CS Shubham Kapoor

MAJOR HIGHLIGHTS OF THE COMPANIES (AMENDMENT) ACT, 2020

2020-10-03T09:47:00.001+05:30

The Companies (Amendment) Bill, 2020 was introduced in Lok Sabha by the Minister for Corporate Affairs, Ms. Nirmala Sitharaman, on March 17, 2020. The Bill seeks to amend the Companies Act, 2013. It was passed by Lok Sabha on 19th September 2020 and passed further by Rajya Sabha on 22nd September 2020 and received the assent from President on 28th September, 2020.

The CAB, 2020 has been based on the Company Law Committee (“CLC/Committee”) which was set up under the Chairmanship of Shri Injeti Srinivas in September, 2019. The CLC was constituted with a view to decriminalize offences and provide ease of doing business to the corporates and other stakeholders. The Committee presented its Report 2 in November, 2019 which provided for de-clogging 46 penal provisions in the following manner:

•Re-categorising of 23 offences out of 66 compoundable offences to an in-house adjudication framework wherein penalty will be levied by an adjudication officer

•Omitting 7 compoundable offences

•Limiting 11 compoundable offences to fine only (by removing imprisonment part)

•Recommending 5 offences to be dealt with in an alternative framework

The CAB, 2020 based on the CLC Report provides majorly for the following:

•Decriminalise certain offences under the Companies Act, 2013in case of defaults which can be determined objectively, and which otherwise lack any element of fraud or do not involve larger public interest;

•To empower the CG to exclude, in consultation with the SEBI, certain class of companies

from the definition of "listed company", mainly for listing of debt securities;

•To make provisions for allowing payment of adequate remuneration to non-executive directors in case of inadequacy of profits, by aligning the same with the provisions for remuneration to executive directors in such cases;

•To exempt any class of persons from complying with the requirements of section 89 relating to declaration of beneficial interest in shares;

•To reduce timelines for applying for rights issues to speed up such issues under section 62;

•To extend exemptions to certain classes of non-banking financial companies and housing finance companies from filing certain resolutions under section 117;

•To further amend provisions relating to CSR;

Quick Review of Major Highlights

1. Definition of Listed Company

Empower Central Government to exclude, in consultation with SEBI, certain class from the definition of Listed Company. (Those Whose Debt securities are being Listed).

2. Rectification of Name

Change of name as per the Direction of Central Government

Earlier Duration – 6 Months

Amended Duration – 3 Months

3. Section 62(1)(a)- Right Issue

Earlier Letter of Offer Timing – Min. 15 days, Max. 30 days

Proposed Timing - Less than the timing Prescribed currently.

4. Section 117- Resolution and Agreement to be filed

The Section requires filing of resolution to ROC. It currently exempts banking Companies which are Providing Loan, Guarantee, Security in connection with Loan in their ordinary Course of business to file Form MGT-14 to ROC.

It has now been Proposed to extend the same exemption to registered NBFC and HFCs.

5. Section 129 A- (Newly Incorporate Section)

Central Government can direct to any class or Classes of the Companies as may be prescribed to-

I Prepare Periodical Financial Statements

II Obtain approval from BOD

III Complete Limited review of Such Financial Statements

IV File with ROC with in 30 days.

6. Section 135 – Corporate Social Responsibility

Set off amount spent in excess of the CSR amount required to be Spent (No. of Years to be Prescribed)

Penalty for not transferring the amount to respective Funds –

Company- Twice of the Amount required to be transferred

One Crore

(Which Ever is Lower)

Officer in Default- 1/10th of the amount required to be transferred

Two lakh

(Whichever is lower)

No need of CSR Committee if amount required to be spent is less than 50 lakh.

Section 149-Company to have Board of Directors (Independent Directors)

Currently, provisions provide that Independent Directors are not subject to stock options and are entitled to sitting fees only, profit related commission and reimbursement of expenses incurred in attending meetings as per Section 197(5).

Amendment- An ID and Non-Executive Directors may receive any other sort of remuneration, excluding the aforesaid, in terms of Schedule V where there is no profit or inadequate profits in the company.

Section 197- Overall Maximum Managerial Remuneration and Managerial Remuneration in Case of Absence or Inadequacy of Profits

Section 197(3) has been aligned with Section 149(9) to include NEDs and IDs within the ambit of remuneration payable as per Schedule V in case of no profits or inadequate profits.

PENAL PROVISIONS

Section 8(11) Formation of Companies with Charitable Objects, etc.

Current- The Directors and every officer of the company who is in default Shall be punishable with imprisonment for a term which may extend to 3 years or with fine which shall not be less than Rs. 25000 which may extend to Rs. 25 lakhs, or with both.

Amendment- The Directors and every officer of the company who is in default Shall be punishable ~~with imprisonment for a term which may extend to 3 years or~~ with fine which shall not be less than Rs. 25000 which may extend to Rs. 25 lakhs, or with both.

Section 16(3) Rectification of Name of Company

Current- If a company makes default in complying with any direction given under sub-section (1), Fine on Company: Rs. 1000 for every day during which the default continues.

Every officer who is in default shall be punishable with fine:

Which shall not be less than Rs. 5000 but which may extend to Rs. 1 Lakh.

Amendment- If a company is in default in complying with any direction given under sub-section (1), The CG shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the ROC in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter.

Provided that nothing in this sub-section shall prevent a company from subsequently changing its name in accordance with the provisions of section 13.

Sections- 26(9) Matters to be Stated in Prospectus

Current- Fine on Company: Which shall not be less than Rs. 50,000 but which may extend to Rs. 3 Lakhs

and

Every person who is knowingly a party to the issue of such prospectus: shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 3 Lakhs or with both.

Amendment- Fine on Company: Which shall not be less than Rs. 50,000 but which may extend to Rs. 3 Lakhs

and

Every person who is knowingly a party to the issue of such prospectus: shall be punishable ~~with imprisonment for a term which may extend to three years or~~ with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 3 Lakhs ~~or with both.~~

Section-48(5) Variation of Shareholders' Rights

Current- Where any default is made in complying with the provisions of this section, Fine on Company: Which shall not be less than Rs. 25,000 but which may extend to Rs. 5 Lakhs and

Every officer of the company who is in default shall be Punishable: with imprisonment for a term which may extend to 6 months or with fine which shall not be less than Rs. 25,000 but which may extend to Rs. 5 Lakhs, or with both.

Amendment – Omitted

Section -56(6) Transfer and Transmission of Securities

Current- Where any default is made in complying with the provisions of sub-sections (1) to (5), Fine on Company: Which shall not be less than Rs. 25,000 but which may extend to Rs. 5 Lakhs and Every officer of the company who is in default shall be punishable:

With fine which shall not be less than Rs.10,000 ten thousand rupees but which may extend to Rs. 1 Lakhs.

Amendment- Where any default is made in complying with the provisions of sub-sections (1) to (5), the company and every officer of the company who is in default shall be liable to a penalty of Rs. 50,000.

Section 59(5)- Rectification of Register of Members

Current- If any default is made in complying with the order of the Tribunal under this section,

Fine on Company: Which shall not be less than Rs. 1 lakh but which may extend to Rs. 5 lakhs and

Every officer of the Company who is in default shall be Punishable:

With imprisonment for a term which may extend to 1 year or with fine which shall not be less than Rs. 1 lakh but Which may extend to Rs. 3 lakhs, or with both.

Amendment- Omitted

Section 64(2) Notice to be Given to Registrar for Alteration of Share Capital

Where any company fails to comply with the provisions of sub-section (1),

Penalty on Company and every officer who is in default shall be liable to a penalty of Rs.1000 for each day during which such default continues, or Rs. 5 Lakhs whichever is less.

Omitted- Where any company fails to comply with the provisions of sub-section (1),

Penalty on Company and every officer who is in default shall be liable to a penalty of Rs. 500 for each day during which such default continues, subject to a maximum of Rs. 5 Lakhs in case of a company and Rs. 1 Lakh in case of an officer who is in default.

Section 66(11) Reduction of Share Capital

Current- If a company fails to comply with the provisions of sub-section (4),

Fine on Company: Which shall not be less than Rs. 5 Lakhs but which may extend to Rs. 25 Lakhs

Amendment- Omitted

Section 68(11) Power of the Company to Purchase its own Securities

Current- If a company makes any default in complying with the provisions of this section or any regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2),

Fine on Company: Which shall not be less than Rs. 1 Lakh but which may extend to Rs. 3 Lakhs and

Every officer of the company who is in default shall be punishable:

With imprisonment for a term which may extend to 3 years or with fine which shall not be less than Rs. 1 Lakh but which may extend to Rs. 3 Lakhs, or with both.

Amendment-If a company makes any default in complying with the provisions of this section or any regulation made by the Securities and Exchange Board, for the purposes of clause (f) of sub-section (2),

Fine on Company: Which shall not be less than Rs. 1 Lakh but which may extend to Rs. 3 Lakhs

Every officer of the company who is in default shall be punishable:

~~With imprisonment for a term which may extend to 3 years or with fine which shall not be less than Rs. 1 Lakh but which may extend to Rs. 3 Lakhs, or with both.~~

Section 71(11) Debentures

Current- If any default is made in complying with the order of the Tribunal under this section,

Every officer of the company who is in default shall be punishable :

With imprisonment for a term which may extend to 3 years or with fine which shall not be less than Rs. 2 Lakhs but which may extend to Rs. 5 Lakhs, or with both.

