Amendment to Companies Act
Amendment to Companies Act
Section 135 of the Companies
Act, 2013 mandates every company above a certain threshold to formulate a
Corporate Social Responsibility (CSR) Policy, and to ensure that the company
spends at least 2% of its average net profits made during the preceding three
financial years, on CSR activities. Schedule VII of the Act, enlists the activities
that can be undertaken by the companies under their CSR policies. Item No.
(viii) of Schedule VII covers ‘relief and welfare of the Scheduled Castes, the
Scheduled Tribes, other backward classes, minorities and women’ as eligible CSR
activities.
Section 135 of the Act, Schedule VII and Companies CSR Policy Rules, 2014 read with General Circular dated 18.06.2014 issued by the Ministry of Corporate Affairs, provide the broad contour within which eligible companies are required to formulate their CSR policies including activities to be undertaken and implement the same in the right earnest. The decision to allocate CSR fund across various items of Schedule VII is taken by the Board of the Company under the provisions of the Act.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
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Time taken for registration of
a company cut by 50% as a part of ‘ease-of-doing business’ effort by the
Ministry of Corporate Affairs; Ministry to soon introduce a new version of Form
INC29 incorporating suggestions received from the stakeholders allowing up to 5
directors to be appointed and greater flexibility in proposing a name for a
company
Ministry of Corporate Affairs,
Government of India has, during the past one year, taken a number of steps, and
is in the process of further streamlining processes and the regulatory
framework, to reduce the overall time taken for incorporating of a company as a
part of ‘ease-of-doing business’ effort of the Ministry. The introduction of an
integrated incorporation Form INC29 and tighter monitoring of Registrar of
Companies’ (ROCs’) performance has resulted in faster approvals and lesser
number of clarifications being asked from the stakeholders. The Ministry will
soon introduce a new version of Form INC29 incorporating suggestions received
from the stakeholders allowing up to 5 directors to be appointed and greater
flexibility in proposing a name for a company. This will allow an even more
wider use of this integrated Form, which is already gaining in popularity. The
rules with regard to reserving and approving of names for companies are also
being simplified, and a centralized new process will be introduced soon for
strictly time bound approval of names for companies.
As a result of many steps taken by the Ministry, the average number of days taken for incorporation of a company has come down significantly from 9.57 days in December 2014 to 4.51 days in November 2015. It is targeting that the average number of days would be further reduced to one to two days for approval in normal cases. The Ministry would welcome feedback from companies and professionals to countercheck the system introduced.
As a result of many steps taken by the Ministry, the average number of days taken for incorporation of a company has come down significantly from 9.57 days in December 2014 to 4.51 days in November 2015. It is targeting that the average number of days would be further reduced to one to two days for approval in normal cases. The Ministry would welcome feedback from companies and professionals to countercheck the system introduced.
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National Company Law Tribunal
(NCLT) and National Company Law Appellate Tribunal (NCLAT)
The provisions of the
Companies Act, 2013 regarding constitution of National Company Law
Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) had
been challenged in the Supreme Court and the matter was decided by the Hon’ble
Court by judgment dated 14th May, 2015. The process of setting up of these
bodies has been initiated and these are likely to become functional from the
next financial year.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
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Enrolment of Foreign Companies
with the Registrar of Companies
Every foreign company, as
defined under Section 2(42) of Companies Act, 2013 (the Act), is required to
get itself registered with Registrar of Companies, New Delhi within 30 days of
its establishing a place of business in India in accordance with Section 380 of
the Act. Such foreign companies also include those which have a place of
business in India established through electronic mode.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
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Serious Fraud Investigation Office (SFIO)
The numbers cases investigated by Serious Fraud Investigation Office (SFIO)
during each of the last three years and the current year are as follows:
|
Year
|
No. of companies assigned for investigation
|
No. of companies where investigations
completed
|
|
2012-13
|
45
|
22
|
|
2013-14
|
83
|
22
|
|
2014-15
|
71
|
39
|
|
2015-16 (till 30-11-2015)
|
35
|
23
|
As on 30-11-2015, investigations into the affairs of 127 companies were in
progress with SFIO and investigation of one company has been stayed by Court.
