Tag Archives: compliances

ROC Patna order

Registrar of Companies, Patna order against a company Sukhasan Farmer Producer Company Limited for not painting the name & address of its registered office outside its registered office premises. Penalty of Rs.47,000/- each was levied on the company and its five directors.

The ROC officials visited the registered office on 29/8/2022 but found nothing outside the registered office to suggest that it was the registered office of a company. As per section 12 of the companies act, 2013 companies are required to paint or affix its name, address, telephone number, e-mail id and GST No. (if it has a GST regn no – this is as per the GST law) in a prominent place outside its registered office.

The penalty is Rs.1000/- per day during which the default continues.

The company replied stating that the name was affixed or painted but due to heavy rains and storms in the area, the said name plate got damaged. They managed to have it fixed on 31/8/2022 but on the day that ROC officials came visiting the said name board was missing, so they deemed it as a non compliance.

Surprisingly the no. of days of non compliance has been calculated as 94 days being from 29/8/2022 (date of ROC visit) to 30/11/2022 (the date that the company replied). But the fact that the name board has been replaced on 31/8/2022 as claimed by the company was not given any effect.

Since the company is a small company, it was levied half of the penalty leviable on non small companies and therefore the amount came to Rs.47,000/- each on the company and its 5 directors.

From the name of the company it appears that its a farmer producer company, a new concept for the agriculture sector, where producer farmers come together and register a company for the benefit of the farmers in their area. Still they have to navigate through the maze of compliances which other non producer companies have to adhere to. Producer companies have to also engage the services of company secretaries in order to ensure that they are in the right side of the law.

To view the adjudication order, you can visit here

https://www.mca.gov.in/content/mca/global/en/data-and-reports/rd-roc-info/roc-adjudication-orders.html

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power sector compliances

The government had launched a Regulatory Compliance Portal (https:// eodbrcp.dipp.gov.in), a central online repository of all central and state-level compliances to reduce the regulatory compliance burden of citizens and businesses. During 2021, Ministry of Power had eased compliances related to seventy-nine nos. of issues affecting industry and consumer. The Ministry has started a fresh exercise for 2022 and has prepared an Action Plan for 2022 under two phases. The first phase will continue till 31st Mar, 2022 while the second phase will continue till 15th Aug, 2022.

A few of the significant initiatives taken by organizations of the Ministry are,

  1. Bureau of Energy Efficiency (BEE) has simplified the implementation of the Standards & Labelling (S&L) program. It had also introduced Digitalization and Online tracking of status of application for manufacturers. A helpdesk has also been created to resolve grievances of Designated Consumers (DCs). In the second phase of the Action Plan for 2022, BEE also plans to introduce QR code based labels to strengthen star labelling and also to bring transparency for consumers, Extend the validity of ESCerts till the date it is traded, and introduce online Reporting of Energy and Production related data under PAT (Perform, Achieve and Trade).
  2. Central Transmission Utility (CTU) has eased Connectivity Bank Guarantee under revised RE procedure unlocking about Rs. 400 Cr for RE Developers. A positive step towards RE development in the country. Further, CTU has made available an alternate mode of Payment for avoiding BG Encashment for RE Developers. About 240 nos. of existing Transmission lines have been made Go-Live on PM Gati Shakti Portal. This will help in better planning and approval for new transmission lines.
  3. Power System Operation Corporation (POSOCO) has enhanced the Validity of registration for REC from 5 years to 10 years. National Open Access Registry (NOAR) to be launched to facilitate single point access to stakeholders for approval for transacting power. NOAR will be integrated with Single Window System. POSOCO has formulated a ‘Procedure for STOA in Interstate Transmission through NOAR’ to facilitate seamless and quick implementation of web based processing of pan India Open Access Transactions.
  4. Central Electricity Authority (CEA) has abolished furnishing of various formats related to Filing of Statistics, Returns and Information; and amended the regulations related to Safety Requirements for Construction, Operation and Maintenance of Electrical Plants and Electric Lines in the first phase of the 2022 EoDB-RCB exercise. Many reports published by CEA were also made available online. In the second phase, CEA will take feedback from industries/ stakeholders for easing the compliance burden on them. A committee has also been set up for the purpose. Further, CEA will be making online portals for collecting information, giving clearances and approvals, under this stage.
  5. In the first phase, the Central Electricity Regulatory Commission (CERC) has notified the Ancillary Services Regulation repealing the earlier one. The new regulation provides for the provision of primary, secondary, tertiary and other ancillary services and is expected to benefit the entity/consumer connected to the grid. In the second phase, CERC is proposing to introduce new transmission access regulations. The Commission will also be revamping the Renewable Energy Certificate Regulations for promoting renewable energy in the country in this phase.