Amendment- Omitted

Section 86(1) Punishment for Contravention

Current- If any company contravenes any provision of this Chapter,

Fine on Company: Which shall not be less than Rs. 1 Lakh but which may extend to Rs. 10 Lakhs and

Every officer of the company who is in default shall be punishable:

with imprisonment for a term which may extend to 6 months or with fine which shall not be less than Rs. 25,000 but which may extend to Rs. 1 Lakh, or with both.

Amendment- If any company is in default in complying with any of the provisions of this Chapter, the company shall be liable to a penalty of Rs. 5 Lakhs and every officer of the company who is in default shall be liable to a penalty of Rs. 50,000.

Section 88(5) Register of Members, etc.

Current-If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2),

Fine on Company: Which shall not be less than Rs. 50,000 but which may extend to Rs. 3 Lakhs and where the failure is a continuing one, with a further fine which may extend to Rs. 1000 for every day, after the first during which the failure continues.

Every officer of the company who is in default shall be punishable: with a fine which shall not be less than Rs. 50,000 but which may extend to Rs. 3 Lakhs where the failure is a continuing one, with a further fine which may extend to Rs. 1000 for every day, after the first during which the failure continues.

Amendment- If a company does not maintain a register of members or debenture-holders or other security holders or fails to maintain them in accordance with the provisions of sub-section (1) or sub-section (2), the company shall be liable to a penalty of Rs. 3 Lakhs and every officer of the company who is in default shall be liable to a penalty of Rs. 50,000.

Section- 89(5) Declaration in Respect of Beneficial Interest in any Share

Current- If any person fails, to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), without any reasonable cause, he shall be punishable with fine which may extend to Rs. 50,000 and where the failure is a continuing one, with a further fine which may extend to Rs. 1000 for every day after the first during which the failure continues.

Amendment- If any person fails to make a declaration as required under sub-section (1) or sub-section (2) or sub-section (3), he shall be liable to a penalty of Rs. 50,000 and in case of continuing failure, with a further penalty of Rs. 200 for each day after the first during which such failure continues, subject to a maximum of Rs. 5 Lakhs.

Section 89 Declaration in Respect of Beneficial Interest in any Share

Current- A company, required to file a return under sub-section (6), fails to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than Rs. 500 but which may extend to Rs. 1000 and where the failure is a continuing one, with a further fine which may extend to Rs. 1000 for every day after the first during which the failure continues.

Amendment- If a company, required to file a return under sub-section (6), fails to do so before the expiry of the time specified therein, the company and every officer of the company who is in default shall be liable to a penalty of Rs. 1000 for each day during which such failure continues, subject to a maximum of Rs. 5 Lakhs in the case of a company and Rs. 2 Lakhs in case of an officer who is in default.

Section 90(10) Register of significant beneficial owners in a company

Current- If any person fails to make a declaration as required under sub-section (1), he shall be punishable with imprisonment for a term which may extend to 1 year or with fine which shall not be less than Rs. 1 Lakh but which may extend to Rs. 10 Lakhs or with both and where the failure is a continuing one, with a further fine which may extend to Rs. 1000 for every day after the first during which the failure continues.

Amendment- If any person fails to make a declaration as required under sub-section (1), he shall be liable to a penalty of Rs. 50,000 and in case of continuing failure, with a further penalty of Rs. 1000 for each day after the first during which such failure continues, subject to a maximum of Rs. 2 Lakhs.

Section 90(11) Register of significant beneficial owners in a company

Current -If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company and every officer of the company who is in default shall be punishable with fine which shall not be less than Rs. 10 Lakhs but which may extend to Rs. 50 Lakhs and where the failure is a continuing one, with a further fine which may extend to Ra. 1000 for every day after the first during which the failure continues.

Amendment- If a company, required to maintain register under sub-section (2) and file the information under sub-section (4) or required to take necessary steps under sub-section (4A), fails to do so or denies inspection as provided therein, the company shall be liable to a penalty of Rs. 1 Lakhs and in case of continuing failure, with a further penalty of Rs. 500 for each day, after the first during which such failure continues, subject to a maximum of Rs. 5 Lakhs and every officer of the company who is in default shall be liable to a penalty of Rs. 25,000 and in case of continuing failure, with a further penalty of Rs. 200 for each day, after the first during which such failure continues, subject to a maximum of Rs.1 Lakh.

Section 92(5) Annual Return

Current- If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of Rs. 50,000 and in case of continuing failure, with further penalty of Rs. 100 for each day during which such failure continues, subject to a maximum of Rs. 5 Lakhs

Amendment- If any company fails to file its annual return under sub-section (4), before the expiry of the period specified therein, such company and its every officer who is in default shall be liable to a penalty of Rs. 10,000 and in case of continuing failure, with further penalty of Rs. 100 for each day during which such failure continues, subject to a maximum of Rs. 2 Lakhs in case of a company and Rs. 50,000 in case of an officer who is in default.

Section 92(6) Annual Return

Current- If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be punishable with fine which shall not be less than Rs. 50,000 but which may extend to Rs. 5 Lakhs.

Amendment- If a company secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made thereunder, he shall be liable to a penalty of Rs. 2 Lakhs.

Section-165(6) Number of Directorships

Current- If a person accepts an appointment as a director in contravention of sub-section (1), he shall be liable to a penalty of Rs. 5000 for each day after the first during which such contravention continues.

Amendment- If a person accepts an appointment as a director in violation of this section, he shall be liable to a penalty of Rs. 2000 for each day after the first during which such violation continues, subject to a maximum of Rs. 2 Lakhs.

Related Links

Companies Amendment Act 2020

Regards

CS Shubham Kapoor

Ph- 9711244345, 7017667034

Email- kapoor.shubhamm@gmail.com

Section 8 Micro Finance Company- Features & Benifits

2020-08-29T10:18:00.000+05:30

INTRODUCTION OF SECTION-8 MICRO – FINANCE COMPANY

The Micro finance Company is basically the financial institutions that provide small-scale financial services in the form of loan, credit or savings. These companies are introduced to ease the credit system for small businesses as they don’t get a loan from banks due to their complex process. Therefore it is commonly named as a Micro-credit, Micro-benefit organization. They offer small loans to various small businesses or households that do not have access to formal banking channels or eligibility for loans.

They provide small loans that are less than Rs.50,000 for rural areas and for urban it is Rs.1,25,000. The simplest way to register a Microfinance Company in India is to register the Section-8 Company with MCA (Ministry of Corporate Affairs). Without charging any marginal money or guarantee security. It can give loans at inexpensive rates directed by the RBI and central government. They are a huge support to all rural and agricultural development including income and employment creation.

There are basically 2 types of microfinance companies that are allowed in India, one is which has to be registered with the RBI and another is the non-profit type, which is registered as section 8 company and does not need RBI approval.

MAIN FEATURES OF SECTION-8 MICRO FINANCE COMPANY

· RBI approval is not required.

· No need of minimum capital of Rs. 5 Crores.

· Minimum Compliances.

· Can give unsecured loan to small business of Rs.50,000.

· Can give loan for dwelling residence up to Rs.1.25 lakh.

· Section-8 company have to follow the RBI guidelines on interest rate and processing charges.

· It is a legal finance business and you can sue the defaulter in case of non-payment of loan amount.

· In india, finance businesses are authorised only to Non-Banking Finance Companies (NBFC) and governed by RBI. NBFCs are required to get registration with RBI and comply with RBI guidelines. However, some business forms have been given exemption by the Reserve Bank of India (RBI) to do finance activities up to a certain extent.

· The Reserve Bank of India through its master circular RBI/2015-16/15 DNBR (PD) CC.No.052/03.10.119/2015-16 Dated July 01 2015 has exempted all Section 8 Companies engaged in micro finance activities.

· As per Para 2 (iii), Sections 45-IA, 45-IB and 45-IC of the Reserve Bank of India Act, 1934 (2 of 1934) shall not apply to any non-banking financial company which is engaged in below mentioned activities:

· (a) Engaged in micro financing activities, providing credit not exceeding Rs. 50,000 for a business enterprise and Rs. 1,25,000 for meeting the cost of a dwelling unit to any poor person for enabling him to raise his level of income and standard of living; and.

· (b) Licensed under Section 8 of the Companies Act, 2013; and.

· (c) Not accepting public deposits as defined in paragraph 2(1) (xii) of Notification No. 118 /DG (SPT)-98 dated January 31, 1998.

LOAN LIMITS BY SECTION-8 MICRO FINANCE COMPANY

· Borrower with a rural household annual income not exceeding Rs. 1,00,000 or urban and semi-urban household income not exceeding Rs. 1,60,000 will be eligible.

· Loan amount will not exceed Rs. 60,000 in the first cycle and Rs. 1,00,000 in subsequent cycles.

· Total indebtedness of the borrower will not exceed Rs. 1,00,000.

· Tenure of the loan not to be less than 24 months for loan amount in excess of Rs. 30,000 with prepayment without penalty.

· Loan to be extended without collateral.

· Aggregate amount of loans, given for income generation, is not less than 50 per cent of the total loans given by the mfis.

· Loan is repayable on weekly, fortnightly or monthly installments at the choice of the borrower.

