- Important Circulars/Notifications
issued by MCA in the month of July-2011
- Video conference mandatory for AGM
from next fiscal – MCA
- Draft Circular on providing gifts to the
shareholders during annual general meeting (AGM) of the company
- DoT seeks Trai view on exit policy for new telecom players
- Amendments in Schedule XIII of the Companies
Circulars/Notifications issued by MCA in the month of July-2011
A.(1) FILING OF BALANCE
SHEET AND PROFIT AND LOSS ACCOUNT IN EXTENSIBLE BUSINESS REPORTING LANGUAGE (XBRL)
MODE - EXTENSION OF DATE OF FILING AND VERIFICATION AND CERTIFICATION OF THE
XBRL DOCUMENT OF FINANCIAL STATEMENTS BY AUTHORIZED SIGNATORY OF THE COMPANY AS
WELL AS PROFESSIONAL LIKE CHARTERED ACCOUNTANT OR COMPANY SECRETARY OR COST
ACCOUNTANT IN WHOLE TIME PRACTICE.
57/2011, DATED 28-7-2011
The Para 3 of the Circular No. 37/2011, dated
7-6-2011 may be read as under: -
"All companies falling in
Phase-I class of companies (excluding exempted class) are permitted to file
their financial statements without any additional fee up to 30-11-2011 or
within 60 days of their due date, whichever is later."
2. Further, in supersession of Para 2(i) of
Ministry's Circular No. 43/2011, dated
7-7-2011, it is informed that the verification and certification of
the XBRL document of financial statements on the e-forms would continue to be
done by authorized signatory of the company as well as professional like
Chartered Accountant or Company Secretary or Cost Accountant in whole time
3. This issue with approval of Competent Authority
A.(2) SECTION 538 OF THE COMPANIES ACT, 1956 - WINDING
UP - OFFENCES BY OFFICERS OF COMPANIES IN LIQUIDATION - SCRUTINY INSPECTION AND
INVESTIGATION IN ALL WINDING UP CASES
GENERAL CIRCULAR NO. 55/2011, DATED
It has been noticed that winding up petitions are being
filed by management after having committed major violations under the Companies
Act, 1956 as well as misappropriation of funds of the company. Winding up of
such companies are also being filed by creditors. In order to curb such
malpractices following procedure may be followed in all such cases:—
(a) The moment winding up petition is filed before
the Court, Official Liquidator (OL) will obtain a copy
of petition and forward the same to the Registrar of Companies (ROC) concerned.
(b) ROC will have a scrutiny of the
details/documents available in respect of the company in MCA 21 registry and
will submit a preliminary report to the Ministry within a week time for
inspection or investigation, if so required, containing following information
for the past five years of the date of filing of petition:—
(i) History of the company, viz.
incorporation, maintenance of registered office, main object
and present business activities;
(ii) Management pattern, including details of
directors/nominee directors and their directorship in other companies;
(iii) Capital structure and shareholding pattern;
(iv) Financial position and working results;
(v) Comments on filing position and compliances of
Schedule VI read with Accounting Standards;
(vi) Nature of complaints registered on MCA-21, their nature and any noticeable
(vii) Whether any complaint was received alleging
that the company is involved in fraudulent activities, siphoning of funds etc. If so, the details thereof.
(viii)Whether any scrutiny/inspection was carried
out, if so, the details thereof;
(ix) Whether the company is having any holding or
subsidiary company, if so, details thereof;
(x) Whether company has raised funds through IPO,
if so, the utilization of amount collected, compliance of provisions of the Act
for deviation from the object stated in Prospectus/Offer Document; transactions
with related parties;
(xi) In case of public company, whether it has
accepted public deposit. If so, whether the payment of
matured amount including interest was made as per schedule. In case any
amount is still pending, the details of amount and interest thereon.
(xii) The quantum of unsecured loan amount and
related party transactions thereto.
