Appointment of First Auditor in General Meeting by Members - OR

Ordinary Resolution passed at a General Meeting appointing the First Auditor(S) where board fails to appoint within thirty days of Incorporation date

“RESOLVED THAT pursuant to provisos to Sub-section (6) of Section 139 of the Companies Act, 2013, Shri _________, Chartered Accountant, _________, be and is hereby appointed as the auditor of the company to hold office until the conclusion of the first Annual General Meeting on a remuneration of `________ plus reimbursement of out-of-pocket expenses that may be incurred by the auditor in the performance of his duties as auditor of the company."

Explanatory Statement;

The company was registered on ________. The Board of directors of the company failed to exercise its power under Sub-section (6) of Section 139 of the Companies Act, 2013 within thirty days of the date of registration of the company and did not appoint the first auditor of the company.

Therefore, in exercise of its power under the proviso to Sub-section (6) of Section 139 of the Act, the company may appoint the first auditor of the company by passing the proposed ordinary resolution as set out in the notice of the meeting.

None of the directors of the company is concerned or interested in the proposed resolution.

Appointment of Auditor to fill casual vacancy caused by resignation - OR

Ordinary Resolution for appointment of an Auditor of the Company to fill casual vacancy caused by resignation

“RESOLVED THAT, pursuant to proviso to Sub-section (8) of Section 139 of the Companies Act, 2013, M/s________________ Chartered Accountants ____________, New Delhi, be and are hereby appointed as the auditors of the company to fill the vacancy caused by the resignation of M/s___________ Chartered Accountants, ____________ New Delhi, present auditors of the company, to hold the office from the date of this meeting until the conclusion of the next annual general meeting of the company on a remuneration of _________ plus reimbursement of out-of-pocket expenses that may be incurred by the auditors in the performance of their duties as auditors of the company.”

Explanatory Statement

M/s. ______________, the existing auditors have submitted their letter of resignation, citing personal reasons.

Proviso to Section 139 (8) of the Companies Act, 2013, lays down that where vacancy in the office of an auditor is caused by the resignation of the existing auditor, the vacancy shall be filled by the Board of Directors and the appointment made by the Board shall be approved in a general meeting within 3 months of the recommendation of the Board.

The letter of resignation of M/s._____________ may be inspected at the registered office of the company at_____________ during the business hours on any working day.

None of the directors is interested or concerned in the proposed resolution.

Authorising Board of Directors to appoint Branch Auditor - OR

Ordinary Resolution to be passed at an Annual General Meeting to authorise Board Of Directors to appoint Branch Auditor

“RESOLVED THAT pursuant to section 143(8) of the Companies Act, 2013, the accounts for the year ending 31^st  March, _____ of the Company’s branch office/s at _______ be audited by such person/s, other than the Company’s Auditor, as is/are qualified for appointment as Auditor of the Company under section 139 of the Companies Act, 2013, and the Board of Directors be and is hereby authorised to appoint such Branch Auditor/s in consultation with the Company’s Auditor and on such terms and conditions and on such remuneration as may be fixed by the Board.

Approval for preparing Annual Report in Form AOC-3 - BR

Board Resolution for approval for preparing Annual Report in Form AOC-3 for sending to the members

“RESOLVED THAT pursuant to the provisions of First proviso of sub – section (1) of Section 136 of the Companies Act, 2013 and Rule 10 of the Companies (Accounts) Rules 2014, the Annual Reports comprising of the Balance Sheet, Profit and Loss Account etc. of the company for the financial year ended 31st March _____ be also prepared, finalised and audited in the prescribed Form No AOC – 3 for sending to the members of the company.

RESOLVED FURTHER THAT the draft audited statement containing salient features of financial statements for the year ended 31st March 20__, prepared in the prescribed Form No. AOC – 3 in accordance with First proviso of sub – section (1) of Section 136 of the Companies Act, 2013 and Rule 10 of the Companies (Accounts) Rules, 2014 as submitted to the meeting, be and are hereby approved and the same be authenticated by the directors of the company as required under Section 136 of the Act and be sent to the statutory auditors of the company for their report thereon and thereafter be sent to the members of the company for adoption at the ensuing annual general meeting of the company.”

