The Year was 2012. Dr. Atreya, promoter of a health-care enterprise which was in the product-POC stage would always barge into our office with a smile on his face and a compact, loaded leather bag in his hand. The bag contained his entire office – all share certificates, meeting notices, minutes, visiting cards, common seal, rubber stamps, stapler, clips, pens, pencils, notepads, photographs, DSCs, his laptop etc. etc. He would be always prepared – to ‘rubber stamp’ any document with the quintessential blue or black ink and sign on it. After signing umpteen number of documents he would joke “If required, I can stamp the director seal on my forehead too. Have a broad one.” ☺ While he had his apartment for his registered office, he was always on the move, meeting people. His work never required him to work out of a fixed place. Each time we quizzed him where his office was, he would make a grand statement “The broken bench in Cubbon Park (a huge green space in the heart of Bangalore) under the huge banyan tree where I meet all my prospective employees and investors. No fan, no electricity, no furniture required. Open air, open thoughts, open discussions.” We would all laugh imagining the broken-bench. More so the affable way in which Dr. Atreya would put it.
Cut to 2019. Government is having the last laugh now. How will one satisfy the ACTIVE form filing requirement if one were to operate from his apartment or Cubbon Park ? Technology has given us the freedom of working from garages, dining rooms, bedrooms, kitchen tops, cafes, cars, buses, airplanes, coworking spaces – literally anywhere on planet Earth. Having a brick and mortar office is an option until certain scales are reached. Or so all the entrepreneurs thought. Starting on shoe-string budget with work-from-your-own-space concept, physical office was not a requirement except for registering purposes. Not any more with the introduction of filing INC22A (A.C.T.I.V.E) by every company registered with the Ministry of Corporate Affairs. This calls for the director to take a photograph of himself sitting inside the registered office, another photo outside the office building indicating the latitude and longitude and filing it online on the MCA portal using the services of a professional. Well, the purpose of the Government obviously is to target shell companies and scam promoters who register companies for dubious purposes and hence do not require physical offices. All of you are aware of how a single address serves as registered office for hundreds of companies. But then the model of shared office spaces, co-working spaces, business centres etc. in which startups like Dr. Atreya’s thrive throws up issues in complying with the government diktat.
Whatever may be the intention of the Government and however ridiculous the whole exercise may seem, do we have a choice ? The directive must be complied with both in letter and spirit. While there are genuine compliance difficulties, it is unfortunate that many companies are trying to find work-around using technology (read photoshopping of building and director photos) or appointing ‘temp-directors’ only for this purpose. Worse still, despite being in responsible positions, they expect Company Secretaries who are supposed to be ‘Chowkidars (sentinels) of Corporate Governance’ to help them find ‘other ways’ to comply. Agreed that as professionals we need to have a ‘solution-oriented approach’ but definitely not when it is a straight-jacketed matter such as filing a form that verifies the existence of a physical registered office of a legal entity and its director in ‘flesh and blood’. Any deviation is going to cost both the director and the Company Secretary heavily. No wonder our Institute of Company Secretaries of India (ICSI) has issued an Advisory to thwart such deviations, asking us to play our ‘Chowkidar’ roles in letter and spirit. Government trusts us. Public trusts us. Corporates trust us. Our mantra should be “Don’t break the Trust.” !!
Being an important issue of compliance engaging the entire corporate world in India, I thought it is worthwhile to highlight it in this 211th issue of Samhita. For the benefit of the readers, ICSI Advisory is also carried in this issue. Compliance timeline for the INC22A filing has moved from 25th April to 15th June. It is time companies get their act together and complete the filing well in time. The next few months have an overload of compliances under the Companies Act with DPT3, MSME1, SBO forms etc. being released or under work-in-progress. Planning is the need of the hour for both companies and professionals – wish this is true for MCA and Infosys too ! All the flip-flops in forms, dates, content etc. can be avoided.