(xiii)Secretarial reports and qualifications made
by the auditors on accounts of the company;
(xiv) Whether company or its members/creditors
have requested for investigation into the affairs of the company, if so, the
(c) MCA will take a final view in the matter
within a period of 15 days from the date of receipt of preliminary report from
ROC. If any inspection under section 209A and/or investigation under section
235/237 of the Act is ordered, the same will be
completed by the ROC and forwarded to the OL within 30 days.
(d) The OL will place the report before the Hon'ble High Courts for seeking appropriate order/action
under sections 539 to 544 and other relevant provisions of the Act.
Simultaneously, necessary action as per law will be initiated against the
director, ex-director and key management of the company for any violation of
law/Companies Act, 1956.
(e) These cases will be monitored in the monthly
staff meeting of Regional Directors.
A.(3) SECTION 297
OF THE COMPANIES ACT, 1956 - BOARD'S SANCTION TO BE REQUIRED FOR CERTAIN
CONTRACTS IN WHICH PARTICULAR DIRECTORS ARE INTERESTED - SIMPLIFIED PROCEDURE
FOR OBTAINING ONLINE APPROVAL OF CENTRAL GOVERNMENT UNDER SECTION 297
GENERAL CIRCULAR NO. 52/2011, DATED 25-7-2011
Ministry of Corporate Affairs has been receiving representations form various
stakeholders to simplify the approval processes under section 297 of the
Companies Act, 1956.
order to cut timelines in giving approval, the Ministry has decided to simplify
the procedures and to give approval online, if the proposed contract has been
approved by the shareholders by way of special resolutions in a general
2. According to new procedure, application will be made
in a new e-form with the prescribed fee. The relevant information like terms of
contract and details of Board resolutions and special resolutions shall be
captured in the e-form. The e-form shall also be certified by the practicing
professional who shall specifically certify the correctness of the information
and declarations given by the company in the e-form.
3. The company while seeking approval of the directors
and shareholders in their meetings shall specifically take approval to the
contract is competitive, at an arm's length, without conflict of interest and
is not less advantageous to it as compared to similar contracts with other
company has not made any default in repayment of any of its debts (including
public deposits) or debentures or interest payable thereon and has filed its upto date Balance Sheets and Annual Returns with the
Registrar of Companies.
(iii) The proposed
contract is falling within the provisions of section 297 of the Act and
provisions of sections 198, 269, 309, 314 and 295 are not applicable in the
company and its Directors have complied with the provisions of sections 173,
287, 299, 300, 301 and other applicable provisions of the Companies Act, 1956
with regard to the proposed contract.
4. The application will be processed online and approval of
Central Government shall also be made available to the applicant company online
on the basis of declarations made by the company and certifications by the
professionals given in the e-form.
5. If any of the information or declaration given by the
company or certificate given by the professional in the e-form is found to be
wrong, then the applicant company, its Directors and professional shall be
liable for penal action under sections 297 and 628 of the Companies Act, 1956
in addition to penal action prescribed in regulations of the respective
6. The process of online approval of Central Government under
section 297 of the Companies Act, 1956 is likely to be implemented with effect
from 24th September, 2011.
141 OF THE COMPANIES ACT, 1956 - RECTIFICATION BY CENTRAL GOVERNMENT OF
REGISTER OF CHARGES - SIMPLIFIED PROCEDURE FOR RECTIFICATION OF REGISTER OF
CHARGES UNDER SECTION 141
GENERAL CIRCULAR NO. 51/2011, DATED 25-7-2011
order to simplify the procedures and cut timelines, the Ministry has decided to
notify section 20 of the Companies (Second Amendment) Act, 2002 (1 of 2003)
thereby the work relating to rectification of register of charges under section
141 of the Companies Act, 1956 shall be shifted from the jurisdiction of
Company Law Board to the Central Government.
