Category: Company Law

Company Law Articles, Video, PPT, Discussion, Expert Analysis

Amendment in Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 ( MCA Notification dated 09th June 2022)

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In exercise of the powers conferred by sub-sections (1), (2) and (4) of section 248 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 , namely:-

1. Short title and commencement.- (1) These rules may be called the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022. (2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016, –

I. in rule 4, after sub-rule (3), the following sub-rule shall be inserted, namely:─

“(4) (a) Where the Registrar, on examining the application made in Form STK-2, finds that it is necessary to call for further information or finds such application or any document annexed therewith is defective or incomplete in any respect, he shall inform to the applicant to remove the defects and re-submit the complete Form within fifteen days from the date of such information, failing which the Registrar shall treat the Form as invalid in the electronic record, and shall inform the applicant, accordingly.

(b) After the re-submission of the Form or document, if the Registrar finds that the Form or document is defective or incomplete in any respect, he shall give further time of fifteen days to remove such defects or complete the Form, failing which the Registrar shall treat the Form as invalid in the electronic record and shall inform the applicant, accordingly.

(c) Any re-submission of the application in Form STK-2 made prior to the commencement of the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022 shall not be counted for the purposes of reckoning the maximum number of re-submissions of such Form.”.

II. for Form No. STK 1, Form No. STK – 5 and Form No. STK-5A, the following Forms shall respectively, be substituted, namely:-

National CSR Exchange Portal

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National CSR Exchange Portal

Launch of National CSR Exchange Portal-  a digital initiative on CSR which will enable stakeholders to list, search, interact, engage and manage their CSR projects on a voluntary basis. The portal is a testimony to the idea of “Technology empowers the less empowered”.

Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman to launch the Iconic Day celebrations of Ministry of Corporate Affairs at Vigyan Bhawan on 7th June 2022

Launching of National CSR Exchange Portal

MCA  released commemorative Postal Stamp on Investor Awareness

A short film on the evolution of Corporate Governance in India is  released

Union Minister for Finance and Corporate Affairs Smt. Nirmala Sitharaman will flag off the Iconic Day celebrations of Ministry of Corporate Affairs (MCA) during Iconic Week of Azadi ka Amrit Mahotsav (AKAM) as a part of the mega celebration of Ministry of Finance and Ministry of Corporate Affairs in New Delhi, tomorrow. The Iconic Day will be celebrated at the Plenary Hall, Vigyan Bhawan.

Union Minister for Finance and Corporate Affairs will grace the occasion the as the Chief Guest and Rao Inderjit Singh, Minister of State for Ministry of Corporate Affairs & MoS (I/C) Ministry of Statistics and Programme Implementation, Ministry of Planning would be the Guest of Honour.

The event will be an amalgam of various industry experts, consumer & investor voices, regulatory experts, professionals, corporate citizens, investors and other stakeholders. During the inaugural session the chief guest will unveil eight major releases, viz:

Releases, Launch & Prize Distribution

  1. Release of Short Film “Journey of Corporate Governance in India: A Panorama”- will majorly include evolution of Corporate Governance in India
  2. Release of Film on Investors Oath –the film on oath will be released and oath will administered in 75 unique locations throughout India, wherein present and prospective investors from all over the country will come together in physical and virtual mode to take oath with under the aegis of IEPFA to become informed and empowered investor.
  3. Release of Commemorative Postal Stamp on Investor Awareness – A unique postal stamp carrying the message of inclusive financial literacy & investor awareness with the mandate of Investor Education & Protection Fund Authority.
  4. Launch of Special Window Facility (for senior citizens of 75 years age and above)- the film shows the unique initiative of IEPFA for Senior Citizens of 75 years age and above.
  5. Launch of National CSR Exchange Portal-  a digital initiative on CSR which will enable stakeholders to list, search, interact, engage and manage their CSR projects on a voluntary basis. The portal is a testimony to the idea of “Technology empowers the less empowered”.
  6. Release of Publication on IBC –Insolvency Now & Beyond-for the benefit of stakeholders of IBC ecosystem in India. The publication is a compilation covering UK experiences and best practices on the emerging areas/ issues under the Insolvency ecosystem in India.
  7. Presentation of awards to winners of National Online Quiz on IBC, 2016-IBBI-  in collaboration with MyGov.in and BSE Investors’ Protection Fund, IBBI has conducted the ‘3rd National Online Quiz on Insolvency and Bankruptcy Code, 2016’, to promote awareness and understanding of the Code among various stakeholders across the country. The Quiz received participation of more than 71,000 participants.
  8. Release of E-Book A Compendium on CSR Compendium – For the benefit of stakeholders and ease of accessing the information, the Ministry of Corporate Affairs compiled all the existing knowledge resources on CSR into a single source, and proposed to release as an e-book “Compendium on CSR”.

