This fortnight has been quite tumultuous for people in power and position. Somebody in a powerful position stepped down voluntarily (or so it seemed). A few others enjoying power were routed out by the public. In yet another country a person in power is fighting hard to implement an exit decision that is facing huge resistance from its citizens. You know what these instances are. Elsewhere we have men and women who crave neither for power nor for position, just doing their duty. Not afraid to embrace death, if need be. Away from their families. Oblivious to day and night. Braving harsh weather conditions. With no fixed working hours. Unafraid to face the enemy. These are our armed forces who pay with their lives for our freedom and safety. I dedicate this issue in their honour as India celebrated 7th December as Armed Forces Flag Day, to collect the funds from people all around the country for the wellbeing of the staff of the Indian Armed Forces.
While we have fearless, young men and women guarding our borders, we have experienced ones guarding governance in the interests of stakeholders – Directors of corporates. It is true many of them have looted banks, defrauded investors, cheated employees, robbed the government, defied the courts, schemed and fled. In some cases it is heartening to note that the long arm of law is soon catching up with them. All this is reported, discussed, deciphered, dissected & decried. And rightfully so. However what doesn’t get reported is the plight of the other board members who are unknowingly caught in the ‘fire’ and find themselves facing regulatory wrath by way of notices, tax demands, hearings, investigation, interrogation and sometimes arrest warrants too.
Recently I got SoS calls from 2 chartered accountants seeking help and guidance for their client directors who have unwittingly been trapped as above for their fault of signing up as directors of certain unscrupulous boards. Obviously lack of due diligence on their part about the company and its founders. More importantly being punished for not speaking up and asking the right questions. Merely trusting. These directors are facing non-bailable warrants in respect of non-compliances even when they were not wholetime directors, simply because the actual offenders, the founder directors have fled. Well, there are laws, there are lawyers and there are courts to mete out justice but at what cost to the directors ? Rules were there before also. The difference is today these rules are being enforced and acted upon strictly. Being a board member of a company – even if it is a startup, unlisted private limited company – is not a fancy position at all. It carries huge responsibilities and liabilities which can catch up any time. Sometimes the regulators are wrongly slapping notices even after a director has resigned from the Board, haunting them for years. It is advisable to make sure that the entry and exit from boards are properly documented and the regulator (ROC) is correctly kept informed. Directors Beware !
Interestingly while we are talking about humans as directors and their saga during and post their board tenures, Mr. Guruprasad, a CA & CS with multiple other qualifications opens our eyes to the possibility of humanoids / robots sitting on corporate boards and taking part in decisions. Interesting and intriguing sci-fi kind of tech developments ! He says it is not too far into the future. Well, while laws have to be rewritten thanks to technology, it is a wake up call to Company Secretaries as well. Quo vadis ?? (Latin for “Where are you going”).
Along with a few updates from MCA, IBC, IT & GST, the third article on “Steps in Mediation”, written very lucidly by Ms. Saradha Kumar, Lawyer and ADR practitioner is a must read in this 202nd issue of Samhita. For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/
A Robot in the Boardroom: Is the role of Company Secretary about to change?
“Companies Act in any part of the world across the globe does not recognise a robot (AI) as a legal person entitled to attend and vote at the meetings since real compliance responsibility lies on the company officers who will continue to have fiduciary duties to shareholders and other stakeholders. But with advancement of technologies beyond our imagination, we need to have a relook at the existing company law and corporate governance frame work itself across the world.”
Mr. Guruprasad V continues his contribution through this article on AI which reads like straight out of “Ripleys – Believe it or not” science fiction. But wait, this is not fiction but a future reality and not too far……..
Mediation is a flexible process, which means strict rules of evidence and formal rules of procedure do not apply as compared to a court procedure. Typically, a Mediation has several stages which are followed by the mediator during the process…Read more
IBC Updates :
Appointment of IRPs and Liquidators Guidelines, 2018
In case an operational creditor has made an application for corporate insolvency resolution process (CIRP) and has not proposed an IRP, the Adjudicating Authority (NCLT) must make a reference to the Insolvency and Bankruptcy Board of India (Board) for recommendation of an insolvency professional (IP) who may act as an interim resolution professional (IRP). The Board, within ten days of the receipt of the reference from the NCLT, is required to recommend the name of an IP against whom no disciplinary proceedings are pending.
Detailed guidelines for scoring and appointment of IPs as IRPs and Liquidators, effective from 1st January, 2019 have been notified.
MCA updates :
Companies (Cost Records and Audit) Amendment Rules, 2018
Companies (Cost Records and Audit) Amendment Rules, 2014 have been amended through the above 2018 amendment rules as below:
Companies which have extension of time for holding an AGM will have extended time to file Form CRA-4 along with the audited financial statements
The Unit of Measurement referred to in Form CRA-3 for each Customs Act Tariff Heading shall correspond to the Custom Tariff Act, 1975
Extension of the last date of filing of Form NFRA-1
The time limit for filing Form NFRA-1 has been extended for a period of 30 days from the date of deployment of said form on the website of the Ministry/NFRA.
Income Tax updates :
No TDS on interest to senior citizen
Central Board of Direct Taxes (CBDT) has clarified that no TDS needs to be deducted from the interest income of senior citizens where the amount of such income or, the aggregate of the amounts of such income credited or paid during the financial year does not exceed Rs. 50,000/-
Conversion of foreign banks to subsidiaries- revised IT provisions
CBTD has notified the revised provisions related to unabsorbed depreciation, set off and carry forward of losses, tax credit in respect of tax paid on deemed income relating to certain companies and the computation of income in the case of foreign company (branch of a foreign bank) referred to in sub-section (1) of section 115JG of the Income Tax Act 1961 and the Indian subsidiary company (Indian subsidiary of a foreign bank).
Section 115 JG of the Income Tax Act allows capital gains tax exemption upon conversion of an Indian branch of foreign company into subsidiary Indian company. In computing the period of holding of assets by such branches, the period for which the asset was held by the subsidiary and by the previous owner if any who has acquired the capital asset by mode specified in Section 49(1) of the Income Tax Act, 1961 shall be included.
GST Updates :
GST Annual Return date extended
The due date for filing the Annual Return by every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person has been extended from 31st December, 2018 to 31st March, 2019. This relates to the period from 1st July, 2017 to 31st March, 2018.
GSTR 3B/ GSTR 1, GSTR 7 dates extended
The due date for filing GSTR 3B for month of October, 2018 for registered persons whose principal place of business is in Cuddalore, Thiruvarur, Puddukottai, Dindigul, Nagapatinam, Theni, Thanjavur, Sivagangai, Tiruchirappalli, Karur and Ramanathapuram in the State of Tamil Nadu extended to 20th December, 2018
The due date for filing GSTR-7 by a registered person required to deduct tax at source under the provisions of section 51 for month of October, 2018 to December, 2018 till the 31st day of January, 2019.
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.