Regulatory updates in India

published on 17 January 2020 | reading time approx. 1,5 minutes

Appointment of Company Secretary and conducting Secretarial Audits

The MCA notified on 6 January 2020 the amended Companies (Appointment and Remuneration of Managerial Personnel) rules, 2014 to bring out changes in the scope of appointment of Company Secretary. The slated changes are to be effective from 1 April 2020. Earlier, every private company having a paid up capital of INR 5 crores or more had to appoint a whole time Company Secretary on the payroll of the company. This criteria has now changed to paid up capital of INR 10 crores w.e.f 1 April 2020.

Listed companies and public companies having a paid up share capital of INR 50 crores or turnover of INR 250 crores or more were required to conduct mandatorily a Secretarial Audit. Now, in addition to this requirement, companies having outstanding loans or borrowings from banks or public financial institutions of INR 100 crores or more are also required to have Secretarial Audits as per S. 204 of the Companies Act, 2013.

Extension of deadline for reporting of SBO

Following the amendments and deadline circulars by MCA to beneficial ownership rules by introducing Companies (Significant Beneficial Owners) Amendment Rules, 2019 (“Rules”) on 8 February 2019, the MCA has issued a circular dated 1 January 2020 to extend the time limit for filing of Form BEN-2 (Return to the Registrar in respect of declaration u/s 90) up to 31 March 2020.

With an aim to have clear regulatory frameworks that would help to identity of the person(s) behind the curtain who is/are having a significant beneficial ownership of a company and is/are essentially controlling the management and daily affairs of a company, the BEN Rules had been introduced.

The declaration of Significant Beneficial Ownership by SBO in form BEN-1 to the Company has to accordingly be construed as form BEN-2 has to be filed with the Registrar of Companies within 30 days from the receipt of declaration in form BEN-1. Thus, this provides additional time for companies to trace SBO details and file accordingly without incurring penalties.