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January 2022

The MCA has notified the second and third provisos to sub-section (1) of section 403 of the Companies Act, 2013 on 11 January 2022. As per these provisos, where there is a delay in submission, filing, registration or recording of the documents, facts or information required or authorised to be registered under the Companies Act, 2013, subject to any legal action or liability under the Companies Act, 2013, entities would need to pay additional fees, as is prescribed (refer notifications 1 and 2). These provisions would be effective from 1 July 2022. Further, revised fees have been notified for the delay in filing of forms other than for increase in nominal share capital under Section 92/137 of the Companies Act, 2013 or forms for filing charges (refer notification 3).

Relaxation on levy of additional fees

The MCA vide circular dated 14 February 2022 has provided a relaxation on levy of additional fees on annual financial statements/return filings for the financial year ended 31 March 2021. Therefore, no additional fees will be levied

  • Upto 15 March 2022 , for filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and AOC-4 (non-XBRL)
  • Upto 31 March 2022, for filing forms MGT-7/MGT-7A

During the said period, only normal fees would be payable.

To access the text of the Companies (Amendment) Act, 2017, please click here

To access the text of the Companies (Amendment) Act, 2020, please click here

To access the text of MCA notifications, please click 1, 2 and 3

To access the text of MCA circular dated 14 February 2022, please click here

Action Points for Auditors

The management is responsible for compliance with laws and regulations. Section 403 of the Companies Act, 2013 requires submission, filing, registration or recording of documents, facts or information on a timely basis, however an additional fee would be applicable in case of delay in filing of information. SA 250, Consideration of Laws and Regulations in an Audit of Financial Statements mentions that non-compliance with laws and regulations may result in fines, litigations or other consequences for an entity that may have a material effect on the financial statements. Thus, auditors should consider this in their audits of financial statements

February 2022

Rule 12 of the Companies (Accounts) Rules, 2014 inter alia prescribes the forms for filing of financial statements and fees to be paid thereon. As per sub-rules (1) and (1A) of rule 12, companies and Non-Banking Financial Companies (NBFCs) are required to file their standalone and consolidated financial statements with the registrar along with stipulated forms3.

On 11 February 2022, MCA issued the Companies (Accounts) Amendment Rules, 2022 which amended rule 12 of the Companies (Accounts) Rules, 2014.

A new sub-rule (1B) has been inserted which requires every company covered under the provisions of section 135(1) of the Companies Act, 20134 to furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding financial year (2020-2021) and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

Form CSR-2 for the preceding financial year (FY2020- 2021) would be filed separately on or before 31 March 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

MCA has specified the format of the report on CSR in the notification issued

  1. Companies are required to file their standalone and consolidated financial statements along with forms AOC-4 and AOC-4 CFS respectively. NBFCs that are required to comply with Ind AS should file their standalone and consolidated financial statements along with forms AOC-4 NBFC (Ind AS) and AOC-4 CFS NBFC (Ind AS) respectively.
  2. As per section 135(1) of the Companies Act, 2013, every company having
    • Net worth of INR500 crore or more, or
    • Turnover of INR1,000 crore or more or
    • A net profit of INR5 crore or more
    during the immediately preceding financial year is required to constitute a Corporate Social Responsibility Committee of the Board consisting of three or more Directors, out of which at least one director shall be an independent director.

To access the text of MCA notification, please click here

Action Points for Auditorss

Previously, there was no form prescribed to furnish a report on CSR. Earlier, details of CSR committee, the CSR policy and other prescribed matters were required to be part of the Board of Directors’ Report. While the auditors do not have any reporting obligations on this form, they should engage with clients and make them aware of the new norms.

MCA received various requests from stakeholders regarding relaxation of levy of additional fees for annual financial statements/return filings required to be done for the financial year ended 31 March 2021. In this view, MCA has decided not to charge additional fees for filing of certain forms for financial year ended 31 March 2021 as below:

  • Upto 15 March 2022: for filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL and non-XBRL and
  • Upto 31 March 2022: for filing forms MGT 7/MGT-7A

During the said period, only normal fees would be payable

To access the text of MCA circular, please click here

March 2022

As per the proviso to rule 3 of the Companies (Accounts) Rules, 2014, every company which uses accounting software for maintaining its books of account, should use only such accounting software which has a feature of recording audit trail of each and every transaction, creates an edit log of each change made in the books of account along with the date when such changes were made and ensures that the audit trail cannot be disabled. This rule was applicable from 1 April 2022.

The MCA vide circular dated 31 March 2022 has deferred the applicability of this clause; accordingly, it would now be applicable from 1 April 2023.

To access the text of MCA circular, please click here

On 11 February 2022, MCA had amended rule 12 of the Companies (Accounts) Rules, 2014, thereby inserting a new sub-rule (1B) which required every company covered under section 135(1) of the Companies Act, 2013 to furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding financial year (2020-2021) and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

Form CSR-2 for the preceding financial year (FY2020- 2021) would be filed separately on or before 31 March 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

The MCA, vide notification dated 31 March 2022 has extended the due date for filing Form CSR-2 for FY2020-2021 to 31 May 2022 .

To access the text of MCA notification dated 11 February 2022, please click here

To access the text of MCA notification dated 31 March 2022, please click here

Action Points for Auditors

Earlier a form to furnish a report on CSR was not prescribed. Details of CSR committee, the CSR policy and other prescribed matters were required to be part of the Board of Directors Report. While the auditors do not have any reporting obligations on this form, they should engage with clients and make them aware of the new norms along with the revised reporting timelines.
April 2022

Rule 3 of the Companies (Registration of Charges) Rules, 2014 (Registration of Charges Rules) requires companies to register the creation or modification of charges and pay stipulated amount for such registration. In case of delay of such registration, additional fees are charged.

MCA, vide a notification dated 27 April 2022 has stated that nothing contained in Rule 3 of the Registration of Charges Rules would apply to any charge required to be created or modified by a banking company under section 774 of the Companies Act, 2013 in favour of the Reserve Bank of India (RBI) when any loan or advance has been provided to it under clause 4(d) of section 17 of RBI Act, 1934.

Effective date: The Rules would be effective from the date of publication in the Official Gazettei.e., 27 April 2022

  1. As per section 77 of the Companies Act, 2013, it is the duty of every company creating a charge within or outside India, on its property or assets or any of its undertakings (tangible or intangible) situated in or outside India, to register the particulars of the charge created by the company and pay prescribed amount of fees within the prescribed time.

To access the text of the notification, please click here

Action Points for Auditors

Auditors of banking companies should take note of this amendment and consider it while auditing charges created against loans or advances received by the banking company post the date of the notification.

The Ministry of Corporate Affairs (MCA) constituted the Company Law Committee (CLC) to make recommendations to the Government inter aliaon changes aimed at facilitating and promoting greater ease of doing business in India and effective implementation of the Companies Act, 2013, the Limited Liability Partnership Act, 2008 and the Rules made thereunder.

The CLC submitted its latest report to the Government on 21 March 2022. The report has proposed various important amendments to the Companies Act, 2013 and the Limited Liability Partnership Act, 2008. The suggestions aim to ensure ease of compliances, laying strong emphasis on digitisation and also building a robust corporate governance framework including alignment of the law with the provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations). Some of the key recommendations pertaining to the Companies Act, 2013 are:

A. Revised provisions relating to directors and committees of the board

  • Provisions pertaining to Independent Directors (ID)
    • Period of appointment: TheCLC reiterated that an ID cannot be appointed for more than two consecutive terms. Further, the period of appointment of IDs cannot exceed the prescribed period of five years for a single term or ten years for two consecutive terms. While calculating this period, any tenure held as an additional director would also be considered.
    • Engagement of IDs as a legal / consulting firm during cooling-off period: Currently,an employee, proprietor or partner of a legal or consulting firm, transacting with a company, could be appointed as an ID in such a company provided that such a transaction amounted to less than 10 per cent of the gross turnover of that firm (threshold). However, upon ceasing to hold office of an ID, there would be a blanket prohibition on the firm to function as a legal or consulting firm regardless of the threshold being met.
      The CLC recommended that the relevant legal or consulting firm should be permitted to continue to render its services as per thresholds even after the ID completed his/her term. Further, CLC recommended to reduce the threshold to 5 per cent instead of the existing limit of 10 per cent of gross turnover of the firm.
  • Provisions on disqualification of directors: The Companies Act, 2013 lays down provisions relating to the disqualification and vacation of office of directors of a company. The CLC recommendations are as follows:
    • Vacancy of directorship should only arise due to disqualification under personal capacity, under section 164(1) of the Companies Act, 2013 (and not on account of defaults made by a company under section 164(2)5of the Companies Act, 2013)
    • Extend the period of exemption for newly appointed directors from the default made by a company under section 164(2) of the Companies Act, 2013 to two years (instead of the current six months).
    • Rights of nominee directors appointed pursuant to nomination by debenture trustees registered with SEBI should be safeguarded from disqualification under section 164(2) of the Companies Act, 2013.
  • Cooling off period for directors and auditors
    • Cooling off period before an auditor becomes a director: There should be a mandatory one-year cooling-off period, from the date of cessation of office, after which an auditor of a company may be permitted to hold the position of a director in the same company or group of companies. Such a restriction would only apply to the concerned partner of an audit firm/LLP that audited the company.
    • Cooling off period before an ID becomes a managerial personnel: There should be a mandatory one-year cooling-off period, from the date of cessation of office, after which an ID may be permitted to hold the position of a managing director, whole-time director, or manager in the same company or group of companies.
  • Resignation of Key Managerial Personnel (KMPs) Procedure of resignation of certain KMPs (whose appointments were filed with the RoC) should be aligned with the procedure of resignation of directors under Section 168 of the Companies Act, 2013. This means that a company should file the notice of resignation within 30 days of receipt of such notice, failing which KMPs may directly file the same with the RoC.
  • Setting up Risk Management Committee (RMC): To include new provisions in the Companies Act, 2013, for constitution of an RMC for such class of companies, as the CG may prescribe.

