As you are all aware that the New Companies Act, 2013 has been implemented with effect from 01st April 2014. There are certain changes as notified by Ministry of Corporate Affairs which are effective immediately and need urgent attention, and there are certain provisions which are provided with a transitional period for compliance.
Below mentioned are few Immediate Changes Required (URGENT)
- Changes in Letterhead/ Invoices/ Other official communication:
Applicability: Every Company
Compliance: Certain mandatory information is required to be disclosed on the letterhead, invoices, debit note, agreements, e-mails, website, business letters, notices or other official communication:
- Full Name of Company
- Registered Address of the Company
- Corporate Identification Number (CIN) issued by the Ministry of Corporate Affairs at the time of registration
- Telephone Number, Fax, E-mail, Website address, if any
For the complete information, please refer to the attached file.
- Registered Office:
Applicability: Every Company
Compliance: Every company whether public or private or any other category is required to comply with the following with respect to registered office address:
- Maintain a registered office where the company can accept and acknowledge receipt of documents
- Display a board outside of every office or business place, having company name (current and former) and address of registered office in local language or any other legible language
- Have its name engraved in legible character on its seal
- Printing of name and address on hundies, promissory notes, bills of exchange and any other similar documents
- Loans to Director:
Applicability: Every Company
Compliance: Every company whether public or private cannot advance (prohibition) any kind of loan/ security/ guarantee to the following persons:
- Any Director
- Director of holding company
- His partner
- His relative,
- Firm in which he or his relative is partner,
- Private limited in which he is Director or member
- Any bodies corporate whose 25% or more of total voting power or board of Directors is controlled by him
Exception: Managing Directors and Whole time Directors do enjoy certain exceptions.
- Transfer of Shares
Applicability: Every Company
Compliance: Every company shall insist on Form SH4 (instead of 7B earlier) which is application by members for transfer of shares supported by Share Certificates.
- Disclosure by a Director of his interest:
Applicability: Director of every Company whether public or private
Compliance: Every Director shall disclose the following:
- His interest in any company or body corporate in form MBP1
- Information about his or her interest at the first meeting of every financial year and every time there are any changes in such interest
It is the duty of the company to preserve this information at registered office for at least 8 years
- Limit on Directorship
Applicability: Director of every Company
Compliance: Every Director shall comply with the following within one year of this Act becoming effective i.e. 01st April, 2014:
An individual can be a Director on maximum of 20 companies out of which not more than 10 should be public limited companies. In case a person is a Director in more than 20 companies, he should choose the 20 companies in which he will stay as Director within one year from 01st April, 2014 and from the rest he needs to resign within transitional period.
- Resignation of Director
Applicability: Director of every Company
Compliance: Every Director shall comply with the following:
- Now it is mandatory for a Director to give notice to the company for his resignation
- Director shall within 30 days of his resignation file the same with registrar in Form DIR-11 along with specifying the reasons for resignation
- Company shall file the resignation of director within 30 days to Registrar in Form DIR-12
- The effective date of resignation will be the date of receiving the resignation letter by the company or date specified in the resignation by Director, whichever is later.
- Allotment of Shares
Applicability: Every Company
Compliance: All companies intending to make allotment of shares on or from 1 April 2014, regardless whether public or private, following have to be complied with–
- Company should accept share application money from existing shareholders only in the same proportion of their current shareholding.
- In case a company does not intend to allot shares in the same proportion/ only few shareholders/ to non-members, company should obtain consent of members by passing special resolution.
- Company should accept share application money only through normal banking channels and not in cash.
- The monies collected as share application money should be kept in a separate bank account and should not be used for business requirements till allotment of shares is done.
- Company should allot shares against such application money within 60 days from the date of receipt.
- In case allotment is not done, the pending share application has to be refunded within 15 days of expiry of 60 days.
- Companies having share application money pending allotment as on 31st March 2014, following options are available preferably on 31st March 2014 –
- Refund such application money immediately or,
- Make an allotment against such money immediately or,
- In case the share application money is accepted from members, directors or Directors’ relatives, convert the share application money into unsecured loan as on 31st Mar 2014
Please contact us for procedural compliance’s for above options.
- Related Party Transaction
Applicability: Both Private and Public Limited Companies
Compliance: Section 188 of the Companies Act, 2013 talks about the transaction which requires prior consent of board or Company as the case may be to enter into contracts in which Directors are interested. The following transactions will amount to related party transaction unless done in ordinary course of business adhering to arm’s length principles:
- Sale, purchase, or supply of any goods or materials
- Selling or otherwise disposing of, or buying property of any kind
- Leasing of property of any kind
- Availing or rendering of any services
- Appointment of any agent for purchase or sales of goods or materials, services or property
- Such related party’s appointment to any office or place of profit in the company, its subsidiary company, or associate company; and
- Underwriting the subscription of any securities or derivatives thereof of the company
o No contract or arrangement shall be enter into except with prior approval of the Company by Special Resolution for certain specified limits
o In case the contract is already entered into, the approval of the Board of Directors / Shareholders, as the case may be, has to be obtained within 3 months from the date of such contract
o Notice of Board meeting should contain prescribed particulars and the explanatory statement is required to be annexed to the notice of general meeting containing prescribed particulars
o No member can vote on such special resolution if such member is a related party, further even the interested Director cannot participate in the discussion on the approval of related party transactions
Please contact us for any procedural compliance’s with regard to Related Party transactions.
Hope the above information would be useful to you. We will be circulating important updates like these on regular basis.
You are requested to kindly follow the above mentioned points carefully and feel free to contact us in case of any doubts / concerns for any other matter related to New Companies Act, 2013 at below mentioned contact details-
Malavika Bhatia | malavika.bhatia@bluelotusstrategy.com | M +91 98733 18440
Monika Bhardwaj | monika.bhardwaj@bluelotusstrategy.com |M +91 98915 60525
We will do our best to assist you with the compliance’s and removal of doubts / queries. However, please note that since the Act is new, all rules are yet to get promulgated and further MCA website would not be operational from 1st April 2014 till 13th April 2014, as there are lot many areas where operational issues are to be sorted out.
In case of queries that requires clarification from Ministry of Corporate Affairs, we will come back to you after seeking necessary clarifications from the Ministry.
