Issue 22 – Insights 2
June 29, 2017
Insights – Make in India
On 13th June, 2017, the Ministry of Company Affairs issued a notification that provided for a host of exemptions in addition to and (in some cases) modification of the principal notification issued on 5th June, 2015. This seems to have opened up a gamut of opportunities for existing private companies, “not for profit” companies and government companies. However the maximum benefits seem to be handed out to start ups in India.
Snapshot of the exemptions
| S.No | Exemption | What the 5th June 2015 notification stated | What the 13th June 2017 notification states | What it means |
|---|---|---|---|---|
| 1. | Cash flow statement may not be prepared and included in the financial statements | This exemption was applicable to 1. Small companies, 2. One Person Companies and 3. Dormant companies | This exemption I applicable to 1. Small companies, 2. One Person Companies, 3. Dormant companies and 4. Private companies which are start ups | Start up Private companies can also avail the exemption |
| 2. | Exemptions on complying with provisions of section 73(2)(a) to (e) relating to Deposit Circulars, Deposit repayment reserves, Deposit Insurance etc. | Applicable to 1. Private companies which accepts from its member, moneys not exceeding 100% of the paid capital + fee reserves + securities premium | Applicable to 1. Private companies that fulfil the following conditions namely (a) it is an independent private company (not an associate or subsidiary of any other company) (b) if borrowings are less than: 2 times paid up capital OR Rs. 50 crores whichever is lesser (c) has not defaulted in repaying the borrowings at the time of accepting deposits 2. For Start-ups for a period of 5 years from the date of incorporation. | Start-ups can also avail the exemptions. Certain conditions have been laid down for Private companies. Only on the compliance of these conditions, can such exemptions be availed. |
| 3. | Disclosure of remuneration in Annual Return in Form MGT 7 | Every company to disclose details of remuneration of Directors and Key Managerial Personnel (KMP) | Private companies which are small companies shall disclose the aggregate of remuneration of directors | Small Private companies need not provide the breakup of remuneration for each director. The total amount of remuneration can be stated. |
| 4. | Signing of the Annual Return in Form MGT 7 | In (i) One Person Company (OPC) and (ii) Small company. Annual return to be signed by the Company Secretary (where there is one) or by Director | 1. One Person Company (OPC), 2. Small company, 3. Private company if it is a start-up, Annual return to be signed by the Company Secretary (where there is one) or by Director | Start- up Private companies have also been included to avail this facility. |
| 5. | Statement on adequacy of internal financial controls and operating effectiveness in the Auditors Report | 1. Private One person company or 2. Private small company or 3. Private company which has less than Rs. 50 crores turnover or borrowings less than Rs. 25 crores, the Auditors report to contain statement on adequacy of internal financial controls and operating effectiveness in the Auditors Report | 1. Private One person company or 2. Private small company or 3. Private company which has less than Rs. 50 crores turnover or borrowings less than Rs. 25 crores, the Auditors report need not contain statement on adequacy of internal financial controls and operating effectiveness in the Auditors Report | Total exemption from such reporting |
| 6. | At least 1 meeting of the Board in each half of the calendar year and gap between the two meetings not being more than 90 days | Applicable to 1. OPC 2. Small company 3. Dormant company | Applicable to 1. OPC 2. Small company 3. Dormant company 4. Private company which is a start-up | Start-up companies are exempt from holding the 4 Board meetings. Instead they can hold only 2 meetings in a calendar years with gap between such meetings not exceeding 90 days. |
| 7. | Interested Director for the purpose of Quorum | Interested director not counted for the purpose of ascertaining quorum | Interested director can be counted for the purpose of quorum provided disclosure of the same in made. | The quorum provisions have been eased. This could specially be useful for small companies, private companies and start-ups which have only 2 directors and one of them is interested. |
He holds a Bachelor’s and Master’s Degree in Corporate Secretaryship and a Degree in Law. He is a Fellow member of the Institute of Company Secretaries of India and an Associate Member of the Corporate Governance Institute, UK and Ireland. He has also completed a program from ISB on ‘Value Creation through Mergers and Acquisitions.
