MCA Update: MCA notified significant beneficial ownership rules

Ministry of Corporate Affairs (MCA) issued a notification notifying the Companies (Significant Beneficial Owners) Rules, 2018 with effect from 13th June, 2018.

This step is taken by MCA after notifying Section 90 of Companies Act, 2013 with effect from 13th June, 2018. Section 90 deals with "significant beneficial owner".

These rules are in respect to provide for significant beneficial ownership aimed at tracking the real beneficiaries of shares as often benami holdings are found in shell companies. The new section (Section 90) that was inserted in the Companies Act is also part of the global fight against money laundering and came at the behest of Paris based Financial Action Task Force with countries such as the UK already incorporating the provisions. 

This section and the rules provide for maintaining of a register of “beneficial owners”. MCA has set the limit at 10% to whom such rules will be applicable, thereby increasing the ambit of the provisions to cover a larger base of shareholders, who may be warehousing the shares for someone else.

These rules provide for mandatory disclosure within a stipulated period and once the rules are notified there will be a rush of filings as shares in most companies are not widely held. A failure to disclose beneficial ownership can result in a fine of up to Rs 50,000 with a daily penalty of Rs 1,000, if the failure to comply with the rules continues. The Companies Act also allows the Centre to investigate cases of beneficial ownership.

The copy of rules can be found below.

Income Tax Updates: Cost Inflation Index is 280 for FY 2018-19

Central Board of Direct Taxes (CBDT) has notified the cost inflation index (CII) at 280 for FY 2018-19. By issuing a notification dated 13th June, 2018, CBDT has added an entry for FY 2018-19 for Cost Inflation Index at 280.

CBDT further clarifies that this changes will come into force with effect from 01st day of April, 2019 and shall apply to AY 2019-20 and subsequent years.

You can find below the copy of Notification issued by CBDT.

Form 9 - Consent to act as Partner

Form 9 is required to be signed from the person who is willing to be appointed as Designated Partner / Partner in LLP, pursuant to Rule 7 and Rule 10(8) of LLP Rules.

Form 9 is required to be obtained in following cases.

1. Incorporation of Limited Liability Partnership

2. Admission of Partner in LLP

Authorisation Letter for Form DIR-11

This Authorisation Letter is required to be signed by a Foreign Director who has given resignation to the Company and wants to authorise someone else to file Form DIR-11 on his behalf.

Pursuant to Rule 16 of Companies (Appointment and Qualification of Directors) Rules, 2014, when a Director resigns from his office, he shall file Form DIR-11 within 30 days from the date of resignation. However, Director needs to use his Digital Signature to file this form. This rule further provides that, foreign director can authorise practicing professional and other resident Director to file Form DIR-11 on his behalf.

Confirmation Letter about Director's resignation

The Confirmation Letter is issued by a Company to the Director, who has given a resignation from the office of a Director, acknowledging the receipt of Director's resignation and confirming the date of resignation. This letter can be attached in Form DIR-12 as "proof of cessation".

Form DIR-8 - Intimation about Disqualification

Pursuant to Section 164(2) of Companies Act, 2013 read with Rule 14 of Companies (Appointment and Qualification of Directors) Rules, 2014, Every Director shall inform to the Company concerned about his disqualification under sub-section (2) of Section 164, if any, in Form DIR - 8 before he is appointed or re-appointed. 

Intimation Letter to Auditor

Intimation Letter to Auditor is required to be sent by Company to an Auditor informing / intimating them about their appointment by the Company as Statutory Auditor under Section 139 of Companies Act, 2013. This Intimation letter shall be send to Auditor by Company within 15 days from the date of Appointment.