a MD or a WTD or a nominee director

Who is eligible to be an Independent Director?

(a) who, in the opinion of the Board, is a person of integrity and possesses relevant expertise and experience

(b) who is or was not a promoter or related to promoters or directors of the company or its holding, subsidiary or associate company

(c) who is only concerned with remuneration as director or having transaction not exceeding 10% of his total income or such amount as may be prescribed, with the company, its holding, subsidiary or associate company, or their promoters, or directors, during the 2 immediately preceding FY or during the current FY

(d)none of whose relatives— (i) is holding any security of or interest in the company, its holding, subsidiary or associate company during the 2 immediately preceding FY or during the current FY: Provided that the relative may hold security or interest in the company of face value not exceeding 50 lakh rupees or 2% of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed; (ii) is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the 2 immediately preceding FY or during the current FY; (iii) has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the 2 immediately preceding FY or during the current FY; or (iv) has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to 2% or more of its gross turnover or total income singly or in combination with the transactions referred to in sub-clause (i), (ii) or (iii)

(e) who, neither himself nor any of his relatives— (i) holds or has held the position of a key managerial personnel or is or has been employee of the company or its holding, subsidiary or associate company in any of the 3FY immediately preceding the financial year in which he is proposed to be appointed Provided that in case of a relative who is an employee, the restriction under this clause shall not apply for his employment during preceding 3FY (ii) is or has been an employee or proprietor or a partner, in any of the 3FY immediately preceding the FY in which he is proposed to be appointed, of— (A) a firm of auditors or company secretaries in practice or cost auditors of the company or its holding, subsidiary or associate company; or (B) any legal or a consulting firm that has or had any transaction with the company, its holding, subsidiary or associate company amounting to 10% or more of the gross turnover of such firm; (iii) holds together with his relatives 2% or more of the total voting power of the company; or (iv) is a CEO or director, by whatever name called, of any NPO that receives 25% or more of its receipts from the company, any of its promoters, directors or its holding, subsidiary or associate company or that holds 2% or more of the total voting power of the company or

(f) who possesses such other qualifications as may be prescribed

Now the question arises that how can independent director show his independence and shares his unbiased views over working of company to the public at large??

Section 149 (4) states that every listed public company shall have at least 1/3^rd of the total number of directors as independent directors and the C.G.  may prescribe the min. number of independent directors in case of any class or classes of public companies,

Also, if we talk about listed companies, where as per section 177 the board of every listed public company shall constitute an audit committee, comprising majorly of the Independent Directors, and the Audit Committee may call for the comments of the auditors about internal control systems and the management of the company, also they shall have power to obtain professional advice from external sources and have full access to information contained in the records of the company,

Conclusion: via audit committee the independent director come to know about any irregularities or misconduct in working of the company except from purview of financial Results.

Now business activities of LLP can be Manufacturing or allied activities as per LLP Act

Business activities of LLP cannot CAN be Manufacturing or allied activities as per LLP Act

A Limited Liability Partnership (“LLP”) is a body corporate formed and incorporated under the Limited Liability Partnership Act, 2008 (“Act”), and it is a legal entity separate from its partners, having perpetual succession, and unlike sole proprietorship any change in the partners of the LLP shall not affect the existence, rights or liabilities of the LLP.

Why one should go for LLP??

Benefits of LLP

1)    Easy to register

2)    Just like a PLC, LLP is also a body corporate, which means it has its own existence as compared to partnership firm

3)    LLP exists as a separate legal entity from its partners. Liability for repayment of debts and lawsuits incurred by the LLP lies on the LLP itself

4)    LLP has perpetual succession and continue to exist till its wound up in accordance with the provisions of the relevant law

5)    LLP is flexible to manage

6)    LLPs are not subject to Dividend Distribution Tax, so no taxes are applicable upon distribution of profits among the partners, as is required in case of dividend distribution by a PLC

7)    LLP is not required to get its accounts audited, which is a mandatory requirement for PLC

8)    As compared to a PLC, LLP has relatively lesser compliance requirements

They were majorly formed for small business purposes specifically related to Service Sectors. But professionals have always faced dilemma for the fact that whether ‘Manufacturing’ can be a part of LLP Business or not?

For this MCA had issued internal clarification dated 6^th March, 2019 stating that the Manufacturing Companies cannot carry on its business under the tag of LLP,

But the new news is that MCA has withdrawn the clarification and with this, LLP’s can be incorporated for the purpose of Manufacturing Activity,

Moreover if you are a company engaged in manufacturing activity and willing to convert your company into LLP then you may proceed with this.

If we go through the provisions of section 2(1)(e) of the LLP Act, 2008 we see that “business includes every trade, profession, service and occupation”,

Authors View:-

The Definition given under section 2(1)(e) is INCLUSIVE ONE, i.e. the terms such as “Trade”, “Profession”, “Service”, “Occupation” are presented here as the example of what Business includes, there is no where mentioned that Manufacturing CANNOT be a Business undertaken by LLP,

All the Limited Liability Partnerships are registered with Registrar of Companies (ROC) in India. It is type of business structure with easy compliance as it is a mix of features of Partnership firm and Limited Liability company.

Effect of this clarification:- the Central Registration Centre (“CRC”) can if all other requirement are satisfied, allow the incorporation of LLP or Conversion to LLP’s where proposed business is Manufacturing or allied activities. So if you are a company engaged in manufacturing and wish to convert the company structure to LLP, NOW YOU CAN PROCEED.

Other requirements for LLP Incorporation:

1.    Designated Partner Identification Number (DPIN)

2.    Digital Signatures (DSC)

3.    Proposed Designated Partners

4.    LLP Name

To know more about how to select name, please go through our article as below;

http://www.steerabidance.com/blogselecting-business-name/

5.    Registered Office

6.    LLP Agreement

Compliances required to be done for LLP

1.    Annual ROC Compliances of LLP

Every LLP registered have to file returns for the year ending 31^st March of the FY. Filings are mandatory whether the LLP has done any business or not.

The following are the returns to be filed by the LLP for the year ended 31^st March of the FY

Form 11 (Annual Return) due date is 30^th May every year

Form 8 (Accounts) due date is 30^th October every year

2.    Event based Compliances of LLP

              i.        Appointment of Designated Partner

            ii.        Cessation of Designated Partner

           iii.        Amendment in Initial LLP Agreement

           iv.        Changes in Main objects of LLP

            v.        Changes in Profit Sharing Ratio

           vi.        Increase in Contribution of LLP

This has diversified the business area of LLP’s, opening up more opportunities for manufacturing industries