A statutory audit is a legally required audit of the financial statements of a company by an external auditor. It is conducted to ensure that the financial statements are in compliance with applicable accounting standards and other legal requirements. The statutory audit of a private limited company is conducted to ensure that the financial statements presented by the company to its shareholders are true, fair and accurate. The statutory audit of a private limited company is conducted by an independent Chartered Accountant (CA) or an audit firm registered with the Institute of Chartered Accountants of India (ICAI). The auditor is required to check and verify the accuracy of the financial statements, the reliability of the accounting records, the internal controls, and compliance with applicable laws and regulations. The auditor is also required to provide an opinion as to whether the financial statements give a true and fair view of the company’s financial position and operations. The statutory audit is conducted in accordance with the applicable accounting standards and other legal requirements. The auditor is required to review the financial statements in detail and provide an independent opinion as to whether the financial statements are prepared in accordance with the applicable accounting standards and other legal requirements. The auditor is also required to review the internal controls and ensure that the company’s financial records are accurate and reliable. The statutory audit report is issued by the auditor to the shareholders at the end of the audit process. The audit report contains the opinion of the auditor as to whether the financial statements give a true and fair view of the company’s financial position and operations. The audit report is important because it provides the shareholders with assurance that the financial statements are accurate and reliable. The statutory audit of a private limited company is an important process that helps to ensure the accuracy and reliability of the financial statements. It is also important for shareholders to receive assurance that the financial statements are in compliance with applicable accounting standards and other legal requirements.
The government has revised the Paid up Capital and Turnover Criteria Revised for Small Companies to Four crore as paid up capital and 40 crore as turnover.
Small Companies under Companies act enjoy less compliance burden as compared to normal Companies.
The major benefit are available for Small Company
- No need to prepare Cash Flow Statement
- No Annual Return Signing from Company Secretary
- No Certification on E forms by Professionals
- Less Disclosure in Director Report
- Abridged Annual Return in form MGT7A
- No internal Financial Control reporting in Auditor Report by Auditor
- Holding of Two Board Meetings etc
Please note that following Companies are not included in the definition of Small Company
- Public Company
- Holding company or a subsidiary company
- Section 8 Company
- Company or body corporate governed by special act (LIC) (SBI)
MINISTRY OF CORPORATE AFFAIRS
New Delhi, the 15th December, 2016
G.S.R. 1147(E).-In exercise of the powers conferred by sub-section (1) and (2) of section 469 read with section 66 of the Companies Act, 2013 (18 of 2013) the Central Government hereby makes the following rules namely:-
1. Short title and Commencement.-
(1) These rules may be called the National Company Law Tribunal (Procedure for reduction of share capital of Company) Rules, 2016.
(2) They shall come into force on the date of their publication in the Official Gazette.
(3) The words and expressions used in these rules but not defined and defined in the Companies Act, 2013 (hereinafter referred to as the Act) or in the Companies (Specification of Definitions Details) Rules, 2014 or the National Company Law Tribunal Rules, 2016 shall have the meanings respectively assigned to them in the Act or the said rules.
2. Form of application or petition for Reduction of share capital under section 66.-
(1) An application to the Tribunal to confirm a reduction of share capital of a company shall be in Form No. RSC-1 and fee shall be, as prescribed in the Schedule of fee to these rules.
(2) An application to confirm a reduction of share capital of a company shall be accompanied with ─
(a) the list of creditors duly certified by the Managing Director, or in his absence, by two directors, as true and correct, which is made as on a date not earlier than fifteen days prior to the date of filing of an application showing the details of the creditors of the company, class-wise, indicating their names, addresses and amounts owed to them;
(b) a certificate from the auditor of the company to the effect that the list of creditors referred to in clause (a) is correct as per the records of the company verified by the auditor;
(c) a certificate by the auditor and declaration by a director of the company that the company is not, as on the date of filing of the application, in arrears in the repayment of the deposits or the interest thereon; and
(d) a certificate by the company’s auditor to the effect that the accounting treatment proposed by the company for the reduction of share capital is in conformity with the accounting standards specified in section 133 or any other provisions of Act.
(3) Copies of the list of creditors shall be kept at the registered office of the company and any person desirous of inspecting the same may, at any time during the ordinary hours of business, inspect and take extracts from the same on payment of the sum of rupees fifty for inspection and for taking extracts on payment of the sum of rupees ten per page to the company.