BENEFITS OF OF SECTION-8 MICRO FINANCE COMPANY

Government of India and the Reserve Bank of India have created conducive policy framework for Microfinance Institutions (MFIs) to provide necessary legitimacy and impetus to the sector. The following are the benefit of Micro Finance Business.

· Provide access to funding

· Encourage self-sufficiency and entrepreneurship

· It offers a better overall loan repayment rate than traditional banking products.

· Strengthen financial condition for some days till situation gets better.

· Help in meeting credit needs for such a population range from emergency loans, consumption loans, business loan, working capital loan, housing etc.

BASIC DOCUMENTS REQUIRED FOR INCORPORATION OF SECTION-8 MICRO- FINANCE COMPANY

· Aadhar Card, Aadhar number is now a necessity for applying for any registration in India.

· Income tax return can only be filed if the person has linked his PAN card with Aadhar number.

· Address proof will be required for all directors and shareholders of the company to be incorporated.

· For Indian nationals, PAN is mandatory. For foreign nationals, apostilled or notarised copy of passport must be mandatorily submitted.

· Residence proof documents like bank statement or electricity bill should not be more than 2 months old.

· All documents submitted must be valid

· Register office of all companies must be in India. If it is a Rented Property, Rent agreement and NOC from a landlord. If it is a Self-owned Property, Electricity bill or any other address proof.

· Documents submitted must be valid and not more than 2 month old.

Consumer Protection Act, 2019- Key Highlights

2020-08-22T15:12:00.000+05:30

The Digital Age has directed in a new era of commerce and digital branding, as well as a new set of customer expectations. Digitization has provided easy access, a large variety of choice, convenient payment mechanisms, improved services and shopping as per convenience. However, along the growth path it also brought in challenges related to consumer protection.

Keeping this in mind and to address the new set of challenges faced by consumers in the digital age, the Indian Parliament, on 6 August 2019, passed the landmark Consumer Protection Bill, 2019 which aims to provide the timely and effective administration and settlement of consumer disputes. The Consumer Protection Act, 2019 (New Act) received the assent of the President of India and was published in the official gazette on 9 August 2019. The New Consumer Protection Act, 2019 came into force on 20th July 2020 and it will empower consumers and help them in protecting their rights through its various notified rules and provisions.

The New Act seeks to replace the more than 3 (three) decades old Consumer Protection Act, 1986 (Act).

KEY HIGHLIGHTS OF THE NEW ACT-

Establishment of Central Consumer Protection Authority:

The New Act will establish a new regulatory authority known as the Central Consumer Protection Authority (“Central Authority”), which will have wide powers of investigation including the power of search and seizure. The CCPA will have an investigation wing, headed by a Director-General, which may conduct inquiry or investigation into violation of consumer rights or unfair trade practices.

The CCPA has been granted wide powers to take suo-moto actions, recall products, order reimbursement of the price of goods/services, cancel licenses and file class action suits, if a consumer complaint affects more than 1 (one) individual.

E-Commerce Transactions:

The New Act has widened the definition of 'consumer'. The definition now includes any person who buys any goods, whether through offline or online transactions, electronic means, teleshopping, direct selling or multi-level marketing. The earlier Act did not specifically include e-commerce transactions, and this lacuna has been addressed by the New Act.

Pecuniary Jurisdiction:

Revised pecuniary limits have been fixed under the New Act. Accordingly, the district forum can now entertain consumer complaints where the value of goods or services paid does not exceed INR 10,000,000 (Indian Rupees Ten Million). The State Commission can entertain disputes where such value exceeds INR 10,000,000 (Indian Rupees Ten Million) but does not exceed INR 100,000,000 (Indian Rupees One Hundred Million), and the National Commission can exercise jurisdiction where such value exceeds INR 100,000,000 (INR One Hundred Million).

E-Filing of Complaints:

The New Act provides flexibility to the consumer to file complaints with the jurisdictional consumer forum located at the place of residence or work of the consumer. This is unlike the current practice of filing it at the place of purchase or where the seller has its registered office address. The New Act also contains enabling provisions for consumers to file complaints electronically and for hearing and/or examining parties through video-conferencing. This is aimed to provide procedural ease and reduce inconvenience and harassment for the consumers.

Product Liability:

The New Act has formally introduced the concept of product liability and brought within its fold not just the product manufacturer and product service provider but the product seller as well. A ‘product seller’ is such a person who is involved in placing the product in the market for a commercial purpose (e.g. brand owner). A product liability action for compensation can now be formally made on grounds of defectiveness of good or deficiency of services that has caused harm to a person or his/her property on grounds. The scope of defect and deficiency has been expanded to include non-conformance to express warranty or specifications, design defect, failure to provide adequate instructions or warnings to prevent any harm etc.

Unfair Contracts:

Following international jurisprudence, the New Act introduces a unique provision that safeguards consumers against unfair contracts by declaring them to be illegal. An unfair contract covers contracts between manufacturer/ trader and a consumer that causes significant changes in the rights of the consumer that the New Act explicitly recognizes, such as by way of – imposing unreasonable obligation or condition on the consumer which puts consumer to disadvantage; reserving right to unilateral termination (without reasonable cause) or assignment without consent (which is to the detriment of the consumer) in the contract; imposing a penalty for breach which is disproportionate to loss caused etc.

Unfair Trade Practices:

The New Act introduces a broader definition of Unfair Trade Practices, which also includes sharing of personal information given by the consumer in confidence, unless such disclosure is made in accordance with the provisions of any other law. The New Act empowers the Central Authority and Consumer Commission (i.e. the judicial fora) to order the perpetrator of such practice to discontinue it.

Penalties for Misleading Advertisement:

The New Act introduces, for the first time, a definition of misleading advertisement. It covers false description and guarantee of a product or services. It also covers information that was deliberately concealed from the consumer. If a misleading advertisement is found to be prejudicial to the interest of consumers, then the Central Authority may impose a penalty of up to INR 1,000,000 (Indian Rupees One Million) on a manufacturer. Separately, the New Act has made it a criminal offence to publish false or misleading advertisement for manufacturers and services providers. If found guilty, they could be sentenced to imprisonment for up to 2 (two) years.

Celebrity Endorsement:

The New Act fixes liability on endorsers considering that there have been numerous instances in the recent past where consumers have fallen prey to unfair trade practices under the influence of celebrities acting as brand ambassadors. In such cases, it becomes important for the endorser to take the onus and exercise due diligence to verify the veracity of the claims made in the advertisement to refute liability claims. If a misleading advertisement is found to be prejudicial to the interest of consumers, then the Central Authority may impose a penalty of up to INR 1,000,000 (Indian Rupees One Million) on the endorser as well. The Central Authority can also prohibit the endorser of a misleading advertisement from endorsing that particular product or service for a period of up to 1 (one) year. For every subsequent offence, the period of prohibition may extend to 3 (three) years.

Provision for Alternate Dispute Resolution:

The New Act provides for mediation as an alternate dispute resolution mechanism, making the process of dispute adjudication simpler and quicker. This will help speedier resolution of disputes and reduce pressure on consumer courts.

Conclusion

Gone are the days of ‘Buyers beware’. The consumer is now the king, not just in business but also in law. Hence, it is important for FMCG, E-retailers and Celebrity Endorsers to be cognizant of the provisions of the New Act. All businesses must pull up their socks and amend their business practices and contracts to meet the expectations of the New Act, so that they do not find themselves caught on the wrong side of the law when then New Act is enforced.

Regards

CS Shubham Kapoor

Ph- 9711244345, 7017667034

Email- kapoor.shubhamm@gmail.com

Corporate Social Responsibility - Current Scenario and Reforms

2020-06-13T15:34:00.000+05:30

Corporate Social Responsibility (CSR) is well accepted among shareholders as well as with various other stakeholders of society in India. The term CSR is new normal for Indian organisations. CSR tends to focus on what is done with profits after they are made. Larger corporations understand that CSR is an integral part of business framework for sustainable development. Companies also consider that CSR is an approach towards sustainable development and focus on the triple bottom line of Economic, Environmental and Social performance. CSR Shall be Considered as a Responsibility of Corporate towards Society and shall not be taken as Charity.

In India, the term Corporate Social Responsibility (CSR) is widely being used even though related concepts and terms, such as business responsibility, sustainable development, philanthropy, sustainability, corporate citizenship, responsible business, triple bottom line, shared value, value creation, business ethics, socio-economic responsibility, bottom of pyramid, stakeholder management, corporate responsibility, and corporate social performance.

The CSR activities of Indian companies are in line with the provisions of Section 135 with Schedule VII to the Companies Act, 2013. The CSR initiatives of companies thrust on creating value in the lives of the communities around its areas of business and manufacturing operations.Most of the businesses consider community as one of its apex stakeholders and believes in inclusive growth. This year most of the organisations continued its CSR initiatives in the realm of Education, Health, Livelihood, Rural Development and Social Entrepreneurship.

Section 135 of Companies Act 2013

Every company having

Net worth of rupees five hundred crore or more,

Turnover of rupees one thousand crore or more

Net profit of rupees five crore or more

during 3 [Immediate Preceding Financial Year] shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. Where there is no requirement of appointment of Independent Director, It shall have 2 or more directors in its CSR Committee.

