Partner of SR & Associates, Practicing Company Secretaries at Noida, Dealing in all corporate laws matters, FDI, IPR, Taxation & Appearance before Quasi Judicial Bodies
Sunday, 31 December 2017
Tuesday, 19 December 2017
Thursday, 3 August 2017
Case Study on Section 185 and Section 186 of Companies Act 2013
(a) any director of the lending company, or of a company which is its holding company or any partner or relative of any such director;
(b) any firm in which any such director or relative is a partner;
(c) any private company of which any such director is a director or member;
(d) any body corporate at a general meeting of which not less than twenty five per cent. of the total voting power may be exercised or controlled by any such director, or by two or more such directors, together; or
(e) any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.
Friday, 23 June 2017
Friday, 26 May 2017
Thursday, 6 April 2017
Striking off of name of a company under Companies Act 2013
Ministry of Corporate Affairs (MCA) has recently announced Form STK-2 for removal of name/ Strike off of Company. This is is not a alternative to winding up of a Company but yes it is a simple process of strike off name of a company from the register of the Registrar subject to statutory criterion specified under the section 248 of the Companies Act , 2013. This has replaced Section 560 (Form FTE) of erstwhile Companies Act, 1956.
A. Following Companies can not be removed under these provisions:
i. Listed Companies
ii. Companies registered under section 8
iii. Companies having charges which are pending for satisfaction
iv. Companies whose application for Compounding is pending
v. Companies against which any prosecution for an offence is pending in any court
vi. Vanishing Companies
vii. Companies that have been delisted due to non-compliance of listing regulations or listing agreement or any other statutory laws;
viii. Companies where inspection or investigation is ordered and being carried out or actions or such order are yet to be taken up or were complete but prosecutions arising out of such inspection or investigation are pending in the court.
ix. Companies which have accepted public deposits which are either outstanding or the company is in default in repayment of the same;
x. Companies where notices under section 234 of CA 1956 or 206 or 207 of the Act, 2016 have been issued by the Registrar or Inspector and reply thereto is pending or report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the court.
B. Companies which can file form:
(i.) Any active company; or
(ii.) Dormant company.
C. Removal of company name from the register of companies:
The Registrar of Companies has the following powers to remove name of company from the register of companies, if the Registrar has reasonable cause to believe that:
i. A company has failed to commence its business within one year of its incorporation. OR
ii. A company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.
D. Form STK-2:
The process for removing a company name from the register of companies can also be initiated by the company by filing Form STK-2 (fee Rs. 5,000/-). 6. Attachment – STK-2:
1. Indemnity Bond from Every Director in Form STK-3
2. Statement of Accounts certified by CA comprising assets and liabilities of a company made upto a day, not exceeding 30 days from the date of application.
3. An Affidavit from every Director in Form STK-4
4. Copy of Special Resolution duly signed by each Director
5. Statement regarding pending litigations, if any, involving Company.
Certification- STK-2:
E-form STK-2 shall be signed by a Director. Director should be [3]authorized by the Board for such purpose. In case director don’t have DSC, Physical copy of STK-2 manually signed by the director authorized shall be attached with the form STK-2.
Certification:
The e-form STK-2 shall be certified by Company Secretary in Whole time Practice or Chartered Accountant or Cost Accountant in whole time practice.
Place of application on Website:
The Company will place the copy of application on its website till the disposal of the application. . Rule 7(1).
Undertaking from Director – Discharge of
Liability:
The Registrar, if feel necessary, obtain necessary undertakings from the managing director, director or other persons in charge of the management of the company that the sufficient provision has been made for the realization of all amount due to the company and for the payment or discharge of its liabilities and obligations by the company.
