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Compliance News

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Company Law Updates

1. The exemption in Independent Director compliance 

The Ministry of Corporate Affairs (MCA), vide notification (number G.S.R. 579 (E)) dated 19 August 2021 has issued the Companies (Appointment and Qualification of Directors) Amendment Rules 2021 (“Amendment Rules”)  which have come into effect from 20 August 2021. The Amendment Rules provide for the exemptions to certain persons appointed as Independent Directors or persons desirous of being appointed as Independent Directors in any company from taking the online proficiency self-assessment test  or persons desirous of being appointed as Independent Directors in any company. The exemption can be taken by individuals who are or have been, at least 10 years, an advocate of a court, or in practice as a chartered accountant, or in practice as a cost accountant or in practice as a company secretary.

 

2. Extension in holding the Annual General Meeting

As per section 96 of the Companies Act 2013, every company shall hold its annual general meeting within 6 (six) months from the date of closing of its financial year. However, due to the current Covid-19 pandemic, the Registrar of Companies of various jurisdictions in India, including Pune, Mumbai, Chennai, Hyderabad, Delhi, Gujarat and Karnataka have issued respective orders to extend the due date for the companies to hold their AGM within a period of 11 months from date of closing of its financial year ending March 2021.

 

3. Default name of a company in case the company fails to change its name as per the direction of the Regional Director

MCA, vide notification (no. G.S.R. 503(E)) dated 22 July 2021, has inserted Rules 33A in the Companies (Incorporation) Rules 2014. As per the Rule 33A, in case the name of a company is not as per the relevant provision of the Companies Act 2013, and the company fails to change its name according to the directions issued by the Central Government within a period of 3 (three) months from the date of issuing of such directions,  the letters “ORDNC” (which is an abbreviation of the words “Order of Regional Director Not Complied”), the year of passing of the direction, the serial number and the existing Corporate Identity Number (CIN) of the company shall become the new name of the company without any further act or deed by the company, and the Registrar shall accordingly make entry of the new name in the register of companies and issue a fresh certificate of incorporation.

 

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 (October-December 2021)

 

ParticularsDue Date 
Hold at least one Board Meeting in quarter Oct-Dec 202131 December 2021

Hold subsequent Annual General Meeting (AGM)

 

(The companies having financial year 2020-21 have been granted an extension by a period of 2(two) months from the due date for holding the subsequent AGM)

30 November 2021
Form AOC-4 (Filing of financial statement and other documents with the Registrar)30 days from the date of AGM
Form MGT-7 (Filing of Annual Return)60 days from the date of AGM

Form MSME-I

 

(Half year MSME return for 1 April 2021 to 30 September 2021)

31 October 2021

 

 

 

 

Updates by the Reserve Bank of India (RBI)

1. Transition from the existing LIBOR Rates

In light of the transitioning from the LIBOR (The London Inter-Bank Offered Rate) due to LIBOR being discontinued from 31 December 2021, the RBI, vide Notification No. FEMA 23(R)/(5)/2021-RB dated 8 September 2021, has issued the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021, which amends the Regulation 15 of the existing Foreign Exchange Management (Export of Goods and Services) Regulation 2015. As per the amended regulations, the rate of interest, if any, payable on the advance payment shall not exceed 100 basis points above the LIBOR or other applicable benchmark as may be directed by the Reserve Bank, as the case may be.


Further, the RBI issued Notification (no. RBI/2021-22/69) dated 8 July 2021 which suggested a roadmap for the transition from the LIBOR upon its cessation. In the said roadmap, for the purpose of a safe and sound LIBOR transition, RBI has suggested companies which are entering into new financial contracts to cease reference of the LIBOR as a benchmark and instead use any widely accepted alternate reference rates. Further, for the existing financial contracts, companies are suggested to alter the said existing contracts to refer any widely accepted alternate reference rates before 31 December 2021. Vide the said roadmap, RBI has also suggested the financial institutes to incorporate robust fallback clauses in all financial contracts in terms of easy transition from the LIBOR reference rate.

 

Updates by the Ministry of Micro, Small and Medium Enterprises

1. Definition to insert Retail and trade sector

Ministry of Micro, Small and Medium Enterprises vide Office Memorandum No. 5/2(2)/2021-E/P & G/ Policy dated 2 July 2021, has decided to include Retail and Wholesale trade as MSMEs for the limited purpose of Priority Sector Lending and such entities will be allowed to be registered on Udyam Registration Portal as MSMEs.

 

2. MSME launches IndiaXport 2021 portal

The Ministry of Micro, Small & Medium Enterprises has launched the Indian Export initiative and the IndiaXport 2021 web portal for Small & Medium Enterprises (SME) forum on 29 September 2021.  The aim of the Ministry by launching the IndiaXport 2021 portal is to increase the export growth in the MSME sector. This portal serves as a knowledge base for exports by Indian MSMEs with the required information related to export potential for all the 456 tariff lines along with the potential markets as well as trends in exports, export procedures. Further, the portal also provides an instructor led orientation to MSMEs through a series of sessions for specific sectors highlighting the opportunities in specific products in international markets.

 

Updates by the Ministry of Labour and Employment

1. National Pension Scheme to small traders, shopkeepers, self employed persons

Ministry of Labour and Employment, vide notification no. S.O. 3219(E) dated 3 August 2021 has issued National Pension Scheme (“Scheme”) for the small traders, shopkeepers and self-employed persons (“Beneficiaries”) in order to ensure their old age protection. The said Scheme is implemented through the Life Insurance Corporation of India and common service centers. As per the Scheme, a minimum monthly assured pension of INR 3,000/- per month is to be provided to the Beneficiaries after attaining the age of 60 years. In order for a person to avail the benefits under the Scheme, such individual shall be required to furnish the proof of possession of Aadhaar or undergo Aadhaar authentication. This notification shall come into force from the date of its publication in the official gazette in all states and union territories of India. 

 From The Newsletter

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