2) The Board's report under sub-section (3) of Section 134 shall disclose the composition of the Corporate Social Responsibility Committee.

(3) The Corporate Social Responsibility Committee shall,—
(a) formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company

Schedule VII

Activities which may be included by companies in their Corporate Social Responsibility Policies Activities relating to:—

(i) Eradicating hunger, poverty and malnutrition, [‘‘promoting health care including preventinve health care’’] and sanitation [including contribution to the Swach Bharat Kosh set-up by the Central Government for the promotion of sanitation] and making available safe drinking water.

(ii) Promoting education, including special education and employment enhancing vocation skills especially among children, women, elderly and the differently abled and livelihood enhancement projects.

(iii) Promoting gender equality, empowering women, setting up homes and hostels for women and orphans; setting up old age homes, day care centres and such other facilities for senior citizens and measures for reducing inequalities faced by socially and economically backward groups.

(iv) Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, agroforestry, conservation of natural resources and maintaining quality of soil, air and water [including contribution to the Clean Ganga Fund set-up by the Central Government for rejuvenation of river Ganga].

(v) Protection of national heritage, art and culture including restoration of buildings and sites of historical importance and works of art; setting up public libraries; promotion and development of traditional art and handicrafts;

(vi) Measures for the benefit of armed forces veterans, war widows and their dependents;

(vii) Training to promote rural sports, nationally recognised sports, paralympic sports and olympic sports

(viii) Contribution to the prime minister's national relief fund 8[or Prime Minister’s Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)] or any other fund set up by the central govt. for socio economic development and relief and welfare of the schedule caste, tribes, other backward classes, minorities and women;

(ix) Contribution to incubators funded by Central Government or State Government or any agency or Public Sector Undertaking of Central Government or State Government, and contributions to public funded Universities, Indian Institute of Technology (IITs), National Laboratories and Autonomous Bodies (established under the auspices of Indian Council of Agricultural Research (ICAR), Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Atomic Energy (DAE), Defence Research and Development Organisation (DRDO), [Department of Biotechnology (DBT)], Department of Science and Technology (DST), Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs).]

(x) rural development projects

(b) recommend the amount of expenditure to be incurred on the activities and
(c) monitor the Corporate Social Responsibility Policy of the company from time to time.

(4) The Board of every company referred to in sub-section (1) shall-

(a) after taking into account the recommendations made by the Corporate Social Responsibility Committee, approve the Corporate Social Responsibility Policy for the company and disclose contents of such Policy in its report and also place it on the company's website, if any, in such manner as may be prescribed;

And

(b) ensure that the activities as are included in Corporate Social Responsibility Policy of the company are undertaken by the company.

(5) The Board of every company referred to in sub-section (1), shall ensure that the company spends, in every financial year, at least two per cent. of the average net profits of the company made during the three immediately preceding financial years [or where the company has not completed the period of three financial years since its incorporation, during such immediately preceding financial years], in pursuance of its Corporate Social Responsibility Policy.

Provided that the company shall give preference to the local area and areas around it where it operates, for spending the amount earmarked for Corporate Social Responsibility activities:

Provided further that if the company fails to spend such amount, the Board shall, in its report made under clause (o) of sub-section (3) of section 134, specify the reasons for not spending the amount [and, unless the unspent amount relates to any ongoing project referred to in sub-section (6), transfer such unspent amount to a Fund specified in Schedule VII, within a period of six months of the expiry of the financial year].

Table to Calculate the Net Profit for CSR

	Particulars
	Net profit after tax

Add:	Allowed Credits
1.	Profit on sale of Immovable Property (Original Cost-WDV)

Less:	Credit Disallowed
1	Premium on shares or debentures
2	Profit on sale of forfeited shares
3	Profit on sale of immovable property (Sale Value of Immovable Property – Original Cost)
4	Surplus in P&L on measurement of asset or liability at fair value

Less:	Expenses Allowed
1	All the usual Working Charges
2	Director’s Remuneration
3	Bonus or Commission paid to Staff
4	Tax on escess or abnormal profit
5	Tax on business profits imposed for special reasons
6	Interest on Debentures
7	Interest on Loans
8	Expenses on repairs (other than Capital Expenditure)
9	Contributions made under section 181 (Bonafide Charitable Trusts)
10	Depreciation
11	Prior period items
12	Legal liability for compensation or damages
13	Insurance Expenses

Add:	Expenses Disallowed
1	Income Tax
2	Compensations, damages or payments made voluntarily
3	Capital Loss on sale of undertaking or part thereof (Not include losses on sale of asset)
4	Expenditure in P&L on measurement of asset or liability at fair value

Comparison Chart between Newly Formed CSR Rules 2020 and Existing Rules 2014

S.No.	Existing Rules AS Per Companies (CSR Policy) Rules 2014	Proposed Rules As Per Companies (CSR Policy) Rules 2020
Rule 2	“Corporate Social Responsibility (CSR)” means and includes but is not limited to: - (i)Projects or programs relating to activities [areas or subjects] specified in Schedule VII to the Act; or (ii) Projects or programs relating to activities undertaken by the board of directors of a company (Board) in pursuance of recommendations of the CSR Committee of the Board as per declared CSR Policy of the company subject to the condition that such policy will (Include activities, Areas and Subjects) specified in Schedule VII of the Act.	Corporate Social Responsibility (CSR)" means the activities undertaken by a Company in pursuance of its statutory obligation laid down in section 135 of the Act in accordance with the provisions contained in these Rules, but shall not include the following, namely- i) Activities undertaken in pursuance of normal course of business of the company. ii) Any activity undertaken by the company outside India. iii) Contribution of any amount directly or indirectly to any political party under section 182 of the Act. iv) activities that significantly benefit the employees of the company and their families. Provided that in case of any activity having less than twenty five percent employees as its beneficiary, then such activity shall be deemed to be CSR activity under these rules.
	“CSR Policy” relates to the activities to be undertaken by the (Company in areas and Subject) expenditure thereon, excluding activities undertaken Specified in Schedule VII to the Act and in pursuance of normal course of business of a company;	"CSR Policy" means a statement containing the approach and direction given by the board of a company, as per recommendations of its CSR Committee, for selection, implementation and monitoring of activities to be undertaken in areas or subjects specified in Schedule VII of the Act
Rule 4	The Board of a company may decide to undertake its CSR activities approved by the CSR Committee, through (a) a company established under section 8 of the Act or a registered trust or a registered society, established by the company, either singly or alongwith any other company, or (b) a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government or any entity established under an Act of Parliament or a state legislature	The Board shall ensure that the CSR activities are undertaken by the company itself or through: (a) a company established under section 8 of the Act, or (b) any entity established under an Act of Parliament or a State legislature. Provided that such company/entity, covered under clause (a) or (b), shall register itself with the central government for undertaking any CSR activity by filing the e-form CSR-1 with the Registrar along with prescribed fee. Provided further that the provisions of this sub-rule shall not affect the CSR projects or programmes that were approved prior to the commencement of the Companies (CSR Policy) Amendment Rules, 2020.

	A company may also collaborate with other companies for undertaking projects or programs or CSR activities in such a manner that the CSR Committees of respective companies are able to report separately on such projects or programs in accordance with these rules.	No Change
		A company may engage international organizations for designing, monitoring and evaluation of the CSR projects or programmes as per its CSR policy as well as for capacity building of their own personnel for CSR. Provided that a company may also engage an international organization for implementation of a CSR project subject to prior approval of the central government.
		Board of a company shall satisfy itself that the funds so disbursed have been utilized for the purpose and in the manner as approved by it and Chief financial Officer or the person responsible for financial management shall certify to the effect.
		In case of ongoing projects, the Board of a company shall monitor the implementation of the project with reference to the approved timelines and year wise allocation and shall be competent to make modifications, if any, for smooth implementation of the project within the overall permissible time period.
Rule 5	The CSR Committee shall institute a transparent monitoring mechanism for implementation of the CSR projects or programs, or activities undertaken by the company.	The CSR Committee shall formulate and recommend to the Board, an annual action plan in pursuance of its CSR policy, which shall include the following: (a) the list of CSR projects or programmes that are approved to be undertaken in areas or subjects specified in Schedule VII of the Act; (b) the manner of execution of such projects or programmes as specified in sub-rule (1) of Rule 4; (c) the modalities of utilization of funds and implementation schedules for the projects or programmes; and (d) monitoring and reporting mechanism for the projects or programmes. (e) Details of need and impact assessment, if any, undertaken by the company.”

Rule 6

The CSR Policy of the company shall, inter-alia, include the following namely:-

(a) a list of CSR projects or programs which a company plans to undertake 1[areas or subjects specified in] of the Schedule VII of the Act, specifying modalities of execution of such project or programs and implementation schedules for the same; and

(b) monitoring process of such projects or programs:

Provided that the CSR activities does not include the activities undertaken in pursuance of normal course of business of a company.

Provided further that the Board of Directors shall ensure that activities included by a company in its Corporate Social Responsibility Policy are related to the 2[areas or subjects specified in Schedule VII] of the Act.

(2) The CSR Policy of the company shall specify that the surplus arising out of the CSR projects or programs or activities shall not form part of the business profit of a company.

Omitted

Rule 7

CSR expenditure shall include all expenditure including contribution to corpus, or on projects or programs relating to CSR activities approved by the Board on the recommendation of its CSR Committee, but does not include any expenditure on an item not in conformity or not in line with activities which fall within the areas, Subjects and activities as specified under Schedule VII.