Shri Rajesh Verma, Secretary, Ministry  of Corporate Affairs (MCA), along with head of other subordinate and regulatory organisations under the MCA will also be present during the occasion. Various other technical sessions were organized by IEPF Authority, Competition Commission of India, Insolvency and Bankruptcy Board of India, Indian Institute of Corporate Affairs, Professional Institutes viz. ICAI, ICSI, ICoAI.

Different activities conducted by organisations under the Ministry throughout the period of Amrit Mahotsav will also be exhibited during the events.

The event shall include various technical session being organised by IEPF Authority, Competition Commission of India, Insolvency and Bankruptcy Board of India, Indian Institute of Corporate Affairs, Professional Institutes viz. ICAI, ICSI, ICoAI.

The event shall see participation of various industry experts, consumer & investor voices, regulatory experts, professionals, corporate citizens, investors and other stakeholders and would also be webcasted live through social media and Other Channels.

Being the facilitator for Corporate Governance in India, the Ministry of Corporate Affairs has over the past years organized more than 360 programmes on the different themes under this Mahotsav including Ideas @75, Resolve @75, Actions @ 75, Achievements @ 75 and commemorating the freedom struggle. These programmes have been organized involving all key stakeholders at various parts of the country in spirit of Jan Bhagidari.

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MCA Press Release 06th June 2022

MCA : IBBI to hold Conference on “Entrepreneurship Liberty: Freedom of Entry, Competition and Exit” and IP Conclave under Azadi ka Amrit Mahotsav on 10th June 2022

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Insolvency and Bankruptcy Board of India (IBBI) is organising a one-day iconic event on 10th June 2022 at the Habitat Centre, New Delhi, to mark the glorious conclusion of the on-going celebrations across 75 locations across the country, to trace the journey of reforms in the three stages of a business.

Markets need freedom, broadly, at three stages of a business – to start a business (free entry), to continue the business (free competition) and to discontinue the business (free exit). The Insolvency and Bankruptcy Code, 2016 offers a market directed, time bound mechanism for resolution of insolvency, wherever possible, or exit, wherever required, and thereby ensures the ultimate freedom, the freedom to exit, facilitating ease of doing business.

Hon’ble Justice Ashok Bhushan Chairperson, National Company Law Appellate Tribunal will grace the occasion as Chief Guest. Shri Rajesh Verma, Secretary, Ministry of Corporate Affairs; Shri Ashok Kumar Gupta, Chairperson, Competition Commission of India; and Shri Praveen Kumar, DG & CEO, Indian Institute of Corporate Affairs will be the Guests of Honourat the event. The Conference shall be followed by a half day Insolvency Professional Conclave.

Further Shri Dharmender Singh Hon’ble Member (Judicial), National Company Law Tribunal; Shri Avinash K. Srivastava Hon’ble Member (Technical), National Company Law Tribunal; Shri Anant Barua Whole Time Member, Securities and Exchange Board of India Shri Satish Kumar Gupta Insolvency Professional; Shri Debajyoti Ray Chaudhuri MD & CEO, National E-Governance Services Ltd.; Shri Kapil Mantri Head M&A, Jindal Steel and Power Ltd.; Shri Amarjit Singh Chandhiok Senior Advocate; President, INSOL India ; Shri Shardul Shroff Executive Chairman, Shardul Amarchand Mangaldas & Co. and CS Alka Kapoor, COO ICSI IIP will also address the participants at the event.

A publication titled, “Anusandhaan: Exploring New Perspectives on Insolvency” containing 26 research papers that emerged out of an international research conference organized by IBBI and IIM Ahmedabad recently is also scheduled to be released during the inaugural session of the Conference.

Large number of stakeholders of the IBC ecosystem, from across the country, including insolvency professionals, registered valuers, economists, financial creditors, service providers, researchers, students, professionals, regulators, academia and government officers are expected to join the Conference both in physical well as online mode.

