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Amendments in the Companies Act, 2013 and Notification of Voluntary Liquidation process
CompaniesAct.in
Apr 01, 2017

Amendment in the Companies (Audit and Auditors) Rules, 2014

MCA vide Notification No. 307(E) dated March 30, 2017, has amended the Companies (Audit and Auditors) Rules, 2014 w.e.f. 30.03.2017: -

In the Companies (Audit and Auditors) Rules, 2014, in rule 11, after clause (c), the following clause shall be inserted namely:-

“(d) whether the company had provided requisite disclosures in its financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8th November, 2016 to 30th December,2016 and if so, whether these are in accordance with the books of accounts maintained by the company.”

Click here to download the amended rules.

Amendments to Schedule III of the Companies Act, 2013

MCA vide Notification No. 308(E) dated March 30, 2017, has amended the Schedule III of the Companies Act, 2013 w.e.f. 30.03.2017:-

1. In Schedule III, in Division I, in Part I under the heading “General instructions for preparation of Balance Sheet” in paragraph 6,after clause ‘W’, the following clause shall be inserted namely:-

“X. Every company shall disclose the details of Specified Bank Notes (SBN) held and transacted during the period from 8th November, 2016 to 30th December, 2016 as provided in the Table below:-

  SBNs Other denomination notes Total
Closing cash in hand as on 08.11.2016      
(+) Permitted receipts      
(-) Permitted payments      
(-) Amount deposited in Banks      
Closing cash in hand as on 30.12.2016      

Explanation : For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.”

2. In Schedule III, in Division II, in Part I under the heading “General instructions for preparation of Balance Sheet” in paragraph 6, after clause ‘J’, the following clause shall be inserted namely:-

“K. Every company shall disclose the details of Specified Bank Notes (SBN) held and transacted during the period 08/11/2016 to 30/12/2016 as provided in the Table below:-

  SBNs Other denomination notes Total
Closing cash in hand as on 08.11.2016      
(+) Permitted receipts      
(-) Permitted payments      
(-) Amount deposited in Banks      
Closing cash in hand as on 30.12.2016      

Explanation : For the purposes of this clause, the term ‘Specified Bank Notes’ shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.”

Comments:Specified Bank Notes’ means bank notes of denominations of the value of five hundred rupees and one thousand rupees of the series existing as on 8th November, 2016.

Click here to download the Notification.

Amendment in the Companies (Meetings of Board and its Powers) Rules, 2014

MCA vide Notification No. 309(E) dated March 30, 2017, has amended the Companies (Meetings of Board and its Powers) Rules, 2014 w.e.f. 30.03.2017: -

In the Companies (Meetings of Board and its Powers) Rules, 2014, in rule 15, in sub-rule (3), in clause (a):-

  1. in item (i), item (ii), item (iii) and item (iv), for the words “exceeding ten per cent.” wherever they occur, the words “amounting to ten per cent. or more” shall be substituted; and
  2. in item (iii), for the words “ten per cent. of turnover” the words “ten per cent. or more of turnover” shall be substituted.

Impact:
For the purposes of section 188(1), 1st proviso, except with the prior approval of the company by a resolution, a company shall not enter into a transaction or transactions, where the transaction or transactions to be entered into as contracts or arrangements with respect to clauses (a) to (e) of section 188(1), with criteria as mentioned below:-

S. No. Particulars Before Amendment After Amendment
1. sale, purchase or supply of any goods or materials, directly or through appointment of agent exceeding 10% of the turnover of the company or rupees 100 crore, whichever is lower. amounting to 10% or more of the turnover of the company or rupees 100 crore, whichever is lower.
2. selling or otherwise disposing of or buying property of any kind, directly or through appointment of agent exceeding 10% of net worth of the company or rupees 100 crore, whichever is lower. amounting to 10% or more of net worth of the company or rupees 100 crore, whichever is lower.
3. leasing of property of any kind exceeding 10% of the net worth of the company or 10% of turnover of the company or rupees 100 crore, whichever is lower. amounting to 10% or more of the net worth of the company or10% or more of turnover of the company or rupees 100 crore, whichever is lower.
4. availing or rending of any services, directly or through appointment of agent` exceeding 10% of the turnover of the company or rupees 50 crore, whichever is lower. amounting to 10% or more of the turnover of the company or rupees 50 crore, whichever is lower.

Click here to download the amended rules.

 

Application form for applying for removal of name expected to be made available on 5th April, 2017

Form STK-2 i.e. the application form to be submitted by the company for removal of its name from register of companies under Section 248(2) of Companies Act, 2013 read with Rule 4(1) of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016  is likely to be made available w.e.f. 5th April, 2017.

