Updates of Company Law from 15th April 2011 to 20th May 2011
The Ministry of Corporate Affairs as a part of the green initiative in Corporate Governance allowed paperless compliances by the companies. It has dispensed with physical sending of the Annual Report comprising of Balance Sheet, Profit and Loss Account, Director’s Report, Auditor’s Report to its members as required u/s.219 of the Act vide its General Circular No. 17/2011, dated 21- 4-2011. In lieu thereof it has clarified vide General Circular No. 18/2011, dated 29th April 2011, that the same are permitted to be sent by E-mail but subject to fulfilment of certain conditions.
Details available on:
http://www.mca.gov.in/Ministry/pdf/Circular_17- 2011_21apr2011.pdf and
http://www.mca.gov.in/Ministry/pdf/Circular_18- 2011_29apr2011.pdf
The Ministry of Corporate Affairs has vide General Circular No. 19/2011, dated 2-5-2011, informed that the portal has a facility that allows the Registrar of Companies to mark a company as ‘marked as having management dispute based on the complaints received by them. This creates an alert and documents filed on the portal are not approved and remain in the registry as work in progress till it is demarked by the Registrar. The matters in which the Registrar of Companies shall use this facility is available on:
http://www.mca.gov.in/Ministry/pdf/Circular_19- 2011_02may2011.pdf
The Ministry of Corporate Affairs has vide General Circular No. 20/2011, dated 2-5-2011 has intimated regarding the E-form 32 pertaining to the particulars of appointment of directors, etc., and changes therein pursuant to section 303(2) of the Companies Act — filing of conflicting return by contesting parties.
Details about this Circular are available on
http://www.mca.gov.in/Ministry/pdf/Circular_20-2011 _02may2011.pdf
The Ministry of Corporate Affairs has vide Circular No. 21/2011, dated 2nd May 2011 given approval to the National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL), subject to the condition that they obtain a certificate from Standardisation Testing and Quality Certification (STQC) Directorate, New Delhi for providing electronic platform for electronic voting under the Companies Act, 1956. For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_21-2011 _02may2011.pdf
The Ministry of Corporate Affairs vide Circular No. 2/11, dated 8-2-2011, had granted a general exemption u/s. 212(8) to companies for attaching the balance sheets of subsidiaries to their annual reports, provided conditions specified therein were satisfied. The Ministry has clarified the same will apply to unlisted companies also in order to ensure transparency in those cases where balance sheets are not attached. For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_22-2011 _02may2011.pdf
The Ministry of Corporate Affairs has issued a corrigendum to Circular No. 9/2011, dated 31-3-2011 pertaining to Filing of Balance Sheet and Profit and Loss Account in eXtensible Business Reporting Language (XBRL) The following shall be substituted and read as under:
“(i) all Companies listed in India and their subsidiaries, having paid up capital of Rs.5 crores and above or a turnover of Rs.100 crores or above, excluding Banking Companies, Insurance Companies, Power Companies, NBFC’s and overseas subsidiaries of these Companies.”
For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_25- 2011_12may2011.pdf
The Ministry of Corporate Affairs vide General Circular No. 24/2011, dated 11-5- 2011 has clarified that when the beneficiary of the loan/guarantee/security is a Public Limited Company, approval of the Central Government needs to be sought only if provisions of sub-sections (d) and (e) of section 295 are attracted. For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_24- 2011_12may2011.pdf
The Ministry of Corporate Affairs has vide Circular No. 23/2011, dated 3rd May 2011 clarified that the effective date of the Companies (Particulars of Employees) Amendment Rules, 2011, as all Directors Reports u/s. 217 approved by the Board on or after 1-4-2011 irrespective of the accounting year, to which they relate. The MCA vide GSR 289(E) dated 31-3-2011 had raised the limit of employee’s salary to be disclosed in the Directors’ Report u/s. 217 to Rs.60 lac for the year or at Rs.5.00 lac per month in case of part of the year. For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_25- 2011_12may2011.pdf
The Central Government vide Notification GSR (E), dated 11-5-2011 made the following amendment in the Companies (Accounting Standards) Rules, 2006 called the Companies (Accounting Standards) Amendment Rules 201. In the said rules, in the Annexure under the heading ‘B. ACCOUNTING STANDARDS’, in the sub-heading ‘Accounting Standards (AS) 11 relating to ‘the Effects of Changes in Foreign Exchange Rates’, in Paragraph 46, for the words and figures “46. In respect of accounting periods commencing on or after 7th December 2006 and ending on or before 31st March 2011,” the following shall be substituted namely:
“46. In respect of accounting periods commencing on or after 7th December 2006 and ending on or before 31st March 2012.”
For details refer:
http://www.mca.gov.in/Ministry/notification/pdf/ Notification_G.S.R._11may2011.pdf
Business rules and taxonomy for XBRL reporting — Ministry of Corporate Affairs has informed that it is in process of finalising business rules and taxonomy for XBRL reporting. Final taxonomy and business rules would be circulated by 20th May, 2011. Stakeholders and companies have been requested not to buy accounting software before final business rules so as to avoid any inconvenience.