Declaration from any Director:
The directors will give following below mentioned declarations:
· The application has been in accordance with the conditions mentioned under sub section (1) and (2) of section 248 and sub section (1) of section 249:
· There is no inspection or investigation ordered and carried out or yet to be carried out or being carried out against the company and where inspection or investigation have been carried out , no prosecution pending in any court arising out of such inspection or investigation;
· The company is neither having any public deposit which are outstanding nor the company is in default in its repayment or interest thereon ;
· The company does not have any outstanding loans, secured or unsecured;
· The company does not have any dues towards income tax .VAT, excise duty, service tax or any other duty, by whatever name called, payable to the central government or state government, statutory authority or local authority;
· All other liabilities of the company have been settled or discharged or extinguished;
· All the requirements of the act and rules made thereunder relating to removing the name of the company from the register of companies and matters incidental or supplemental thereto have been complied with;
· To the best of my knowledge and belief, the information given in this application and its attachment is correct and complete;
· the requisite fee has been paid.
Issue notice of Striking off and dissolution of Companies:
If no objections received then ROC shall issue a notice u/s 248(5) of striking off of Company and publish the same in official gazette in form No. STK-7. The copy of notice shall also be placed on the official website of the MCA.
Other Provisions:
Liability of Directors:
The liability, if any, of every director, manager or other officer who was exercising any power of management, and of every member of the company dissolved under sub-section (5), shall continue and may be enforced as if the company had not been dissolved.
Effect of Strike off:
It shall on and from the date mentioned in the notice under sub-section (5) of section 248 cease to operate as a company and the Certificate of Incorporation issued to it shall be deemed to have been cancelled from such date except for the purpose of realising the amount due to the company and for the payment or discharge of the liabilities or obligations of the company.
Appeal to Tribunal:
Any person aggrieved by an order of the Registrar, notifying a company as dissolved under section 248, may file an appeal to the Tribunal (NCLT) within a period of three years from the date of the order of the Registrar and if the Tribunal is of the opinion that the removal of the name of the company from the register of companies is not justified in view of the absence of any of the grounds on which the order was passed by the Registrar, it may order restoration of the name of the company in the register of companies.
Conclusion:
This form does not make mandatory for company to have statutory annual filings done for strike off of companies. But since the forms is Non-STP (i.e. through approval route) the ROC concerned would definitely ask and peruse all the filings and compliances made by the company.
CS Ravi Bhushan Kumar
9990339200
cs.ravibhushan@gmail.com
Friday, 24 March 2017
FREQUENTLY ASKED QUESTIONS UNDER FEMA
- Automatic Route: Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Annex B of Schedule 1 to Notification No. FEMA 20.
- Government Route: Foreign investment in activities not covered under the automatic route requires prior approval of the Government which are considered by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance. Application can be made in Form FC-IL, which can be downloaded from http://www.dipp.gov.in. Plain paper applications carrying all relevant details are also accepted. No fee is payable.
- Equity shares issued in accordance with the provisions of the Companies Act, 2013;
- Fully and mandatorily convertible preference shares, and fully and mandatorily convertible debentures. The price/ conversion formula of convertible instruments should be determined upfront at the time of issue of the instruments and should not in any case be lower than the fair value worked out, at the time of issuance of such instruments, in accordance with FEMA 20
- Partly paid equity shares and warrants issued by an Indian company in accordance with the provision of the Companies Act, 2013 and the SEBI guidelines, as applicable, The pricing and receipt of balance consideration shall be as stipulated in terms of A.P.(DIR Series) Circular No.3 dated July 14, 2014 as modified from time to time.
- inward remittance through normal banking channels;
- debit to NRE/ FCNR (B) account of a person concerned maintained with an AD Category I bank;
- debit to non-interest bearing Escrow account in Indian Rupees in India which is opened with the approval from AD Category – I bank and is maintained with the AD Category I bank on behalf of residents and non-residents towards payment of share purchase consideration;
- conversion of royalty/ lump sum/ technical know-how fee due for payment or conversion of ECB;
- conversion of pre-incorporation/ pre-operative expenses incurred by the a non-resident entity up to a limit of five percent of its capital or USD 500,000 whichever is less;
- conversion of import payables/ pre incorporation expenses/ can be treated as consideration for issue of shares with the approval of FIPB;
- against any other funds payable to a person resident outside India, the remittance of which does not require the prior approval of the Reserve Bank or the Government of India: and
- Swap of capital instruments, provided where the Indian investee company is engaged in a Government route sector, prior Government approval shall be required
- Lottery Business including Government / private lottery, online lotteries, etc.