B. Reviewing and strengthening the audit framework

  • Amendments relating to NFRA: TheCentral Government has constituted the National Financial Reporting Authority (NFRA) for matters relating to accounting and auditing standards for companies. CLC recommendations are as follows:
    • Empower NFRA to take an appropriate action: Empower NFRA to take appropriate action against individuals or firms for non-compliance with the Companies Act, 2013 and requirements thereunder in addition to its existing powers to take action against ‘professional or other misconduct’.
    • Constitution of NFRA fund: An NFRA Fund should be constituted to provide financial autonomy to NFRA.
    • Regulations and supervisory powers: NFRA should be enabled to make certain regulations6 and supervisory powers should be granted to the NFRA Chairperson
  • Reviewing and strengthening the audit framework and introducing mechanisms to ensure the independence of auditors
    The CLC recommendations are as follows:
    • Non-audit services Enabling provisions should be introduced for the CG to prescribe a differential list of prohibitions on availing non-audit services or total prohibition on availing non-audit services for such class or classes of companies where public interest is inherent.
    • Punishment under Section 143: Section 147 of the Companies Act, 2013 to be amended to cover penal consequences for contravention of Section 143 of the Companies Act, 2013 regarding sub-sections other than sub-section (12). Penal consequences of such sub-sections except sub-section (12) are currently not covered under the Companies Act, 2013.
    • Obligations of the resigning auditor: A resigning auditor should be under an explicit obligation to provide detailed disclosures before resignation and should specifically mention whether such resignation is due to non-cooperation from the company, fraud, severe non-compliance or diversion of funds. However, if the auditor fails to make such disclosures in the resignation statement, then suitable action would be taken against such an auditor. Additionally, the auditor should assure shareholders and stakeholders that in his/her opinion there is nothing in the company’s accounts which needs to brought to their notice, and that his/her decision to resign is an independent decision.
    • Mandatory joint audit for certain companies: The Central Government should have powers to mandate joint audits for such class or classes of companies as it may deem necessary.
    • Auditor of holding company to comment on the true and fair view of each subsidiary company: To amend the Companies Act, 2013 after further examination and public consultation so as to ensure that the auditor of a holding company has been given assurance about the fairness of audit of each subsidiary company by respective auditors. In addition, the auditor of the holding company may be empowered to independently verify the accounts or part of accounts of any subsidiary company.
    • Forensic Audit: The Companies Act, 2013 should enable the CG to prescribe detailed Rules relating to forensic audit through subordinate legislation.
  • Standardisation of qualifications by auditors: Enabling provisions should be introduced for the CG to issue a format for auditors to provide the impact of every qualification or an adverse remark on a company’s financial statements for circulation to the board of directors before the financial statements are circulated to the shareholders of a company.

C. Reviewing provisions relating to mergers and acquisitions

  • Treasury stock: Companies holding treasury stock would be required to report to CG through a declaration in a prescribed form. Additionally, such a company should dispose off the treasury stock within a period of three years. In case, the company fails to dispose off the treasury shares, then such shares would be considered as cancelled and share capital of the company would be reduced in a prescribed manner and penal action can be initiated against such a company.
  • Fast-track mergers: Permit fast-track mergers between a holding company and its subsidiary company or companies other than wholly-owned subsidiaries, if such companies are not listed and meet prescribed conditions.

D. Other matters

The CLC recommendations are as follows:

  • Companies, which cease to be associated with a foreign entity, should be allowed to file a fresh application with the CG in a prescribed form to allow them to revert back to the financial year followed under the Companies Act, 2013.
  • Enable companies to hold general meetings, i.e., AGMs and EGMs physically, virtually, and in hybrid mode. Where EGM is to be conducted entirely in electronic mode, the notice period for such a meeting should be reduced.
  • The CG will prescribe rules for class or classes of companies mandatorily required to serve certain documents in electronic mode only (however, physical documents to be delivered where requested by a shareholder).
  • Mandatorily require prescribed class or classes of companies to maintain their statutory registers on an electronic platform in the manner laid down by the CG.
  • Free reservesare to be included in the calculation of buy-back of equity shares even though the term has not been specifically included in the proviso to section 68(2)(c) (which clarifies the manner in which the limits for buy back of shares is calculated). Further, only shares on which the shareholders have exercised the stock option should be allowed to be bought back.
  • Company law should be amended to enable issuance, holding, transfer of fractional shares, in dematerialised form, for prescribed class or classes of companies in consultation with SEBI (for listed companies), as may be required. Further, Restricted Stock Units (RSUs) and Stock Appreciation Rights (SARs) should be recognised under the Companies Act, 2013, and their issuance should be sufficiently encumbered.
  • Distressed companies7 should be allowed to issue shares at a discount in such a manner as prescribed by the CG.
  • Introduction of an enabling provision to recognise Special Purpose Acquisition Companies (SPACs) under the Companies Act, 2013 and allow entrepreneurs to list a SPAC incorporated in India on domestic and global exchanges.
  • Amendments relating to the Investor Education and Protection Fund (IEPF) such as
    • Enabling dividend pertaining to shares that are transferred to IEPF to also be transferred to IEPF at the time of transfer of shares irrespective of the year they pertain to.
    • Purpose for which IEPF may be utilised includes ‘redemption amount towards unclaimed or unpaid preference shares’.
    • Unclaimed money pertaining to shares or securities that have been bought back or cancelled should be allowed to be transferred to IEPF.
  1. Section 164(2) deals with the disqualification of directors on account of lapses made by a company in filing its annual returns and financial statements or default in repayment of deposits or debentures.
  2. Regulations that NFRA should be empowered to make include:
      - Form and manner of filing information with NFRA,
      - Place, timing, and procedure to be followed for NFRA meetings.
  3. Distressed companies may be categorised as such class or classes of companies that have cash losses (other than those arising out of depreciation or revaluation) for previous three consecutive years or more and fulfil such terms and conditions.

Action Points for Auditors

CLC has suggested certain key amendments to the corporate governance provisions, to the erstwhile audit framework, to certain provisions pertaining to mergers and acquisitions, and various other provisions of the Companies Act, 2013. There are various recommendations that are likely to impact the auditors and their practice; thus, auditors should watch this space for further developments in this area. Some of the significant points to consider for auditors include:

  • Strengthening of the NFRA
  • Prohibition on non-audit services
  • Obligations of resigning auditors
  • Standardisation qualifications by auditors
  • Cooling-off period before auditors become directors
  • Mandatory joint audit for companies involving public interest with recognition of liability of individual auditors
  • Provisions pertaining to directors
  • Forensic audit
May 2022

The Ministry of Corporate Affairs (MCA), vide a circular dated 5 May 2022, has allowed companies whose AGMs are due to be held in the year 2022, to conduct their AGMs through video conference or other audio-visual means on or before 31 December 20221(earlier: 30 June 2022).

The MCA has further clarified that the aforesaid circular should not be construed as conferring any extension of time for holding of AGMs by the companies under the Companies Act, 2013, and the companies which have not adhered to the relevant timelines would remain subject to legal action.

Also, MCA, vide another circular dated 5 May 2022, has allowed companies to conduct their EGMs through video conference or other audio-visual means or transact items through postal ballot in accordance with the prescribed framework up to 31 December 2022(earlier: 30 June 2022).

  1. As per the provisions of the original circular number 20/2020 dated 5 May 2020, there has inter aliaalso been an extension in the provision for issuing financial statements (including the Board’s report, Auditor’s report or other documents required to be attached therewith) by email to members, trustees for debenture-holders of any debentures issued by the company, and to all other persons entitled.

To access the text of the circular relating to AGMs dated 5 May 2022, please click here

To access the text of the circular relating to EGMs dated 5 May 2022, please click here

Action Points for Auditors

While companies have now been permitted to hold AGMs and EGMs in the calendar year 2022 vide video conference or other audio-visual means, this does not imply an extension in timeline for holding of AGMs. Accordingly, provisions of SA 250, Consideration of Laws and Regulations in an Audit of Financial Statementsshould be considered by auditors when there has been a delay in holding an AGM.