3. Issue of notice and directions by the National Company Law Tribunal.─
(1) The Tribunal shall, within fifteen days of submission of the application under rule 2, give notice, or direct that notice be given to ─
(i) the Central Government, Registrar of Companies, in all cases, in Form No. RSC-2;
(ii) the Securities and Exchange Board of India, in the case of listed companies in Form No. RSC-2;
(iii) the creditors of the company, in all cases in Form No. RSC-3; seeking their representations and objections, if any.
(2) The notice under clause (iii) of sub-rule (1) shall be sent, within seven days of the direction given under that sub-rule or such other period as may be directed by the Tribunal, to each creditor whose name is entered in the list of creditors submitted by the company about the presentation of the application and of the said list, stating the amount of the proposed reduction of share capital and the amount or estimated value of the debt or the contingent debt or claim or both for which such creditor’s name is entered in the said list, and the time within which the creditor may send his representations and objections.
(3) The Tribunal shall along with directions under sub-rule (1) give directions for the notice to be published, in Form No. RSC-4 within seven days from the date on which the directions are given, in English language in a leading English newspaper and in a leading vernacular language newspaper, both having wide circulation in the State in which the registered office of the company is situated, or such newspapers as may be directed by the Tribunal and for uploading on the website of the company (if any) seeking objections from the creditors and intimating about the date of hearing.
(4) The notice under sub-rule (3) shall state the amount of the proposed reduction of share capital, and the places, where the aforesaid list of creditors may be inspected, and the time as fixed by the Tribunal within which creditors of the company may send their objections:
Provided that the objections, if any, shall be filed in the Tribunal within three months from the date of publication of the notice with a copy served on the company.
(5) The company or the person who was directed to issue notices and the publication in the newspaper under this rule shall, as soon as may be, but not later than seven days from the date of issue of such notices, file an affidavit in Form No. RSC- 5 confirming the despatch and publication of the notice.
(6) Where the Tribunal is satisfied that the debt or claim of every creditor has been discharged or determined or has been secured or his consent is obtained, it may dispense with the requirement of giving of notice to creditors or publication of notice under this rule or both.
4. Representation by Central Government, Registrar etc. under sub-section (2) of section 66.-
If the authorities or the creditors of the company referred to in clause (i), clause (ii) and clause (iii) of sub-rule (1) of rule 3 desire to make any representation under sub-section (2) of section 66, the same shall be sent to the Tribunal within a period of three months from the date of receipt of notice and copy of such representation shall simultaneously be sent to the company and in case no representation has been received within the said period by the Tribunal it shall be presumed that they have no objection to the reduction.
5. Procedure with regard to representations and objections received.-
(1) The company shall submit to the Tribunal, within seven days of expiry of period upto which representations or objections were sought, the representations or objections so received along with the responses of the company thereto.
(2) The Tribunal may give such directions as it may think fit with respect to holding of any enquiry or adjudication of claims or for hearing the objection or otherwise.
(3) At the hearing of the application, the Tribunal may, if it thinks fit, give such directions as may deem proper with reference to securing the debts or claims of creditors who do not consent to the proposed reduction, and the further hearing of the petition may be adjourned to enable the company to comply with such directions.
6. Order on application and Minute thereof.-
(1) Where the Tribunal makes an order confirming a reduction, the order confirming the reduction and approving the minute may include such directions or terms and conditions as the Tribunal deems fit .
(2) The order confirming the reduction of share capital and approving the minute shall be in Form No. RSC – 6 on such terms and conditions as may be deemed fit.
(3) The Certificate issued by the Registrar under sub-section (5) of section 66 shall be in Form No. RSC -7.
[F. No. 1/30/2013/CL. V]
AMARDEEP SINGH BHATIA, Jt. Secy.
Board of Directors of the Company plays a main important role in functioning operation of the company, Section 179 of Companies Act 2013 provides powers of Board of Directors of Company
Following are the Powers of Board of Directors
(1) The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do:
Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting:
Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting.
(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made.
