MCA Services

Company Incorporation

Choosing a Business Structure:

• Private Limited Company: Best for businesses requiring funding and limited liability.

• Public Limited Company: Suitable for large-scale operations.

• One Person Company (OPC): For single entrepreneurs.

• Section 8 Company: For non-profit objectives.

Name Reservation:

• File SPICe+ Part A for name reservation.

• The chosen name should comply with the Companies (Incorporation) Rules, 2014, ensuring it's unique and not already registered.

Obtaining Director Identification Number (DIN) and Digital Signature Certificate (DSC):

• Directors must obtain a DIN and DSC for signing electronic documents.

Filing Incorporation Forms:

• SPICe+ Part B: The form includes incorporation, PAN/TAN application, GST registration, ESIC, EPFO, and opening of a bank account.

• AGILE PRO-S: For GST, ESIC, EPFO, and bank account.

• INC-33 and INC-34: e-Memorandum of Association (e-MoA) and e-Articles of Association (e-AoA).

Submission of Documents:

• Proof of identity and address of directors and shareholders.

• Proof of the registered office.

• Declaration by professionals like Chartered Accountants or Company Secretaries.

Certificate of Incorporation:

• Issued by the Registrar of Companies (RoC) upon successful processing of the application, along with PAN and TAN.

Post-Incorporation Compliances:

• Opening a bank account.

• Filing for commencement of business (Form INC-20A).

• Registering under MSME, if applicable.

LLP Incorporation

Choosing a Name:

• File RUN-LLP (Reserve Unique Name for LLP) for name approval.

Obtaining Designated Partner Identification Number (DPIN) and Digital Signature Certificate (DSC):

• All designated partners must have DPIN and DSC.

Filing Incorporation Form:

• Form FiLLiP (Form for Incorporation of LLP) is filed with MCA, which integrates DIN allotment as well.

• Form 9: Consent to act as designated partners.

Submission of Documents:

• Proof of identity and address of partners.

• Address proof of the registered office.

• LLP Agreement defining the rights and duties of partners.

Certificate of Incorporation:

• Issued by the RoC after verifying the submitted documents.

LLP Agreement Filing:

• Form 3 must be filed within 30 days of incorporation to register the LLP Agreement.

Key Differences Between Company and LLP Incorporation:

• Liability: LLP partners have limited liability but are also agents of the LLP.

• Compliance: Companies have more stringent compliance requirements, including regular board meetings and maintenance of minutes, whereas LLPs have simpler regulations.

• Taxation: Companies are subject to corporate tax rates, while LLPs are taxed as partnerships, often resulting in different tax implications.

Both entities provide limited liability but cater to different business needs and operational scales, influencing the choice of structure based on business objectives and regulatory preferences.

Company and LLP Incorporation

For Companies

Annual Return (Form MGT-7/MGT-7A)

• Form MGT-7: Applicable to all companies except small companies and OPCs.

• Form MGT-7A: Simplified form for small companies and OPCs.

• Details Required:

  • Shareholding pattern.

  • Changes in directorships.

  • Details of annual general meetings.

  • Debt structure and other company details.

• Due Date:

  • Within 60 days of holding the annual general meeting (AGM).

  • For most companies, the AGM is required to be held within 6 months from the end of the financial year (typically by 30th September).

  • Hence, the due date for filing MGT-7/MGT-7A is generally 29th November.

Financial Statements (Form AOC-4/AOC-4 XBRL/AOC-4 CFS)

• Form AOC-4: For filing the company’s financial statements.

• Form AOC-4 XBRL: For companies required to file their financial statements in XBRL format (e.g., listed companies, public companies with a paid-up capital of ₹5 crore or more).

• Form AOC-4 CFS: For companies with consolidated financial statements.

• Details Required:

  • Balance sheet.

  • Profit and loss account.

  • Cash flow statement.

  • Auditor’s report.

  • Board’s report.

• Due Date:

  • Within 30 days from the date of the AGM.

  • Typically, the due date is 30th October for companies with a financial year ending 31st March.

For LLPs

Annual Return (Form LLP-11)

• Details Required:

  • Summary of the partners.

  • Changes in the partnership structure.

  • Contribution and obligations of the partners.

• Due Date:

  • Within 60 days from the end of the financial year.

  • Generally, the due date is 30th May for LLPs.

Statement of Accounts and Solvency (Form LLP-8)

• Details Required:

  • Financial position, including assets, liabilities, and income.

  • Declaration on the solvency of the LLP by the designated partners.

• Due Date:

  • Within 30 days from the end of six months of the financial year.

  • Typically, the due date is 30th October.

Penalties for Non-Compliance

• Companies: Late filing of annual returns or financial statements can attract penalties under Section 92 and Section 137 of the Companies Act, 2013. Penalties include a fine for the company and officers in default, with additional fines for each day of delay.

• LLPs: Delayed filings of Form LLP-11 and LLP-8 attract additional fees of ₹100 per day until the forms are filed.