(1) The board shall ensure that the administrative overheads incurred in pursuance of sub-section (4) (b) of section 135 of the Act shall not exceed five percent of total CSR expenditure of the company for the financial year.

Provided that a company undertaking impact assessment, in pursuance of sub-rule (3) of Rule 8, may incur administrative overheads not exceeding ten percent of total CSR expenditure for that financial year.

(2) Any surplus arising out of the CSR projects or programmes or activities shall not form part of the business profit of a company and shall be ploughed back into the same project or shall be transferred to the Unspent CSR Account and spent in pursuance of CSR policy and action plan of the company.

3) The CSR amount may be spent by a company for creation or acquisition of assets which shall only be held by a company established under section 8 of the Act having charitable objects or a public authority.

Provided that any asset created by a company prior to the commencement of Companies (CSR Policy) Amendment Rules, 2020, shall within a period of One hundred and eighty days from such commencement comply with the requirement of this rule, which may be extended by a further period of not more than ninety days with the approval of the board based on reasonable justification.

(4)Unspent balance, if any, towards fulfilment of CSR obligation at the time of commencement of these Rules shall be transferred within a period of thirty days from the end of Financial Year 2020-21 to special account viz., ‘Unspent Corporate Social Responsibility Account’ opened by the company and such amount shall be spent by the company in pursuance of its obligation towards the Corporate Social Responsibility Policy within a period of three financial years from the date of such transfer, failing which, the company shall transfer the same to a Fund specified in Schedule VII, within a period of thirty days from the date of completion of the third financial year.”

Rule 8

1) The Board’s Report of a company covered under these rules pertaining to a financial year commencing on or after the 1st day of April, 2014 shall include an annual report on CSR containing particulars specified in Annexure.

(2) In case of a foreign company, the balance sheet filed under sub-clause (b) of sub-section (1) of section 381 shall contain an Annexure regarding report on CSR.

A New Sub Section 3 shall be added

(3) A company having the obligation of spending average CSR amount of Rs 5 Crore or more in the three immediately preceding financial years in pursuance of sub section 5 of Section 135 of the Act, shall undertake impact assessment for their CSR projects or programmes, and shall disclose details of the same in its Annual Report on CSR.”

Rule 9

The Board of Directors of the company shall, after taking into account the recommendations of CSR Committee, approve the CSR Policy for the company and disclose contents of such policy in its report and the same shall be displayed on the company’s website, if any, as per the particulars specified in the Annexure.

The Board of Directors of the company shall mandatorily disclose the composition of the CSR Committee, and CSR Policy and Projects approved by the Board on their website for public viewing, as per the particulars specified in the Annexure.”

Rule 10

National Unspent Corporate Social Responsibility Fund: (1) The Central Government shall establish a fund called the “National Unspent Corporate Social Responsibility Fund” (herein after referred as “the Fund”) for the purposes of sub-section (5) and (6) of section 135 of the Act. The Fund shall be utilized for the purposes of undertaking CSR projects in the in areas or subjects specified in schedule VII of the Act.

Provided that until such fund is created the unspent CSR amount in terms of provisions of sub-section (5) and (6) of section 135 of the Act shall be transferred by the company to any fund as specified in schedule VII of the Act.

(2) The manner of administration, authority for administration of the Fund shall be in accordance with such guidelines as may be prescribed by the Central Government from time to time.”

CSR During Covid-19

1. Contribution to 'PM Care Funds'- Qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013.

2. Contribution made to ‘Chief Minister’s Relief Funds’ or ‘State Relief Fund’- not qualify as CSR expenditure.

3. Contribution made to State Disaster Management Authority -Qualify as CSR expenditure under item no (viii) of Schedule VII of the Companies Act, 2013.

4. Spending of CSR funds for COVID-19 related activities- qualify as CSR expenditure.

5. Payment of salary/wages to employees and workers, including contract labour, during the lockdown period can be adjusted against the CSR expenditure- As the payment of Salary and wages in normal circumstances is Statutory and Contractual obligation, similarly, In these conditions of pandemic there is the moral obligation of the employer to pay the same. Hence, this shall not qualify as CSR Expenditure.

"Only ex-gratia payment is made to temporary / casual workers/ daily wage workers over and above the disbursement of wages, specifically for the purpose of fighting COVID 19, the same shall be admissible towards CSR expenditure as a onetime exception provided there is an explicit declaration to that effect by the Board of the company, which is duly certified by the statutory auditor."

Conclusion

Businesses in India have been sensitive towards the concerns of society and is committed to operating its core business in a socially responsible way by taking into consideration the wider interests of the community and the environment. But there is grey area too, Where Companies are not taking the Responsibility and twisting the financials for the sake of Compliance. CSR is not just a Compliance it’s a duty towards Society.

“Business needs to go beyond the Interest of their Companies to the Communities they Serve”

Ratan Tata, Former Chairman, Tata Group

Regards

CS Shubham Kapoor

Ph- 9711244345, 7017667034

Email- kapoor.shubhamm@gmail.com

RISE OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs) IN INDIA- ATMANIRBHAR BHARAT ABHIYAN 2020

2020-05-26T01:04:00.004+05:30

BACKGROUND

The micro and small businesses in India are characterised by heterogeneity and fragmentation, and several them are informal. Much before the term, Micro, Small and Medium Enterprises (MSME) caught on and within the broad contours of the ‘export substitution’ policy paradigm, India had defined Small Scale Industry (SSI) in order to target resources towards this segment of industries, rightly considering it to be the engine of growth. An SSI in the 1950s was defined as an industry with investment of up to Rs. 5 lakh in fixed assets and employment of 50/100 people with or without power. By the 1960s, the employment criteria was dropped and the investment ceiling thereafter was constantly increased. The MSMED Act in 2006 used ‘micro and small’ instead of ‘small scale industries’ and added a definition of ‘medium’. Further, the definitions are based on the investment criteria and differentiated on the basis of manufacturing and services.

DEFINITIONS

MSME Definition Earlier

MSME Definition after Amendment

There has been long pending demand for the revision in the definition of MSME to make it harmony with other Law. The earlier threshold in MSME definition have created a distress and demotivate MSMEs of advancing out of the benefits and hence killing the urge to grow. Hence the definition has been revised to make the threshold up by increasing the Investment Limit and introducing the additional parameter of turnover and also distinction between the manufacture and service sector have been eliminated.

Revised Definition of MSME

MARKET SHARE OF MSMEs IN INDIA

According to the MSME Ministry’s FY19 annual report, the MSME sector is dominated by micro-enterprises. India has 6.33 crore MSMEs out of which 6.30 crore -99.4 per cent are micro-enterprises and while 0.52 per cent — 3.31 lakh are small and 0.007 per cent — 5,000 are medium enterprises.

The number of registered MSMEs in FY20 has increased by 18.49 per cent to 25.13 lakh units from 21.21 lakh in FY19, according to government data. The growth rate, however, declined from 39.7 per cent in the last financial year that had increased from 15.17 lakh MSMEs registered in FY18, as per the data shared by the MSME Minister Nitin Gadkari in the Rajya Sabha.

ROLE OF MSMEs IN INDIAN ECONOMY

The Micro, Small & Medium Enterprises (MSMEs) have been contributing significantly to the expansion of entrepreneurial endeavours through business innovations. The MSMEs are widening their domain across sectors of the economy, producing diverse range of products and services to meet demands of domestic as well as global markets.

EMPLOYMENT

As per the National Sample Survey (NSS) 73rd round conducted during the period 2015- 16, MSME sector has been creating 11.10 crore jobs (360.41 lakh in Manufacturing, 387.18 lakh in Trade and 362.22 lakh in Other Services and 0.07 lakh in Non-captive Electricity Generation and Transmission) in the rural and the urban areas across the country.

ESTIMATED EMPLOYMENT IN SECTORS

Broad Activity Category	Employment (in lakh)			Share (%)
Broad Activity Category	Rural	Urban	Total	Share (%)
Manufacturing	186.56	173.86	36.41	32
Trade	16.64	226.54	387.18	35
Other Services	150.53	211.69	362.22	33
Electricity	0.06	0.02	0.07	0
All	497.78	612.10	1109.89	100

*Source- MSME Annual Report 2018-19

BENEFITS FOR MSME IN AATMANIRBHAR BHARAT ABHIYAN (SELF-RELIANT INDIA MOVEMENT)

As a measure of Economic relief in this Covid -19 pandemic, Government came with the Special Package called as Aatmanirbhar Bharat Abhiyan (Self-Reliant India Movement). Our Hon’ble Prime Minister showed his vision by segregating this relief into five pillars of this movement- Economy, Infrastructure, System, Vibrant Demography and Demand. This Package covers various sections including cottage industry, MSMEs, labourers, middle class, industries, among others.

As MSME sector has a vast market share and the backbone of the Indian Economy, this Relief package brought various benefits for this Sector. The various benefits for MSME sector are –

1. Rs 3 lakh crores Collateral free Automatic Loans for Business, including MSME

Conditions

· Borrowers with up to Rs. 25 crores outstanding and Rs. 100 crores turnover eligible.

· Loans to have 4-year tenor with moratorium of 12 months on Principal repayment.

