Compliance News

published on 31 January 2023 I reading time approx. 6 minutes

​Company Law Updates

1. Companies (Registered Valuers and Valuation) Amendment Rules, 2022

The Ministry of Corporate Affairs (MCA) issued notification dated 21 November 2022, whereby, it is clarified that for a partnership firm or Company who have registered themselves as valuers, all partners or directors are required to be eligible to be registered as registered valuers as per Rule 3 (1) of Companies (Registered Valuers and Valuation) Rules, 2017.     Additionally, notification states that such partner or director shall not be a member of more than one registered valuer organization at one point in time.  Further, each partnership firm or Company already registered as valuers has to comply with these amendment rules, 2022, within six  months from the date of commencement of these amendment rules, 2022.

The amendment has further inserted Rule 7A (Intimation of changes in personal details etc.), requiring the registered valuer to inform the requisite authority of any change in the personal details or modification in the composition of the directors or partners, or any modification in any clause of the partnership agreement or Memorandum of Association which may affect the registration of Registered Valuer after payment of fee as per the Table I in Annexure V.

The amendment has further inserted Rule 14A (Intimation of changes in composition of governing board, etc.) requiring the registered valuers’ organizations to intimate the authority for change in composition of its governing board or its committees or appellate panel, or other details after payment of fee as per the Table II in Annexure V. In addition to the above, the amendment has also inserted Clause 26 (1) (b) which clarifies that a member who is a whole-time director of a Company registered as a valuer will not be considered to be in "employment" and therefore, the same will not be considered as a temporary suspension.

2. Extension for holding Annual General Meeting (AGM) through Video Conference or Other Audio-Visual Means

MCA in continuation with General Circular No. 20/2020 dated 5 May 2020 and General Circular No. 02/2022 dated 5 May 2022 has allowed the Companies to conduct their AGMs via Video Conference (VC) or Other Audio-Visual Means (OAVM) on or before 30 September 2023 through General Circular No. 10/2022 dated 28 December 2022.

3. Launch of E-Forms on V3 Portal

MCA, in its recent announcement, intends to shift 56 forms to its updated MCA21 V3 portal, to be launched in two different lots. The first set consisting of ten forms was released on 9 January 2023, and the remaining 46 forms will be rolled out as on 23 January 2023. Further, MCA in its latest General Circular No. 01/2023 dated 9 January 2023 decided that, keeping in view the transition of the company forms from V2 to V3 portal for the period between 7 January 2023 to 22 January 2023, the MCA has allowed additional time of 15 days without levying additional fees, to the stakeholders in cases where the due dates for filing the 45 e forms (except for PAS-3) which fall during the said period.

Company Secretarial (CS) compliance for Private Limited Companies

Below is the summary of the compliances which need to be adhered to in the next quarter (January – March 2023)

Updates by the Reserve Bank of India (RBI)

1. Rationalization of reporting in Single Master Form (SMF) on FIRMS Portal

The Reserve Bank of India (RBI) on 4 January 2023, issued a notification regarding Foreign Investment in India - Rationalization of reporting in Single Master Form (SMF) on FIRMS Portal whereby the forms submitted on the portal will be auto-acknowledged with a time stamp and an auto generated e-mail will be sent to the applicant. The Authorized Dealer (AD) Banks shall verify the forms submitted within five working days based on the uploaded documents which are in compliance with the extant guidelines.

Further in cases of delayed reporting, the AD Banks shall either advise the Late Submission Fee (LSF) to the applicants where the forms are filed with a delay of less than or equal to three years which will be computed by the system or advise for compounding of contravention with the forms filed with a delay greater than three years, post which the applicant may approach RBI with their application for compounding. Detailed guidelines of FIRMS manual are made available at https://firms.rbi.org.in and the version of the manual available at the portal will have the prevail in case of discrepancies.