(3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:-
(a) to make calls on shareholders in respect of money unpaid on their shares;
(b) to authorise buy-back of securities under section 68;
(c) to issue securities, including debentures, whether in or outside India;
(d) to borrow monies;
(e) to invest the funds of the company;
(f) to grant loans or give guarantee or provide security in respect of loans;
(g) to approve financial statement and the Board’s report;
(h) to diversify the business of the company;
(i) to approve amalgamation, merger or reconstruction;
(j) to take over a company or acquire a controlling or substantial stake in another company;
(k) any other matter which may be prescribed:
Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager or any other principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in clauses (d) to (f) on such conditions as it may specify:
Provided further that the acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, or the placing of monies on deposit by a banking company with another banking company on such conditions as the Board may prescribe , shall not be deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company within the meaning of this section.
Explanation I.-Nothing in clause (d) shall apply to borrowings by a banking company from other banking companies or from the Reserve Bank of India, the State Bank of India or any other banks established by or under any Act.
Explanation II.-In respect of dealings between a company and its bankers, the exercise by the company of the power specified in clause (d) shall mean the arrangement made by the company with its bankers for the borrowing of money by way of overdraft or cash credit or otherwise and not the actual day-to-day operation on overdraft, cash credit or other accounts by means of which the arrangement so made is actually availed of.
(4) Nothing in this section shall be deemed to affect the right of the company in general meeting to impose restrictions and conditions on the exercise by the Board of any of the powers specified in this section.
Section 149 (3) of the Companies Act, 2013 has provided for the residence of a director in India (Resident Director in India) as a compulsory i.e. every company shall have at least one director who has stayed in India for a total period of not less than 182 days in the previous calendar year.
So if you are Incorporating a new company that has all the Directors who is not Indian Residents, you need to hire one Indian Resident Director.
Duties and Responsibilities of Resident Director in India
- Resident Director will be fully responsible as Normal Director of the Company,
- Resident Director will not be involved in operational control of the company.
- Resident Director will be appointment to fulfill the statutory requirements.
- Directorship will be covered under the officers and liability insurance.
- Resident Director will participate in Board Meetings of the Company, wherever required
- Circular or other Resolutions will be approved or disapproved as par Individual Understanding.
- Resident Director will be from our team only.
A private limited company is the most accepted and popular business structure in India and is governed by the provisions of the Companies Act and rules made thereunder, to carry out business operations loan from director to company is the main source of debt funding private limited access.
In every type of business structure there are two main sources of funds that an organisation deals with, one is in the form of capital and other is in the form of loan or debt.
In case of a company accepting funds from the capital it has to issue shares, and if the company is accepting funds from loan there should be an agreement with respect to the terms and conditions assigned to the particular loan and the security provided for a given loan.
In this article we will discuss accepting loans from the directors of the company by a private limited company.
Please note that accepting any type of loans or money from any person in a private limited company falls under the provisions of companies acceptance of deposit rules 2014
“deposit” includes any receipt of money by way of deposit or loan or in any other form, by a company, but does not include –
“(viii) any amount received from a person who, at the time of the receipt of the amount, was a director of the company or a relative of the director of the Private company:
Provided that the director of the company or relative of the director of the private company, as the case may be, from whom money is received, furnishes to the company at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others and the company shall disclose the details of money so accepted in the Board’s report;”
Step by step procedure for accepting loans from directors to Company
- hold Board meeting and pass necessary resolution approving the limit up to which company can accept loans
The company is required to hold the board meeting and pass necessary resolution in this regard for approving the limit of loan up to which company can accept the loans.
