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Hi Folks
Last week, as I finished a pleasant, satisfying walk along Kukkarahalli kere in Mysore, I found a lot of people heading towards a small dead end road. I followed them. To my surprise I found a full-fledged eatery there but the only difference was – no board, no chairs to sit and no concrete structure at all. There were 2 mobile vans converted into clean, hygienic food joints with some jugaad engineering deployed to accommodate dosa counters, chapatti making corner, idli steamer and frying pan for hot vada and pakodas. The foldable top provided cover for a hand wash, garbage bin, billing counter, packing section and take-away orders too. Being a traditional south-Indian business, there was place for the customary Gods & Goddesses decorated with fragrant jasmine garland and aromatic incense sticks. Just 3 people were managing the mobile food-van (it was much more than a mere food-truck) and catering to college students, walkers, elderly, office-goers, home makers, beggars etc. with the efficiency of a McDonald and with a welcoming smile on their face. The kitchen and serving area was spick and span – out in the open for all of us to see. Plates and parcels were flying thick and past as if a robot was at work. I was amazed at the speed and turnaround of orders not to mention the variety on the menu list (which was of course not written) and the traditional taste. This is not a startup which is experimenting with its stuff and customers. This business is operating since last 18 years I heard and that too at incredibly reasonable prices. It is a go-to, must-visit eating joint thronged by people from India and abroad whenever they are in Mysore.
Close to this mobile-food van is Manju who has set up ‘Mysuru Kaapi’ under a make-a shift counter, serving piping, hot filter coffee in clean, white, old style porcelain crockery along with biscuits to munch – all at Rs. 10 only. I couldn’t miss noticing his typical Mysore courteous, polite, friendly hospitality as he said “Thank you maa’am. Please come tomorrow also and spread the word”. I was happy to see a young man serving coffee proudly instead of complaining of lack of opportunities to work (which may be the case, who knows). I really wish he sustains in the long run. Salute to the undying entrepreneurship spirit which I am sure all of you have found across our country over the years !
Now, if these 2 businesses were to scale up, then what ? Meeting so many entrepreneurs day in and day out as part of my profession, this was the question ringing in my head. As usual, I wondered whether these guys should start an LLP or a private limited company or an OPC or a mere partnership firm or stay single as they are currently. All the related compliances started buzzing in my head……what if Manju decides to form a private limited company to begin with ? OMG ! his trials and tribulations starting with getting a DIN number, his run with RUN (getting the name), directors appointment, incorporation, board meetings, auditors appointment, the saga of opening a bank account, fund raising, finding an auditor etc. etc. The current need for a director to undergo an annual KYC process by filing DIR3 along with related documents, not to mention the rather long unwanted process of being appointed as a director of a company. (this needs a separate article actually !) Everything is so time-consuming and onerous that it may be better for Manju to stay single I thought. This is not to discourage having a formal legal structure but just a mirror to the actual situation under law. Every entrepreneur or a startup founder must be mentally prepared to go through this process before jumping into a company mode.
This brings us precisely to the DIR3 KYC requirement which has been mandated by MCA for all individuals (Indian or foreign) who are directors of companies and have a DIN allotted before 31st March, 2018. It is their individual responsibility to complete the KYC following the procedure. Please read the news item on this which is clear on the timelines and documents. Apart from this a few more sections of Companies Amendment Act, 2017 have been notified along with rules which we have carried in this 192nd issue of Samhita. Note-worthy is the provision which allows LLPs with just 2 partners also to convert into a private limited company and get dissolved automatically. This is definitely a welcome move. For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/

Happy Reading

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Few market participants are seeking empanelment of Insolvency Professional Entities (‘IPEs’) and a few IPEs are seeking empanelment with market participants. Hence, given the role of an IPE, the Insolvency Bankruptcy Board of India (IBBI) has directed IPEs not to seek empanelment with or joining any panel of any market participant and also clarified that they can only provide services to the Insolvency Professionals (IPs) who are its partners or directors and cannot provide any service to any other person.
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MCA has notified various sections and rules of the Companies (Amendment) Act, 2017 w.e.f 5th July, 2018 and 15th August, 2018 which are compiled as below:

➢ Notified w.e.f 5th July, 2018

S.No Notified Sections of CA, 2017 Sections of Amendments of CA, 2013 Title Changes made
1 S.20 S.82(1) read with Companies (Registration of Charges) Amendment Rules, 2018 Company to report Satisfaction of Charge Time limit for filing satisfaction of charge increased from 30 days to 300 days on payment of additional fee.