Catch up on the regulatory updates plus the lucid article on “Mediation in Medical Negligence” by Advocate Saradha Kumar from CAMP. In this issue we are also carrying certain interesting and useful updates from ICSI which are worth a read. Don’t forget to scroll down. For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/
We frequently come across news relating to medical negligence cases, where some patient has not been treated properly by some hospital or the negligence has proved fatal to the patient and the families of the patient are up in arms, demanding a meeting with the hospital authorities or compensation from the hospital and seeking suitable action against the doctor. The patient normally wants to know what went wrong with the line of treatment, what happened on the OT. They just want to meet the doctor and understand what happened in lay man’s language (to hear from the horse’s mouth). The hospital…Read more
MCA Updates :
Important Changes regarding Registration of Charges
Drastic Changes made in Companies (Registration of Charges) Amendment Rules, 2019 issued on 30.04.2019, w.r.t filing of Charges and Modification of Charges:
30 days time is available for filing CHG-1 and CHG-3 (Charge and Modification) and CHG-9 (for debentures) with normal filing fee. Delayed Filing fee structure is as below :
Upto 30 days
2x filing fees
4x filing fees
6x filing fees
For OPC / Small Company
For Other Companies
Upto 30 days
3x filing fees
6x filing fees
3x filing fees + Ad valorem fee of 0.025 % of the amount secured by the charge subject to a max of Rs. 1 Lac
6x filing fees + Ad valorem fee of 0.05 % of the amount secured by the charge subject to a max of Rs. 5 Lac
Beyond the 120 days time, fine and imprisonment provisions are attracted – for Company fine of 1 L – 10 L and OID (Officer in Default) – Rs. 25, 000 – 1L OR Imprisonment upto 6 months OR Both. Compounding application to be filed with Regional Director (RD).
On failure by the company to register the charge, the charge holder can file the forms for registration and recover the fee / additional fee / ad valorem fee as the case may be from the Company.
For rectification of Register of Charges on account of omission / misstatement of facts and extension of time for satisfaction of charge beyond 300 days, application to be made to Central Government.
Companies to take serious note of the above changes and not miss out filing of Charges in case of Secured Borrowings.
Extension of Due Date – ACTIVE
The Companies (Incorporation) Fourth Amendment Rules, 2019 have been notified and shall come into force on the date of the publication of the said notification in the Official Gazette.
The due date for filing form INC-22A (ACTIVE) has been extended to 15.06.2019 from 25.04.2019.
Late filing of the said form (post 15.06.2019) shall attract a late filing fee of INR 10,000. The Companies (Registration Offices and Fees) Rules, 2014 has been amended to give effect to the same.
RoC shall not accept the following event based information from Companies who do not file the said form and they shall be marked as “ACTIVE non-compliant”:
1. Change in Authorized Capital (Form SH-7)
2. Change in Paid-up Capital (Form PAS-03)
3. Changes in Director except cessation (Form DIR-12)
4. Change in Registered Office (Form INC-22)
5. Amalgamation, de-merger (Form INC-28)
DIR-3 KYC – Revised Dates
The Companies (Appointment and Qualification of Directors) Amendment Rules, 2019 have been notified and shall come into force on the date of publication of the notification in the Official Gazette.
The due date for DIR-3 KYC on an annual basis is extended to 30th June of the immediate next financial year from 30th April of the immediate next financial year.
DPT-3 – Revised Dates
DPT-3 form was earlier required to be filed within 90 days from 22.01.2019 which was the date of date of publication of Companies (Acceptance of Deposits) Amendment Rules, 2019. However, the form was not made available for filing. Now vide Companies (Acceptance of Deposits) Second Amendment Rules, 2019, the reckoning date (date for considering information for one-time filing) has been changed from 22.01.2019 to 31.03.2019 which means the due date for filing DPT-3 is 29.06.2019. The form has been released for filing.
IBBI updates :
IP & IPE – Fees payable to IBBI
An Insolvency Professional (IP) and Insolvency Professional Entity (IPE) are required to pay to IBBI, 0.25% of their professional fee and 0.25% of the turnover of the services rendered in the preceding FY, on or before 30th April every year respectively.
An IP is to file a statement for the same in form E and IPE is to file the statement in form G electronically.
GST updates :
Summary of Several GST changes
A separate note has been prepared detailing the several changes made to the GST regulations, issued by the CBIC (Central Board of Indirect Taxes and Customs). For more details kindly go through the same.
ICSI updates :
Guidance Note on Related Party Transactions
ICSI (Institute of Company Secretaries of India) has released Guidance Note on Related Party Transactions in terms of Companies Act, 2013, SEBI LODR and Accounting Standards. It’s a useful, handy book (soft copy available) that can be referred to both by professionals as well as Corporates.
Model Code for meetings of Non-Corporate Entities
ICSI has released a Model Code for meetings of Non-Corporate Entities such as Trusts, Societies, Clubs, Civic Bodies, etc.
ICSI has issued advisory that cautions Company Secretaries to support corporates in INC-22A filing both in letter and spirit, i.e., no workarounds to be suggested and certified.