Impact of Companies Amendment Act, 2017 on Annual Filing F.Y. ended 31.03.2018
Impact of Companies Amendment Act, 2017 on Annual Filing
F.Y. ended 31.03.2018
MCA vide notified approximately 84 sections of
Companies Amendment Act, 2017 out of 93 sections. Link for list of notified
section available on below mentioned link:
In this editorial author
shall endeavor to states about impact of such amended sections on Annual
Filings of Company for the f.y. ended 31st March, 2018. As many
sections has been notified by Amendment Act which shall impact the Annual
Filing of Company like: preparation of Directors Report, Annual Return, Filing
of Forms etc.
Below given are list of Sections which may impact the Annual Filing for
31.03.2018.
S. No.
|
Section
|
Particular of Section
|
Notified w.e.f.
|
A.
|
2(6)
|
Associate Company
|
07.05.2018
|
B.
|
2(87)
|
Subsidiary Company
|
07.05.2018
|
C.
|
2(46)
|
Holding Company
|
09.02.2018
|
D.
|
2(41)
|
Financial Year
|
09.02.2018
|
E.
|
2(91)
|
Turnover
|
09.02.2018
|
F.
|
2(57)
|
Networth
|
09.02.2018
|
G.
|
92
|
Annual Return
|
07.05.2018
|
H.
|
96
|
Annual General Meeting
|
13.06.2018
|
I.
|
101
|
Notice of Meeting
|
09.02.2018
|
J.
|
117
|
Resolution and agreement to be filed
|
07.05.2018
|
K.
|
129
|
Financial Statement
|
07.05.2018
|
L.
|
134
|
Board Report
|
31.07.2018
|
M.
|
136
|
Right of members to
copies of audited financial statement
|
07.05.2018
|
N.
|
137
|
Copy of financial statement to be filed with ROC
|
07.05.2018
|
O.
|
139
|
Ratification of
Auditor
|
07.05.2018
|
P.
|
403
|
Fee for filing
|
07.05.2018
|
A.
Associate Company:
“ASSOCIATE COMPANY”
[Section 2(6)] {Notified w.e.f. 07th May, 2018} in
relation to another company, means a company in which that other company has a significant
influence, but which is not a subsidiary company of the company having
such influence and includes a joint venture company.
Explanation — For the purposes of this
clause, “significant influence” means control of at least twenty per cent of total
share capital, or of business decisions under an agreement;
Amended Provision: Significant Influence’ under the definition of Associate Company:
Significant influence to mean control of at
least 20% of voting power or control or
participation in business decision under an agreement.
Impact: As this section has been
notified w.e.f. 07.05.2018. Therefore, for the purpose to check whether a
company is associate or not for the purpose of consolidation, preparation of
financials statement ‘status of relation as on 31st March’ shall be
considered.
Therefore
one can opine that this amendment in this section shall not affect the Annual
filing for the f.y. ended 31.03.2018
B.
Subsidiary
Company:
“SUBSIDIARY COMPANY” [Section 2(87)] {Notified
w.e.f. 07th May, 2018} “Subsidiary
company” or “subsidiary”, in relation to any other company (that is to say the
holding company), means a company in which the holding company
(ii) Exercises or controls more than one-half of
the total share capital either at its own or together with one or
more of its subsidiary companies
Amended Provision: Exercises or controls more than one-half of Total
Voting Power either at its own or together with one or more of its subsidiary
companies.
Impact: As this section has been
notified w.e.f. 07.05.2018. Therefore, for the purpose to check whether a
company is subsidiary or not for the purpose of consolidation, preparation of
financials statement ‘status of relation as on 31st March’ shall be
considered.
Therefore one can opine that this amendment in this section
shall not affect the Annual filing for the f. y. ended 31.03.2018
C. Holding Company:
“HOLDING COMPANY” [Section 2(46)] {Notified
w.e.f. 09th Feb, 2018} “Holding
Company”, in relation to one or more other companies, means a Company of which such companies are subsidiary companies
Amended Provision: Explanation: the expression “Company” includes any “Body Corporate”.
Impact: As this section has been
notified w.e.f. 09.02.2018. Therefore, for the purpose to check whether a body
corporate is holding or not for the purpose of consolidation, preparation of
financials statement ‘status of relation as on 31st March’ shall be
considered.