Keeping Books of accounts at a place other than Registered office - BR

Board Resolution for keeping and maintaining books of Accounts at a place other than the Registered Office

“RESOLVED THAT pursuant to the proviso to Section 128(1) of the Companies Act, 2013, the books of accounts of the company be kept and maintained at the company’s head office at __________ with effect from ____________ and that Mr. ____________, secretary of the company, be and is hereby authorised to file electronically E-Form No AOC-5 with the Registrar of Companies __________ at ______________ by affixing his digital signature thereon and with the requisite filing fees within the prescribed time of seven days hereof and to take all necessary actions in this respect.”

Declaration of dividend out of current profits - BR

Board Resolution for recommending payment of dividend on equity shares out of current profits

“RESOLVED THAT in accordance with the provisions of Section 123 and other applicable provisions, if any, of the Companies Act, 2013 and the Companies (Declaration and Payment of Dividend) Rules, 2014, the Board of directors of the company do hereby recommend a dividend at the rate of Rs _________ per equity share out of the current profits of the company for the year ended on ____________ 20__ on the ________ fully paid equity shares of the company absorbing Rs. _________ out of the profits of the year and that, subject to the declaration by the members of the company at the ensuing annual general meeting, such dividend be paid to the registered holders of the equity shares whose names would appear on the register of members on _______ 20__.”

Declaration of Dividend out of Reserves - BR

Board Resolution for recommending declaration of dividend out of reserves

"RESOLVED THAT the Board of directors of the company do hereby recommend to the members of the company, the declaration and payment of a dividend at the rate of ten per cent on all the fully paid equity shares of the company out of the free reserves of the company that stood in the books of the company on _______ 20__ absorbing a total of ` ______, with due compliance of the Companies (Declaration and Payment of Dividend) Rules, 2014, and that, subject to the declaration by the members at the forthcoming annual general meeting, to the holders of the equity shares whose names will appear on the register of members on ________ 20__."

Change of Name of Company

Following is the basic procedure to change the name of Company.

1. Name Availability

Company is required to file an application for availability of proposed name of the Company. This application is filed in RUN Application.

2. Shareholders Approval

Once the new name is reserved, shareholders’ approval is required to pass following special resolution.

- the change in name of the Company and to alter the Memorandum and Article of Association with regard to change in name of the Company

3. Central Government's approval

Once the shareholders' approval is obtained, the Company is required to file application in Form INC-24 to Registrar of Companies (ROC) within 30 days for shareholders' approval.

4. Issue of Fresh Certificate of Incorporation

Upon approval of application (as per point 3 above), the Fresh Certificate of Incorporation upon change of name will be issued by ROC.

Pre-requisites for change of name of Company

Pursuant to Rule 29 of Companies (Incorporation) Rules, 2014, the change of name shall not be allowed to a company which has defaulted in filing its annual returns or financial statements or any document due for filing with the Registrar or which has defaulted in repayment of matured deposits or debentures or interest on deposits or debentures.

Hence, before moving forward, it is necessary to complete pending filings of annual returns or financial statement, if any.

Steps to complete this Process

Step - 1: Send atleast 7 days' notice to hold Board Meeting

Step - 2: Hold the Board meeting at decided date for passing following resolutions

- to authorise any Director to file application for availability of new name (RUN Application)

- to approve change of name of the Company, subject to approval of Shareholders

- to decide the date, time and place for holding Extraordinary General Meeting (EGM) and issuing atleast 21 days' notice to all the shareholders.