The Government of India has amended the foreign investment norms by making it mandatory for countries sharing land borders with India to take prior approval from the Indian Government before making any subscriptions or acquisitions within India. In this regard, MCA has notified a slew of amendments as given below:

Rules amended Applicability date
The Companies (Prospectus and Allotment of Securities) Rules, 2014 (Prospectus Rules) 5 May 2022
The Companies (Incorporation) Rules, 2014
   - Revised form INC-9
   - Revised form SPICe32
 1 June 2022
The Companies (Share Capital and Debenture) Rules, 2014 4 May 2022
The Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Amalgamation Rules) 30 May 2022
The Companies (Appointment and Qualification of Directors) Rules, 2014 (Directors Rules)
   • Revision of Rule 8 and form DIR-2    • Revision of Rule 10 and form DIR-3 		1 June 2022

Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022

Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014 (Prospectus Rules) states that a prior approval of shareholders by a special resolution is required by an entity, before it makes an offer to subscribe to securities through private placement. Further, an offer or an invitation to subscribe to securities would be made through issue of private placement offer letter in form PAS-4.

MCA, vide a notification dated 5 May 2022 issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022, which has inter aliainserted a new proviso under Rule 14(1) (Private placement) of the Prospectus Rules. As per the amendments, no offer or invitation of any securities should be made (under Rule 14 of the Prospectus Rules) to a body corporate incorporated in, or a national of, a country which shares a land border with India, unless such body corporate or the national have obtained the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and have attached the same with the private placement offer cum application letter. These amendments have been made in the form PAS-4.

The Rules come into force from the date of publication in the Official Gazette (i.e. 5 May 2022).

To access the text of the MCA notification, please click here

Revised form INC-9 issued

As per Section 7 of the Companies Act, 2013 (dealing with incorporation of companies) read with Rule 15 of the Companies (Incorporation) Rules, 2014, each of the subscribers to the memorandum of association and persons named as the first directors in the articles of association need to make certain declarations in form INC-92:

MCA, vide a notification dated 20 May 2022 has issued revised form INC-9. As per the revised form INC-9, in addition to the existing declarations, subscribers to the memorandum and first directors of the companies are now required to confirm whether they need to obtain a Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the subscription of shares3.If a Government approval is required then, enclose such clearance in the form.

Additionally, in the form SPICe32 (form for incorporation of a company), when a national of a country who shares land border with India seeks appointment in a company being incorporated in India then, entities need to submit the security clearance (of such individual) obtained from the Ministry of Home Affairs.

The amendment has come into effect from 1 June 2022.

To access the text of the notification, please click here

The Companies (Share Capital and Debentures) Amendment Rules, 2022

As per Section 56 of the Companies Act, 2013 read with Rule 11 (1) of the Companies (Share Capital and Debenture) Rules, 2014, securities held in physical form need to be transferred in form no. SH-4. The following information needs to be provided in Form SH-4:

  • Details of the securities to be transferred
  • Details of the transferor, and
  • Details of the transferee

On 4 May 2022, MCA issued the Companies (Share Capital and Debentures) Amendment Rules, 2022, thereby requiring additional declarations for the transferee in form SH-4. These additional declarations include whether the transferee requires to obtain a government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior totransfer of shares, and enclosure of such approval (where required and obtained).

The Rules come into force from the date of publication in the Official Gazette (i.e. 4 May 2022).

To access the text of the notification, please click here

The Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2022

As per Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Amalgamation Rules) if a foreign company incorporated outside India intends to merge with an Indian company, or vice versa, it needs to file an application before the Tribunal as per provisions of Sections 230 to 232 of the Companies Act, 2013 read with the Amalgamation Rules. Additionally, certain provisions stated in the Companies Act, 2013 and the Amalgamation Rules need to be complied with.

The MCA, vide a notification dated 30 May 2022 has issued the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2022. As per the amendment, in case of a compromise, an arrangement, merger, or demerger between an Indian company and a company or body corporate which has been incorporated in a country which shares land border with India, a declaration in Form No. CAA-16 would be required at the stage of submission of application under section 230 of the Companies Act, 2013.

Form No CAA-16, requires the authorised representative of a company/body corporate which has been incorporated in a country which shares land border with India to declare whether the company/body corporate is required to obtain a prior approval of the Government under the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, and enclose such approval, where obtained.

The Rules come into force from the date of publication in the Official Gazette (i.e. 30 May 2022).

To access the text of the Rules, please click here

The Companies (Appointment and Qualification of Directors) Amendment Rules, 2022

On 1 June 2022, MCA issued the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022. Following are the amendments:

  • Amendment in Rule 8: As per Rule 8 of the Companies (Appointment and Qualification of Directors) Rules, 2014 (Directors Rules), every person who has been appointed as a director is required to furnish to the company his/her consent in writing to act as such in form DIR-2. Further, companies are required to file such a consent with the Registrar of companies in the form DIR-12 within 30 days of appointment of the director.
    The amendments now state, that in case the person seeking appointment is a national of a country which shares land border with India, necessary security clearance from the Ministry of Home Affairs, Government of India should also be attached along with the consent in form DIR-2. Requisite amendments have been made in form DIR-2.
  • Amendment in Rule 10: As per Rule 9 and Rule 10 of the Directors Rules, every person who intends to be appointed as a director needs to apply to the Central Government for a Director Identification Number (DIN) in the form DIR-3. On submission of DIR-3 on the portal and payment of requisite fees, an application number is generated by the system automatically.
    As per the amendment, an application number would not be generated in case the person applying for DIN is a national of a country which shares land border with India, unless necessary security clearances are obtained from the Ministry of Home Affairs, Government of India along with form DIR-3. Requisite amendments have been made in the form DIR-3.

The Rules come into force from the date of publication in the Official Gazette (i.e. 1 June 2022).

  1. Form INC-9 is the form in which subscribers to the memorandum and first directors as mentioned in the articles of association of a company make following declarations:
    ♦ He/she is not convicted of any offence in connection with the promotion, formation or management of any company,
    ♦ He/she has not been found guilty of any fraud or misfeasance or of any breach of duty to any company under this Act or any previous company law during the preceding five years
    ♦ All the document filed with the Registrar for registration of the company contain information that is correct and complete and true to the best of his/her knowledge and belief;
  2. This would be the case when the person seeking appointment is a national of a country which shares a land border with India.

To access the text of the Rules, please click here

Action Points for Auditors

Auditors should take note of the companies that they audit which have foreign investments, are planning mergers with companies incorporated outside India or have directors who are nationals of countries which share a land border with India.

With regard to private placement of shares or convertible debentures (fully, partly or optionally convertible debentures) by a company during the year, auditors should take note of the reporting requirements under the CARO 2020 on:

    - whether the private placement is in accordance with Section 42 of the Companies Act, 2013, and

    - whether the funds raised have been used for the purposes for which they were raised. If not, details of the amount involved, and nature of non-compliance need to be reported.

Section 42 of the Companies Act, 2013 inter aliaprovides that a company can make private placement only to a select group of persons (as identified by the board of directors of a company). Thus, the auditors would need to ascertain whether the company has complied with the requirements specified in Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022 in determining the group of persons for private placement. In case of any non-compliance, the auditors would need to report non-compliances in accordance with the requirements of the CARO 2020.

On 11 February 2022, MCA had amended Rule 12 of the Companies (Accounts) Rules, 2014, thereby inserting a new sub-rule (1B) which required every company covered under section 135(1) of the Companies Act, 20134 to furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding financial year (FY 2020-2021) and onwards, on or before 31 May 2022, as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

The MCA, vide notification dated 31 May 2022 has extended the due date for filing Form CSR-2 for FY 2020-2021 to 30 June 2022.

It has also been provided that the Form CSR-2 for FY 2021-22 would be required to be filed on or before 31 March 2023after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

The amendment comes into force from the date of publication in the Official Gazette (i.e. 31 May 2022).

  1. Section 135(1) of the Companies Act, 2013 requires companies having net worth of INR500 crore or more, turnover of INR1,000 crore or more or a net profit of INR5 crore or more during the immediately preceding financial year to comply with the Corporate Social Responsibility (CSR) provisions.

To access the text of the notification, please click here

Action Points for Auditors

Earlier a form to furnish a report on CSR was not prescribed. Details of the CSR committee, the CSR policy and other prescribed matters were required to be part of the Board of Directors’ Report. Auditors should engage with the companies covered under the provision of Section 135(1) of the Companies Act, 2013 and communicate the new norms along with the revised reporting timelines.
June 2022

Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014 (Directors Rules) specifies the compliance requirements for a person who is eligible and willing to be appointed as an independent director of a company. As per Rule 6 of the Directors Rules, every individual who intends to get appointed as an independent director should apply to the Indian Institute of Corporate Affairs at Manesar (IICA) for inclusion of his/her name in the data bank of independent directors for a period of one year, five years, or for life-time, and renew such application in a prescribed manner.

Additionally, sub-rule 4 of Rule 6 of the Directors Rules requires certain individuals whose name is included in the data bank of the independent directors to pass an online proficiency selfassessment test conducted by IICA within a prescribed period, failing which, his/her name would be removed from the databank of independent directors.