- Pass Resolution for Authorising Director to sign Necessary Terms and Conditions /Loan agreement for the loan
- Accept at the time of giving the money, a declaration in writing to the effect that the amount is not being given out of funds acquired by him by borrowing or accepting loans or deposits from others
- Credit of Funds to Company Bank Account
Compliance with Respect to Loan : If the Loan Agreement or Terms of Loan Contains clause relating to the conversion of this loan into equity then the company is required to file form mgt 14 within 30 days from the date of such agreement
Annual Compliance with respect to loan from Director to Company :
As this loan is exempted from the deposit, the company is required to file Form DPT -3 with the amount of loan accepted from Directors of the Company under the column, Items Not considered as Deposits
Last date for Filing of Returns and Forms under Company Fresh start Scheme 2020 is 30th September, 2020
What is this Company Fresh Start Scheme – 2020 (CFSS-2020) for
Company Fresh Start Scheme -2020 is for Waiver for Payment of Additional Fee for Filing of E forms with ROC/MCA and Immunity from launch of prosecution or proceedings for imposing penalty
- Companies which has not filed Annual Return and Financial Statements to ROC /MCA i.e. Form AOC-4, AOC-4 XBRL, AOC-4 CFS, Form MGT-7
- Companies which has not filed any E Forms that are required to be filed to ROC /MCA and not filed i.e. Form MGT-14, ADT-1, Form DPT-3 , Form DIR-12, Form 20A, INC 22
Period for Which Returns Can be filed under CFSS-2020
- From 01-04-2020 to 30-09-2020
Fee Payable for Filing of Documents
- Normal Filing Fee
What is Form CFSS-2020
- E Form
- Required to be Filed with MCA
- Within 6 Months after the End of the Scheme
- No Filing Fee for E Form CFSS-2020
Non Applicability of CFSS-2020
- Company under Strike off
- Amalgamated Companies
- Applications filed for obtaining Status of Dormant Companies
- Vanishing Companies
- Form SH-7 for Increase in Authorized Share Capital
- Form CHG-1 , CHG-4, CHG-8, CHG-9 related to Charge
- Application for Obtaining Status of Dormant Company
- STK-2 for Strike of Name of Company
Action by ROc/MCA
- If Pending Returns/ Documents are not filed
- MCA/ROC will take action as per provisions of Companies Act, 2013 which provides for very high penalties
If a Private Limited company wish to undertake any object (New Business Activity) which is not mentioned in its MOA, and the company wants to start up a new business which is not as per it’s MOA then, it should make a change in its main object by Following the procedure mentioned below
Step by Step Procedure for Change in Object Clause of MOA of Company
Time Requierd 25 days
Hold Board Meeting and send Notice for Extra Ordinary General Meeting for change in Object Clause
The first step for change in object clause of the MOA of the company is to hold Board meeting of the Company, in the board meeting main agenda should be to hold an Extra-Ordinary General Meeting of the Company.
Hold Extra-Ordinary General Meeting on the specified date for the change in Object Clause
Now hold the extra Ordinary general meeting of the Company, in this regard do necessary legal and procedural requirement at venue of general meeting
Pass Resolution by taking approval of Shareholders for change in Object Clause
Now start the proceedings of general meeting and pass required resolution for change in main object of the company, resolution is required to be passed by requisite approval of shareholders of company
Get true certified copies of all the documents and resolutions in respect to change in Object Clause
Once all the approval of shareholders are received , any director of company or authorized person will prepare necessary documents , like certified copies of all the documents and resolution , Following documents certified copies is mandatory required to be arranged :
1. Altered MOA of the Company
2. Resolution passed at EGM of the Company
File MGT-14 with all the Resolutions and Altered MOA
Once the above requirements are complete in all respect, Company is required to file E Form MGT-14 to Registrar of Companies with payment of fee.
Approval of E form MGT-14 for Change in Object of the Company
Once e Form MGT-14 is filed with ROC , the ROC will check and verify the correctness of the Form and will if deems fit approve or send back the e form
Certificate of Registration for Change in Object Clause of the Company
Once the E form MGT-14 is approved by ROC , the Company will receive the email in this regard along with Certificate.
Once all the above is completed, complete all the required certificate and altered MOA in single set as new set of MOA of the Company.
In this article we will discuss about procedure for Change in Name of Private Limited Company , A Private Limited company can change its Name with the Approval of Shareholders via Special Resolution and Central Government , for Change in Name of Company Following procedure is required to be followed :
Procedure for Change in Name of Private Limited Company :
- Hold Board Meeting and Pass Resolution for Application to ROC for approval of new Name, Please note that resolution should clearly mention the New Name
- Apply New Name in RUN form along with Resolution of Board for new Name , Certified True copy of Resolution should be attached. Get name Approval from CRC.
- Hold Board Meeting and Send Notice for Holding Extra Ordinary General Meeting
- Hold Extra Ordinary General Meeting of Members of the Company
- Pass Special Resolution
- Get the Certified true Copies of Resolution passed at Extra Ordinary General Meeting of all the documents signed along with Copy of Altered MOA and AOA of the company
- File form MGT-14 with ROC
- Once form MGT-14 is approved , File Form INC-24 for Change in the Name of the Company
- Once INC-24 is approved , you will receive , new certificate after change in the name of Company
- Apply for Changes in PAN Card of the Company
- Apply for Change in GST Registration and any Other statutory Registrations
NOTE: The old name should be written along with the new name in all the documents of the company for two years. ( FORMERLY KNOWN AS ———-)