Therefore one can opine that this amendment in this section
shall affect the Annual filing for the f. y. ended 31.03.2018
D. Financial Year:
“FINANCIAL” [Section 2(41)] {Notified
w.e.f. 09th Feb, 2018}
Amended Provision: Associate Company incorporated outside India can apply for change
in financial year of Indian Company
Impact: As this section has been notified w.e.f. 09.02.2018. Therefore,
associate of Indian company incorporate outside India can file application with
NCLT for change in financial year of Indian company.
E.
Net
Worth:
“NET WORTH” [Section 2(57)] {Notified
w.e.f. 09th Feb, 2018} “net worth” means the aggregate value of the paid -up share capital
and all reserves created out of the
profits and securities premium account , after deducting …………………
Amended Provision: net worth” means the aggregate value of the paid -up share
capital and all reserves created out of the
profits and securities premium account and Debit or Credit balance of
Profit and Loss account
Impact: As this section has been notified w.e.f. 09.02.2018. Therefore
calculation of Net Worth for the financial year ended 31.03.2018 shall be as
per above mentioned definition.
F.
Turnover:
“TURNOVER” [Section 2(91)] {Notified
w.e.f. 09th Feb, 2018} “Turnover”
means the aggregate value of the realization of amount made
from the sale …………………
Amended Provision: Turnover to mean the gross amount of revenue recognized in the profit and loss account
from the sale, supply
Impact: As this section has been notified w.e.f. 09.02.2018. Therefore
calculation of Turnover for the financial year ended 31.03.2018 shall be as per
above mentioned definition
G.
Annual
Return (Section 92):
Amended Provision:
§
The requirement of extract of annual return to the board‘s report
in Form MGT-9 has been omitted
§ Sufficient that the web-link of the annual return be disclosed in the board‘s
report.
§ Requirement related to
disclosing indebtedness omit from the Annual Return.
§ Abridged forms of Annual
Return (Format still not prescribed)
§ Company have to file within
60 days of AGM after 60 days additional fee shall be Rs. 100 per day plus
benefit of section 403 removed.
Impact: As this section has been
notified w.e.f. 07.05.2018.
ü Therefor, If AGM of Company
held on or before 07th May, 2018 in such case above mentioned
amendments shall not applicable on the Company.
ü However, If AGM of Company
held on or after 07th May, 2018 in such case above mentioned
amendments shall applicable on the Company.
H. Notice of Meeting (Section 101): {Notified
w.e.f. 09th Feb, 2018}
Amended Provision: AGM can be held on shorter
notice if consent is given by at least 95% of members entitled to vote
thereat.
. Impact: As this section has been notified w.e.f. 09.02.2018. Therefore
for convening of AGM on shorter notice this section shall be applicable.
I.
Resolution
and agreement to be filed (Section 117): {Notified w.e.f. 07th May, 2018}
Amended Provision: For the purpose of
resolution mentioned u/s 179(3) (like: adoption of financial statement,
adoption of Directors report etc), Special resolution MGT-14 shall be filed
within 30 days of passing of resolution time limit of 270 additional days has
been removed
Impact: As this section has been notified w.e.f. 07.05.2018. However, if
above mentioned transaction held after 07.05.2018 then amendment shall be
applicable. For and example if a public Company adopt finical statement or/and
director report after 07.05.2018 in such case MGT-14 shall be filed within 30
days of passing of resolution otherwise condonation shall be applicable.
J.
Right of
members to copies of audited financial statement (Section 136): {Notified
w.e.f. 09th Feb, 2018}
Amended Provision:
I. Sending Financial
Statement on shorter Notice: "Provided that if the copies of the documents are sent less than
twenty-one days before the date of the meeting, they shall, notwithstanding
that fact, be deemed to have been duly sent if it is so agreed by members—
(a) holding, majority in
number entitled to vote and who represent not less than ninety-five per cent.
of such part of the paid-up share capital of the company as gives a right to
vote at the meeting; or
II.
Only listed Companies having a subsidiary or subsidiaries will be
required to place separate audited accounts in respect of each of subsidiary on
their website, if any. This requirement will not apply to non-listed Companies.
III.
Both listed and non-listed companies will be required to provide
subsidiary financial statements to a member of the Company who asks for it
Impact: As this section has been notified w.e.f. 09.02.2018. Therefore, all
the above mentioned amendments shall be applicable for the financial year
ending 31.03.2018
K.
Copy of
financial statement to be filed with ROC (Section 137): {Notified
w.e.f. 09th Feb, 2018}
Amended Provision:
I.
Allowed the filing of unaudited financial statements of foreign
subsidiary which is not required to get its accounts audited along with a
declaration to that effect
II.
