Compliance under Companies Act, 2013 CS Manish Gupta

Types of Compliance 1. Annual or periodic compliances. 2. Event based compliances. 3. Regular Compliance

 Passed by Lok Shabha on  Passed by Rajya Shabha on  Got President Assent on 29th August 2013 & notified on 30th August, 2013  470 Sections (658)  29 Chapters (13)  7 Schedules (15)  99 Sections were notified on  199 Sections were notified w.e.f  172 Sections Yet to be notified  Amendment Act, 2015 passed & notified on Overview of Companies Act, 2013

Section 2(40) – “Financial Statements” includes B/S, P & L A/c, Cash Flow Statement, & Statement of Changes in Equity. Section 2(41) – “Financial Year” means period ending on the 31st day of March every year, and where it has been incorporated on or after the 1st day of January of a year, the period ending on the 31st day of March of the following year. Exemption to Holding & subsidiary By NCLT. Existing companies to comply with in 2 years. Section 2(77) – “Relative” – Members of HUF, H & W and includes F, M, S, S’s W, D, D’s H & siblings. Section 2(85) – “Small Company” – PUC does not exceeds Rs. 50 Lakhs and Turnover does not exceeds Rs. 2 Crores. Exemptions - Public Company, H & S Company, Section 8 & Special Act Companies Chapter I – Definitions

Additional Requirement at the time of Incorporation : 1.Affidavit from all Subscribers in Form INC – 9. 2.Declaration from Professionals, CA / CS / CWA in Form INC –8. Foreign Nationals as Subscribers to the MOA 1.Resident of Commonwealth Country : Documents to be notarized by a Notary Public of that country. 2.Resident of Country which is party to Hague Convention : Documents to be notarized by a Notary Public of that country and apostillised by the authorities of that country. 3.Resident of any other Country : Documents to be notarized by a Notary Public of that country and Consularised by the Indian Embassy situated in that country. 4.Non Resident Present in India : Having valid Business VISA. Chapter II – Incorporation of Company

Section 5(6) - The Articles of the Company shall be in respective forms specified in Table F (Schedule ‐ I), as may be applicable on the Company. Section 12(3)(a) - Every Company shall paint or affix the name and address of registered office and keep the same painted/affixed, outside every office or place in which its business is carried on, in conspicuous position and legible letters. Section 12(3)(c) - Every Company shall get its name, address of registered office, CIN, telephone/fax no. (if any) and /website address (if any) printed on all business letters, billheads, letter papers, Notices and other official publications. Chapter II – Incorporation of Company

Section 11 – Commencement of Business with in 180 days. Section 14(2) - Every alteration of Articles shall be filed with Registrar within 15 days of alteration, together with copy of altered Articles. Section 15(1) - Every alteration made in MOA and AOA shall be noted in every copy thereof. Section 20 – Service of Documents (Speed Post, Registered Post, Courier Service, by hand or by electronic means) Chapter II – Incorporation of Company

Section 56(1) – Transfer of Shares – Transfer Deed SH - 4. Section 56(4) – Delivery of Certificates.  To Subscribers  On Allotment of Shares  On Transfer of Shares  On issue of Debentures Section 71 – Issue of Debentures – PAS – 3. Application Money Received before – Status & Compliances Chapter IV – Share Capital & Debentures

Section 74(1) –Deposits accepted before commencement of the Companies Act, Section 76 – Acceptance of Deposits by Companies :  Unsecured loan from Directors  Credit Rating from the Specialized Agency  Deposit Insurance Rule 16 – Return of Deposits - DPT – 3 upto 30 th June. Eligible Companies : Having Net Worth <100 cr or turnover < 500 Cr and passed & filed with ROC, a Special Resolution in this regard, before making any deposits. Chapter V – Deposits

Section 77(1) – Registration of Creation & Modification of Charge upto 300 days by the Company / Lender. Section 78 – Charge can also be Registered by the Lender. Section 82 (1) – Registration of Satisfaction of Charge. Section 2(16) - Charge - means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage. Whether Required on Vehicle Loan or not??? Chapter VI – Charges

Section 88 Read with Rule (3) –Register of Members from the date of registration shall be in Form No. MGT ‐ 1 – 6 months from date of commencement of rules. Section 88 Read with Rule (5) – Entries to be made in 7 days. Section 88 Read with Rule (8) – All entries in Register to be authenticated by CS and Date of Board Resolution authorizing the same to be mentioned. Section 88 Read with Rule (5)(1) – Registers to be kept at the Registered Office unless SR for with in the city and to any other place in India, if more than 10% of members resides. Section 88 Read with Rule (6) – Index of Members with ROM. Chapter VII – Management & Administration

Section 92(1) – Annual Return to be prepared in Form No. MGT ‐ 7 to be filed with ROC within 60 days of Annual General Meeting having details upto the closure of financial year. To be signed by a Director and CS of the Company. For all Companies except Small & OPC Companies. Section 92(2) read with Rule 11 – All Listed Companies or companies having PUC of 10 cr or turnover of 50 cr, shall be certified by PCS in Form MGT - 8. Section 92(3) read with Rule 12 – Extract of the Annual Return in Form MGT – 9, shall be attached with Board Report. Section 384(2) : Section 92 shall apply on Foreign Companies, Annual Return to be filed in Form FC – 4 in 60 days. Chapter VII – Management & Administration