Azadi Ka Amrit Mahotsav (AKAM) is an initiative of the Government of India to celebrate and commemorate 75 years of progressive India and the glorious history of its people, culture and achievements. Since the beginning of AKAM celebrations which was started on 12th March, 2021 by the Prime Minister, Shri Narendra Modi. IBBI has organized several activities and events as part of the Mahotsav

For more detailed programme, CLICK HERE.

Ministry of Corporate Affairs Press Release 09th June 2022

SC : Adjudicating authority (NCLT) or the appellate authority (NCLAT) cannot sit in appeal on commercial wisdom of Committee of Creditors

Posted on by Business So Simple in Company Law, Court Room, IBBI, Legal awareness

Case Reference: Vallal Rck Vs Siva Industries And Holdings Limited And Others (Supreme Court) dated 03/06/2022

SC held that when 90% or more of the creditors decide that it will be in the interest of all the stake-holders to permit Settlement Plan filed by promoter of the Corporate Debtor and withdraw Corporate Insolvency Resolution Process as per Section 12A of the IBC, 2016, the adjudicating authority (NCLT) or the appellate authority (NCLAT) cannot sit in appeal over such commercial wisdom of Committee of Creditors.

Revised Format SH-4 (SECURITIES TRANSFER FORM)

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Companies (Share Capital and Debentures) Amendment Rules, 2022 amended Form No. SH-4 (Securities Transfer Form) .

Following declaration required to be given:

In Declaration:

Transferee is not required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to transfer of shares;

or

Transferee is required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to transfer of shares and the same has been obtained and is enclosed herewith.”

Refer below format:

Refer notification:

Amendment in Securities Transfer Form no. SH-4 (MCA Notification dated 04 May 2022)

Revised FORMAT-DIR-2 (Consent to act as A director of a company) (After MCA Notification dated 01st june 2022)

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As per Rule 8 (Consent to Act as Director) of The Companies (Appointment and Qualifications of Directors) Rules, 2014 :

Every person who has been appointed to hold the office of a director shall on or before the appointment furnish to the company a consent in writing to act as such in Form DIR-2:

Provided that the company shall, within thirty days of the appointment of a director, file such consent with the Registrar in Form DIR-12 along with the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014.

Provided further 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 shall also be attached alongwith the consent. ( Inserted by Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 vide MCA Notification dated 01st June 2022)

Revised format given below for your easy reference:

FORM DIR-2

CONSENT TO ACT AS A DIRECTOR OF A COMPANY

[PURSUANT TO SECTION 152(5) AND RULE 8 OF COMPANIES (APPOINTMENT AND QUALIFICATION OF DIRECTORS) RULES, 2014]

To

Name of the Company__________________________

Address of the Company________________________

Subject: Consent to act as a director

I, ______________ hereby give my consent to act as director of __________________________, pursuant to sub-section (5) of section 152 of the Companies Act, 2013 and certify that I am not disqualified to become a director under the Companies Act, 2013.

1. Director Identification Number (DIN):  ___________________________

2. Name (in full): _______________________

3. Father’s Name (in full):  ____________________ 

 4. Address:  __________________________________  

5. E-mail id: __________________________

6. Mobile no.:  ________________________

7. Income-tax PAN:  ________________________

8 . Occupation:  _______________________

9. Date of birth: _______________________

10. Nationality: ________________________

11. No. of companies in which I am already a Director and out of such companies the names of the companies in which I am a Managing Director, Chief Executive Officer, Whole time Director, Secretary, Chief Financial Officer, Manager. ______________________________

12. Particulars of membership No. and Certificate of practice no. if the applicant is a member of any professional Institute. Specifically state NIL if none. _________________________

DECLARATION

i. I declare that I have not been convicted of any offence in connection with the promotion, formation or management of any company or LLP and have 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 in the last five years. I further declare that if appointed my total Directorship in all the companies shall not exceed the prescribed number of companies in which a person can be appointed as a Director.

ii. I further declare that –

 I am not required to obtain the security clearance from the Ministry of Home Affairs, Government of India before seeking appointment as director. …… 

Or

 I am required to obtain the security clearance from the Ministry of Home Affairs, Government of India before seeking appointment as director and the same has been obtained and is attached.

Signature: _______________

Date:   ______________                                                        Name:        _______________

Place: _______________                                                     DIN/PAN:    _______________   

Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 (MCA Notification dated 01st June 2022)

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Short title and commencement.-

(1) These rules may be called the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022.

