Compliance News

published on 30 October 2023 I reading time approx. 6 minutes

​Company Law Updates

1. Substitution of forms 3 and form 4 under Limited Liability Partnership (Second Amendment) Rules, 2023

The Ministry of Corporate Affairs (MCA) vide notification (G.S.R. 644 (E)) dated 1 September 2023 has amended the formats of certain the statutory forms for limited liability partnerships (LLP), which includes form 3 for providing intimation regarding any changes in LLP agreement, and form 4 for intimation of appointment, cessation and change in name/ address/ designation of a designated partner or partner of an LLP. Form 3 has been updated with requirements such as to state the police station having jurisdiction based on the LLP's address. The MCA has also updated a new table with information on each partner's contribution of funds, property, other benefits, or services, as well as their profit-sharing ratio. 

2. Condonation of delay in filings for Limited Liability Partnership

By means of circular no. 08/2023, dated 23 August 2023, the MCA has provided an extension for filings of Forms 3, 4, and 11 till 30 November 2023. Under this circular, MCA provides for: (1) streamlined processing of the Form 3 and 4 utilizing Straight Through Process (STP) mechanism except for change in business activity. (2) Auto-populated forms using existing master data for accurate data. (3) Relief from additional filing fees for Form 3 & 4 filing pending from 1 January 2021 and beyond. (4) Relief in additional filing fees for Form 11 for FY 21-22 and onwards.

Company Secretarial (CS) compliance for Private Limited Companies

Below is a summary of the compliances that needs to be adhered to in the next quarter (October – December 2023):

ParticularsDue Date 

Form MSME- I:

(Form for furnishing outstanding payments to Micro or Small Enterprises with the Registrar for the period 1 April 2023 to 30 September 2023)

31 October 2023

Form ADT-1:

Filing of Return for appointment of Auditor

14 October 2023

Form AOC-4:

Filing of Financial Statements for the financial year 2022-23.

Within 30 days from the date of Annual General Meeting

Form MGT-7/7A:

Filing of Annual Return for the financial year 2022-23.

Within 60 days from the date of Annual General Meeting
Hold at least one Board Meeting in the quarter October 2023 - December 202331 December 2023
Form ECB-2 Returns
In case External Commercial Borrowings (ECB), that is, commercial loans are availed by eligible resident entities from recognized non-resident lenders, such resident entities are required to file Form ECB-2 return within seven (7) working days from the closing date of each month.

Labor and Industrial Updates

1. The Factories (Karnataka Amendment) Act, 2023

The Factories (Karnataka Amendment) Act, 2023 (Amendment Act), which came into effect on 10 July 2023, introduces significant revisions to various aspects of factory operations. Pursuant to the Amendment Act, the Karnataka government has revised the provisions related to working hours in a day, hours of overtimes
in a quarter, change in shifts and working conditions for female worker.

Under the Amendment Act, the Karnataka state government now possesses the authority to extend the 
daily maximum working hours for adult workers up to 12 hours a day, inclusive of rest intervals. This marks 
a departure from the previous limit of 9 hours stipulated in the Factories Act,1948 (Factories Act) excluding rest intervals. Such extension is granted by the issuance of a notification pertaining to specific groups or classes of factories, provided certain conditions are met, and explicit written consent from the workers is obtained. Further it is pertinent to note that the total working hours are not exceeding 48 hours within a week.

Further, the Amendment Act also for the first time covers cases where a worker exceeds the prescribed working hours, establishing specific criteria for entitlement of overtime. In following cases , the additional hours worked qualify as overtime, entitling workers to wages at twice their ordinary rate. If a workers works for more than:
  • 9 hours in any day or for more than 48 hours in any week, working for 6 days in any week or ; 
  • 10 hours in any day or for more than 48 hours in any week, working for 5 days in any week or;
  • 11 and a half hours in any day working for 4 days in any week, or works on paid holiday. 
Section 65 of the Factories Act has been duly amended to increase the allowable limit of overtime hours in 
a quarter from 75 to 145. It is important to emphasize that this provision is subject to the worker's explicit written consent prior to undertaking overtime work.