- Gambling and Betting including casinos etc.
- Chit funds
- Nidhi company
- Trading in Transferable Development Rights (TDRs)
- Real Estate Business or Construction of Farm Houses
- Manufacturing of Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes
- Activities / sectors not open to private sector investment e.g. (I) Atomic energy and (II) Railway operations (other than permitted activities mentioned in entry 18 of Annex B).
- Transfer by way of sale or gift between a person resident outside India (not being a NRI or an OCB) and any person resident outside India;
Prior Government approval shall be obtained for any transfer in case the company is engaged in a sector which requires Government approval. - Transfer of shares by way of sale or gift by a NRI to any NRI;
Prior Government approval shall be obtained for any transfer in case the company is engaged in a sector which requires Government approval - Transfer by way of gift by a person resident outside India to a resident;
- Transfer by way of sale on a recognized stock exchange by a person resident outside India;
- Transfer by way of sale or gift by a resident to a person outside India subject to conditions prescribed in Regulation 10 of FEMA 20;
- The sale consideration in respect of the shares purchased by a person resident outside India shall be remitted to India through normal banking channels.
- In case the buyer is a Foreign Institutional Investor (FII) / Foreign Portfolio Investor (FPI), payment can be made by debit to its Special Non-Resident Rupee Account.
- In case the buyer is an NRI, the payment shall be remitted to India through normal banking channel or by way of debit to his NRE/FCNR (B) accounts. If the shares are acquired on non-repatriation basis by NRI, the consideration can also be paid by debit to his NRO account.
- The sale proceeds of shares (net of taxes) sold by a person resident outside India) may be remitted outside India.
- In case of FII/ FPI the sale proceeds may be credited to its special Non-Resident Rupee Account.
- In case of NRI, if the shares sold were held on repatriation basis, the sale proceeds (net of taxes) may be credited to his NRE/ FCNR (B) accounts and if the shares sold were held on non-repatriation basis, the sale proceeds should be credited only to his NRO account subject to payment of taxes.
- The sale proceeds of shares (net of taxes) sold by an erstwhile OCB may be remitted outside India directly if the shares were held on repatriation basis and if the shares sold were held on non-repatriation basis, the sale proceeds may be credited to its NRO (Current) Account subject to payment of taxes, except in the case of erstwhile OCBs whose accounts have been blocked by Reserve Bank.
- the price worked out in accordance with the relevant SEBI guidelines in case of a listed Indian company;
- the valuation of capital instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a SEBI registered Merchant Banker, in case of an unlisted Indian Company.
- the price worked out in accordance with the relevant SEBI guidelines in case of a listed Indian company;
- the valuation of capital instruments done as per any internationally accepted pricing methodology for valuation on an arm’s length basis duly certified by a Chartered Accountant or a SEBI registered Merchant Banker, in case of an unlisted Indian Company.
- ESOP
- Sweat Equity
- Bonus
- Rights
- Swap of Shares
- On merger/ de-merger/ amalgamation etc of Indian companies
- Against any other funds payable to a person resident outside India, the remittance of which does not require the prior approval of the Reserve Bank or the Government of India.
- in the case of shares of a company listed on a recognized stock exchange in India, at a price as determined by the company; and
- in the case of shares of a company not listed on a recognized stock exchange in India, at a price which is not less than the price at which the offer on right basis is made to resident shareholders.
