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The post-GST chaos and uncertainty is on expected lines. The degree of intensity may come down only over a period of time as it was with the rushed Companies Act, 2013. The spate of notifications and circulars will continue unabated. So also several Removal of Difficulty Orders. In addition to this, in a complete shakeup of inactive companies, ROC has struck off the names of lakhs of companies that haven’t filed audited balance sheets and annual returns. Dead wood has been cleared but several others that have operations, tax dues, tax refunds, employees etc. have also been knocked off the records. There is confusion and chaos here again with promoters suddenly waking up and running helter skelter to revive their companies. The message from the Government is loud and clear – Comply or Perish !!
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Companies Act, 2013 requires that certain prescribed categories of public companies shall have ID on their Board. Now, MCA has exempted following unlisted public companies from having ID on their Board:
  • a joint venture
  • a wholly owned subsidiary
  • dormant company as defined under the Act.
Through another amendment carried below, it can be inferred that the above companies are not required to have an Audit Committee & Nomination and Remuneration Committee, unless provided for specifically in their AOA.
Schedule IV of Companies Act, 2013 which lays down the Code of ID has been amended. Following changes have been made:
  • New ID should be appointed within 3 months from the date of resignation or removal, of old ID. Previously it was required to be filled up within 180 days from the date of such vacancy.
  • ID shall hold atleast 1 meeting in a financial year. Previously it was calendar year.
  • Certain provisions of the Code are not applicable to Government Company, if the requirements are specified by the concerned ministries or Government departments are complied with. Exempted Code provisions are relating to:
    • Evaluation of the performance of board and management, including the Chairperson, ID, and non-independent Directors.
    • Determining appropriate levels of remuneration of executive directors, key managerial personnel and senior management.
    • Manner of appointment and re-appointment of ID.
  • Any Director who has given intimation about participation in the meeting through electronic mode can also participate in person after intimating the company sufficiently in advance of his intention to participate in person.
  • The draft minutes so recorded at the end of meeting shall be preserved by the company till the confirmation of the draft minutes so circulated to all the Directors.
  • Criteria for constitution of Audit Committee & Nomination and Remuneration Committee has been amended. Every listed company and all Public companies required to have an Independent Director on their Board as per the Act, shall constitute such committees of the Board.
MCA has notified the National Company Law Tribunal (Amendment) Rules, 2017. Procedure for making an appeal to the Tribunal by any person aggrieved by the Order of the Registrar notifying a Company as dissolved under section 248, has been notified. Application is to be made to NCLT with copy to ROC.

In case of any combination being entered into by any person or enterprise, such party should give a notice to the Competition Commission, within 30 days disclosing the details of the proposed combination. Now, in the interest of the public, MCA has exempted every person or enterprise, being a party to a combination under the Act, from giving this notice, for a period of 5 years from the date of publication of notification in the Official Gazette.
  • Proceedings relating to arbitration, compromise, arrangements and reconstructions under CA 1956 now transferred to NCLT Benches w.e.f. 15th December, 2016.
  • Voluntary winding up petitions and applications pending before a High Court as on 1st April, 2017 shall continue with the High Court as per CA 1956 and the Companies (Court) Rules, 1959;
  • Insolvency and Bankruptcy Code (IBC), 2016 has now notified the provisions of voluntary winding up w.e.f 1st April, 2017.
Consequently, difficulties have arisen regarding transfer of proceedings for voluntary winding-up, where notice of the resolution by advertisement has been given but the company has not been dissolved before the 1st April, 2017. On comparing the 1956 Act and the IBC, conflicting framework has been provided.
  • Under the 1956 Act, any person could be appointed as a liquidator; whereas under the IBC, only an insolvency professional registered with the Insolvency and Bankruptcy Board of India can be appointed as a liquidator subject to certain conditions.
  • Under the 1956 Act, Liquidator is required to make a report to the Official Liquidator who, in turn, makes a report to the High Court for dissolution of the company. Under IBC, the liquidator is required to make an application for dissolution directly to the Tribunal;
    To remove these difficulties, the Order clarifies that such proceedings shall continue as per the old Act and Rules.
Rule 96A of the CGST Rules provides that in case of export of goods or services without payment of GST, the exporter has to furnish a Bond or Letter of Undertaking (LUT) in form GST RFD-11, valid for 12 months. This is also required in case of supply to SEZ unit/ SEZ Developer. LUT can be provided by exporters who are ‘Status Holders’ as per para 5 of Foreign Trade Policy 2015-20 OR a person who has received foreign inward remittances equal to a minimum of 10% of the export turnover, which should not be less than Rs. 1 Crore.
Persons who are not eligible to furnish LUT would have to furnish a Bond the value of which will be based on the estimated tax liability for the year as assessed by the exporter. This should be accompanied by a bank guarantee for an amount not exceeding 15% of the bond amount. The bond would be a running bond for the financial year and a new bond must be taken if the bond value falls below the actual export turnover.
Under the Karnataka Goods & Service Tax Act (KGST), necessary documents to be carried while transporting goods has been specified until the e-way bill system are in place under GST.
Particulars of report of Income tax audit to be given in item 31 have been amended. Kindly refer to the notification for details.
Section 269ST prohibits receipt of cash of Rs. 2 lakhs or more in aggregate from one person in a day or in respect of a single transaction or in respect of transactions relating to one event or occasion from a person. However a few more types of transactions have been exempted under this.
  • Import of aircraft and lease of aircraft from outside India have been exempted under IGST upon execution of a bond.
  • IGST on service imports by SEZ units / SEZ developer for authorised operations have been notified as exempt.
  • Duty Credit Scripts cannot be used for payment of IGST, CGST, SGST & GST compensation cess on imports and domestic procurement.
  • Central Excise Authority to be read as Jurisdictional Customs Authority.
  • Exemption from payment of IGST not available for importers under Advance Authorisation scheme and EPCG Scheme. They need to pay IGST and take input tax credit. However exemption continues from payment of Basic customs duty, Additional Customs duty, Education cess and other duties under Advance Authorisation scheme.
  • Imports by EOU/EHTP/STP/BTP are exempt from Basic Customs duty, while IGST and compensation cess must be paid. Clarification is provided about DTA Clearances of finished goods & Inter unit transfer/supply of goods by such units.
  • Clarification also covers supplies under deemed exports, TED Refund etc.
Foreign Investment Promotion Board (FIPB) has been abolished. In its place the concerned Ministries / Departments will give government approval with respect to the 11 sectors/activities which have been notified.
DIPP has issued a Standard Operating Procedure (SOP) to be followed by the Foreign Investment Facilitation Portal.
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 Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]
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