https://pib.gov.in/PressReleasePage.aspx?PRID=1805123

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MCA extends due date

Annual forms filing dates have been extended by MCA today.
As per MCA portal – due dates for these forms are further extended
AOC-4/ AOC-4 XBRL/ AOC-4 CFS : 15th March 2022
MGT-7/ MGT-7A : 31st March 2022

Companies get a breather for another month to file the forms, which it was get stifling due to too much of deadlines and compliances. There is a last date for Tax Audit Report, which is falling due on 15th February, 2022 and many company cases, where the accounts and audit reports are yet to reach us company secretaries.

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extension in tax compliances

Govt. has announced some extension in tax compliances due to the ongoing covid pandemic and to give relief to the tax payers and assessees. Details are as follows:

In view of the impact of the Covid-19 pandemic, taxpayers are facing inconvenience in meeting certain tax compliances and also in filing response to various notices. In order to ease compliances to be made by taxpayers during this difficult time, reliefs are being provided through Notifications nos. 74/2021 & 75/2021 dated 25th June, 2021 Circular no. 12/2021 dated 25th June, 2021. These reliefs are:

  1. Objections to Dispute Resolution Panel (DRP) and Assessing Officer under section 144C of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for which the last date of filing under that section is 1st June, 2021 or thereafter, may be filed within the time provided in that section or by 31st August, 2021, whichever is later.
  2. The Statement of Deduction of Tax for the last quarter of the Financial Year 2020-21, required to be furnished on or before 31st May, 2021 under Rule 31A of the Income-tax Rules,1962 (hereinafter referred to as “the Rules”), as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021.
  3. The Certificate of Tax Deducted at Source in Form No.16, required to be furnished to the employee by 15th June, 2021 under Rule 31 of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021.
  4. The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64D for the Previous Year 2020-21, required to be furnished on or before 15th June, 2021 under Rule 12CB of the Rules, as extended to 30th June, 2021 vide Circular No.9 of 2021, may be furnished on or before 15th July, 2021.
  1. The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64C for the Previous Year 2020-21, required to be furnished on or before 30th June, 2021 under Rule 12CB of the Rules, as extended to 15th July, 2021 vide Circular No.9 of 2021, may be furnished on or before 31st July, 2021.
  2. The application under Section 10(23C), 12AB, 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No. 10A/ Form No.10AB, for registration/ provisional registration/ intimation/ approval/ provisional approval of Trusts/ Institutions/ Research Associations etc., required to be made on or before 30th June, 2021, may be made on or before 31st August, 2021.
  3. The compliances to be made by the taxpayers such as investment, deposit, payment, acquisition, purchase, construction or such other action, by whatever name called, for the purpose of claiming any exemption under the provisions contained in Section 54 to 54GB of the Act, for which the last date of such compliance falls between 1st April, 2021 to 29th September, 2021 (both days inclusive), may be completed on or before 30th September, 2021.
  4. The Quarterly Statement in Form No. 15CC to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021, required to be furnished on or before 15th July, 2021 under Rule 37 BB of the Rules, may be furnished on or before 31st July, 2021.
  5. The Equalization Levy Statement in Form No. 1 for the Financial Year 2020-21, which is required to be filed on or before 30th June, 2021, may be furnished on or before 31st July, 2021.
  6. The Annual Statement required to be furnished under sub-section (5) of section 9A of the Act by the eligible investment fund in Form No. 3CEK for the Financial Year 2020-21, which is required to be filed on or before 29th June, 2021, may be furnished on or before 31st July, 2021.
  7. Uploading of the declarations received from recipients in Form No. 15G/15H during the quarter ending 30th June, 2021, which is required to be uploaded on or before 15th July, 2021, may be uploaded by 31st August,2021.
  8. Exercising of option to withdraw pending application (filed before the erstwhile Income Tax Settlement Commission) under sub-section (1) of Section 245M of the Act in Form No. 34BB, which is required to be exercised on or before 27th June, 2021, may be exercised on or before 31st July, 2021.
  9. Last date of linkage of Aadhaar with PAN under section 139AA of the Act, which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
  10. Last date of payment of amount under Vivad se Vishwas(without additional amount) which was earlier extended to 30th June, 2021 is further extended to 31st August, 2021.
  11. Last date of payment of amount under Vivad se Vishwas (with additional amount) has been notified as 31st October, 2021.
  12. Time Limit for passing assessment order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
  13. Time Limit for passing penalty order which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.
  14. Time Limit for processing Equalisation Levy returns which was earlier extended to 30th June, 2021 is further extended to 30th September, 2021.