Updates by the Ministry of Labour and Employment

1. Employment of Women in factories during the Night Shifts in Andhra Pradesh

The Government of Andhra Pradesh, through the Office of the Director of Factories issued a Circular (No. LAE05-12021/31) /2/2022-BSEC-DOF) on 25 October 2022 thereby removing restrictions on employment of women in Factories during Night shifts. The circular was passed after the Hon’ble High Court of Andhra Pradesh struck down Section 66 (1) (b) of the Factories Act, 1948 as unconstitutional. The factories employing working women in the night shifts shall inter alia comply with additional conditions like consent of such women to work during night shift must be in writing, transportation facility shall be provided, toilets, washrooms and drinking facilities must be accessible near the workplace. This is to ensure the occupational safety and health of the women workers.

2. Tamil Nadu has amended the contribution rates under the Tamil Nadu Welfare Fund, Rules, 1973

The department of Tamil Nadu Labour Welfare and Skill Development issued a notification on 2 December 2022, to further amend the Tamil Nadu Labour Welfare Fund Rules, 1973. This has come into force on 2 December 2022. As per the said notification, the rates of contributions have been revised to INR 20 for employees and INR 40 for employers.

3. ESIC issues a general circular for companies obtained registration under the MCA portal

Employees’ State Insurance Corporation (ESIC) has released a general circular dated 1 December 2022, addressing the companies who have been mandatory allocated registration under the Employees’ State Insurance Act,1948 (ESI Act) by virtue of their registration on the MCA portal through a new web-based form called SPICe+.  It is pertinent to note that the ESI Act becomes applicable upon the reaching the threshold of 10 ten or more employees. However, companies who have been incorporated through a new web-based form called SPICe+, the companies are also registered under the ESI Act, in spite of not having reached the employee threshold of ten or more for the purpose of applicability of ESI Act.  In this regard, accordingly, ESIC has issued certain guidelines which are as follows:

• Such companies, establishments, units, factories do not need to undertake compliance for the next six months or till they reach the threshold of the ESI Act’s coverage, whichever is earlier.
• In case that, such threshold limit is not reached within six months then such companies, establishments, units, factories will have to login in the ESIC website and extend their “Dormant” mode.
• If any company fails to activate the “Dormant” mode, they will be automatically activated and will have to comply with the ESI Act.

4. AICTE has been directed to discontinue with the NEEM Scheme with the immediate effect

The Indian Ministry of Education (Department of Higher Education Technical Section-II), issued a letter dated 23 December 2022 addressing to All India Council for Technical Education (AICTE) stating that it has been decided to discontinue with the National Employability Enhancement Scheme (NEEM Scheme) with immediate effect.

NEEM which stands for National Employability Enhancement Scheme is a joint collaboration of Ministry of Human Resource Development and AICTE to launch an apprenticeship program of a person who is either pursuing Post Graduation, Graduation/Diploma in any technical or non-technical stream or has discontinued studies after Class 10th to gain first-hand experience of working in an industrial set-up.

There appears to be a lot of speculation about the reasoning behind the discontinuation of the NEEM Scheme. It appears a few of the reasons behind the discontinuation include:

• The objective of creating employability was diluted by substituting NEEM Scheme as a form of employment to avoid statutory contributions applicable to regular employees under the Employees’ Provident Fund & Miscellaneous Provisions Act 1952 (EPF Act), the Employees’ State Insurance Act, 1948 (ESI Act).
• Training in line with National Skill Qualification Framework (NSQF) was being disregarded.
• No control was exercised on the number of NEEM trainees as the NEEM Scheme did not specify any such limit on the number.

It appears that a step towards the discontinuation of NEEM Scheme was taken based on new revised draft of NEEM guidelines which were drafted and sent to the ministry for approval on 11 August, 2022. The decision regarding discontinuation of the NEEM Scheme has at the moment left the NEEM trainees and other stakeholders with little to no information about how they should proceed and further clarifications are awaited from the AICTE on the current status of NEEM trainees who are currently enrolled.