2. It has further been decided to delegate this work to the
respective Registrar of Companies under whose jurisdiction the registered
office of the company is situated. The petitions filed with the Company Law
Board and pending as on the effective date of notification shall be transferred
to respective Registrar of Companies.
3. The revised e-forms and business re-engineering process
under MCA-21 system is being developed and the simplified procedures to be
followed by the companies and Registrar of Companies shall be given in the
modified e-forms and instruction kit thereto shortly.
4. It is expected that on discharging of these functions
by the respective Registrar of Companies on implementation of simplified
procedures, the cost and the time to get condonation
under section 141 of the Companies Act, 1956 shall be reduced.
5. The above simplified process is likely to be implemented
with effect from 24th September, 2011
of Registered Office from one state to another state now becomes easier
Circular No. 50 / 2011; GOI; MCA; Dated 25th July, 2011
Directors, All Registrar of Companies, All
Simplified procedure for obtaining confirmation of shifting of registered
office from one state to another state under section 17 of the Companies Act,1956.
In order to
simplify the procedures and cut timelines, the Ministry has decided to notify
section 8 of the Companies (Second Amendment) Ac t, 2002 (1) of 2003 thereby
the work relating to confirmation of shifting of registered office from one
state to another state and consequent alteration to Memorandum of Association of
the company under section 17 of the Companies Ac t, 1956 shall be shifted from
the jurisdiction of Company Law Board to the Central Government.
2. It has
further been decided to delegate this work to the respective Registrar of
Companies under whose jurisdiction the registered office of the company is
situated. The petitions filed with the Company Law Board and pending as on the
effective date of notification shall be transferred to respective Registrar of
revised e-forms and business re-engineering process under MCA-21 system is
being developed and the simplified procedures to be followed by the companies
and Registrar of Companies shall be given in the modified e-forms and
instruction kit thereto shortly.
4. It is
expected that on discharging of these functions by the respective Registrar of
Companies on implementation of simplified procedures, the cost and the time to
get such confirmation and alteration to Memorandum of Association under section
17 of the Companies Ac t, 1956 shall be reduced.
5. The above
simplified process is likely to be implemented with effect from 24th September,
12 OF THE COMPANIES ACT, 1956 - MODE OF FORMING INCORPORATED COMPANY - ONLINE
INCORPORATION OF COMPANIES WITHIN 24 HOURS
GENERAL CIRCULAR NO. 49/2011, DATED 23-7-2011
In order to give ease to the
corporate world to carry business in India, the Ministry of Corporate Affairs
has been simplifying the procedures under the Companies Act, 1956. As another
step in this direction, the Ministry is modifying the incorporation procedures
to enable promoters to get their companies incorporated online within 24 hours.
2. Ministry has already implemented online approval of
Director's Identification Number (DIN) with effect from 12-6-2011 and names of
the proposed company will also be made available online with effect from
24-7-2011. The digital certificate of incorporation is already being issued
online by the Registrar of Companies.
3. Now, the Ministry is also simplifying the procedures to
approve incorporation applications forms online.
In case the e-forms 1, 18, 32 and
e-form for Memorandum of Association (MOA) and Articles of Association (AOA)
have been certified by the practicing professional regarding the correctness of
the information and declarations given by the subscribers, the application
shall be processed electronically and the digital certificate of incorporation
shall be issued immediately online by the Registrar of Companies.
4. The above facility is optional to the existing process of
backend processing of applications by the Registrar of Companies where no such
certifications have been done by the practicing professional.
5. If any of the information or declaration given by the
company or certificate given by the professional in the e-forms and
attachment(s) thereto is/are, found to be wrong, false or illegal then the
subscribers, declarant(s) and professional(s) shall be liable for penal action
under sections 628 and 629 of the Companies Act, 1956 in addition to penal
action prescribed in regulations of the respective professional institutes.