The Ministry of Corporate Affairs has been informed that Form 61 for normalising a company should not be filed by a dormant company which is desirous of getting struck off under the Easy Exit Scheme (EES), 2011. Such company should file Form EES, 2011 only. In case any charges are pending, such company is also allowed to file Form 17 for satisfaction of the same. Form 61 for normalising a company should be filed by only those dormant companies which are desirous of getting back to active status by filing the due annual returns and balance sheets.
CORRIGENDUM [F.No. 5/7/2011-CL V], dated 1-5-2011 — In exercise of the powers conferred by sub-section (1) of section 637 of the Companies Act, 1956, regarding the Delegation by Central Government of its powers and functions u/s. 25 of the Companies Act, 1956, namely, pertaining to the power to grant approval to dispense with ‘Limited’ in name of charitable or other company, to the Registrar of Companies, the Central Government has notified that it shall come into force w.e.f. 1st May, 2011.
Provided further that the applications received by the Regional Directors u/s. 25 of the Companies Act, 1956 during the period 17th March, 2011 till 30th April, 2011 will be dealt by the concerned Regional Directors.
The Central Government vide Order dated F. No. 52/26/CAB-2010, dated 2nd May 2011 has directed all companies to which the following Cost Accounting Records Rules apply and those which have an aggregate value of networth exceeding Rs.5 crore or aggregate value of turnover from sale or supply of all products or activities exceeding Rs.20 crore or those companies having listed securities whether in India or outside India to have their cost accounting records for each financial year commencing on or after 1st April 2011, audited by a Cost Auditor:
1. Cost Accounting Records (Bulk Drugs) Rules, 1974
2. Cost Accounting Records (Formulations) Rules, 1988
3. Cost Accounting Records (Fertilisers) Rules, 1993
4. Cost Accounting Records (Sugar) Rules, 1997
5. Cost Accounting Records (Industrial Alcohol) Rules, 1997
6. Cost Accounting Records (Electrical Industry) Rules, 2001
7. Cost Accounting Records (Petroleum Industry) Rules, 2002
8. Cost Accounting Records (Telecommunications) Rules, 2002.
Further the companies need to follow the revised procedure for appointment of Cost Auditor as given in the General Circular No. 15/2011 [52/2/CAB -2011], dated 11th April 2011.
The Central Government vide Order dated F. No. 52/26/CAB-2010, dated 3rd May 2011 for has directed all companies to which any of the following Cost Accounting Records Rules apply and those which have an aggregate value of turnover from sale or supply of all products or activities exceeding Rs.100 crore or those companies having listed securities whether in India or outside India to have their cost accounting records for each financial year commencing on or after 1st April 2011, audited by a Cost Auditor for:
(a) Cost Accounting Records (Cement) Rules, 1997
(b) Cost Accounting Records (Tyres and Tubes) Rules, 1967
(c) Cost Accounting Records (Steel Plant) Rules, 1990
(d) Cost Accounting Records (Steel Tubes and Pipes) Rules, 1984
(e) Cost Accounting Records (Paper) Rules, 1975
(f) Cost Accounting Records (Insecticides) Rules, 1993.
Further the companies need to follow the revised procedure for appointment of Cost Auditor as given in the General Circular No. 15/2011 [52/2/CAB -2011], dated 11th April 2011.
Appointment of Cost Auditor — The Cost Audit Branch under the Ministry of Corporate Affairs has revised the procedure to be followed by companies to appoint Cost Auditors u/s. 233B of the Companies Act, 1956. As per the revised procedure, the audit committee will be the first point of reference for appointment of the Cost Auditors. The Company will electronically file an application in E-form 23C within 90 days of the Commencement of the finan-cial year with the Central Government for approval and the same will deemed to be approved, unless the contrary is heard within 30 days.
For details refer:
http://www.mca.gov.in/Ministry/mcaoffices/CAB_ Circular_15-2011_11Apr2011.pdf
Participation by shareholders in the Gen-eral Meetings through electronic mode: The Ministry of Corporate Affairs has vide General Circular No. 27/2011, dated 20th May 2011 has clarified that shareholders of a company may participate in a gen-eral meeting through electronic mode i.e., video conference facility so long as other terms and conditions mentioned in the Circular are fulfilled.
For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_27-2011 _20may2011.pdf
Participation by Directors in meetings of Board/ Committee of Directors through electronic mode: The Ministry of Corporate Affairs has vide General Circular No. 28/2011, dated 20th May 2011 has clarified that directors of a
company may participate in a meeting/committee of directors through electronic mode i.e., video conference facility so long as other terms and conditions mentioned in the Circular are fulfilled.
For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_28-2011 _20may2011.pdf
Issue of Certificate by Digital Signature: The Ministry of Corporate Affairs has vide General Circular No. 29/2011, dated 20th May 2011 has decided that all certificates and standard let-ters issued by the Registrar of Companies will be issued electronically under the electronic signature of the Registrar. For details refer:
http://www.mca.gov.in/Ministry/pdf/Circular_29-2011 _20may2011.pdf