Section 93 : Listed Company to file Form MGT – 10 with ROC for 2% change in shareholding of Promoters / top 10 Sh/h. Section 94 Read with Rule (15) –Preservation of Records & Registers at Registered Office  Register of Members  Other Registers & Returns To maintain at any other place in India :  More than 1/10 shareholders  Special Resolution  Advance intimation to ROC Section 102 (1) – Explanatory Statement to have interest of all directors / KMP / & their relatives. Chapter VII – Management & Administration

Section Quorum : For Private Limited - 2 Members Section Quorum : For Public Limited  5 Members upto 1000 members  15 Members upto 5000 members  30 Members more than 5000 members. Section 107 – At General Meeting voting shall be on show of hands unless poll is demanded or carried out electronically. Section 108 – E-Voting Section Minutes of the Meetings. (Secretarial Standards, Notice, Numbering, Signatures, Attendance Registers) Section 120 Read with Rule (27) – Maintenance of Document, Records, Registers & Minutes. Chapter VII – Management & Administration

Section 117 – Resolution & Agreements to be filed (MGT – 14) 1.Special Resolution 2.BR for Appointment, Reappointment, Renewal or variation of terms of appointment of Managing Director. 3.To make calls on shareholders in respect of money unpaid on their shares; 4.To authorise buy-back of securities under section 68; 5.To to borrow monies; 6.To invest the funds of the Company; 7.To grant loans or give guarantee or provide security in respect of loans; 8.To approve financial statement & Board Report; 9.To take over a Company or Substantial Stake in another Company; 10.To approve amalgamation, merger or reconstruction; 11.To make Political Contributions; 12.To appoint or remove key managerial personnel (KMP); 13.To appoint Internal Auditors and Secretarial Auditor; Filing : With in 30 days or with additional fees upto next 270 days. Penalty : Section 117(2) - Company Rs. 5 Lakhs to Rs. 25 Lakhs - Others - Rs. 1 Lakh to Rs. 5 Lakhs Chapter VII – Management & Administration

Section 134 – Board Report to include : Extract of Annual Return, Details of Board Meetings, Related Party Transactions, Declarations given by Independent Directors, Explanation on qualification of Auditors, CSR & its usage, Details of Loans, Guarantees & Investments, Separate Section of report on performance of Subsidiaries, JV, Associate. Section 135 – Corporate Social Responsibility Every company having net worth of Rs. 500 crore or more, or Turnover of Rs 1000 Crore or more or Net Profit of rupees Rs. 5 crore or more during any financial year shall constitute a Corporate Social Responsibility Committee and spend 2% of Average Net Profit of immediately 3 preceding financial years. No Penalty Provisions only disclosure in the Board Report. Chapter IX – Accounts

Section 138 – Internal Auditor With 6 months  For Listed Companies  For Public Companies (50 CR / 200 CR / 100 Cr / 25 cr)  For Private Limited Companies (200 CR / 100 Cr) Section 139 – Appointment of Auditors  First Auditor to be appointed in 30 days.  Casual Vacancy - in 30 days & to be confirmed in GM with in 3 months.  Prior Approval of Audit Committee Section 140 – Auditors to File ADT – 3 with in 30 days of resignation. Section 144 – Auditor not to render services. Comply by 31/03. Section 146 – Auditor to attend Annual General Meeting. Chapter X – Audit & Auditors

Constitution of NCLT / NCLAT Erstwhile 293 and 372A is applicable to Private Limited Cos (Section 180 and 186) Company can not give loan to directors or related entities & Exemption of loan to subsidiary – withdrawn Related Party Transaction to be approved by Audit Committee, Board & then By Shareholders Maximum directors 15, can be increased by Special Resolution Every Listed Company and Public Company having PUC of 100 Crores or Turnover of Rs. 300 Crores at appoint One Women Director on the Board. Appointment of Directors u/s 160 – Nomination along with deposit of Rs. 1 Lakh. MISCELLANEOUS PROVISIONS

Independent Directors - Listed Company - 1/3 of the Board; Other Public Company – Atleast 2 – (10 CR / 100 CR / 50 cr) Audit Committee and Nomination & Remuneration Committee 4 Board Meeting to be held in a year with maximum gap of 120 days. Every Director to attend atleast 1 BM in a year. Every Company to have atleast 1 Resident Director Participation through Video Conferencing will be counted for Quorum. Appointment of KMP - Section 203 Secretarial Audit – Section 204 MISCELLANEOUS PROVISIONS

Section Punishment for False Statement. if in any return, report, certificate, financial statement, prospectus, statement or other document required by, or for, the purposes of any of the provisions of this Act or the rules made thereunder, any person makes a statement,— (a) which is false in any material particulars, knowing it to be false; (b) which omits any material fact, knowing it to be material, he shall be liable under section 447. Section Punishment for Fraud Any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. MISCELLANEOUS PROVISIONS

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