· Interest to be capped.

· 100% credit guarantee cover to Banks and NBFCs on principal and interest.

· Scheme can be availed till 31st Oct 2020.

· No guarantee fee, no fresh collateral.

2. Rs 20,000 crore Subordinate Debt for MSMEs

Conditions

· This loan shall strictly focus on the Stressed MSME.

· Functioning MSMEs which are NPA or are stressed will be eligible.

· Promoters of the MSME will be given debt by banks, which will then be infused by promoter as equity in the Unit.

3. Rs 50,000 crore equity infusion through MSME Fund of Funds

Conditions

· Provide funding in the form of Equity for MSME with growth potential and viability

· Fund of Funds will be operated through a Mother Fund and few daughter funds.

· Mother Fund means that Government provide 10,000 Crore of funding through Equity infusion through which the Private Funds (VC) or Daughter funds would attract and can Invest upto 40,000 Crores in these MSMEs.

4. Global tender to be disallowed upto Rs 200 crores

Conditions

· Global tenders will be disallowed in Government procurement tenders upto Rs 200 crores.

· This amendment would protect MSME and other Companies from unfair trade Practices.

5. No fresh Insolvency Proceedings against MSME for One Year

· The government has raised the minimum threshold to initiate insolvency proceedings to Rs 1 crore from Rs 1 lakh.

· The second important measure announced is a special insolvency resolution framework under Section 240A of the IBC which will be notified soon.

6. E-Market Linkage

· MSMEs currently face problems of marketing and liquidity due to COVID

· e-market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.

CONCLUSION

The government and financial institutions need to work in harmony for all players in the MSME lending ecosystem to thrive and address the current challenges plaguing them. Institutions such as the SEBI, which helped establish an MSME exchange on both the BSE and the NSE, need to ensure that the listing norms require minimal disclosure without hampering the interest of investors, have relaxed public shareholding requirements, make sure paperless processes take effect and provide an opportunity for anchor investors to invest in MSME stocks on the exchange.

Regulations and frameworks must be developed to manage short-term and long-term crisis. As the MSME sector suffers from closure very often, the process of closure or rehabilitation must be smooth and cost-effective.

It has been a long-standing demand from industry to hike the investment limits, as with inflation, units often cross the threshold that will bring them benefits. The decision to add turnover criteria to investment is seen as a good decision as there are units that leverage a small capital to post large revenues.

In the end, It would come in the near future that how all these efforts, whether pre and post this Covid-19 package would be beneficial for the MSME Sector.

https://msme.gov.in/

Regards

CS Shubham Kapoor

Ph- 9711244345, 7017667034

Email- kapoor.shubhamm@gmail.com

Convening of Annual General Meeting during COVID- 19 Crisis

2020-05-22T16:52:00.000+05:30

BACKGROUND

In view of the COVID-19 outbreak, the Ministry of Corporate Affairs (‘MCA’) had come up with the circular dated April 08, 2020, providing certain relaxations from the provisions of Companies Act, 2013 and rules made thereunder including conducting the extra-ordinary general meeting for transecting the business of urgent nature through video conferencing (‘VC’) and other audio visual means (‘OAVM’) till June 30, 2020. Further, in order to provide more clarity on the modalities to be followed by the companies for conducting EGM viz. manner of issuance of notice, voting by show of hands and postal ballot etc., another circular dated April 13, 2020 (Collectively referred to as ‘EGM Circulars’) was brought in force. In continuation to the aforesaid circulars and in view of the social distancing norms and other restrictions thereof, MCA provided an extension of 3 months for holding annual general meeting (‘AGM’) for the companies having the calendar year as the financial year vide its circular dated April 21, 2020.

Now, considering the representations of various stakeholders, MCA has issued a circular dated May 05, 2020, (‘AGM Circular’) in line with the relaxations provided under the EGM Circulars to hold AGMs through VC/ OAVM.

While the AGM Circular will draw its reference from the EGM Circulars in terms of the modalities, however, there are various issues worth discussing to understand the scope, impact and applicability for companies to call AGM during the COVID-19 crisis. This write-up focuses on some of the issues and also provides the comparison between both the EGM Circulars and AGM Circular.

APPLICABILITY

The AGM Circular applies to all the AGMs to be called by companies within the calendar year 2020. Generally speaking all the companies will call their AGM for the financial year 2019-2020 in the calendar year 2020 only. Therefore, one may conclude that this AGM Circular can be availed by all the companies without any exception. Having said that, it is also pertinent to mention that a specific condition has been laid down for companies which are not mandated to provide e-voting facility, to call their AGMs under this AGM Circular.

WHY TO CONVENE THE MEETING THROUGH VC/OAVM

The reasons for convening the meeting through VC/OAVM are as follows:

1. Less time consuming;

2. Convenient in Operation;

3. Cost effective;

4. Environment friendly; (Social Distancing)

AGM CIRCULAR TO COVER BOTH ‘ORDINARY BUSINESS’ AND ‘SPECIAL BUSINESS’

Para A(II) and B(IV) of the AGM Circular provides the type of business which will be transacted in the AGM through VC/OAVM. The text of the same is provided below:

“In such meetings, other than ordinary business, only those items of special business, which are considered to be unavoidable by the Board, may be transacted.”

While on the first reading of the para it seems that the AGM Circular will allow to convene the AGM by VC/OAVM only for the unavoidable special business. However, that should not be the intent of the lawmakers as an AGM without the ordinary business will have to be adjourned till such time the ‘Ordinary Business’ items are decided and concluded. Therefore, aforesaid para should be construed and interpreted in a manner to include the unavoidable special business along with the ordinary business items. Accordingly, in the light of aforesaid circular, the company may proceed with to pass the ordinary as well as unavoidable special business in their AGM.

Further, for items requiring right of representation like removal of auditors or directors, etc. cannot be conducted through VC/OAVM as mentioned under EGM Circular.

The circular provides for both-

For companies which are required to provide the e-voting facility

For companies which are not required to provide the e-voting facility

KEYNOTE-

Only the Unavoidable Business in addition Ordinary business shall be transacted at the AGM.

The circular provides for both-

For companies which are required to provide the e-voting facility

For companies which are not required to provide the e-voting facility

Companies which are required to provide the e-voting facility

Content of the public notice under rule 20 of the Companies (Management and Administration) Rules, 2014

The following contents shall form part of the public notice for e-voting:

i. a statement that the AGM shall be convened through VC or OAVM;

ii. date and time of the AGM;

iii. availability of notice on the website of the company and stock exchange, if required;

iv. the manner in which the following can cast their votes:

a. Physical shareholders; and

b. who have not registered their email addresses with the company;

v. the manner in which the persons can get their email addresses registered;

vi. any other detail considered necessary by the company

Maintenance of recorded transcript

The recorded transcript shall be maintained by the company. In case of public company, the recorded transcript shall also be made available on the website of the company.

Minimum standards of VC/OVAM facility

Ensure that the Meeting through VC/OAVM facility allows two way teleconferencing for the ease of participation of the members. The VC/OVAM facility must have a capacity to allow at least 1000 members to participate on first come first serve basis.

Time frame for VC/OVAM facility

The VC/OVAM facility shall be kept open at least 15 minutes before the scheduled time of the AGM and shall not be closed till the expiry of 15 minutes after the conclusion of the scheduled time for AGM.

Attendance through VC/OVAM

Attendance of members through VC/OAVM shall be counted for quorum under section 103 of the Act.

Voting by the members present in the Meeting

The members who are present in the AGM through VC/OAVM facility and have not casted their vote through remote e-voting shall be allowed to vote through e-voting system.

Election of chairman

Unless the articles require any specific person to be appointed as a Chairman for the Meeting, the Chairman for the Meeting shall be appointed in the following manner:

i. Where there are less than 50 members present at the Meeting, the Chairman shall be appointed in accordance with section 104;

ii. In all other cases, the Chairman shall be appointed by a poll conducted through the e-voting system during the Meeting.

E-voting facility during the Meeting

The Chairman shall ensure that the facility of e-voting system is available for voting during the Meeting held through VC/OAVM.

Voting by the authorized representatives

The representatives of the members may be appointed for the purpose of voting through remote e-voting or for participation and voting in the Meeting held through VC/OAVM.

Role of Scrutinizer

The company should be required appoint a scrutinizer in accordance with the applicable provisions of the CA, 2013 red with allied rules for enabling transparent voting free from any conflict of interest.

Attendance of independent director and the auditor

At least one independent director (if is required to appointed), and the auditor or his authorized representative, shall attend such Meeting through VC/ OAVM.

Notice issued prior to the AGM Circulars

For companies which have already sent their notices for calling AGM, should be required to send out fresh notices containing the fact that meeting will conducted through VC/OAVM in terms of the AGM Circular.

In our view, the length of AGM notices can remain 21 days unless the same is called at a shorter notice.

Filing of resolutions

All resolutions, passed in accordance with this mechanism shall be filed with the ROC within 60 days of the Meeting, clearly indicating therein that the mechanism provided herein along with other provisions of the Act and rules were duly complied with during such Meeting.

Companies which are not required to provide the e-voting facility

Intimation to the members with respect to the Meeting

The company shall contact all the members whose e-mail addresses are not registered with the company over telephone/any other mode, before sending notice to all the members.