Further, during the last three years and current year (till 30-11-2015), SFIO
has been able to secure convictions in 16 cases through courts and Disciplinary
Action Committees of the Institute of Chartered Accountants of India.
In an effort to identify fraudulent activities at an early stage, Market Research
& Analysis Unit (MRAU) of SFIO analyses information in public domain as
well as inputs received from various other sources. Such alerts have
necessarily to be corroborated through examination of books of account and other records by the field
level offices of the Ministry for detection or identification of fraud.
Further, forensic lab set up in MRAU assists investigating teams with digital
data analysis. No separate fund has been allocated for MRAU. Government has taken a number of measures to check cases of corporate
frauds, including:
(i) 'Fraud' as a substantive offence has been
introduced in the Companies Act, 2013.
(ii) Statutory status to the SFIO has been granted
under the said Act.
(iii) Stricter norms of Corporate Governance and their
implementation have been granted under the Companies Act, 2013.
(iv) Increasing application of technology for early/
preliminary identification of cases involving frauds through data analysis and
usage of forensic tools, etc.
This was stated by
Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question
in the Lok Sabha today.
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High Level Committee constituted by the
Government to suggest measures for monitoring the progress of implementation of
Corporate Social Responsibility (CSR)
The High Level Committee constituted by the Government to suggest
measures for monitoring the progress of implementation of Corporate Social
Responsibility (CSR) policies has submitted its Report to the Government.
The report alongwith its recommendations has been placed on the
Ministry’s website (www.mca.gov.in).
The Government does not proposes uniformity in tax exemption for
CSR expenditure to all eligible activities
The Companies Law Committee is examining the issues related to
amendments required, if any, in the Companies Act, 2013 and rules thereunder.
The Companies are required to formulate their CSR policies, if
applicable, under the provision of Section 135 of the Companies Act, 2013,
Schedule VII of the Act and Companies CSR Policy Rules, 2014 read with General
Circular dated 18.06.2014 issued by the Ministry of Corporate Affairs.
This was stated by Shri Arun
Jaitley, Minister of Corporate Affairs in written reply to a question in the
Lok Sabha today.
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Welfare activities under the
Corporate Social Responsibility (CSR) and the Companies Act, 2013
The provisions of
Corporate Social Responsibility (CSR) under Section 135 of the Companies Act,
2013 and rules made thereunder have come into force with effect from
01.04.2014. The year 2014-15 was the first year of implementation of CSR
policies by companies under the legislation. The Board of the company, eligible
to comply with the CSR provisions of the Act, is mandated to make annual
disclosure on CSR in the Board’s report. The companies are still in the process
of filing their Annual Reports with the Ministry. Details of companies
complying with CSR provisions of the Act for the financial year 2014-15, are
expected to be available after requisite filings are made by companies.
The Ministry of Corporate Affairs has not received any specific complaint regarding misuse of CSR funds by companies. Further, Department of Public Enterprises have informed that no complaints regarding misuse of funds by Central Public Sector Enterprises have come to their notice.
The provisions for non-compliance of Section 135 of the Act are prescribed under Section 134 (8) of the Act.
Government has no proposal to constitute any monitoring authority in order to regulate and monitor the activities of CSR.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
The Ministry of Corporate Affairs has not received any specific complaint regarding misuse of CSR funds by companies. Further, Department of Public Enterprises have informed that no complaints regarding misuse of funds by Central Public Sector Enterprises have come to their notice.
The provisions for non-compliance of Section 135 of the Act are prescribed under Section 134 (8) of the Act.
Government has no proposal to constitute any monitoring authority in order to regulate and monitor the activities of CSR.
This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.
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