The Ministry of Corporate Affairs (MCA), vide a notification dated 10 June 2022 issued the Companies (Appointment and Qualifications of Directors) Second Amendment Rules, 2022. The amended rules have inserted a new sub-rule 5 in Rule 6 of the Directors Rules. As per sub-rule 5, any individual whose name has been removed from the data bank of the independent directors under sub-rule 4, may apply for restoration of his/her name on payment of the prescribed fees, subject to the following conditions:

  1. The name would be shown in a separate restored category for a period of one year from the date of restoration within which, the person must pass the online proficiency self-assessment test and thereafter his/her name would be included in the data bank of the independent directors, and
  2. If the person fails to pass the online proficiency self-assessment test within one year from the date of restoration, his/her name would be removed from the data bank, and he/she would be required to apply afresh for inclusion of his/her name in the databank of the independent directors.

The amendment is effective from the date of its publication in the Official Gazette (i.e., 10 June 2022).

To access the text of the notification, please click here

Under the Companies Act, 2013, there are two ways of removing the name of a company from the register of companies. They are as follows:

  1. Removal on suo moto basis: Where companies do not comply with certain provisions11, the Registrar of Companies (ROC) may, on a suo moto basis remove the names of such companies from the register of companies. For this purpose, the ROC will give a notice in writing in form STK-1
  2. Application for removal of name: After extinguishing all its liabilities, a company may, post approval of shareholders by a special resolution, file an application in Form STK-2 in a prescribed manner on certain grounds11 for removing the name of the company from the register of companies.

Where a notice has been issued by the ROC or an application has been received from a company for removal of the name of the company, a public notice will be placed on the official website of MCA or in the official gazette in form STK-5, and in an English language newspaper and at least one vernacular language newspaper in form STK-5A

The MCA, vide a notification dated 9 June 2022, issued the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022 (Removal of Name Amendment Rules). The amended rules permit companies to resubmit form STK-2 in certain cases and amend certain forms. These provisions are discussed below:

  1. Resubmission of form STK-2: If the ROC on examination of the application made in Form STK-2 finds it necessary to call for further information or finds the application defective or incomplete in any respect, he/she should inform the applicant to remove such defects and re-submit the application within 15 days from the date of such information, and After the company has re-submitted the application, if the ROC finds that it is still defective or incomplete in any respect, he/she would give a further time of 15 days to remove such defects or complete the application, failing which the ROC would treat the application as invalid.
    The MCA has also clarified that any re-submission of application in form STK-2 made prior to the commencement of the Removal of Name Amendment Rules, should not be counted for the purposes of reckoning the maximum number of re-submissions of such form.
  2. Amendment of certain forms: Revised formats of Form STK1, STK-5 and STK-5A respectively have been issued by the MCA.

The amendments are applicable from the date of their publication in the Official Gazette (i.e., 9 June 2022).

To access the text of the notification, please click here. click here

  1. Names of companies may be removed from the register in the following cases:

    - The company has failed to commence its business within one year of its incorporation;

    - The company is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455 of the Companies Act, 2013

    - The subscribers to the memorandum have not paid the subscription which they had undertaken to pay at the time of incorporation of a company and a declaration to this effect has not been filed within 180 days of its incorporation under sub-section (1) of section 10A of the Companies Act, 2013.

Action Points for Auditors

An application made by a company in Form STK-2 is required to be certified by a Chartered Accountant/Company Secretary/Cost Accountant in whole time practice, as the case may be. Additionally, Form STK-2 should be accompanied with a statement of accounts comprising assets and liabilities of the company made up to a day, not exceeding 30 days before the date of application and certified by a Chartered Accountant. Since the ROC is empowered to call for any further information contained in or annexed to Form STK-2, Chartered Accountants and other professionals are expected to maintain sufficient documentation with regard to the information contained in and annexed to the application.

Rule 13 of the National Financial Reporting Authority (NFRA) Rules, 2018 (NFRA Rules) states that if a company or any officer of a company or an auditor or any other person contravenes any of the provisions of the NFRA Rules, the company and every officer of the company who is in default, or the auditor or such other person would be punishable as per the provisions of section 45012 of the Companies Act, 2013.

The MCA, vide a notification dated 17 June 2022 has issued the NFRA Amendment Rules, 2022 (NFRA Amendment Rules). The NFRA Amendment Rules have now substituted Rule 13 of the NFRA Rules, stating that anyone who contravenes any of the provisions of these Rules, would be punishable with a fine not exceeding INR5,000, and where the contravention is a continuing one, with a further fine not exceeding INR500 for every day after the first day during which the contravention continues.

The amendments are effective from the date of publication in the Official Gazette (i.e., 17 June 2022).

To access the text of the notification, please click here

  1. Section 450 of the Companies Act, 2013 states that if a company or any officer of a company or any other person contravenes any of the provisions of this Act or the Rules made thereunder, and for which no penalty or punishment is provided elsewhere in this Act, the company and every officer of the company who is in default or such other personwould be liable to a penalty of INR10,000, and in case of continuing contravention, with a further penalty of INR1,000 for each day after the first during which the contravention continues, subject to a maximum of INR2 lakh in case of a company and INR50,000 in case of an officer who is in default or any other person.
There are no updates in July 2022
August 2022

Section 12(9) of the Companies Act, 201315 states that if a registrar of companies has reasonable cause to believe that a company is not carrying on any businesses or operations, he/she may inter alia cause a physical verification of the registered office of the company in a prescribed manner. If any default is found in complying with the requirement to maintain a registered office16, the Registrar of Companies may initiate an action for the removal of the name of the company from the register of companies.

Rule 25 of the Companies (Incorporation) Rules, 2014 (Incorporation Rules) deals with the verification of a registered office, however, it does not stipulate any procedures for physical verification of a registered office.

On 18 August 2022, MCA notified the Companies (Incorporation) Third Amendment Rules, 2022 (Incorporation Amendment Rules), and inserted Rule 25B in the Incorporation Rules, relating to physical verification of a registered office of a company.

Rule 25B of the Incorporation Rules provides that for the purpose of Section 12(9) of the Companies Act, 2013, the registrar of companies, based upon the information or documents made available on MCA2117, must visit at the address of the registered office of the company and may cause its physical verification, in presence of two independent witnesses of the locality in which the said registered office is situated. The registrar may also seek assistance of the local police for such verification, if required.

The documents filed by the company on MCA21 in support of the address of its registered office should be cross verified with the copies of supporting documents of such address collected during the said physical verification, duly authenticated from the occupant of the property where the said registered office is situated. The Accounts Amendment Rules also provide a format in which the report of the physical verification should be prepared.

The above amendments are effective from the date of publication in the Official Gazette (i.e., 18 August 2022).

Subsequently, on 24 August 2022, MCA notified related amendments to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (Removal of Name Rules), and amended certain forms prescribed in the Removal of Name Rules.

To access the text of the notification, please click here

Section 12(9) of the Companies Act, 2013 read with Rule 25B of the Incorporation Rules permit a Registrar of Companies to initiate an action for removal of name of companies from the register of companies if, after a physical verification, the registrar of companies has reasonable cause to believe that the company is not carrying on any business or operations. Currently the forms prescribed in the Removal of Name Rules are silent on this aspect.

The amended forms are as follows:

  • Form STK-1 (Notice for removal of names of companies from the register of companies)
  • Form STK-5 (Public notice for removal of names of companies)
  • Form STK-5A (Public notice by MCA).

The above amendments are effective from the date of publication in the Official Gazette (i.e., 24 August 2022).

To access the text of the notification, please click here

  1. Section 12 of the Companies Act, 2013 deals with registered office a company.
  2. Cases where the registered office is found to be not capable of receiving and acknowledging all communications and notices.
  3. MCA21 is an e-Governance initiative of the Government of India that enables an easy and secure access of the MCA services to the corporate entities, professionals and citizens of India.
September 2022

Section 2(85) of the Companies Act, 2013 read with Rule 2(1)(t) of the Companies (Specification of Definition Details) Rules, 2014 (Definition Rules) defines a ‘small company’ as:

A company, other than a public company,

  1. paid-up share capital of which does not exceed INR50 lakh, or such higher amount as may be prescribed (as per the Definition Rules, this amount is INR2 crore) which shall not be more than INR10 crore, and
  2. turnover of which as per profit and loss account for the immediately preceding financial year does not exceed INR2 crore, or such higher amount as may be prescribed (as per the Definition Rules, this amount is INR20 crore) which shall not be more than INR100 crore.

Provided that nothing in this clause would apply to:

  1. a holding company or a subsidiary company,
  2. a company registered under Section 8, or
  3. a company or body corporate governed by any special Act.

On 15 September 2022, the Ministry of Corporate Affairs (MCA) issued the Companies (Specification of Definition Details) Amendment Rules, 2022 (Definition Amendment Rules), thereby amending the threshold of paid-up share capital and turnover, for determining a ‘small company’.

As per the revised definition, the paid-up share capital and. turnover of a small company should not exceed INR4 crore (earlier, INR2 crore) and INR40 crore (earlier, INR20 crore) respectively.