6. Where a company has been registered online on the basis of
declarations made by the subscribers, declarant(s) and certifications by the
professional(s) given in the e-form, if it is found later on that the company
ought not to have been registered under provisions of the Companies Act, 1956
read with Rules and Regulations made therein, the Registrar of Companies shall
take necessary action to put the company in state of suspended animation and
initiate the process of revocation of the registration of the company after
giving an opportunity of being heard.
7. It is expected that the above immediate online approvals of
DIN, availability of name and registration of e-forms-1, 18, 32 and MOA and
AOA, the complete process of incorporation of a company can be completed within
8. The above simplified process of online incorporation of
companies is likely to be implemented with effect from 11th August, 2011.
A.(7) SCHEDULE VI OF THE COMPANIES ACT, 1956 - BALANCE
SHEETS - FILING OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT IN EXTENSIBLE
BUSINESS REPORTING LANGUAGE (XBRL) MODE - FILING ON MCA 21 IN THE XBRL MODE
WILL BE EFFECTIVE IN RESPECT OF FINANCIAL STATEMENTS CLOSING ON OR AFTER
31-3-2011 INSTEAD OF THE YEAR 2011-12
GENERAL CIRCULAR NO. 43/2011, DATED 7-7-2011
In partial modification to Para 2 of
Ministry's Circular No. 26/2011, dated
18-5-2011, the filing on MCA-21 in the XBRL mode will be effective
in respect of financial statements closing on or after 31-3-2011 instead of the
in continuation to the Circular No. 37/2011, dated
7-6-2011, the further information is given as under:‑
(i) Besides signing by
signatories as specified under section 215 of the Companies Act, 1956, the
Statutory Auditor has to certify the financial statements prepared in XBRL mode
for filing on MCA-21 portal.
(ii) Phase-1 class of companies as
per Circular 9/2011, dated 31-3-2011 and
later exempted from XBRL filing (under Power sector, Insurance sector, NBFC and
Banking sector) who are unable to file their financial statements would be
exempted from additional fee due to delay in filing up to 30-9-2011.
issue with approval of Competent Authority.
Video conference mandatory for AGM from next
fiscal – MCA
The Ministry of Corporate Affairs on Thursday
said it would be mandatory for listed companies to provide the option of video
conferencing for shareholders to participate in the annual general meeting from
“In respect of shareholders’ meetings to be
held during 2011-12, the video conferencing facility for shareholders is
optional. Thereafter, it is mandatory for all listed companies,” an official
statement said. The move, part of the MCA’s green initiative campaign for
corporate governance, would provide larger participation and help curbing
The video conference facility enables all persons
participating in a meeting to communicate concurrently with each other without
an intermediary, and to participate effectively in the meeting. However, the
Ministry said it was not mandatory for companies to provide its directors, the
facility to attend meetings through video conferencing.
Listed companies will also have to ensure
that video conferencing connectivity during such meetings at least five places
SECTION 166 OF THE COMPANIES ACT, 1956 -
MEETINGS & PROCEEDINGS - ANNUAL GENERAL MEETING - PROVIDING GIFTS TO THE
SHAREHOLDERS DURING ANNUAL GENERAL MEETING (AGM) OF THE COMPANY
DRAFT CIRCULAR [F. NO. 17/218/2011 CL.V],
DATED - JULY, 2011
of Corporate Affairs has been receiving representations form various
stakeholders that it has become a general practice in the country to give gifts
to the shareholders while they attend any AGM in addition to the dividend
recommended by the Board of Directors.
2. It has also been
brought to the notice of the Ministry that the companies offer gifts,
extravagant food and other charms to shareholders who attend AGM to divert the
attention of the shareholders from the main purpose of AGM and their right of
key role in the management of the company through AGM. In addition,
shareholders are made busy to collect gifts, gift coupons, packet of snacks
etc., in the duration of meeting while corporate manage to pass certain
resolutions without any debate on the same.