Company have to file financial statement within 30 days of AGM
after 30 days additional fee shall be Rs. 100 per day plus benefit of section
403 removed
Impact: As this section has been notified w.e.f. 07.05.2018. However, if
above mentioned transaction effected after 07.05.2018 then amended provisions
shall be applicable.
L.
Board
Report (Section 134): {Notified w.e.f. 31st
July, 2018}
Amended Provision: The requirement of the
extract of the annual return in Form MGT-9 to be included in the board‘s report
has been omitted, instead web address or link of the annual return to be
provided in Board Report.
·
Disclosures which have been provided in the financial statement
shall not be required to be reproduced in the report again (like: Section 186,
188)
·
Instead of exact text of the policies, key feature of policies
along with its web link shall be disclosed in Board report.
·
Abridge Board Report for Small Companies and OPC
Impact: As this section has been notified w.e.f. 31.07.2018. However, if Directors
Report adopted in Board Meeting held after 31.07.2018 then new Format and new
provisiosn shall be considered.
M. Appointment of Auditor
(Section 139): {Notified w.e.f. 07th May, 2018}
Amended Provision: The requirement related to
Annual Ratification of appointment of auditor
by members is omitted. This change will avoid potential conflict between two
requirements and is supportive of auditor independence
Impact: As this section has been notified w.e.f. 07.05.2018. However, if
AGM of Company held after 07.05.2018 there is no need to pass resolution for
Ratification of Auditor.
FOOD FOR THOUGHT:
If Company has issued
notice of AGM on or before 07.05.2018 then whether Company have to pass
resolution for ratification of auditor in AGM or not?
N. Fee for Filing (Section 403): {Notified
w.e.f. 07th May, 2018}
Amended Provision: Additional Late Filing Fees: in sub-section (1), for the first and
second provisos, the following provisos shall be substituted:
Effect of new proviso:
·
If Company fails to file Annual Return u/s 92
and Financial statement u/s 137 within time prescribed under their specific
sections “without prejudice to any other legal action or liability under this
act,” it may be submitted by payment of additional fees “which shall not be less than INR 100/- (Rupees Hundred) per day” and different amount may be prescribed for
different classes of Companies.
·
If
company fails to file any other documents, facts, information etc other than
section 92 and 137 “without prejudice to any other legal action
or liability under this act,” it may be submitted by payment of additional fees
as may be prescribed.
HIGHER ADDITIONAL FEES: New
concept of higher additional fees has been introduced. As per this proviso
-
Where
there is default on Two or More
occasions in submitting, filling, registering, recorded of
documents,
-
without prejudice to any other legal action
or liability under this act,
-
may be file with “Higher Addition Fees”
-
as may be prescribed and
-
which shall not be lesser than “twice
the additional fee provided under first and second proviso”
Impact: Due to above mention proviso if company fails to file any form
with in time prescribed under its specific section and company made the default
TWO or “More Occasion” then additional fees for filing of from shall be “Twice
of Additional Fees.
(Author
– CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice
from Delhi and can be contacted at csdiveshgoyal@gmail.com). Disclaimer: The entire
contents of this document have been prepared on the basis of relevant
provisions and as per the information existing at the time of the preparation.
Although care has been taken to ensure the accuracy, completeness and
reliability of the information provided, I assume no responsibility therefore.
Users of this information are expected to refer to the relevant existing
provisions of applicable Laws. The user of the information agrees that the
information is not a professional advice and is subject to change without
notice. I assume no responsibility for the consequences of use of such
information. IN NO EVENT SHALL I SHALL BE LIABLE FOR ANY DIRECT, INDIRECT,
SPECIAL OR INCIDENTAL DAMAGE RESULTING FROM, ARISING OUT OF OR IN CONNECTION
WITH THE USE OF THE INFORMATION
Very well written Articl Diveshji..... Appreciable contribution to the Profession.
ReplyDeleteRegards,
CS. Premnarayan Tripathi
Very well drafted and so easy to understand the article. Salute to you and your research team Divesh Ji. Keep doing the excellent work for betterment of our profession
ReplyDeleteReally appreciate for putting all ur efforts in analysing various provisions of Law and more importantly putting it in public domain for all..it's really very useful..Thanks
ReplyDeleteGreat time devotion for prefession
ReplyDeleteVery much useful ... Thank you verv much ..
ReplyDeletegreat
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteMy query for Extract to be attached to Directors Report ??
ReplyDeleteSection 92 has deleted subsection (3) regarding Extract whereas
Rule 12 of Companies (Management & administration)Rules, says to attach extract to Directors Report.
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