To access the text of the Definition Amendment Rules, please click here

Action Points for Auditors

With an aim to facilitate ease of doing business, MCA has increased the threshold for a business to be classified as a small company. This will open the benefits of easier reporting and compliance norms to a larger section of companies. The Companies Act, 2013 has provided various exemptions for small companies, some of the key exemptions are discussed below:

  1. Cash flow statement: A small company need not include a cash flow statement in its financial statements,
  2. Meetings of the Board: As per Section 173 of the Companies Act, 2013, a minimum number of four meetings of its Board of Directors should be held every year in such a manner that not more than 120 days shall intervene between two consecutive meetings of the Board of Directors. However, the Companies Act, 2013 has provided an exemption for a small company. A small company would be deemed to have complied with the provisions of Section 17310, if at least one meeting of the Board of Directors has been conducted in each half of a calendar year and the gap between the two meetings is not less than 90 days,
  3. Mandatory rotation of auditors as per Section 139(2) of the Companies Act, 2013: Small companies are exempted from the requirement of mandatory rotation of auditors after every five years (individual auditors) or after every 10 years (firm of auditors),
  4. Signing of annual return: Section 92 of the Companies Act, 2013 requires companies to get their annual return signed by a director and the company secretary (where a company does not have a company secretary, then a company secretary in practice). However, the annual return of a small company can be signed by the company secretary alone, or where there is no company secretary, then by a director of the company,
  5. Remuneration of directors and Key Managerial Personnel (KMP): Small companies are required to provide details of only the aggregate amount of remuneration drawn by directors, instead of providing details of remuneration of directors and KMP of the company, and
  6. Internal Financial Controls: Auditor of a small company is not required to report on the adequacy and operating effectiveness of the Internal Financial Controls (IFC) in the auditor’s report.

Auditors should engage with companies that would fall within the revised threshold limits and discuss the relaxations that would be available to them and evaluate the potential impact on financial statements and auditor reporting.

  1. Section 173: Meetings of the Board
Background

Over the years, with the continuous evolution of corporate reporting around the globe and increase in emphasis towards sustainability and non-financial information disclosures, MCA has from time to time, introduced various amendments and other key developments to the Companies (Corporate Social Responsibility Policy) Rules, 2014 (CSR Rules).

Recently, MCA, vide a notification dated 20 September 2022 issued the Companies (CSR Policy) Amendment Rules, 2022 (CSR Amendment Rules). Some of the significant amendments issued include:

  • Constitution of CSR Committee by a company having amounts in its unspent CSR account: Rule 3(1) of the CSR Rules requires every company, including its holding or subsidiary company, and a foreign company, fulfilling the prescribed criteria11, to comply with the provisions of Section 135 of the Companies Act, 2013. Further, as per Section 135(6) of the Companies Act, 2013, companies that have not spent any CSR amount pursuant to any ongoing project, undertaken by a company in pursuance of its CSR policy, should be transferred by the company within a period of 30 days to an ‘unspent CSR account’. This amount is required to be spent within a period of three years.

MCA has now added a proviso to Rule 3(1), stating that a company that has amounts outstanding in its unspent CSR account should constitute a CSR Committee and comply with the relevant provisions of Section 135 of the Companies Act, 2013.

The insertion of this proviso will enable continuous monitoring of CSR activities by the CSR committee, which cannot be dissolved till the time an amount is lying in the unspent CSR account of the company.

  • Omission of Rule 3(2) of the CSR Policy Rules: This rule dealt with a situation when CSR committee could be dissolved. However, this rule has been omitted. Therefore, a company would continue to constitute a CSR committee as long as it has funds to run those initiatives.
  • Clarification on the category of entities that can implement CSR activities: Rule 4(1) of the CSR Policy Rules provides that the Board of Directors must ensure that CSR activities are undertaken by a company itself or through certain prescribed entities, i.e., the company may appoint another entity, called the implementing agency, to implement CSR activities on its behalf.

The MCA, vide the CSR Amendment Rules has added additional class of entities that may act as an implementing agency with respect to the CSR activities undertaken by a company- these are:

  1. A Section 8 company, or a registered public trust, or a registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of Section 1012 and approved under Section 80G of the Income Tax Act, 1961, established by the company, either singly or along with any other company, or
  2. A Section 8 company, or a registered public trust, or a registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of Section 10 and approved under Section 80G of the Income Tax Act, 1961, and has an established track record of at least three years in undertaking similar activities.
  • Expenditure on impact assessment that can be considered as a CSR spend: Rule 8 of the CSR Rules require certain entities to undertake an impact assessment of their CSR projects that meet prescribed thresholds13.

Such companies may book the expenditure towards the impact assessment undertaken for that financial year as a CSR expenditure. Before the amendment, the threshold up to which such an expenditure could be considered as CSR spend could not exceed five per cent of the total CSR expenditure for that financial year or INR50 lakh, whichever is less. As per the CSR Amendment Rules, the limit of expenditure incurred on impact assessment that can be considered as CSR spend has been revised to two per cent of the total CSR expenditure for that financial year or INR50 lakh, whichever is higher.

Change in the format for annual report on CSR activities: Annexure II of the CSR Rules prescribes a format for the annual report on CSR activities which needs to be included as a part of a company’s Board of Directors’ report. The MCA has amended the same and issued the revised format for reporting.

Effective date: The amendments are effective from the date of their publication in the official gazette i.e., 20 September 2022.

  1. Section 135(1) of the Companies Act, 2013 states that a company which meets any of the given threshold in the immediately preceding FY is required to comply with the CSR norms:
    1. Net worth of INR500 crore or more, or
    2. Turnover of INR1,000 crore or more, or
    3. Net profit of INR5 crore or more.
  1. Following entities are covered under sub-clauses (iv), (v), (vi) and (via) of clause (23C) of Section 10 of the Income Tax Act, 1961:
    1. Sub-clause (iv): any other fund or institution established for charitable purposes which may be approved by the Principal Commissioner or Commissioner, having regard to the objects of the fund or institution and its importance throughout India, or throughout any State or States,
    2. Sub-clause (v): any trust (including any other legal obligation), or institution wholly for public religious purposes, or wholly for public religious and charitable purposes, which may be approved by the Principal Commissioner or Commissioner, having regard to the manner in which the affairs of the trust or institution are administered and supervised for ensuring that the income accruing thereto is properly applied for the objects thereof,
    3. Sub-clause (vi): any university or other educational institution existing solely for educational purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiab) or sub-clause (iiiad), and which may be approved by the Principal Commissioner or Commissioner, and
    4. Sub-clause (via): any hospital or other institution for the reception and treatment of persons suffering from illness or mental defectiveness, or for the reception and treatment of persons during convalescence, or of persons requiring medical attention or rehabilitation, existing solely for philanthropic purposes and not for purposes of profit, other than those mentioned in sub-clause (iiiac) or sub-clause (iiiae), and which may be approved by the Principal Commissioner or Commissioner.
  2. Every company having an average CSR obligation of INR10 crore or more in pursuance of Section 135(5) of the Companies Act, 2013 in the three immediately preceding financial years, should undertake impact assessment, through an independent agency, of their CSR projects having outlays of INR1 crore or more, and which have been completed not less than one year before undertaking the impact study

To access the text of the notification, please click here

Action Points for Auditors

  • On 11 February 2022, MCA had amended Rule 12 of the Companies (Accounts) Rules, 2014, thereby inserting a new sub-rule (1B) which requires every company covered under section 135(1) of the Companies Act, 2013 to furnish a report on CSR in Form CSR-2 to the Registrar for the preceding FY 2020-2021 and onwards. Thus, it is important to note that while the aforementioned changes have been made in the information to be provided in the annual report , the information to be provided in Form CSR-2 remains unchanged.
  • Form CSR-1 Registration of Entities for undertaking CSR Activities is required to be certified by a Chartered Accountant (in whole-time practice), or a Company Secretary (in whole-time practice), or a Cost Accountant (in whole-time practice). The form has been duly amended to incorporate the changes introduced in Rule 4(1) of the CSR Rules. Thus, auditors should take note of the changes in the form and make sure they certify the revised form .
There are no updates in October 2022
There are no updates in November 2022
There are no updates in December 2022
There are no updates in January 2023
There are no updates in February 2023
There are no updates in March 2023
April 2023

The Government of India, in its budget for FY 2022-23 had announced the establishment of the Centre for Processing Accelerated Corporate Exit (C-PACE) to facilitate and speed-up the voluntary winding up of companies from the currently required two years to less than six months. Subsequently, in March’23, the Ministry of Corporate Affairs (MCA) announced the establishment of C-PACE, at the Indian Institute of Corporate Affairs (IICA) at Manesar.

Currently, Section 248 of the Companies Act, 2013 read with Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (removal of names of companies rules) inter alia requires companies to file an application in form STK-2 along with fees of INR10,000 to the Registrar of Companies (ROC) for removing the name of the company from the register of companies.