(2) They shall come into force on the date of their publication in the Official Gazette. 2. In the Companies (Appointment and Qualification of Directors) Rules, 2014, ―

(i) in rule 8, after the proviso, the following proviso shall be inserted, namely:-

“Provided further 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 shall also be attached alongwith the consent.”;

(ii) in rule 10, in sub-rule (1), the following proviso shall be inserted, namely: –

“Provided that no application number shall be generated in case of the person applying for Director Identification Number is a national of a country which shares land border with India, unless necessary security clearance from the Ministry of Home Affairs, Government of India has been attached alongwith application for Director Identification Number.”.

iii) in the Annexure, –

(A) in Form DIR-2, under the heading Declaration, the existing paragraph, shall be numbered as paragraph

(i) thereof and after the paragraph (i) as so numbered, the following shall be inserted, namely:-

“(ii) I further declare that –

Refer YouTube Video – Click

Amendment in Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (MCA Notification dated 30 May 2022)

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MCA has notified amendment in Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, which requires in case of a compromise or an arrangement or 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 shall be required at the stage of submission of application under section 230 of the Companies Act, 2013.

Refer notification:

MCA Clarification : Micro Finance/Micro Credit as an Object in the Object Clause of MOA of Section 8 companies registered under the CA 2013 (MCA Circular dated 30 May 2022)

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MCA issued General Circular on 30 May 2022 giving Clarification on Micro Finance/Micro Credit as an Object in the Object Clause of MOA of Section 8 companies registered under the CA 2013 :

Refer MCA Circular

Company Law : Order passed by Adjudicating Authority without application of resolution professional’s for initiation of proceedings u/s 43 of IBC is unsustainable

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Order passed by Adjudicating Authority without application of resolution professional’s for initiation of proceedings u/s 43 of IBC is unsustainable

Case Reference :

Sahara India Vs Nandkishor Vishnupant Despande (Delhi- NCLAT) dated 09 May 2022

Conclusion of the case:

When a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out…”

It reflects that the Resolution Professional, a statutory functionary, has not filed an application for initiation of proceedings under Section 43 of the Code in respect of preferential transactions and the Adjudicating Authority has passed the order, then it is supplementing it by fresh reason in through affidavit or otherwise. This is also not acceptable in the case of the Code.

Facts in brief:

The Appellant has remitted the principal amount of Rs. 39,95,00,000/- in various tranches commencing from April, 2018 to February, 2019 in accordance with the ‘Memorandum of Understanding’ (MOU) dated 07th March, 2017 with the Corporate Debtor (CD)/Respondent (in CIRP) for supply of future goods in the form of gold coins/Gold ornaments. The golds were supposed to be supplied by the CD any time after January, 2019. As per MoU vide para 1 reflects clearly that all such advance payments will not attract any interest. It is also stated at para 3 of the MOU that both the parties have agreed to fix the price of Gold coin/Gold ornaments at the prevailing market rate of the day when Gold coin/Gold Ornaments demanded is physically delivered to the Buyer as per the location(s) specified by the Buyer. The Seller also agrees to give 2% discount on the prevailing market price of Gold and will not charge making charges and delivery charges on the future demand by the Buyer (after January, 2019) and at the time of delivery of quantity. The Buyer has a right to assign its obligations and rights as per this MOU to its nominee(s) without taking prior consent of the Seller and the Seller shall not cause any hindrance are raise any objection in the same. The Seller gives at least 30 days’ notice showing its unwillingness to continue the understanding as reached between the parties and the buyer is ready to give a mutually agreed compensation as well as refund the excess amount, if any. The Ld. Counsel for the Appellant has submitted that they have informed the CD vide its letter dated 04th February, 2019 to supply of 10 kg Gold coins (100 points of 100 gram each) as obligation in accordance with the MOU. Even after long wait CD didn’t supplied, accordingly, the Appellant vide its letter dated 05th March, 2019 asked the CD to refund the amount as there is too much delay. The CD informed the Appellant vide its letter dated 11th March, 2019 to convert the advance amount of the Appellant into unsecured loan with 10% p.a. rate of interest on outstanding amount till full and final payment of the same are made to them. However, the Appellant accepted the offer after communicating the notice of default to the CD in between there are other correspondence also. ‘Corporate Insolvency Resolution Process’ was initiated against CD on 13th November 2019. Accordingly, the appellant submitted its claim in Form C. Resolution Professional considered the claims of the appellant, not in the category of ‘Financial Debt’ and as a result the appellant challenged the decision.