Commencement of Sections under Section 1(3) of the Insolvency and Bankruptcy Code, 2016

MCA vide Notification No. S.O. 1005(E) dated March 30, 2017, has enforced the provisions of the following sections of the Insolvency and Bankruptcy Code, 2016 w.e.f 01.04.2017:-

S. No. Sections Particulars
1. Section 59 Voluntary liquidation of corporate persons
2. Section 209 No person to function as information utility without certificate of registration
3. Section 210 Registration of information utility
4. Section 211 Appeal to National Company Law Appellate Tribunal
5. Section 212 Governing Board of information utility
6. Section 213 Core services, etc., of information utilities
7. Section 214 Obligations of information utility
8. Section 215 Procedure for submission, etc., of financial information
9. Sub-section (1) of section 216 Rights and obligations of persons submitting financial information
10. Section 234 Agreements with foreign countries
11. Section 235 Letter of request to a country outside India in certain cases

Click here to download the Notification.

IBBI notifies Information Utilities Regulations

The Insolvency and Bankruptcy Board of India (IBBI), in exercise of its powers conferred by sections 196, 209, 210, 211, 212, 213, 214, 215, 216 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (Code), has notified the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017 dated March 31, 2017. The regulations provide for a framework for registration and regulation of information utilities.

An Information Utility (IU) stores financial information that helps to establish defaults as well as verify claims expeditiously and thereby facilitate completion of transactions under the Code in a time bound manner. It constitutes a key pillar of the insolvency and bankruptcy ecosystem, the other three being the Adjudicating Authority (National Company Law Tribunal and Debt Recovery Tribunal), the IBBI and Insolvency Professionals.

The regulations lay down the eligibility criteria for registration of an IU. A public company with a minimum net worth of Rs.50 crore is eligible. More than half of the directors of its Governing Board shall be independent directors. The IU, its promoters, its directors, its key managerial personnel, and persons holding more than 5% of its paid-up equity share capital or its total voting power, shall be fit and proper persons. Ordinarily a person should not hold more than 10% of paid up equity share capital, while certain specified persons may hold up to 25% of paid up equity share capital. However, to start with a person may hold up to 51% of paid-up equity share capital of an IU, but it has to reduce to 10% or 25%, as the case may be, before expiry of three years from registration.

The regulations enable the IBBI to lay down Technical Standards, through guidelines, for the performance of core services and other services by IUs. The Technical Standards shall inter-alia provide for matters relating to authentication and verification of information to be stored with the IU, registration of users, data integrity and security, porting of information, inter-operability among information utilities etc. The regulations require that each registered user and each information submitted to the IU shall have a unique identifier.

The regulations set out the duties to be performed and services to be delivered by an IU. In order to safeguard the interests of the user, the regulations require an IU to have a grievance redressal policy as well as an exit management plan. An IU shall also have a compliance officer who shall ensure compliance with the provisions of the Code and shall, immediately and independently, report to the IBBI any non-compliance of any provision of the Code observed by him.

The regulations will be effective from 1st April, 2017.

Click here to download the Regulations.

IBBI notifies Corporate Voluntary Liquidation Process Regulations

The Insolvency and Bankruptcy Board of India (IBBI), in exercise of its powers conferred by sections 59, 196 and 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016, has notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2016 dated March 31, 2017. The regulations provide the process of voluntary liquidation of a corporate person i.e. companies, limited liability partnerships and any other persons incorporated with limited liability.

A corporate person may initiate a voluntary liquidation proceeding if majority of the directors or designated partners of the corporate person make a declaration to the effect that

  1. the corporate person has no debt or it will be able to pay its debts in full from the proceeds of the assets to be sold under the proposed liquidation, and
  2. the corporate person is not being liquidated to defraud any person.

If the liquidator is of the opinion that the liquidation is being done to defraud a person or the corporate person will not be able to pay its debts in full from the proceeds of assets to be sold in the liquidation, he shall make an application to the Adjudicating Authority to suspend the process of liquidation and pass any such orders as it deems fit.

The regulations prohibit an insolvency professional from acting as a liquidator for a corporate person if he is not independent of the corporate person. These prohibit partners or directors of an insolvency professional entity of which the insolvency professional is a partner or director from representing other stakeholders in the same liquidation process. These oblige the liquidator, and professional(s) assisting him in liquidation to make disclosures - initial and continuing - about pecuniary or personal relationship with any of the stakeholders or the corporate person.

The regulations specify the manner and content of public announcement, receipt and verification of claims of stakeholders, reports and registers to be maintained, preserved and submitted by the liquidator, realisation of assets and distribution of proceeds to stakeholders, distribution of residual assets, and finally dissolution of corporate person. These oblige a liquidator to preserve a physical or an electronic copy of the reports, registers and books of account for at least eight years after the dissolution of the corporate person, either with himself or with an information utility.

The regulations shall come into effect from 1st April, 2017.

Click here to download the Regulations.



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