On 17 April 2023, the Ministry of Corporate Affairs (MCA), issued the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2023 (the amendment), thereby making following key revisions to Rule 4:

  • Authority for removal of name: With the establishment of the C-PACE, an application for removal of name of a company (under Section 248(2) of the Companies Act, 2013) should be made to the Registrar, C-PACE (and not to the ROC). This application will be made in Form No. STK-2 along with the prescribed fee (emphasis added to highlight the change)
  • Omitted certain requirements: Earlier, the approval by way of a special resolution or by consent of 75 per cent of members in terms of paid-up share capital (special resolution or consent) was required. This requirement has now been omitted Jurisdiction of C-PACE: It has been specified that for the purpose of exercising functional jurisdiction, disposal of applications and all related matters, the Registrar of C-PACE would be the RoC
  • Revised forms: Revised formats of the following forms have been issued:
  • Form No. STK-2: Application by a company to the ROC for removing its name from the register of companies
  • Form No. STK-6: Public notice in the matter of striking off the name of a company under Section 248(2) of the Companies Act, 2013, and
  • Form No. STK-7: Notice of striking off and dissolution.

Effective Date: The amendments would come into force w.e.f. 1 May 2023.

To access the text of the notification for establishment of C-PACE, please click here

To access the text of the amendment, please click here

May 2023

Rule 4 of the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (the Rules) lays down the procedure to be followed by a company for making an application to remove its name from the register of companies.

On 17 April 2023, the Ministry of Corporate Affairs (MCA) had issued certain amendments to Rule 4 of the Rules. The amendments revised sub-rule (1) and inserted a new sub-rule (3A). These amendments have recognised the Centre for Processing Accelerated Corporate Exit (C-PACE1The C-PACE has been set up to centralise the process of striking off of companies, promote ease of doing business and the ease of exit for companies) as the authority for removing the name of a company from the register of companies and have made it mandatory for companies to make an application to C-PACE for removal of a company’s name under Section 248(2)2Section 248: Power of registrar to remove name of company from register of companies of the Companies Act, 2013 (the Act).

Subsequently, on 10 May 2023, MCA issued the Companies (Removal of Names of Companies from the Register of Companies) Second Amendment Rules, 2023, making further amendments to Rule 4(1). The amendments specify following requirements for a company while filling an application to remove its name from the register of companies:

  • The company should not file an application unless the company has filed its overdue financial statements under Section 1373Section 137: Copy of financial statement to be filed with registrar of the Act and overdue annual returns under Section 924Section 92: Annual return of the Act up to the end of the financial year in which the company ceased to carry out its business operations
  • In case the company intends to file an application after the Registrar of Companies (RoC) has initiated steps to remove its name, then it can only file the application after filing all pending financial statements under Section 137 of the Act and all pending annual returns under Section 92 of the Act
  • Once the Registrar of Companies (Registrar) has issued a notice for publication5 As per Section 248(5) of the Act, at the expiry of the time mentioned in the notice (sent by the registrar, mentioning his intention to remove the name of the company from the register of companies), the registrar may, unless cause to the contrary is shown by the company, strike off the name of the company from the register of companies. The registrar will also publish a notice thereof in the Official Gazette, and on the publication in the Official Gazette of this notice, the company shall stand dissolved. pursuant to action initiated under Section 248(1) of the Act, then in such a case the company would not be allowed to file the application under this sub-rule.

Effective Date: The amendments have come into force from the date of their publication in the Official Gazette, i.e., 10 May 2023.

To access the text of the amendments, please click here

Rule 25 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 deals with the approval procedure of merger and amalgamation of certain companies. On 15 May 2023, MCA issued the Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2023 (the amendment), thereby introducing certain amendments to Rule 25.

The amendment aims to streamline the approval process for mergers and ensure clarity with respect to deemed approvals in certain cases as given below. This is also depicted by way of a flow chart below.

streamline the approval process

(Source: Foundation for Audit Quality’s analysis, 2023)

  • No objection received (Rule 25(5)): The amendment provides that if no objection/suggestion is received from the Registrar of Companies (registrar)/official liquidator, within a period of 30 days by the Central Government (CG), and if the CG is of the opinion that the scheme is in the interest of public or creditors, then CG can issue a confirmation order of such a scheme of merger or amalgamation in Form No. CAA.12 within a period of 15 days after the expiry of the said 30 days. However, if the CG does not issue a confirmation order within 60 days, it will be deemed that there is no objection, and a confirmation order will be issued by the CG
  • Objections received from the registrar (Rule 25(6)): The amendment states that if objections or suggestions are received from the registrar/official liquidator, within the prescribed period of 30 days, then the CG must undertake the following action:
  • Issue a confirmation order within 30 days, if the CG is of the opinion that the objections/suggestions are unsustainable, and the scheme is in the interest of public or creditors
  • If CG is of the opinion that the scheme is against the interest of public or creditors, then it can file an application before the Tribunal within 60 days, stating the objections/opinion, requesting the Tribunal to consider the scheme under Section 2326Section 232: Merger and amalgamation of companies of the Act. Further, if the CG does not issue a confirmation order or file an application within a period of 60 days of the receipt of the scheme under Section 2337Section 233: Merger or amalgamation of certain companies of the Act, then it would be deemed that it has no objection to the scheme and a confirmation order should be issued accordingly.

Effective Date: The amendments would come into force w.e.f. 15 June 2023.

To access the text of the amendment, please click here

June 2023

On 11 February 2022, the Ministry of Corporate Affairs (MCA) had amended Rule 12 of the Companies (Accounts) Rules, 2014 (the Accounts Rules), thereby inserting a new sub-rule (1B) which required every company covered under section 135(1) of the Companies Act, 20133 Section 135(1) of the Companies Act, 2013 requires companies having net worth of INR500 crore or more, turnover of INR1,000 crore or more or a net profit of INR5 crore or more during the immediately preceding F.Y. to comply with the CSR provisions to furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding Financial Year (F.Y. 2020-2021) and onwards, as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be. The provisos to Rule 12(1B) specify the timelines for filing of Form CSR-2 for each F.Y.

In this regard, recently, MCA issued the Companies (Accounts) Second Amendment Rules, 2023, thereby inserting a third proviso to Rule 12(1B) of the Accounts Rules. It states that for F.Y. 2022- 23, Form CSR-2 must be filed on or before 31 March 2024 after filing Form AOC-4, AOC-4-NBFC (Ind AS) or AOC-4 XBRL, as the case may be.

The amendment comes into force from the date of publication in the Official Gazette (i.e., 31 May 2023).

To access the text of the notification, please click here

Action Points for Auditors

Auditors should engage with the companies covered under the provision of Section 135(1) of the Companies Act, 2013 and update them regarding the reporting timelines.

MCA, vide a circular dated 21 June 2023 has provided an extension for filing Form DPT-3 (Return of Deposits) by one month. Keeping in view the transition of MCA-21 portal, it was decided to allow the companies to file Form DPT-3 for the F.Y. ended 31 March 2023, without paying additional fees up to 31 July 2023 original due date was 30 June 2023).

To access the text of the circular, please click here

There are no updates in July 2023
August 2023

Companies are required to file Form No. RD-1 for submitting an application to the Central Government (Regional Director) for certain purposes, such as change in the financial year, conversion of public company, rectification of name of a company, etc. Recently, the Ministry of Corporate Affairs (MCA) issued the Companies (Incorporation) Second Amendment Rules, 2023. Through the amendment, MCA has now substituted Form No. RD-1 by adding more disclosures in the revised Form such as details of the board resolution and special resolution where resolutions for the specific proposal were passed, grounds for making application for the proposed change, details of advertisement, etc.

Effective Date: The amendment came into force from the date of its publication in the Official Gazette, i.e., 2 August 2023.

To access the text of the amendment, please click here

September 2023

On 25 September 2023, the Ministry of Corporate Affairs (MCA) issued a circular stating that the companies whose Annual General Meetings (AGMs) are due in 2023 or 2024, can conduct the AGM through Video Conference (VC) or Other Audio-Visual Means (OAVM) on or before 30 September 2024.

The circular clarifies that this should not be implied as conferring any extension of the time for holding the AGMs by the companies. Accordingly, the companies which do not adhere to the relevant statutory timelines, would be liable to legal consequences under the relevant provisions of the Companies Act, 2013.

Further, the aforementioned extension and clarification would be applicable in case of Extraordinary General Meetings (EGMs) as well.

To access the text of the circular, please click here

October 2023

The Ministry of Corporate Affairs (MCA), vide a notification dated 27 October 2023 issued the Companies (Management and Administration) Second Amendment Rules, 2023 (the amendment rules). The amendment specifies provisions w.r.t. appointment of a designated person, i.e., every company must designate a person who would be responsible for furnishing and extending co-operation for providing information to the registrar, or any other authorised officer w.r.t. beneficial interest in shares of the company.

For this purpose, a company may designate:

  • A Company Secretary, if there is a requirement of such appointment under the Companies Act, 2013 and the rules made thereunder, or
  • A key managerial personnel, other than the Company Secretary, or
  • Every director, if there is no Company Secretary or key managerial personnel.

Further, the amendment rules specify that till a person has not been so designated by a company, it would be assumed that the aforementioned persons are the designated persons.

Effective date:The amendment came into force from the date of publication in the Official Gazette, i.e., 27 October 2023.