Step - 3: File Application for availability of new name (RUN Application) with following attachments
- Board Resolution for availability of new name (refer Step - 2)
- Any other document as required on case to case basis

Step - 4: Upon approval of application, ROC will issue a certificate for reserving a new name

Step - 5: Hold an EGM at decided date for passing following special resolution

- to approve change of name of the Company and authorising any Director to file application to ROC for Central Govt's approval (Form INC-24) (Click here for format of resolution)

Step - 6: File Form MGT-14 within 30 days from the date of passing of resolutions in EGM with following attachments

- signed copies of Special Resolutions with Explanatory Statement

- altered Memorandum of Association

- altered Article of Association

It is to be noted that SRN of Form MGT-14 will be filled up in Form INC-24.

Step - 7: File Form INC-24 within 30 days from the date of passing of resolutions in EGM

- Minutes of EGM in which special resolutions were filed (refer Step - 5)

- altered Memorandum of Association

- altered Article of Association
- Declaration by Directors with respect to deposits, debentures etc.

Step - 8: Upon approval of application (Form INC-24) by ROC, ROC will issue a fresh certificate of Incorporation.

Notice for Appointment as Director

This is a notice to be submitted under Section 160 of Companies Act, 2013 by a person who wants to be appointed as Director in a Company.

RBI Updates: AIFs now can be "qualified buyers" under SARFAESI Act

Reserve Bank of India (RBI) allowed Category II and Category III Alternative Investment Funds (AIFs) who are registered with SEBI to act as "Qualified Buyers" under SARFAESI Act.

By issuing a notification dated 05th July, 2018, RBI has allowed AIFs registered with SEBI to act as "Qualified buyers" under clause (u) of sub-section (1) of Section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, they should follow comply with following conditions:

1. The AIF which has invested in an asset reconstruction company (ARC) shall not invest in the security receipts issued by that ARC.

2. The AIF shall not invest in the security receipts issued on the underlying loans of any of its associate or group company.

3. The AIF shall not invest in the security receipts backed by non-performing assets of banks which hold equity of more than 10% in that AIF

Copy of such notification can be accessed below.

SEBI Updates: SEBI reviews mechanism of dividend adjustment for stock option

SEBI on 05^th July, 2018, issued a Circularfor reviewing the mechanism of dividend adjustment for stock options and allowed alteration in strike price.

According to the SEBI, adjustment in strike price will be carried out in case dividend declared by a company is above 5 per cent of the underlying stocks. Besides, adjustment in strike price will be done in all other cases of dividend, wherein listed company has sought exemption from the timeline prescribed under listing and disclosure regulations, SEBI said in a circular.

According to the SEBI, adjustment in strike price will be carried out in case dividend declared by a company is above 5 per cent of the underlying stocks. Besides, adjustment in strike price will be done in all other cases of dividend, wherein listed company has sought exemption from the timeline prescribed under listing and disclosure regulations, SEBI said in a circular.

Strike price, in market parlance, is the price at which a derivative contract can be exercised. It is mainly used to describe stock and index options. For call options, the strike price is where the security can be purchased by the option buyer up till the expiration date. For put options, the strike price is the price at which shares can be sold by the option buyer.

Copy of Circular can be accessed below.

SEBI Updates: SEBI raises overseas investment limit of AIFs and VCFs

SEBI by issuing a Circular dated 03rd July, 2018 enhanced the overseas investment limit of Alternative Investment Fund (AIFs) and Venture Capital Fund (VCFs) to USD 750 million from the current USD 500 million

The decision has been taken in consultation with the Reserve Bank of India, the Securities and Exchange Board of India (SEBI) said in a circular. In order to monitor the utilisation of overseas investment limits, SEBI has asked AIFs and VCFs to mandatorily disclose the utilisation of the such limits within 5 working days of such usage on the regulator's intermediary portal. 

In case an alternative investment fund (AIF) or venture capital fund (VCF) has not utilised the overseas limit granted them within 6 months from SEBI's approval, the same will have to be reported within 2 working days after expiry of the validity period. 

"In case an AIF or VCF has not utilized a part of the overseas limit within the validity period, the same shall be reported within 2 working days after expiry of the validity period," the regulator noted.