Frankly, these are way too much compliances to be done by businesses in India. Govt. should seriously look at eliminating some of these forms and returns to be filed under the Income Tax Act.

https://pib.gov.in/PressReleasePage.aspx?PRID=1730355

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FSSAI licence no. on hotel bills

FSSAI (Food Safety and Standards Authority of India) has mandated vide its order dated 8th June, 2021 that with effect from 1st October, 2021 all food businesses shall mention their 14 digit FSSAI license no. or registration no. on all invoices/ bills/ receipts/ cash memo/ purchase invoices etc.

When 2 transaction documents are issued such as transport challan/ bill etc. then the FSSAI no. needs to be mentioned on both documents. The only exemption is e-way bill and other government documents which are system generated.

Already FSSAI no. is presently being displayed on packaged food labels but establishments such as restaurants, mithai stores, caterers, retail stores were out of this ambit. Now with this order all these food businesses are brought into consideration.

Displaying the license no. will enable customers to access more details about the food business from the FSSAI site or their mobile app. If the no. is not mentioned then it will tantamount to non compliance or even non registration.

The copy of notification can be found on FSSAI site.

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LODR compliances – corp gov.

SEBI has mandated an additional set of compliances for listed entities – under regulation 27 of the Listing Obligations and Disclosure Requirements Regulations 2015. Now disclosures around loans/ guarantees/ letters of comfort/ securities provided by listed entities to their promoter or promoter group entities or any other entity controlled by them, either directly or indirectly has to be made on a half yearly basis from the financial year 2021-22.

The format of the report is given in this circular

https://www.sebi.gov.in/legal/circulars/may-2021/format-of-compliance-report-on-corporate-governance-by-listed-entities_50338.html

Apart from this, there are three other corporate governance reporting to be done in various periods as enumerated under:

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payment system compliances – covid relaxations

RBI has vide its circular dated 21st May, 2021 given relaxations from compliances to payment system operators as follows:

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remittance to IFSC under LRS

RBI has vide its circular dated 16th February, 2021 allowed resident individuals to invest in securities issued in the International Financial Services Centre (IFSC) through the Liberalised Remittance Scheme route. There are some conditions to be fulfilled, which are :

  1. The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India.
  2. Resident Individuals may also open a non interest bearing Foreign Currency Account (FCA) in IFSCs, for making the above permissible investments under LRS. Any funds lying idle in the account for a period upto 15 days from the date of its receipt into the account shall be immediately repatriated to domestic INR account of the investor in India.
  3. Resident Individuals shall not settle any domestic transactions with other residents through these FCAs held in IFSC.

Further there are some compliances to be done by the authorised dealers in such transactions which are :

AD Category – I banks, while allowing such remittances, shall ensure compliance with all other terms and conditions, including reporting requirements prescribed under the Scheme. It may be noted that any person resident in India (outside IFSC) entering into any transaction with a person/entity in IFSC shall only be governed by regulations/directions and rules issued/notified by the Reserve Bank of India and the Government of India respectively under Foreign Exchange Management Act (FEMA), 1999. Further, compounding of any contravention of FEMA provision by such person resident in India shall be dealt by the Reserve Bank of India in accordance with the extant instructions/provisions on compounding of contraventions under FEMA.