- FPIs and FIIs registered with SEBI
- NRIs
- A non-resident, other than portfolio investor, is eligible to acquire shares on stock exchange through a registered broker subject to the condition that the non-resident investor has already acquired and continues to hold the control in accordance with SEBI (Substantial Acquisition of Shares and Takeover) Regulations i.e. he has complied with the minimum stake requirement under SEBI Regulations as per instructions contained in AP (DIR Series) Circular No. 38 dated September 6, 2013.
- by way of inward remittance through normal banking channels, or
- by way of debit to the NRE/ FCNR account of the person concerned maintained with an authorised dealer/ bank;
- by debit to non-interest bearing Escrow account (in Indian Rupees) maintained in India with the AD bank in accordance with Foreign Exchange Management (Deposit) Regulations, 2000;
- the consideration amount may also be paid out of the dividend payable by Indian investee company, in which the said non-resident holds control, provided the right to receive dividend is established and the dividend amount has been credited to specially designated non-interest bearing rupee account for acquisition of shares on the floor of stock exchange.
- securities, issued by an Indian company engaged in any sector mentioned at the answer to question 28 and whose securities are not listed on a recognised stock exchange at the time of issue of the said securities;
- securities issued by a start-up, irrespective of the sector in which it is engaged;
- units of a Venture Capital Fund (VCF) or of a Category I Alternative Investment Fund (Cat-I AIF) or units of a scheme or of a fund set up by a VCF or by a Cat-I AIF, subject to the terms and conditions as may be laid down by the Reserve Bank.
- purchase the securities/ instruments mentioned above either from the issuer of these securities/ instruments or from any person holding these securities/ instruments;
- invest in securities on a recognized stock exchange subject to the provisions of the SEBI (FVCI) Regulations, 2000, as amended from time to time;
- acquire, by purchase or otherwise, from, or transfer, by sale or otherwise, to, any person resident in or outside India, any security/ instrument it is allowed to invest in, at a price that is mutually acceptable to the buyer and the seller/ issuer; and
- receive the proceeds of the liquidation of VCFs or of Cat-I AIFs or of schemes/ funds set up by the VCFs or Cat-I AIFs.
- Biotechnology
- IT related to hardware and software development
- Nanotechnology
- Seed research and development
- Research and development of new chemical entities in pharmaceutical sector
- Dairy industry
- Poultry industry
- Production of bio-fuels
- Hotel-cum-convention centres with seating capacity of more than three thousand.
- Infrastructure sector.
- Any person resident outside India may invest in units of Investment Vehicles subject to the conditions laid down in Schedule 11 to Notification No FEMA 20.
- A person resident outside India who has acquired or purchased units of an investment vehicle may sell or transfer in any manner or redeem the units as per regulations framed by SEBI or directions issued by the Reserve Bank.
- Units may be issued against swap of capital instruments of a Special Purpose Vehicle (SPV) proposed to be acquired by such Investment Vehicle.
- The consideration for such investment shall be made by an inward remittance through banking channels or swap of shares of a Special Purpose Vehicle or out of funds held in NRE or FCNR (B) account maintained by the investor, if eligible to maintain the same.
- The sale/ maturity proceeds (net of taxes) of the units may be remitted outside India or may be credited to the NRE or FCNR (B) account, as the case may be.
- Investment made by an Investment Vehicle into an Indian company or an LLP will be indirect foreign investment for the investee company or the LLP, as the case may be, if either the Sponsor or the Manager or the Investment Manager (i) is not owned and not controlled by resident Indian citizens or (ii) is owned or controlled by persons resident outside India. The extent of investment by persons resident outside India in the corpus of the Investment Vehicle will not be a factor to determine as to whether downstream investment of the Investment Vehicle concerned is indirect foreign investment or not.
- An Alternative Investment Fund Category III with foreign investment shall make portfolio investment in only those securities or instruments in which an FPI is allowed to invest under the Act, rules or regulations made thereunder.