Further, if an AIF or VCF wishes to surrender the overseas limit at any point of time within the validity period, the same will have to be reported within two working days from the date of decision to surrender the limit, it added. The regulator said it has decided to enhance the overseas investment limit of AIFs and VCFs to USD 750 million. 

Earlier in October 2015, the regulator had allowed overseas investment by AIFs and VCFs to the extent of USD 500 million.

AIFs are funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per a pre-decided policy, while VCFs are investment funds that manage the money of investors who seek private equity stakes in startups.

Copy of Circular can be accessed below:

Source: Economic Times

MCA Updates: Directors to submit their KYC to MCA

MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYC to be notified and deployed shortly.

Update 25/07/2018: Click here for more detailed information on DIN KYC

Following points to be kept in mind in this regard by every director.

1. Every Director who has been allotted DIN on or before 31st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file Form DIR-3 KYC on or before 31st August, 2018.

2. While filing the form, the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password (OTP). 

3. The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA). 

4. Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.

5. After expiry of the due date by which the KYC form is to be filed, the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’. 

6. After the due date, filing of Form DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a INR 5,000 only, without prejudice to any other action that may be taken.

7. While filing form, a person is required to use PAN based DSC in case of Indian national, whereas in case of foreign national, applicant's name in DSC should be matched with name mentioned in Passport.

You can find below copy of notification.

SEBI Updates: Filing of Term Sheet by Angel Funds

Angel funds will have to disclose details related to investment as well as venture capital undertakings and "material changes", within 10 days of launching a scheme, markets regulator SEBI said.

Releasing the format of the term sheet, the regulator said that angel fund can launch new schemes, subject to the filing of the term sheet, it needs to contain material information and have to be filed with SEBI within 10 days of launching the scheme. The term sheet has three categories — information related to investment and investee company; compliance with SEBI’s AIF regulation; and “material change”, the regulator said in a circular.

Angel Funds, a sub-category Alternative Investment Funds (AIFs), encourage entrepreneurship by financing small startups at a stage when they find it difficult to obtain capital from traditional sources of finance such as banks and financial institutions. The markets regulator, last month, had replaced the requirement of filing of scheme memorandum to SEBI by angel funds with the requirement of filing term sheet containing material information.

Now, the Securities and Exchange Board of India (SEBI) has released the format of the term sheet. With regard to investment and investee firm, information pertaining to name of the angel fund as well as scheme, name of the investee company, services offered by it, its business details, present investment size, investment highlight, total capital commitment by investors, capital drawn by the fund, price per share, details of lock in for share and exit strategy for angel fund among others need to be divulged.

Further, the term sheet will also have information pertaining to list of investors in the scheme and compliance with the AIF rules, whether the fund has corpus of Rs 5 crore and whether the funds have been raised through private placement among others. Besides, angel fund will have to submit details of material changes, rationale for such change and date of approval from SEBI in this regard.

Besides, the regulator has raised the maximum period of accepting funds from an angel investor to five years, from three years. The move will provide angel funds more time to identify opportunities and invest in venture capital firms. Earlier, SEBI had formed a working group comprising various angel networks, consultants and start-ups in a bid to provide ease of doing business for angel funds.

Copy of Circular can be accessed below:

Source: Financial Express

GST Updates: Reverse Charge Mechanism is deferred till 30 September

The Central Board of Indirect Taxes and Customs issued a notification on 29th June, 2018, postponing the roll-out of the reverse charge mechanism by three more months.

The government has further deferred the reverse charge mechanism under goods and services tax to September 30. Under this mechanism, GST is levied on goods or services procured from unregistered dealers by the buyer and deposited with the government.

This is an anti-tax-evasion measure to ensure that transactions by unregistered people don’t escape tax. In a normal transaction, the supplier of goods or service charges the tax and pays to the government, but in this case, the responsibility reverses and falls on the buyer. 

The mechanism was to kick in from July 1 this year after it had been deferred earlier. The industry had voiced concern that this would increase their compliance burden.

Source: Economic Times

The notification copy can be found below.