Copy of the circular can be found here

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investment advisors

SEBI has notified certain amendments to SEBI (Investment Advisors) Regulations 2013.

Gist of these amendments are as follows

A. Segregation of Advisory & Distribution Activities
• Segregation of Advisory & Distribution Activities at client level to avoid conflict of interest.
• An individual shall have the option to register as an Investment Adviser or
provide distribution services as a distributor.
• A non-individual investment adviser shall have client level segregation at group level for investment advisory and distribution services and maintain an arm’s length relationship between its activities by providing advisory services through a separately identifiable department or division.
B. Implementation services
• Investment Advisers are allowed to provide implementation services (Execution) through direct schemes/ products in the securities market. However, no consideration can be received directly or indirectly, at investment adviser’s group or family level for these services.
C. Agreement between Investment Adviser and client
• Mandatory agreement to be entered between Investment Adviser and the client for ensuring greater transparency with reference to advisory activities.
D. Fees
• The fee charged by the Investment Adviser for providing Investment Advice from a client shall be in the manner as specified by SEBI.
E. Eligibility Criteria for IAs
• Enhanced eligibility criteria for registration as an Investment Adviser including net worth of Rs.50 lakhs for non-individuals and Rs. 5 lakhs for individuals.
• Individual investment adviser or a principal officer of a non-individual investment adviser to have enhanced professional or post-graduate qualification in relevant subjects and relevant experience of five years while grandfathering existing Individual Investment Advisers from complying with the enhanced qualification and experience as specified by SEBI.
• Individuals registered as investment advisers whose number of clients exceed 150 in total, shall apply for registration with SEBI as non-individual investment adviser.

https://www.sebi.gov.in/media/press-releases/jul-2020/sebi-notifies-amendments-to-sebi-investment-advisers-regulations-2013_47006.html

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SEBI – relaxations

https://www.sebi.gov.in/legal/circulars/mar-2020/-further-relaxations-from-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015-lodr-and-the-sebi-circular-dated-january-22-2020-relatin-_46436.html

Further relaxations made by SEBI in compliance matters because of the Covid crisis.

Reg 40(9) certification has been relaxed by one month.

reg 44(5) – holding of AGM by top 100 market listed entities – should have been done within 5 months from the closure – now one month extra has been given

conduct of various committee meetings in a financial year – nomination cum remuneration committee, stakeholders committee, risk management committee, – they are supposed to hold at least one meeting during the financial year. If they have not met, then they can meet upto june 2020.

Standard Operating Procedure i/r of fines and other enforcement actions for non compliances – action will be deferred and will be applicable only for compliances for the period ending 30th june, 2020.

reg 47 – publication of advertisement in newspapers in respect of board meetings and other matters is being exempted since many newspapers are not bringing out their print version of the newspapers.

Still the regulation 76 of the SEBI (Depositories) Act regarding reconcilation of share capital audit is not covered in these circulars.

 

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Industrial Licence for Defence Sector

The initial validity of Industrial License for Defence sector, as per Press Note 5 (2015 series), is presently seven years, further extendable upto 10 years.

In partial modification of the above mentioned Press Note, the initial validity of Industrial License for Defence Sector is being revised to 15 years, further extendable upto 18 years for existing as well as future Licenses. However, in case a license has already expired, the Licensee has to apply afresh for issue of license. This is being done as a measure to further promote ease of doing business, in view of the long gestation period of Defence contracts to mature.

Source: PIB Release

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MCA – penalties for late filings

Section 403 of the Companies Act, 2013 is a wake up call for companies in India. Not any more they can afford to relax and file documents months and years after they are supposed to do so.

Section 403(1) provides that documents should be submitted, filed, registered or recorded within the time specified in the relevant section for the same. For eg. most of the forms require to be filed within 30 days of the event, save for a few provisions such as Auditors appointment within 15 days, annual return within 60 days and charge registration/ modification within 300 days of the event.

The first proviso to section 403(1) provides for additional time within which the documents can be filed by paying additional filing fees. This additional period is 270 days beyond the original period of filing. Therefore in most cases a 300 days period is given for filing the document by paying the normal fees and additional filing fees.

The second proviso to section 403(1) provides that such documents can be filed beyond the said 300 days but it says “without prejudice to any other legal action or liability under the Act”

Section 403(2) provides that where the company fails to submit/ deliver the documents within the time specified including the additional time given, the company and every officers of the company shall be liable for penalty or punishment provided under the Act. This is apart from the fees and additional filing fees payable by the company for filing the document.

The various sections give different penalties for delayed filing beyond the normal period and additional period given thereunder, for eg.

1) delayed filing of annual return under section 92 is liable for a penalty of minimum Rs.50,000 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 six months or with fine which shall not be less than Rs.50,000/- but which may extend to Rs.5 lakhs or with both;
2) for failure to file documents required under section – minimum penalty is Rs.5 lakhs but which may extend to Rs.25 lakhs for the company and every officer of the company who is in default shall be punishable with fine which shall be minimum Rs.1 lakh but which may extend to Rs.5 lakhs;
3) Audited financial statements under section 137 – Fine of Rs.1000/- per day during which the failure continues but which shall not be more than Rs.10 lakhs and MD and CFO (or in the absence of MD/ CFO, any director who is charged by the Board of complying with this section, or in the absence of any such director, all directors of the company) shall be punishable with imprisonment for a term which may extend to six months or with fine, which shall not be less than Rs.1 lakh but which may extend to Rs.5 lakhs or both;

Apparently the system will not allow filings to take place after the period stipulated in section 403 unless the company applies for a an application for condonation of delay with the prescribed authorities which in this case is the REgistar of Companies of the respective jurisdiction.

Therefore Compliance is the Need of the Hour for every company in India. Gone are the days when the companies can sleep for years on end without doing any filings whatever.

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Directors Report

The contents of the Directors Report as hitherto provided in section 217 of the Companies Act, 1956 has undergone changes in the newly enacted section 134 of the Companies Act, 2013.

The Board of Directors’ Report shall now include:

(a) the extract of the annual return as provided under sub-section (3) of section 92;
(b) number of meetings of the Board;
(c) Directors’ Responsibility Statement;
(d) a statement on declaration given by independent directors under sub-section (6) of section 149;
(e) in case of a company covered under sub-section (1) of section 178, company’s policy on directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters
provided under sub-section (3) of section 178;
(f) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made—
(i) by the auditor in his report; and
(ii) by the company secretary in practice in his secretarial audit report;
(g) particulars of loans, guarantees or investments under section 186;
(h) particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the prescribed form;
(i) the state of the company’s affairs;
(j) the amounts, if any, which it proposes to carry to any reserves;
(k) the amount, if any, which it recommends should be paid by way of dividend;
(l) material changes and commitments, if any, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report;
(m) the conservation of energy, technology absorption, foreign exchange earnings and outgo, in such manner as may be prescribed;(n) a statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company;

(o) the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year;

(p) in case of a listed company and every other public company having such paid-up share capital as may be prescribed, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors;
(q) such other matters as may be prescribed.

The Directors’ Responsibility Statement as hitherto provided in section 217(2AA) of the Companies Act, 1956 has two more paragraphs added to in section 134(5) of the Companies Act, 2013

(5) The Directors’ Responsibility Statement referred to in clause (c) of sub-section (3) shall state that—
(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) the directors had prepared the annual accounts on a going concern basis; and 
(e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
Explanation.—For the purposes of this clause, the term “internal financial controls” means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information;
(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Listed companies have to add the last two paragraphs in their Directors’ Responsibility Statement.

The penalties for non compliance are very hefty. It is Rs.50,000 for a company which may extend to Rs.25 lakhs and for every officer in default – imprisonment for a term which may extend to 3 years and with fine of minimum Rs.50,000 per officer which may extend to Rs.5 lakhs per officer.  

Compliances have become now paramount under the new Companies Act, 2013. The only way for companies to secure their compliance is to effectively engage Company Secretaries. 

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