Mr P Muthusamy is an Indian Revenue Service (IRS) officer with an outstanding career of 30+ years of experience and expertise in all niche areas of Indirect Taxes covering a wide spectrum including GST, Customs, GATT Valuation, Central Excise and Foreign Trade.
During his judicial role, he heard and decided a large number of cases, including some of the most sensitive, complicated, and high-stake matters on insolvency and bankruptcy, including many cases on resolution plans, shareholder disputes and Schemes of Amalgamation, De-mergers, restructuring etc.,
Ms. Sarah Abraham has been enrolled with the Bar Council of Tamil Nadu since 1998. Her areas of practice include Shareholder Disputes, Corporate Compliances, Mergers and Acquisitions, Private Equity/ Venture Capital Agreements and allied disputes, Information Technology Contracts, Intellectual Property, General Commercial Agreements, Litigation, Arbitration and Mediation.
A K Mylsamy is the Founder, Managing Partner and the anchor of the firm. He holds a Degree in law and a Degree in Literature. He is enrolled with the Bar Council of Tamil Nadu.
M Subathra holds a Degree in law and a Master’s Degree in International Business Law from the University of Manchester, United Kingdom. She is enrolled with the Bar Council of Tamil Nadu.
Mr. K Rajendran is a former Indian Revenue Service (IRS) officer with a distinguished service of 35 years in the Indirect Taxation Department with rich experience and expertise in the fields of Customs, Central Excise, Service Tax and GST. He possesses Master’s Degree in English literature. Prior to joining the Department, he served for the All India Radio, Coimbatore for a period of about 4 years.
An MBA from the Indian Institute of Management, Calcutta, and an M.Sc. in Tourism Management from the Scottish Hotel School, UK, Ashok Anantram was one fo the earliest IIM graduates to enter the Indian hospitality industry. He joined India Tourism Development Corporation (ITDC) in 1970 and after a brief stint proceeded to the UK on a scholarship. On his return to India, he joined ITC Hotels Limited in 1975. Over the 30 years in this Organisation, he held senior leadership positions in Sales & Marketing and was its Vice President – Sales & Marketing. He was closely involved in decision making at the corporate level and saw the chain grow from a single hotel in 1975 to a very large multi-brand professional hospitality group.
Mani holds a Bachelor Degree in Science and P.G. Diploma in Journalism and Public Relations. He has a rich and varied experience of over 4 decades in Banking, Finance, Hospitality and freelance Journalism. He began his career with Andhra Bank and had the benefit of several training programs in Banking.
Mr. Kailash Chandra Kala joined the Department of Revenue, Ministry of Finance as ‘Customs Appraiser’ at Mumbai in the year 1993.
S Ramanujam, is a Chartered Accountant with over 40 years of experience and specialization in areas of Corporate Tax, Mergers or Demergers, Restructuring and Acquisitions. He worked as the Executive Vice-President, Group Taxation of the UB Group, Bangalore.
K K Balu holds a degree in B.A and B.L and is a Corporate Lawyer having over 50 years of Legal, Teaching and Judicial experience.
Justice M. Jaichandren hails from an illustrious family of lawyers, academics and politicians. Justice Jaichandren majored in criminology and then qualified as a lawyer by securing a gold medal. He successfully practiced in the Madras High Court and appeared in several civil, criminal, consumer, labour, administrative and debt recovery tribunals. He held office as an Advocate for the Government (Writs Side) in Chennai and was on the panel of several government organizations as senior counsel. His true passion lay in practicing Constitutional laws with focus on writs in the Madras High Court. He was appointed Judge, High Court of Madras in December 2005 and retired in February 2017.
S Balasubramanian is a Commerce and Law Graduate. He is a member of the Delhi Bar Council, an associate Member of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and Management Accountants of India.