MCA has issued two very important updates:
- Amendment in the Companies (Management and Administration) Rules
- Companies (Removal of Difficulties) Sixth Order, 2014
The details are given below:
Amendment in the Companies (Management and Administration) Rules
MCA vide notification dated 24th July 2014 has amended the Companies (Management and Administration) Rules 2014 through the Companies (Management and Administration) Second Amendment Rules, 2014. The necessary details of the system are given below:
- In rule 9, after sub-rule (3), the following proviso shall be inserted, namely:-
- "Provided that nothing contained in this rule shall apply in relation to a trust which is created, to set up a Mutual Fund or Venture Capital Fund or such other fund as may be approved by the Securities and Exchange Board of India".
- Text of Rule no 9(3) is given below
- "9. Declaration in respect of beneficial interest in any shares.-
- (1) A person whose name is entered in the register of members of a company as the holder of shares in that company but who does not hold the beneficial interest in such shares (hereinafter referred to as ("the registered owner"), shall file with the company, a declaration to that effect in Form No.MGT.4 in duplicate, within a period of thirty days from the date on which his name is entered in the register of members of such company:
- Provided that where any change occurs in the beneficial interest in such shares, the registered owner shall, within a period of thirty days from the date of such change, make a declaration of such change to the company in Form No.MGT.4 in duplicate.
- (2) Every person holding and exempted from furnishing declaration or acquiring a beneficial interest in shares of a company not registered in his name (hereinafter referred to as "the beneficial owner") shall file with the company, a declaration disclosing such interest in Form No. MGT.5 in duplicate, within beneficial interest in the shares of the company:
- Provided that where any change occurs in the beneficial interest in such shares, the beneficial owner shall, within a period of thirty days from the date of such change, make a declaration of such change to the company in Form No.MGT.5 in duplicate.
- (3) Where any declaration under section 89 is received by the company, the company shall make a note of such declaration in the register of members and shall file, within a period of thirty days from the date of receipt of declaration by it, a return in Form No.MGT.6 with the Registrar in respect of such declaration with fee."
- in rule 13,-
- the words "either value or volume of the shares" shall be omitted;
- the Explanation shall be omitted.
- Text of Rule no 13 is given below
- "13. Return of changes in shareholding position of promoters and top ten shareholders.-
- Every listed company shall file with the Registrar, a return in Form No.MGT.10 along with the fee with respect to changes relating to either increase or decrease of two percent, or more in the shareholding position of promoters and top ten shareholders of the company in each case, either value or volume of the shares, within fifteen days of such change.
- Explanation.- For the purpose of this sub-rule, the "change" means increase or decrease by two percent or more in the shareholding of each of the promoters and each of the top ten shareholders of the company."
- In rule 23, in sub-rule (1), for the words "not less than five lakh rupees", the words "not more than five lakh rupees" shall be substituted;
- Text of Rule no 23 is given below
- "23. Special Notice.-
- (1) A special notice required to be given to the company shall be signed, either individually or collectively by such number of members holding not less than one percent of total voting power or holding shares on which an aggregate sum of not less than five lakh rupees has been paid up on the date of the notice."
- In rule 27, in sub-rule (1) and in the Explanation, for the word "shall", the word "may" shall be substituted.
- Text of Rule no 27 is given below
- "27. Maintenance and inspection of document in electronic form.-
- (1) Every listed company or a company having not less than one thousand shareholders, debenture holders and other security holders, shall maintain its records, as required to be maintained under the Act or rules made there under, in electronic form.
- Explanation.- For the purposes of this sub-rule, it is hereby clarified that in case of existing companies, data shall be converted from physical mode to electronic mode within six months from the date of notification of provisions of section 120 of the Act."
- The aforesaid amendment relating to maintenance of records in electronic format comes as major relief to the corporates , who were facing various difficulties in finding solutions for converting their existing data in electronic form. Moreover there were also various confusions relating to the period for which the data needs to be converted.
Companies (Removal of Difficulties) Sixth Order, 2014
MCA has issued the 6th ROD order dated 24th July. The ROD deals with definition of the term "related party" under section 2 of the Companies Act 2013 and provides relief for the difficulty arising due to absence of the word "relative" from certain clause of the definition resulting in disharmonious interpretation. As per the ROD, in section 2 of the Companies Act, 2013, in clause (76), in sub-clause (iv), after the word "manager", the word "or his relative" shall be inserted. Relevant text of the Section 2(76) is given below: 2(76) "related party", with reference to a company, means—
- a director or his relative;
- a key managerial personnel or his relative;
- a firm, in which a director, manager or his relative is a partner;
- a private company in which a director or manager is a member or director;
- a public company in which a director or manager is a director or holds along with his relatives, more than two per cent. of its paid-up share capital;
- any body corporate whose Board of Directors, Managing Director, or manager is accustomed to act in accordance with the advice, directions or instructions of a director or manager;
- any person on whose advice, directions or instructions a director or manager is accustomed to act:
Provided that nothing in sub-clauses (vi) and (vii) shall apply to the advice, directions or instructions given in a professional capacity;
- any company which is—
- a holding, subsidiary or an associate company of such company; or
- a subsidiary of a holding company to which it is also a subsidiary: