DIR-3-KYC: A big confusion for FY 2019-20: Governance Professional

confusion

Let us invite your attention to one major confusion among the professionals nowadays about the filing of new styled e form DIR-3-KYC for the Individual has already been complied with the KYC norms introduced very first time.

Before to proceed to the core of the Article, let us brief you about the provision that the MCA has issued one notification dated 5th July 2018, to become effective from 10th July 2018, to insert one rule “Rule 12A” as the 4th amendment in the principal rules “Companies (Appointment and Qualification of Directors) Rules 2014.

The verbatim reproduction of the said new rule as under:

“12A Directors KYC- Every individual who has been allotted a Director Identification Number (DIN) as on 31st March of a financial year as per these rules shall submit e-form DIR-3-KYC to the Central Government on or before April 30th of the immediate next financial year”

The new rule mandate filing of the DIR-3-KYC by every Individual “has been allotted” a DIN on or before 31st March shall file the form on or before 30th April, however, it was not clear yet about the nature of compliance (i.e., Annual or one time only), but, in our view, the words “has been allotted” experience us about an event taken place through some act (like filing of an application), accordingly, it gives an impression that “an individual to whom fresh DIN allotted through a fresh application on or before 31st March”

Let’s understand the expression “has been allotted” through an example illustrated below:

  1. Mr. A; to whom DIN allotted in 1991 – In this case, Mr. A is an old Director to whom DIN was already issued through an old system and also has done with the KYC at the first time of the new norms. It’s no matter the DIN allotted either on or after 31st March of 1991.
  2. Mr. A; to whom DIN allotted in 2019 – In this case, Mr. A is an Individual has filed an application on or before 31st March 2019 in an e-form DIR 3 for the allotment of the DIN. The expression “has been allotted” somewhere get justified in this case.

Further, a professional has also raised a ticket on 2nd April 2019 with the MCA portal, which for the time being giving indirect clarification that filing of e-form DIR-3-KYC is not Annual compliance. The error comes while pre-fill of the DIN of an Individual who has already been done the KYC for the first time” DIR-3-KYC has already been filed for given KYC”

However, unless any communication from the MCA about the clarification over nature of compliance (i.e., Annual or One time), the compliance to be treated as Annual in nature.

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Company Secretary – Let’s change the parameters of the appointment: Governance Professional

Freedom

Through the article, let us seek your kind attention to the following mentioned parameters have been used many a time in the Companies Act 2013 (“the Act”) for compliance purpose. There are provisions in the Act to which compliances merely based upon the limits/ thresholds; which mainly financial numbers in nature. The word which marked very frequently to define any such limit includes “Turnover“, “Net-worth“, “Outstanding loan“, “Deposit“, “Number of shareholders/ deposit holders” etc. 

As you are aware that the number of changes being taken place recently in the Act hardly has happened in the history of the Indian Company Law, accordingly, the roles & responsibilities of the professionals include In-house for the adherence to the applicable laws upon client company have also been increased over the period of time. The situation like professionals nowadays surrounded by an environment where they need to be cautious and active to remain in the industry.

However, there is one thing need to be get appreciated that the recognition and roles & responsibilities of the Company Secretaries get many folded with such changes. The business environment in India comes to a position where if someone is running a company or any other legal structure has to have remained in touch with the Company Secretary so as to enable smooth passage with the compliance requirements and to enable the businessman to keep their eye centered on business without any distraction or interferences from the government side.

But, there is one thing which also needs your attention with the change in time, despite, the increase in the role being occupied by a Company Secretary in a company or through own office, the criterion to appoint such professional remain based upon paid-up capital. In fact, this is a very good time that our regulatory environment getting filtered with the strikeout old laws and change in the existing enactments with a view to aligning the Indian economy with leading countries. The role of professionals may be in near time at higher stakes or would take a different picture.

As everyone knows that the Indian Company law used to define many other parameters for the compliances, accordingly, the appointment of professionals to ensure such compliances should also get stretched to other parameters over the period of time to unlock the opportunities.

In our opinion, It may be the one other way our Indian economy would uncover the many other opportunities by enabling the experts in compliances to occupy the position with the different sizes of the legal structure to avoid any collapses.

 

 

 

INC 22A (ACTIVE) – The ball in the ICSI court, Let’s counter: Governance Professional

I am CS

As everyone know that since the moment of an introduction of a new styled e-form INC 22A (ACTIVE) all the Companies qualified the criteria of having Company Secretary in terms of rule 8 & 8A read with section 203 of the Indian Companies Act 2013 wouldn’t be able to escape more by taking the shelter of non – availability of the competent Company Secretaries.

Every such company falls into the limits must have a Company Secretary. The period of such appointment so far not given in any provision except in the case to fill the casual vacancy which needs to be filled up within 6 months, however, the things to get cheered now that immediately upon the introduction of the e-form the period to fill-up such vacancy has been shortened till the due date of the e-form INC 22A or the six months as given in the Act, whichever is earlier, hence, we would say that the company has to appoint one Company Secretary within the next few days to comply with the requirements and to save the Company from a tag of “ACTIVE – NON-COMPLIANT”

As the period of filling up such vacancy or hiring for the Company Secretary by newly incorporated Company may likely to get manifolds in the next few days.


Let’s appreciate the efforts of the team member who has taken up the matter before ICSI and raised the voice of the Members of ICSI in practice and employment!!

Respected Sir,

It’s indeed a pleasant moment to share with you some suggestions this morning. I hope it would be able to seek your kind attention. As the number of amendments has been taken place recently leads to the scope of Company Secretary altogether on a different level. Now it becomes the talks of old days that a “Company Secretary – a professional to be contacted during Annual Filing”. Since earlier, the Industry used to with a mindset that Company Secretaries work based upon a particular season, however, the amendments recently kicked off the number of opportunities and have the potential to be marked the “whole year as the season” for us. I would say it’s all about the timing and the management; hence, I also must appreciate the whole of the Council members for the achievement.

Further, the changes and the introduction of the new set of e-forms somewhere have been helped to act as the support pillar and creation of pitch to justify the presence of a Company Secretary until the INC 22A, however, immediately upon the introduction of e-form INC 22A, such presence has been turned to become reality.  Fortunately, we are living in an environment where every company which qualified the criteria under section 203 of the Companies Act 2013 has to appoint a Company Secretary within few days without any excuses so as to enable to get prepared to save the business from a tag “Non-Compliant” and “image & business loss” before the vendors.

In nutshell, I would like to define the whole amendments, either minor or major in nature, as “the ball in the ICSI court“. I also would like to add one thing in order to tap all available opportunities the counter from the Institute and the members going to play a major role, hence, it’s a good time to come up with some specified norms brief as follows:

  1. Minimum Certification feeSince there are the number of e-forms have been introduced recently needs to be filed with the ROC and, in my view, a Company Secretary has the potential to suggests the corporate in a better and efficient manner, however, the way tapping the opportunities would matter a most. There would be the members with lesser experience may quote less to attract the client or vice versa, therefore, the Institute must sooner promulgate the norms to define the minimum certification fee along with dos and don’t’s for the members in practice.
  2. Salary norms for the members in the employment: Since the Introduction of e-form INC 22A has an impact like to expedite the recruitment process by a Company. In this situation there would be two types of the companies 1) The company looking to fill the casual vacancy arises u/s 203 of Act 2) A company incorporated with a high paid-up, therefore, in order to avoid a high burden of CTC, the corporate may play a game with the Company Secretaries in the nature of “hiring freshers at a low salary”, hence, in my opinion, the Institute also must come-up with norms to lay the Salary structure with a base CTC (like 420,000 for the fresher and 500,000 to 550,000 for the year one experience) along with the do’s and don’ts

I hope the words have knocked with an intended approach. I will be delighted to fall in detail discussion at your convenient time.

Looking excitingly with the higher aspirations

Regards

ACS Prem Munjal

co.secy.prem@gmail.com

Export and Import of currency: Governance Professional

FEMA

Let us inform you quickly that the RBI has introduced significant changes on 26th February 2019 in Foreign Exchange Management (Export and import of the Currency) Regulations, 2015 (hereinafter referred to as “the principal regulations” notified on 29th December 2015) to mandate that one person of India may take or send out of India to Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India notes (other than notes of denominations of above Rs.100 in either case), provided that an individual traveling from India to Nepal or Bhutan can carry Reserve Bank of India notes of Mahatma Gandhi (new) Series of denominations Rs. 200/- and/or Rs. 500/- up to a total limit of Rs. 25,000

If we do analyze the said amendment, the interpretation would be that no person can take or send out of India or while traveling from India to Nepal and Bhutan, any currency note issued by the RBI of Mahatma Gandhi new series of the denomination of Rs 100.


Let us brief you on the principal regulation as below:

  1. It has been divided into 8 sub-regulations with the two prohibitory provisions “sub-regulation 4 & 5”
  2. Under every Central Act, the government has been reserved one right to make the appropriate changes without approaching the parliament. Similarly, in the FEMA Act, the government has the power to make regulations under section 47 of the FEMA Act.
  3. It was published on 29th December 2015.

MSME update -Calculation of the Investment limits: Governance Professional

 

Let’s understand the whole picture in one case:

A company (“Supplier”) has plants across the country but the MSME certificate is being issued for the State where the registered office is being located. Another company (“Receiver”) received the goods from the plants of the Supplier company other than the state of the registered office.

Question: Is the recipient company will need to file any MSME Form 1?

Solution: A company or proprietorship or Hindu or undivided family or association of persons or co-operative society or partnership firm or company or any other undertaking shall be termed as the MSME on the basis of the *Investment in plant & machinery or Equipment used for providing services, as the case may be, shall be taken together (i.e., the investment made in plant & machinery or equipment to be calculated on across the country basis), hence, if the company (“Receiver”) is receiving the goods/ services from the company (“Supplier”) having investment in plant & machinery / Equipment across the country as per the limits defined under section 7 “classification of the enterprises” of the in the MSMED Act 2006, the Receiver company shall be subject to the filing of MSME Form 1.

*The investment made in the cost of pollution control, research, and development, industrial safety devices shall be excluded. 

Note: The MSMED Act has replaced the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993

E-form SH 7 – Your form may be sent for re-submission: Governance Professional

Hello Professional friends,

Let us inform you that in the given case the Company has recently been filed one e-form SH 7 for the Redemption of the Preference Shares with all the requisite attachments. The said Redemption has not resulted in any change into authorized capital of the company, hence, the requirement of the alteration of the Authorized Capital clause didn’t arise. However, the ROC has been sent the form for resubmission on account of the query “Please file altered MOA for doing needful”

Let us further shared you the reply submitted by the Company as under:

 

Date………….

ROC’s name

State of the ROC

ROC address

Sub: Clarification wr.t. resubmission of the e-form SH 7

Ref: SRN No and dated

Dear Sir/ Madam,

In reference to the subject as cited, we wish to seek your kind attention on our following reply:

“Please file altered MOA for doing needful.”

We would like to clarify that the form SH-7 being filed for the redemption of the Preference share Capital and subject to the compliance of provisions of section 55 of Companies Act 2013, the Company didn’t required to altered its Memorandum of Association (“MOA”), hence, in our view, the filing of the same shall also not be applicable. However, we do assure you to the compliances with the applicable provision in this connection.

You are kindly requested to consider the same and shall be obliged to get resolved the matter at earliest so as to enable us to proceed further.

Thanking You,

For & on behalf of Board of Directors

ANZ Private Limited

 

Mr. Y

Company Secretary



 

Alternative Reply: 

 

Date………….

ROC’s name

State of the ROC

ROC address

Sub: Clarification wr.t. resubmission of the e-form SH 7

Ref: SRN No and dated

Dear Sir/ Madam,

In reference to the subject as cited, we wish to seek your kind attention on our following reply:

“Please file altered MOA for doing needful”

We would like to clarify that the form SH-7 being filed for the “Redemption of the Preference Share Capital”. The said redemption has no impact on the Authorize Share Capital Clause, hence, the requirements to altered the Memorandum of Association (“MOA”) didn’t arise.

Further, we do assure you of being compliant with the other applicable provision in this connection from time to time. 

You are kindly requested to consider the same and shall be obliged to get resolved the matter at earliest so as to enable us to proceed further.

Thanking You,

For & on behalf of Board of Directors

ANZ Private Limited

 

Mr. Y

Company Secretary

E-form INC 22A (ACTIVE) – Let’s support MCA to experience a high time: Governance Professional

I am CS

It’s really good news for the Company Secretaries in India. The moment the e-form  INC 22A (ACTIVE) has been deployed on the MCA’s portal, the faces of the Company Secretaries have been shining with a ray of hope inside and stock of confidence while conversation. In our view, the hope the profession is living up to at present has never been earlier even though rules and other changes made and implemented from time to time by the Ministry.

25th February 2019; an unusual Morning. Let us brief you that as per section 203 of the Indan Companies Act 2013, every company with paid-up capital size of not less than INR 5 crore during any point of time shall have one whole time Company Secretary. We being professionals must not forget to appreciate that the Ministry has been taking various actions to implement the Act as a good measure to wipe off the non-compliance from the Industry. However, the action in this nature has never been taken before and decided this time to punish all the non-compliant companies not made such appointment so far under section 203 of the Indian Companies Act 2013 despite the mandatory requirements and repetitive efforts.

We should also not doubted the Ministry for its actions in the past to implement section 203, however, every action and patience has its own limit to curb the wrong-doings. But the Ministry this time has been decided to pull out all such defaulter companies with a major stroke on their big mind by issued a debatable notification dated 21st February 2019 to roll out an e-form INC 22A (ACTIVE) to be effective and shall be available for filing on Ministry’s portal from 25th February 2019 onwards.

The e-form has been designed very carefully with a proper thought process since every data asked to be filled up in the form has been connected deeply in the back office of the Ministry. The form is being designed very carefully with unique features. In the e-form, the government has asked each and every information from the Company’s basic details (like PAN no, main office address etc) to Number of directors and to its Auditors in the previous financial year and the details of all statutory filing. No doubt, the e-form shall get automatically seeded with its unique feature “pre-fill” upon entering the Company’s 21 alpha-numeric identity number. 

To be continued………