Further, the amendment lists out restrictions on employment of women during night shifts. The employer shall see that the women workers if working at night shift shall be in a batch of 10. The employer shall provide transportation facility to women working at night shifts. The employer shall provide adequate lighting and CCTV coverage inside and around the factory premises where the female workers move in the course of work.

2. Supreme Court Ruling : Model Standing Order shall have a precedence over the Employee Union Settlement unless more beneficial in nature

The Hon’ble Supreme Court of India (SC) in deciding the appeal in the case of Bharatiya Kamgar Karmchari Mahasang vs. M/s. Jet Airways Ltd 2023 LLR 1063 held that any settlement between employee union and the employer would not override the Model Standing Order or Certified Standing Order, unless it is more advantageous to the employees. 

The brief facts involved in the present case was Employee Union was representing around 160 workmen temporarily engaged on fixed-term contract by M/s. Jet Airways Ltd for ancillary roles such as loader-cum-cleaners, drivers and operators. The dispute arose from the contention that despite completing 240 days in service, the workmen were considered temporary. In this regard, to present their side M/s. Jet Airways Ltd relied on a settlement which was reached on 2 May 2002, wherein the demand for permanency was relinquished by Employee Union in exchange for various benefits. M/s. Jet Airways Ltd argued that this settlement precluded the entitlement to permanency.  

It is pertinent to note that the Industrial Employment (Standing Orders) Act, 1946 (IESO Act ) applies to every establishment wherein 100 or more workmen are employed or were employed on any day of the preceding 2 months. Under Standing Order Act, Bombay Industrial Employment (Standing Orders) rules, 1959 (Bombay Standing Orders) are framed and Model Standing Order is provided which regulate conditions of employment between the workmen and the industrial establishment. 

The Supreme Court emphasized the significance of specific clauses within the Bombay Model Standing Order. As per clause 4C of Bombay Standing Order states that a worker who has put in 240 days ‘uninterrupted service' in the aggregate in any establishment other than the seasonal establishment during
a period of during a period of preceding 12 calendar months, shall be made permanent in that establishment by order in writing signed by the Manager, or any person authorized in that behalf by the Manager, irrespective of whether or not his name is on the muster roll of the establishment throughout the period of the said 12 months. Further Clause 32 ensures that standing orders do not override existing laws or the rights of workers established through contracts, customs, or agreements.The Supreme Court held that IESO Act being the beneficial legislation provides that any agreement/contract/settlement wherein the rights of the employees are waived off would not override the Standing Orders. 

The key takeaway for employers from this judgment is that any settlement reached between an employee union and the employer cannot override the Model Standing Order or Certified Standing Order unless it offers more advantageous terms to the employees. Employers should ensure that any agreements or settlements they enter into are in compliance with the established standing orders, especially regarding issues such as permanency after a specified period of service.

Updates under Data Protection Laws

The Digital Personal Data Protection Act, 2023

The Ministry of Law and Justice vide notification dated 11 August 2023, passed the Digital Personal Data Protection Act, 2023 for processing of digital personal data of an individual in a manner that recognizes both the right of individuals to protect their personal data and the need to process such personal data for lawful purposes and for matters connected therewith. 

The Act requires every organization to obtain informed consent from the individuals before collecting and using their personal data. Such consent is revocable. When the personal data is transferred across borders the organizations must ensure that appropriate safeguards are in place to protect the data’s privacy and security.  

The organizations are responsible for complying with data protection laws and demonstrating their commitment to data privacy through policies, practices, and documentations. The Act requires adequate security measures to be implemented to protect personal data from breaches, unauthorized access and cyberattacks. 

See below this Newsletter's section on "Accounting and Audit News" for practical implications of the new law in a Company's finance department. 

Updates under Legal Metrology Laws

Legal Metrology (Packaged Commodities) (Amendment) Rules, 2023

The Ministry of the Consumer Affairs vide notification G.S.R. 714(E) dated 30 September 2023 has notified that the Legal Metrology (Packaged Commodities) Amendment Rules, 2023 shall be commenced from 

1 January 2024. The amended Rules has extended the timelines for obtaining Legal Metrology Packaged Commodities Certificate by all manufacturers, importers, or commercial packers from 1 October 2023 to 

1 January 2024.

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