Content of the public notice

Where the contact details of any of the members are not available with the company, it shall issue of public notice in vernacular language and vernacular newspaper in which the registered office is situated, & in English language and English newspaper having wide circulation in that district and electronic editions.

The following content shall form part of the public notice:

i. A statement that the AGM shall be convened through VC or OAVM; and the company proposes to send the notice by email at least 3 days from the date of publication of the public notice;

ii. The details of the email address along with the phone number on which the members may contact for getting their e-mail addresses registered for participation and voting in the Meeting.

Maintenance of recorded transcript

The recorded transcript shall be maintained by the company. In case of public company, the recorded transcript shall also be made available on the website of the company.

Minimum standards of VC/OVAM facility

Ensure that the Meeting through VC/OAVM facility allows two way teleconferencing for the ease of participation of the members. The VC/OVAM facility must have a capacity to allow at least 500 members or members equal to total number of members, whichever is lower to participate on first come first serve basis.

Timeframe for VC/OVAM facility

The VC/OVAM facility shall be kept open at least 15 minutes before the scheduled time of the AGM and shall not be closed till the expiry of 15 minutes after the conclusion of the AGM.

Designated e-mail address for voting

The company shall provide a designated e-mail address to all members at the time of sending the notice of Meeting so that the members can convey their vote, when a poll is required to be taken during the Meeting on any resolution, at such designated email address.

Voting through registered e-mail only

During the Meeting held through VC/OVAM facility, where a poll on any item is required, the members shall cast their vote on the resolutions only by sending their email addresses which are registered with the company. The said emails shall only be sent to the designated email address circulated by the company in advance.

Attendance of independent director and the auditor

At least one independent director (if is required to appointed), and the auditor or his authorized representative, shall attend such Meeting through VC/ OAVM.

Role of Scrutinizer

The company may appoint a scrutinizer even though on a voluntary basis for enabling transparent voting free from any conflict of interest.

Declaration of voting results

In case the counting of votes requires time, the said meeting may be adjourned and called later to declare the result.

Notice issued prior to the AGM Circulars

Same for these kinds of Companies.

Filing of resolutions

Same for these kinds of Companies.

Application for extension of AGM for certain companies

The companies which do not have calendar year as their financial year and are unable to conduct their AGM in accordance with the framework provided in AGM Circular may apply for the application for extension of AGM before the concerned Registrar of Companies under section 96 the Act.

http://www.mca.gov.in/Ministry/pdf/Circular17_13042020.pdf

http://www.mca.gov.in/Ministry/pdf/Circular20_05052020.pdf

Regards

CS Shubham Kapoor

Contact- 9711244345

Email- kapoor.shubhamm@gmail.com

Nirmala Sitharaman speech highlights: Third tranche offers Support to farmers along with Governance Reforms

2020-05-17T20:03:00.001+05:30

FM Nirmala Sitharaman announced the third tranche of the mammoth Rs 20 lakh crore stimulus package today.

The eleven measures announced today dealt with upgrading farm infrastructure, animal husbandry & fisheries and governance reforms. The finance minister said that the three tranches of stimulus announced so far is aimed at empowering people to help them become self-sufficient and earn livelihoods.

The finance minister, flanked by MoS Anurag Thakur and secretaries in the finance ministry, started her daily rounds of press conference from Wednesday unveiling the Modi government's mega Covid stimulus of Rs 20 lakh crore.

During her first interaction on Wednesday she focussed on the MSME sector, NBFCs and power discoms. India Inc welcomed the measures announced for the beleaguered MSME sector saying that they will mitigate the pain and help in saving jobs.

The second set of relief measures were announced on Thursday particularly aimed at migrant workers and urban poor. The finance minister announced free ration for those who do not have a ration card in the states they are residing. She also announced a single ration card that will be applicable across the country. Also, incentives for providing rental accommodation for migrant workers were announced the press conference on Thursday.

She also rolled out a special credit facility worth Rs 5,000 crore for street vendors and offered concessional credit through Kisan Credit Cards to small and marginal farmers. The extension of Credit linked Subsidy Scheme till March 2021 will provide a Rs 70,000 crore booster shot to the affordable housing segment.

Key Takeaways

The third tranche deals with framers, food processing and allied activities. Eleven measures have been announced today. Eight are related to strengthening infrastructure, the rest three will deal with governance and administrative reforms.

Also, in the last two months, the government took following steps to provide relief to agriculture and dairy sector:

· Rs 74,300 crore of purchases based on MSP happened during lockdown.

· Rs 18,700 crore transferred to farmers under PM Kisan.

· Under Fasal Bima Yojana, Rs 6,400 cr claims processed

For Animal Husbandry:

Dairy industry was under severe difficulty. Around 560 lakh litres of milk per day was procured by Co-operatives. Rs 5,000 crore additional liquidity has been transferred to dairy farmers. A total of 111 crore litres of milk was procured.

New scheme utilised for interest subvention for 2% for dairy farmers. Additional 2% for prompt service.

New Announcements:

For Upgrading Infrastructure

1. One lakh crore fund for strengthening the farm gate infrastructure like cold chains, post harvest storage infrastructures etc.

2. Rs 10,000 crore fund for micro food scheme will be executed with cluster based approach. Will benefit 2 lakh Micro Food Enterprises. For instance, Bihar can have Makhana cluster, Kashmir can have Kesar cluster, Telangana can have Turmeric cluster, Andhra can have Kesar cluster, Telangana can have Turmeric cluster, Andhra can have chilli cluster.

3. Govt will launch Pradhan Mantri Matsya Sampada Yojana for development of marine and inland fisheries. Rs 20,000 crore will be spent to fill the gaps in value chains. This will lead to an additional fish production of 70 lakh tons in next five years and provide employment to 55 lakh people.

4. Rs 13,343 crore for vaccination of livestock in India to eradicate foot and mouth disease.

5. Rs 15,000 crore will be spent on ramping up the dairy infrastructure. Also, investments will be made in cattle feed.

6. Rs 4,000 crore for growing of herbal and medicinal plants. Ten lakh hectares of land will be used for growing medicinal and herbal plants and will provide income of nearly Rs 5,000 crore for farmers.

7. Rs 500 crore have been allocated for beekeeping. This will help 2 lakh beekeepers.

8. TOP to TOTAL: Rs 500 crore for Operation Greens that will be extended beyond tomatoes, potatoes and onion and will applicable to all vegetables.

Governance Reforms:

9. Propose amendment to Essential Commodities Act to enable better price realisation for farmers. Food stuffs including edible oils, oil seeds, pulses, onions and potato will be deregulated. And stock limits will be imposed only under exceptional circumstances like famine and surge in prices.

Agriculture Marketing Reforms:

10. A central law will be formulated to provide

· Adequate choices to sell produce at attractive price.

· Barrier free inter-state trade.

· Framework for e-trading of agriculture produce.

Agriculture Produce Price and Quality Assurance

11. Facilitative legal framework will be created to enable farmers for engaging with processors, aggregators, large retailers, exporters etc. in a fair and transparent manner. Risk mitigation for farmers, assured returns and quality standardization shall form integral part of the framework.

Process to Shift the Registered office from one State to another State

2020-05-16T17:17:00.007+05:30

Meaning of Registered office

A registered office is the official address of a company to which all official letters, notices and reminders will be sent by any person, any government or non government or regulatory body. In terms of Section 7 of the Companies Act, 2013 (the “Act”), all registered companies are legally required to have a registered office address in India from the date of commencement of business or within fifteen days (As per Companies Amendment Act, 2017 period of 15 days shall be substituted with 30 days) from the date of incorporation whichever is earlier However, under the incorporation process effective as on date, the proposed company is required to intimate the address of its proposed registered office the time of incorporation itself.

Usually a registered office is situated where most of the stakeholders reside. The only reason being is for their convenience. However sometimes it happens so that the registered office needs to be shifted to another place for better management of the company. The shifting can be within the local limits of same city, outside the local limits within same city, from jurisdiction of present ROC to jurisdiction of another ROC (in Maharashtra and Tamilnadu1) and sometimes, from one state to another.

Out of State Shifting of the Registered Office under the Companies Act, 2013 Provisions relating to shifting of the registered office from one state to another are contained in Section 13(4) of the Companies Act, 2013 which are detailed in the rule 30 of The Companies (Incorporation) Rules, 2014. In the present article, this procedure has been given in a step by step manner for easy understanding of the readers.

Detailed Procedure

To consider the proposal for shifting of registered office.
Fix up the date, time, and place of the General Meeting.
Approve the notice of Extraordinary General Meeting and calling of General Meeting.
Authorize the CS or Director to move an application before RD to alter Clause II of Memorandum of Association within whose jurisdiction the registered office of the company (before change) is situated.
The Board shall authorized the Director and the Secretary severally to see that the consent of the Creditor and debenture holders if any etc. is obtained or that sufficient provisions is made for the discharge of their debts or adequate security is made section 13(5).
Authorise the CS or Director to move an application before CG for approval .

B. Send Notice of general meeting to all members along with Explanatory Statement (Section-102), Proxy Form, Route Map and Attendance Slip.

C. Hold General Meeting and Pass the Special Resolution approving the shifting subject to the approval of the RD.

D, Prepare the Minutes of Extraordinary General meeting/ General Meeting.