To access the text of the notification, please click here

MCA, vide a notification dated 27 October 2023 issued the Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2023 (the amendment rules). The key amendments issued include:

  • Share warrants not converted into shares: The amendment states that every public company which has issued share warrants prior to the commencement of the Companies Act, 2013 and not converted them into shares should:
  • Inform the registrar in Form PAS-7 about such warrant within three months of the commencement of the amendment rules
  • The bearer of the share warrants should surrender such warrants and get the same dematerialised within six months of the commencement of the amendment rules, and
  • Where such warrants are not surrendered by the bearer within the prescribed period, the company should convert them into dematerialised form and transfer the same to the Investor Education and Protection Fund.
  • Issue of securities in dematerialised form: Every private company, other than a small company should issue its securities in dematerialised form and facilitate dematerialisation of all its securities within 18 months of the closure of a financial year.
  • Form PAS-7 and PAS-8: The amendment rules have also inserted Form PAS-7 (i.e., details of pending share warrants) and Form PAS-8 (i.e., notice for bearers of pending share warrants).

Effective date:The amendments came into force from the date of publication in the Official Gazette, i.e., 27 October 2023.

To access the text of the notification, please click here

Rule 30 of the Companies (Incorporation) Rules, 2014 (the Incorporation Rules) prescribes provisions relating to shifting of a company’s registered office from one state or union territory to another state. As per these rules, a company needs to make an application in a prescribed form seeking approval for alteration of the memorandum with regard to the change of place of the registered office from one state or union territory to another.

On receipt of such application and other stipulated documents (such as a confirmation that no objection has been received from stakeholders on such transfer) the central government would confirm the alteration of the memorandum subject to certain terms and conditions3This requirement is advocated in sub-rule 9 of Rule 30 of the Incorporation rules..

Recently, MCA amended Rule 30 of the Incorporation Rules, thereby inserting a new proviso to sub-rule 9, which states that – in case, where the management of the company has been taken over by a new management under a resolution plan, approved under Section 31 of the Insolvency Bankruptcy Code, 2016, and no appeal against the resolution plan is pending in any court or tribunal, and further no inquiry, inspection and investigation is pending or initiated after the approval of such plan, then shifting of company’s registered office may be allowed.

Effective date:The amendment has come into force w.e.f. 21 October 2023.

To access the text of the amendment, please click here

November 2023

Section 23 of the Companies Act, 2013 specifies regulations pertaining to public offer and private placement of securities. In 2020, the Ministry of Corporate Affairs (MCA) had amended it by inserting sub-regulations 3 and 4. These sub-regulations enabled certain class of public companies to issue prescribed class of securities for listing in identified stock exchange(s) in permissible foreign jurisdictions.

Additionally, it was specified that the Central Government could exempt any class or classes of public companies from the requirements of Chapter III, Chapter IV, Section 89, Section 90, or Section 1271 Chapter III prescribes the requirements of issuing a prospectus and allotment of securities, Chapter IV prescribes the regulations pertaining to share capital and debentures, Section 89 discusses the requirements of declaration in respect of beneficial interest in any share, Section 90 discusses the need for registration of significant beneficial owners in a company and Section 127 prescribes the punishment for failure to distribute dividends. of the Companies Act, 2013.

In this regard, MCA, vide a notification dated 30 October 2023 has specified that the effective date for the applicability of sub-regulations 3 and 4 of Section 23 of the Companies Act, 2013 would be 30 October 2023

To access the text of the MCA notification, please click here

Action Points for Auditors

The Company Law Committee, in its report issued in March 2022 had mentioned that for a foreign listing of Indian incorporated SPACs2 Special Purpose Acquisition Companies- a type of company that does not have an operating business and has been formed with the specific objective of acquiring a target company.114 This concept allows a shell company to issue an Initial Public Offering (“IPO”) without any commercial activity. After listing, the SPAC merges with or acquires a company, i.e., the target, thereby allowing the target company to benefit from such listing without going through the formalities and rigours of an IPO. to become a reality, the commencement of Section 23(3) and 23(4) of the Companies Act, 2013 is a necessary pre-condition.

With these regulations now becoming effective, auditors should look out for important updates, including the rules pertaining to these regulations. This will enable auditors to understand the way forward on these regulations.

Recently, MCA notified the Limited Liability Partnership (Third Amendment) Rules, 2023 (the amendment). The amendment introduces two new Rules – Rule 22A and 22B in the Limited Liability Partnership Rules, 2009 (the LLP Rules 2009). These are discussed below:

  • Rule 22A – Register of Partners: Rule 22A – Register of Partners, states that every LLP should, from the date of its incorporation, maintain a register of its partners in Form 4A at its registered office. The register should contain important particulars regarding the partners of the LLP, such as their names, address, date of becoming a partner, amount and nature of contribution, etc. Further, the amendment specifies that entries in the register should be made within seven days pursuant to any change made in the contribution amount, or in the name and details of the partners in the LLP agreement, or in cases of cessation of partnership interest. LLPs existing on the date of commencement of this amendment should maintain the register of partners in Form 4A within 30 days of such commencement.
  • Rule 22B – Declaration w.r.t. beneficial interest in any contribution: The amendment specifies that a person whose name is entered in the register of partners, but who does not hold any beneficial interest fully or partly in the contribution (beneficial interest) should file with the LLP, a declaration to that effect in Form 4B . This form should be filed within a period of 30 days from the date on which the person’s name is entered in the register of partners. Any changes in the beneficial interest should be declared within 30 days of such change in Form 4B . Further, every person who holds or acquires a beneficial interest, but his/her name is not registered in the register of partners, should file with the LLP, a declaration disclosing such interest in Form 4C, within a period of 30 days after acquiring such beneficial interest. The LLP must record the declarations received in forms 4B and 4C. Within 30 days of receipt of such declarations, a return should be filed with the registrar in Form 4D. Also, the LLP should specify a designated partner who would be responsible for furnishing of and extending co-operation for providing information with respect to a beneficial interest in contribution to the registrar or any other authorised officer and file such information in Form 4 (the amendment specifies the revised Form 4) .

Effective date: The amendment came into force from the date of its publication in the Official Gazette, i.e., 27 October 2023.

To access the text of the amendment, please click here

Action Points for Auditors

Certain audit firms that are LLPs should take note of these additional requirements.

On 9 November 2023, MCA issued the LLP (Significant Beneficial Owners) Rules, 2023 (the SBO Rules 2023). Some of the key provisions of the SBO Rules 2023 include:

  • Applicability: The SBO Rules 2023 are applicable to any LLP, subject to such exemptions as specified herewith.
  • Duty of the reporting LLP: It has been specified that every reporting LLP3 Reporting LLP means an LLP which is required to comply with the requirements of Section 90 of the Companies Act, 2013 should take the necessary steps to find out, if there’s any individual who is an SBO4 SBO refers to an individual, who acting alone or together or through one or more persons or trust, possesses one or more of the following rights or entitlements: - Holds indirectly or together with any direct holdings, not less than 10 per cent of the contribution
    - Holds indirectly or together with any direct holdings, not less than 10 per cent of the voting rights w.r.t. the management or policy decisions in the LLP
    - Has right to receive or participate in not less than 10 per cent of the total distributable profits, or any other distribution, in a F.Y. through indirect holdings alone or together with any direct holdings
    - Has right to exercise or actually exercises, significant influence or control, in any manner other than through direct-holdings alone.     w.r.t. that LLP. If yes, then the LLP should identify him/her, and such individual should make a declaration in Form No. LLP BEN-1 . Further, every reporting LLP should in all cases, where its partner (other than an individual), holds not less than 10 per cent of its – contribution, or voting rights, or right to receive or participate in the distributable profits or any other distribution payable in a financial year, should give a notice to such partner in Form No. LLP BEN-4 , seeking requisite information
  • Declaration of SBO: The SBO Rules 2023 specify that every individual, who is an SBO must file a declaration in Form No. LLP BEN-1 within 90 days from the commencement of the SBO Rules 2023. Also, every individual, who subsequently becomes an SBO, or where his/her ownership undergoes any change, should file a declaration in Form No. LLP BEN-1, within 30 days of acquiring such SBO or any change therein.
  • Return of SBO in contribution: The reporting LLP should file a return in Form No. LLP BEN-2 with the registrar within a period of 30 days from the date of receipt of the declaration in Form No. LLP BEN-1.
  • Register of SBO: It has been specified that an LLP should maintain a register of SBO in Form No. LLP BEN-3.

Effective date: The SBO Rules 2023 came into force from the date of their publication in the Official Gazette, i.e., 9 November 2023.

To access the text of the SBO Rules 2023, please click here

There are no updates in December 2023
January 2024

On 30 October 2023, the Ministry of Corporate Affairs (MCA) had notified section 5 of the Companies (Amendment) Act, 2020, thereby amending Section 23 of the Companies Act, 2013, which allowed certain class of Indian public companies to list their securities on permitted foreign stock exchanges. However, a detailed framework/rules for operationalisation of this regulation was awaited.