3. The Secretarial
Standards on General Meeting issued by the Institute of Company Secretaries of
India has also specifically mentioned that no gifts, gifts coupons or cash in
lieu of gifts should be distributed to the members at or in connection with the
4. Keeping the principle
of good corporate governance view, it has been decided that no company shall
offer any other thing except tea, coffee, soft drinks and snacks etc. in the
AGM. As a courtesy to the shareholders, the same may be made available before
the start of the meeting. Any other gifts, food coupons or gift coupons and
other enticement shall be treated as misconduct on the part of board of
directors of the company. The directors of such companies shall be liable to
pay back the cost of such expenses to the company and shall also be liable for
the penal action as provided under section 168 of the Companies Act, 1956 for
not convening the AGM properly as required under section 166 of the Companies
5. All the stakeholders
are requested to consider and examine the above proposal of the Ministry and
furnish their views/comments/recommendations to the Ministry by 14th August,
2011 on following e-mail addresses - Kamna.email@example.com / firstname.lastname@example.org
DoT seeks Trai view on exit policy for new telecom players
The Department of Telecommunications (DoT)
will seek the views of Telecom Regulatory Authority of India (Trai) on the exit policy for new players. “We are
considering it (exit policy) and it may take some time.We
will ask Trai to initiate the consultation process
and seek industry and public views on the subject,” said Communications and IT
Minister Kapil Sibal. The
issue will be part of the New Telecom Policy 2011, being formulated by DoT.
Several new operators, who had entered the market, have not rolled out their
services, including Videocon and Etisalat DB. In
another development, the Telecom Commission, the decision-making arm of the
DoT, has cleared the Rs 20,000-crore project to provide broadband connectivity
to all villages within the next three years. “The Telecom Commission has
approved the project that will be funded through the Universal Service
Obligation (USO) Fund. We will take the proposal to the Cabinet soon,” Sibal said.
GOVERNMENT OF INDIA, MINISTRY OF CORPORATE
Delhi, the,14 July, 2011
– In exercise of the powers conferred by the sub section (1) of Section 641 of
the Companies Act, 1956, the Central Government hereby makes the following
further amendments in Schedule XIII of the Companies Act, 1956: -
In GSR 396(E) dated 23th May, 2011 in Para 1(i) the words “fourth proviso” may
be read as “third proviso”.
In Schedule XIII, in part II, in Section II –
in sub-para (C), the
fourth proviso shall be substituted by the proviso as under: -
“Provided further that approval of Central Government is
not required for a subsidiary of a listed company, if —
i. the Remuneration Committee and Board of Directors of
the holding company give their consent for the amount of such remuneration of
the applicant and for the said amount to be deemed remuneration by the holding
company for the purpose of section 198 of the Companies Act, 1956 and;
ii. a special resolution has
been passed at the general meeting of the company for payment of remuneration
of the applicant and;
iii the remuneration of
the applicant is deemed to be remuneration paid by holding company and;
iv. all members of the
subsidiary are bodies corporate.
Provided that a listed company or a subsidiary of a
Listed company shall not require Central Government approval for the payment of
remuneration to its managerial personnel, if the remuneration is fixed by Board
of Industrial and Financial Reconstruction.”
In Schedule XIII, in part II, in Section II- in sub-para
(C), after fourth proviso, the following proviso shall be inserted, namely
“Provided that no approval of Central Government is
required if the managerial person is not having any interest in the capital of
the company or its holding company, directly or indirectly or through any other
statutory structures and not having any direct or indirect interest or related
to the directors or promoters of the company or its holding company at any time
during last two years before or on the date of appointment and is having a
graduate level qualification with expert and specialized knowledge in the field
of his profession.”
After Explanation VI, to the Section II in part II of Schedule XIII of the
Companies Act, 1956 following shall be inserted;-
“Explanation WI: For the purpose of Section II of this
part, “Statutory Structure” means any entity which is entitled to hold shares
in any company formed under any statute.”
It shall come in to force from the date of its publication in the Official