➢ Notified w.e.f 15th August, 2018
S.No Notified Sections of CA, 2017 Sections of Amendments of CA, 2013 Title Changes made
1 S.15 S. 73 read with the Companies (Acceptance of Deposits) Amendment Rules, 2018 Prohibition on acceptance of
Deposits from public
  • Amount being not less than 20% of the amount of deposits, maturing during the following financial year be deposited on or before the 30th day of April each year and kept in a separate account in a scheduled bank called Deposit Repayment Reserve account. Currently at least 15% of such amount is required to be deposited and that is also of amount of deposits maturing during a financial year and the financial year next following.
  • Companies which had defaulted in repayment of deposits, can also accept deposits after a period of 5 years from the date of making good the default.
  • The requirement to have deposit insurance is omitted.
2 S.16 S.74(1)(b) Repayment of Deposits, etc.,accepted before commencement of this act
  • Any unpaid deposit/interest amount as on the commencement of the Companies Act 2013 shall be repaid within 3 years from the date of commencement or before the expiry of the period for which the deposit was accepted whichever is earlier. Provided that renewal of any such deposits shall be done in accordance with the provisions of the Act and the rules made thereunder.
  • Currently the amount was to be repaid within 1 year or before the expiry of the period for which the deposit was accepted, whichever is earlier.
3 S.75 S.366 read with the Companies (Authorised to Register) Second Amendment Rules, 2018 Companies capable of being Registered
  • A partnership firm, LLP, Society or Cooperative society having 2 members or more may convert into an unlimited company, company limited by shares or guarantee.
  • Earlier the minimum number required for conversion was 7 persons.
  • If an entity has less than 7 members it shall be converted into Private Limited Company.
4 S.76 S.374 Obligations of companies registering under this Part. Upon registration as a company under the Part-I of Chapter-XXI, an LLP incorporated under the Limited Liability Partnership Act, 2008 shall be deemed to have been dissolved under that Act without any further act or deed.
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The Companies (Appointment and Qualification of Directors) fourth Amendment Rules, 2018 w.r.t applicability of e-form DIR 3 KYC is effective from 10th July, 2018 as follows:
Applicability All individuals holding approved DIN (including de-activated DINs) as on 31st March, 2018 For the year 2018 due date is 31st August, 2018
Due date for submission is 30th April every year
Note: DIR-3-KYC need not be submitted for the year 2018, if DINs are approved after 1st April, 2018.
Further, the Companies (Registration Offices and Fees) Third Amendment Rules, 2018 w.r.t filing fee for Form DIR 3 KYC is notified and is effective from 10th July, 2018 as follows:
Fees payable By DIN-holders in their individual capacity Upto 31st August, 2018 No filing fee
After 1st September, 2018 INR 5,000
Upto 30th April every year. No filing fee
After 1st May every year NINR 5,000
Required information/ documents are Director’s own mobile number, personal email id and PAN/Aadhar card/Passport.
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To address the concerns arising out of the anonymity provided by payments through Demand Drafts (DD) and its possible misuse for money laundering, RBI has directed that the name of the purchaser be incorporated on the face of the DD, pay order, banker’s cheques, etc., by the issuing bank. Accordingly, Master Direction on KYC has been amended and shall be effective for such instruments issued on or after 15th September, 2018.
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The exemption of Inter-State supply of goods or services or both received by a registered person from any supplier, who is not registered, from the whole of the integrated tax leviable is extended from 30th June, 2018 to 30th September, 2018.

Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.
 


S. C. Sharada & Associates,
Company Secretaries. #405, 7th Cross, IV Block, Koramangala, Bangalore – 560 034
sharadasc.com Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]

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