On 24 January 2024, MCA issued the Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024 (the 2024 Rules). Some of the key guidelines include:

  • Applicability: The 2024 Rules would apply to:
  • Unlisted public companies, and
  • Listed public companies, so far as they are in accordance with the regulations framed or directions issued by SEBI or the relevant authority9 ‘Authority’ w.r.t. the 2024 Rules means the International Financial Services Centres Authority established under Section 4 of the International Financial Services Centres Authority Act, 2019.

which issue their securities for the purpose of listing on permitted stock exchanges10 India International Exchange, NSE ; International Exchange in permissible jurisdictions11 International Financial Services Centre.

  • Eligibility criteria: Every company would be eligible for issuing its equity shares for listing, except for the ones which fall under Rule 5 of the 2024 Rules. These include companies which:
  • Have been registered under Section 8 or declared as Nidhi under Section 406 of the Companies Act, 2013 (the Act)
  • Are limited by guarantee and also having share capital
  • Have any outstanding deposits accepted from the public as per Chapter V of the Act and rules made thereunder
  • Have a negative net worth
  • Have defaulted12 This clause would not apply if the company had made good the default and a period of two years had lapsed since the date of making good the default. in payment of dues to any bank or public financial institution or non- convertible debenture holder or any other secured creditor
  • Have made any application for winding-up under the Act or for resolution or winding-up under the Insolvency and Bankruptcy Code, 2016 (IBC 2016), and in case any proceedings against the company for winding-up under the Act or for resolution or winding-up under the IBC 2016 is pending
  • Have defaulted in filing of an annual return under Section 92 or financial statements under Section 137 of the Act within the specified period.
  • Procedure for listing: The 2024 Rules state that an unlisted public company should file the prospectus in e-Form LEAP-1 within a period of seven days after the same has been finalised and filed in the permitted exchange. After listing, a company needs to comply with Indian Accounting Standards (Ind AS) for preparation of their financial statements, in addition to any other accounting standard, which they may be required to comply.

Effective date: The 2024 Rules came into force from the date of their publication in the Official Gazette, i.e., 24 January 2024.

To access the text of the 2024 Rules, please click here

Action points for auditors

On 24 January 2024, the Ministry of Finance (MoF) notified the Foreign Exchange Management (Non-debt Instruments) Amendment Rules, 2024 to amend the Foreign Exchange Management (Non-debt Instruments) Rules, 2019. The amendments came into force on 24 January 2024. The MoF has also issued Frequently Asked Questions (FAQs) on the Direct Listing Scheme, thereby providing guidelines and clarifications on direct listing of equity shares by Indian companies on international exchanges. The amendments and clarifications notified by MoF and MCA cumulatively permit the direct listing of equity shares of Indian public companies on international exchanges operating in GIFT-IFSC13 Gujarat International Finance Tec-City - International Financial Services Centre in India . Given that further application guidance would be required in this matter, members of the profession should watch this space for further updates.

There are no updates in February 2024
There are no updates in March 2024
There are no updates in April 2024
There are no updates in May 2024
There are no updates in June 2024
July 2024

On 15 July 2024, the Ministry of Company Affairs (MCA) amended the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 (Specified companies order) by issuing the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024 (Amendment order). The Specified companies order requires every specified company14Specified companies include all companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 to file details of all outstanding dues to Micro or small enterprises suppliers in MSME Form 1. The amendment order states that only those specified companies which are having payments pending to any micro or small enterprises for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services under Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 should furnish the information in MSME Form-1. The amendment order has further provided a revised format of MSME Form-1 which contains details to be filed by specified companies relating to delay in payments to MSME. The amendments are effective from 15 July 2024.

To access the text of the MCA notification, please click here

Action points for auditors

This is an important update for companies, and implications of any non-compliance should be reviewed by auditors in accordance with SA 250, Consideration of Laws and Regulations in an Audit of Financial Statements.

Additionally, auditors should review the tax implications and interest accrual in case of delays in payments to be made to MSEs within the 45 days timeline.

August 2024

The Companies Act, 2013 enables the adjudication of penalties by certain officers appointed by the Central Government (referred to as adjudicating officers). Such adjudicating officers are empowered to issue show cause notices to companies and officers in default, summon the attendance of such persons or require the production of evidence, etc1 Currently prescribed by Section 454 of the Companies Act, 2013 and the Companies (Adjudication of Penalties) Rules, 2014 (Adjudication rules) .

On 5 August 2024, the MCA issued the Companies (Adjudication of Penalties) Amendment Rules, 2024 (adjudication amendment rules), thereby introduced an e-adjudication platform developed by the central government. As per the adjudication amendment rules, all adjudication proceedings2 Issue of notices, filing replies or documents, evidences, holding of hearing, attendance of witnesses, passing of orders and payment of penalty. of the adjudicating officer and regional director would be undertaken in an electronic mode through the e-adjudication platform. Where email address of concerned persons is not available for sending notices or summons, then such notice should be sent by post at the last intimated address and a copy would be uploaded on the e-adjudication platform.

The adjudication amendment rules have also provided a format of Form ADJ for e-filing an appeal against the adjudication notices.

Effective date: The adjudication amendment rules are effective from 16 September 2024.

To access the text of the adjudication amendment rules, please click here

Action points for auditors

The e-adjudication platform provides a centralised repository of all adjudications against a particular entity. Auditors may consider accessing this platform to obtain details of all adjudication proceedings against a company or its officers as part of their audit procedures.

September 2024

Section 234 of the Companies Act, 2013 read with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Rules) prescribe the regulations pertaining to merger of a company with a foreign company. As per these regulations, a foreign company may merge with an Indian company after obtaining prior approval of the Reserve Bank of India (RBI) and complying with Sections 230 to 232 of the Companies Act, 2013 (which requires companies to obtain approval of the National Company Law Tribunal (NCLT)). On 9 September 2024, MCA issued the Companies (Compromises, Arrangements and Amalgamation) Amendment Rules, 2024 (Amendment Rules), which has laid down changes to Rule 25A of the Rules. The Amendment Rules now permit foreign holding companies to enter into a merger or amalgamation with their wholly owned Indian subsidiaries after obtaining approval from the RBI and complying with Section 233 of the Companies Act, 2013, which deals with fast-track mergers. In this case, approval of NCLT is not required, however, approval of Registrar of Companies (RoC), shareholders and creditors would still be required.

Effective date: The Amendment Rules are effective from 17 September 2024.

To access the text of the Amendment Rules, please click here

Action points for auditors

Auditors of companies planning to enter into transactions covered under the Amendment Rules should consider discussing these matters, as it would result in relaxed requirements for a proposed merger of a foreign company with its Indian wholly owned subsidiary.

MCA vide its circular (the circular) dated 19 September 2024 has issued a clarification, allowing companies whose AGM’s are due in year 2024 or 2025, to conduct their AGM’s through Video Conferencing (VC) or Other Audio Visual Means (OAVM) on or before 30 September 2025. Further, the circular also permits companies to conduct their EGM’s through VC or OAVM or transact items through postal ballot upto 30 September 2025. However, the circular clarifies that it does not provide any extension in statutory timeline for holding of AGM’s by the companies under the Companies Act, 2013) and the companies failing to adhere to these timelines would be liable to the consequences as specified in provisions of the Companies Act, 2013.

To access the text of the circular, please click here

Rule 12 of the Companies (Accounts) Rules, 2014 requires every company covered under the Corporate Social Responsibility (CSR) provisions4 Companies falling under Section 135(1) of the Companies Act, 2013 are obligated to file form CSR-2. This includes companies that attain particular financial threshholds such as: net worth exceeding ₹500 crore, an annual turnover surpassing ₹1,000 crore, or a net profit greater than ₹5 crore. to furnish a report in Form CSR-2 to the Registrar of Companies as an addendum to Form AOC-4 and its variants5 This includes AOC-4, AOC-4 XBRL or AOC-4 NBFC (Ind AS) . MCA vide its notification dated 24 September 2024, issued the Companies (Accounts) Amendment Rules, 2024 which requires the Form CSR-2 for the financial year 2023-24 to be filed separately on or before 31 December 2024. This filing is to be done after filing of Form AOC-4 and its variants.

Effective date: The notification comes into force on the date of its publication in the Offical Gazette.

To access the text of the Amendment Rules, please click here

Action points for auditors

Any non-compliances in filing of the Form CSR-2 beyond the prescribed timelines should be assessed in accordance with SA 250, Consideration of Laws and Regulations in an Audit of Financial Statements .

October 2024

In August 2024, the Ministry of Corporate Affairs (MCA) issued the Companies (Adjudication of Penalties) Amendment Rules, 2024 (amendment rules), introducing an e-adjudication platform developed by the central government. According to the amendment rules, all adjudication proceedings—including the issuance of notices, filing of replies or documents, submission of evidence, conducting hearings, attendance of witnesses, issuance of orders, and payment of penalties—by the adjudicating officer and regional director would be conducted electronically via the e-adjudication platform.

Subsequently, on 9 October 2024, the MCA provided a clarification through the Companies (Adjudication of Penalties) Second Amendment Rules, 2024. This clarification states that any proceedings pending before an Adjudicating Officer or Regional Director as of the effective date of the Adjudication Amendment Rules, i.e., 16 September 2024, would continue under the provisions that were in place prior to the commencement of the amendment rules.

To access the notification please click here

There are no updates in November 2024

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