India and in particular Bangalore is witnessing aSankranti (harvest festival) of different
sorts – increasing number of entrepreneurs. Let me share two ends of this spectrum.In December, we incorporated a company for an entrepreneur and told him clearly that he should not begin operations until he opens a bank account,
puts in the seed capital and files the commencement of business documents with the ROC. In his eagerness to kick start some project, he went ahead and signed an agreement immediately after getting the company name cleared by the ROC. Not only that, on the basis of the name reservation document he also opened a bank account even before the company was incorporated. Now, don’t ask me how the bank manager opened the account without the incorporation documents. It was shocking when he showed us the credit entry in the bank statement for having deposited the seed capital. Either the bank manager is an ignorant dud or works ‘for and under’ the entrepreneur’s instructions. Wonder what happened to RBI’s KYC norms. Bank manager entrepreneur ki mutthi mein ! (bank manager under the entrepreneur’s control).
Of course we didn’ stay quiet. We made sure he opens another bank account after company incorporation and complies with the Companies Act provisions relating to commencement of business. But imagine what power he wielded on the banker !!
On the other hand, here is another entrepreneur who is exploring how to fund his start up operations without increasing the promoters’ contribution i.e. share capital – essentially how to borrow when the new Companies Act places restrictions on borrowing from shareholders, relatives & third party individuals. Added to this is the restriction that even a director who can lend to the Company must not do so from borrowed funds. For small privately held companies, this does create challenges in terms of fund crunch which can be severe at times and especially till revenue generation. The options we gave to overcome the restrictions were not acceptable to him. Being a second time entrepreneur he knew the consequences of taking a short cut to the problem. Not wanting to risk any penalties, he decided to renegotiate the contract with his client which would give him a bigger advance amount and also shorter billing cycles. He is one of the types that wants to do ethical business. I was glad that he heeded our advice and found a practical way out.
It is always a pleasure to serve the second type of compliant entrepreneur. Here is wishing that his tribe grows more leading to a sustainable and well governed economy.
While there are several positive announcements by the Government relating to liberalization of the labour laws, changes in land acquisition regulations, privatization of railways, GST bill etc., we have compiled only the regulatory changes formally notified and enforced. As we welcome the year 2015 with our 121st issue, we draw inspiration from Swami Vivekananda to grow from strength to strength. Should you wish to refer to any of our older issues, do visit our Resource Centre at sharadasc.comWarm regards
As per the amendment,
Companies engaged in the production of goods and services including Foreign Companies under Sec. 2(48) of CA 2013 having overall turnover from their products and services of Rs. 35 crore or more shall be required to maintain cost records.
Companies in the Regulated Sectors (Telecommunication, Petroleum, Sugar, Fertilisers etc.) having annual turnover from all the products and services of Rs. 50 crores or more and the aggregate turnover from the individual product or service of Rs. 25 crores or more shall be required to undergo the Cost Audit.
Companies in the Non-Regulated Sectors having annual turnover from all their products and services of Rs. 100 crores or more and the aggregate turnover from the individual product or service of Rs. 35 crores or more shall be required to undergo the Cost Audit.
In case of casual vacancy of the cost auditor, Board of Directors is to be intimate the Central Govt. in Form CRA-2 within the 30 days of the occurrence of such vacancy.
Central Govt. has authorised 7 officers from the office of Regional Director (Northern Region) to file complaint against an individual who obtains more than one Director Identification Number (DIN) which is a punishable offence u/s 159 of CA 2013.
Central Board of Excise and Customs (CBEC) has decided to merge Commercial Invoice and Packing List into one document to reduce the number of mandatory documents required by customs for import and export of goods. Earlier an importer/ exporter was required to submit Commercial invoice and packing list separately.
External Commercial Borrowing (ECB) from overseas lenders can be secured by creation of charge on immovable assets, movable assets, financial securities and issue of corporate and / or personal guarantees subject to certain conditions. Existing lenders must give a no objection certificate.
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. Lex Valorem disclaims all liability on action taken without professional advice.