E. After taking the approval of the members, file a certified copy of the special resolution along with the explanatory statement and altered copy of MOA within 30 days of passing of Special Resolution in form MGT-14 (Filling of Resolution and agreement to the registrar under section 117) with ROC.

Attachments

Copy of Special Resolution(s) along with the Copy of Explanatory Statement U/s 102.
Altered MOA.
Minutes of EGM.
Shorter notice Consents, if any.

F. Publication of Notice in News Paper:

Publish a notice in Form No.INC.26, at least once vernacular newspaper in the principal vernacular language in the district in which the registered office of the company is situated, and at least once in English language in an English newspaper circulating in that district.

G. Prepare a list of CREDITORS and DEBENTURE HOLDERS and intimate them accordingly.

The list is required to be filed with the application.
The list should be duly verified by an affidavit.
List should be verified by the Statutory Auditor of the Company.
The list should not precede the date of filing of petition by more than one month (List Should not be older than one month from filling of petition).

List Contain the Information:

The names and address of every creditor and debenture holder of the company; The nature and respective amounts due to them in respect of debts, claims or liabilities:

AFFIDAVIT:

As per Rule 30 Sub Rule (2) of The Companies (Incorporation) Rules, 2014 (Affidavit should be signed by the Company Secretary of the Company, if any and not less than two directors of the Company, one of whom shall be managing Director, where there is one, to the effect that they have made a full equity into the affairs of the company and, having done so, have formed an opinion that the list of creditors is correct, and that the estimated value as given in the list of the debts or claims payable on the contingency or not ascertained are proper estimates of the values of such debts and claims and that there are no other debts of or claims against the company to their knowledge)

H. Prepare List of Employees:

The Application on affidavit from the directors of the company that no employee shall be retrenched as a consequence of shifting of the registered office from one state to another state.

I. Prepare List of Application:

Company will prepare the application for shifting of Registered Office along with the required documents.

J. Prepare an Application in and all relevant annexure to be filled with the Regional Director for seeking approval for shifting of the registered office from one state to another.

K. Send a copy of the application with complete annexure to the Chief Secretary of the State where the registered office is situated at the time of filing the application and obtain acknowledgment for sending the notice.

L. The Petition along with the enclosure should be Serially Numbered and scanned copy of the petition is filed in Form GNL-2 with Registrar of Companies.

M. The Original Application U/s 13(4) along with all Necessary Annexure for seeking approval of the [1]Central Government (Regional Director) for shifting of Registered office from one State to another shall be filed in Form- INC-23 along with the fee and the following documents:-

a. A copy of the Memorandum And Articles Of Association;

b. Certified True Copy of Board Resolution.

c. A copy of the Notice Convening The General Meeting along with relevant Explanatory Statement;

d. A copy of the Special Resolution sanctioning the alteration by the members of the company; (if possible supportive by Attendance sheet)

e. A copy of the Minutes of The General Meeting at which the resolution authorizing such alteration was passed, giving details of the number of votes cast in favor or against the resolution;

f. An Affidavit Verifying the application (On Stamp Paper duly notarized)

g. The List of Creditors and Debenture Holders entitled to object to the application;

h. An Affidavit Verifying The List of Creditors; (On Stamp Paper duly notarized)

i. The document relating to payment of application fee;

j. Copy of News Paper Advertisement.

k. Affidavit by Director verifying non-retrenchment of employees

l. Affidavit verifying the Publication of News Paper Notice.

m. Memorandum of Appearance and Board resolution authorizing company secretary / Chartered Accountant or advocate

n. A copy of Board Resolution Or Power Of Attorney or the executed Vakalatnama, as the case may be (in the favour of Professional)

o. An Affidavit verifying the list of Employees.(On Stamp Paper duly notarized)

p. Copy of the latest audited balance sheet and profit and loss account of the company along with auditors’ and directors’ report.

q. Affidavit proving the dispatch and service of notice to the Chief Secretary.

r. Board resolution authorizing the director to submit the petition.

s. Form MGT-14 along with paid challan.

♦ Further, Hard copy of the petition is to be submitted with Concerned Regional Director Office.

♦ AFFIDAVIT: An affidavit verifying the petition on a non judicial stamp paper, which is notarized, shall be attached. Five affidavits are to be given along with the petition.

i. One affidavit is verifying the petition;

ii. One affidavit is verifying publication of notice

iii. One affidavit verifying the creditors.’

iv. One affidavit verifying the Non retrenchment of Employee

v. One Affidavit from Director in terms of rules

vi. One Affidavit from Director that there is no enquiry, inspection, investigation and prosecution is pending against the Company

Where the Third, Forth & Fifth affidavit shall be given by two directors of the company.

♦ Petition should not be prepared in the letter head.

N. After checking of application with Annexures the hearing will take place at the Regional Director office and it should be represented by the company or practicing professional or advocate. The creditors, if any and the representatives of the company may also represent and are heard before making any order.

O. Power to Inspect:A duly authenticated copy of the list of the creditors shall be kept at the registered office of the company and any person desirous of inspecting the same may at any time during the ordinary hours of business, inspect and take extracts of the same on the payment of a sum not exceeding ten rupees per page to the

P. Objection if Any Received:

Where any objection of any person whose interest is likely to be affected by the proposed application has been received by the applicant, it shall serve a copy thereof to the Central Government on or before the date of hearing .If objection is received, Central Government will, before passing any order, ensure that the company has either obtained consent of the person who had objected to the alteration or his debt or claim has been discharged or has determined, or has been secured to the satisfaction of the Central Government.

(i) the Central Government shall hold a hearing or hearings, as required and direct the company to file an affidavit to record the consensus reached at the hearing, upon executing which, the Central Government shall pass an order approving the shifting, within sixty days of filing the application.

(ii) where no consensus is reached at the hearings the company shall file an affidavit specifying the manner in which objection is to be resolved within a definite time frame, duly reserving the original jurisdiction to the objector for pursuing its legal remedies, even after the registered office is shifted, upon execution of which the Central Government shall pass an order confirming or rejecting the alteration within sixty days of the filing of application.

Q. Where No Objection Is Received:

If no objection is received from anybody, Central Government (Regional Director) will confirm the change of registered office on the date of hearing and put the application for necessary orders.

Where no objection has been received from any person in response to the advertisement or notice or otherwise, the application may be put up for orders without hearing and the order either approving or rejecting the application shall be passed within fifteen days of the receipt of the application.

R. The Regional Director will make an order confirming the alteration on such terms and conditions, if any, as it thinks fit, and may make such order as to costs as it thinks proper:

S. Obtain certified copies of the order confirming the shifting of registered office from one state to another, passed by the Central Government,

T. File e-form INC-28 with ROC within 30 days of confirmation of shifting by Central Government along with following Documents:

i. Confirmation given by Central Government for change of registered office.

U. File e-form INC-22 with ROC within 15 days of confirmation of shifting by Central Government along with following Documents:

a. Registered document of the title of the premises of the registered office in the name of the company; or (b) Notarized copy of lease / rent agreement in the name of the company along with a copy of rent paid receipt not older than one month;

b. Authorization from the owner or authorized occupant of the premises along with proof of Ownership or occupancy authorization, to use the premises by the company as its registered office.

c. Document of connection of any utility service like telephone, gas, electricity, etc. depicting the address of the premises in the name of the owner/document as the case may be which is not older than 2 months.

d. The list of all other companies with their CIN, having the same unit/tenement/premises as their registered office address.

e. NOC from the owner of premises.

If the documents are in order, Registrars of both states will approve the forms and registered office change will be updated in register of Registrar and new Certificate of Incorporation will be issued by the Registrar of the State within 30 days, where the company’s registered office is going to be shifted.

STEPS AFTER OBTAINING NEW CERTIFICATE FROM ROC:

Make alteration in the MOA with respect to the state in every copy of Memorandum.
Each stationery, banner, signboard, bills, invoice etc. should show the new address and necessary advice should be sent to shareholders, debenture holders, and other concerned parties.
Necessary changes are required to be made in the letter heads, books, records etc. of the company. The necessary changes are required to be made in PAN. TAN and ST2 etc and inform to all the Government departments, banks, customers and others wherever required.

Tail Piece: Provided that the shifting of registered office shall not be allowed if any inquiry, inspection or investigation has been initiated against the company or any prosecution is pending against the company under the Act.

* Proof of Registered Office Includes:

Conveyance
Lease Deed
Rent Agreement (along with rent receipt not older than 1 (one) month.

* Utility Bill:Depicting the address of the premises in the name of the owner and documents

Should note be older than 2 (Two) months.

Telephone Bill
Gas Bill
Electricity Bill etc

VERIFICATION OF REGISTERED OFFICE:

(Rule- 25 of the Companies (Incorporation) Rules, 2014

I. If Premises is on the name of company: The registered document of the title of the premises of the registered office “in the name of company”.

II. If Premises is not on the name of company, not on rent and not on Lease: Than Authorization from the owner of the premises + along with the proof of ownership and NOC in the favour of Company for use of the premises by the company as its registered office.

III. If premises is taken on Lease: The Notarized Copy of Lease deed in the name of the company along with a copy of rent paid receipt not older than one month.

IV. If premises taken on Rent: The Notarized Copy of Rent Agreement in the name of the company along with a copy of rent paid receipt not older than one month.

1. Power of Central Government has been delegated to Regional Director.