By adhering to these due dates and requirements, companies and LLPs can avoid penalties and ensure compliance with MCA regulations.

Filing of Financial Statements and Annual Returns

For Companies

1. Register of Members (Form MGT-1)

   • Details: Records details of shareholders, including name, address, date of becoming a member, and the number of shares held.

   • Updates: Ongoing; any change in the ownership or details of the shareholders must be updated promptly.

2. Register of Directors and Key Managerial Personnel (Form MBP-1 and DIR-12)

   • Details: Includes details like name, address, nationality, and other directorships held.

   • Updates: Must be updated within 30 days of any change in directorship or key managerial personnel.

3. Register of Charges (Form CHG-1 and CHG-7)

   • Details: Records details of charges created by the company on its assets.

   • Updates: Register must be updated whenever a charge is created, modified, or satisfied. Filings must be done within 30 days of the event.

4. Register of Loans and Investments (Section 186)

   • Details: Tracks loans, guarantees, and securities provided, and investments made by the company.

   • Updates: Ongoing; any transaction in the scope of Section 186 must be recorded.

5. Register of Contracts or Arrangements (Form MBP-4)

   • Details: Maintains a record of contracts or arrangements in which directors are interested.

   • Updates: Must be updated as and when new contracts or arrangements are entered into.

6. Minutes of Meetings (Section 118)

   • Details: Records proceedings of board meetings, committee meetings, and general meetings.

   • Due Dates: Minutes must be signed and entered into the minutes book within 30 days of the meeting.

7. Register of Debentures (Section 88)

   • Details: Includes the particulars of debenture holders and their holdings.

   • Updates: As per changes in debenture ownership.

For LLPs

1. Register of Partners (Section 23)

   • Details: Contains the names, addresses, contributions, and other details of the partners.

   • Updates: Must be updated whenever there is a change in the partners or their details, within 30 days of the change.

2. Books of Accounts (Section 34)

   • Details: LLPs are required to maintain books of accounts that reflect the true and fair view of their state of affairs.

   • Due Dates: Must be maintained on a cash or accrual basis and according to the double-entry system. These must be prepared annually and kept at the registered office.

3. Minutes of Meetings

   • Details: Although not mandatory like for companies, maintaining minutes for LLP meetings is a good practice for records and dispute resolution.

   • Updates: Ongoing.

Penalties for Non-Compliance

• Companies: Non-maintenance or improper maintenance of statutory registers can attract fines. For instance, failing to maintain the Register of Members or Register of Directors can lead to a fine of up to ₹50,000 and a continuing fine for each day the default continues.

• LLPs: Failure to maintain proper books of account or registers can result in penalties, typically starting from ₹10,000 and an additional fine for continued defaults.

Maintaining these statutory registers and records accurately and updating them on time helps companies and LLPs ensure compliance with regulatory requirements and avoid penalties.

Maintenance of Statutory Registers and Records

1. Board Meetings

Frequency of Board Meetings

• Private Companies: At least two board meetings in a calendar year, with a minimum gap of 90 days between them.

• Public Companies: At least four board meetings each year, with not more than 120 days gap between two consecutive meetings.

Notice of Board Meeting

• Notice Period: Minimum 7 days in writing to every director at their registered address via hand delivery, post, or electronic means.

• Shorter Notice: Permissible if at least one independent director is present at the meeting. If not, decisions are valid only after ratification by at least one independent director.

Agenda and Minutes of Meetings

• Agenda: Circulated in advance to all directors.

• Minutes: Must be prepared, signed, and entered into the minutes book within 30 days of the meeting.

Penalties for Non-Compliance

• Failure to hold the required number of board meetings can result in fines up to ₹25,000 for the company and ₹5,000 for each officer in default.

2. Shareholders' Meetings

Annual General Meeting (AGM)

• Applicability: Mandatory for public companies and private companies (other than OPCs).

• Due Date:

  • The first AGM must be held within 9 months from the end of the first financial year.

  • Subsequent AGMs must be held within 6 months from the end of the financial year, and not later than 15 months from the previous AGM.

  • Typically, for companies with a financial year ending on 31st March, the AGM is to be held by 30th September.

Notice of AGM

• Notice Period: At least 21 clear days before the meeting (excluding the date of sending and date of meeting).

• Mode of Sending: Hand delivery, post, or electronic means to every member, director, and auditor.

Agenda and Minutes of AGM

• Agenda: Should include key resolutions such as approval of financial statements, declaration of dividends, appointment of directors, and auditors.

• Minutes: Must be prepared, signed, and maintained in the minutes book within 30 days of the meeting.

Extraordinary General Meeting (EGM)

• Applicability: Called to discuss urgent matters requiring shareholder approval that cannot wait until the AGM.

• Notice: Same as for the AGM, at least 21 clear days notice.

Penalties for Non-Compliance

• Not holding an AGM or EGM as required can result in a fine of up to ₹1,00,000 for the company, with an additional fine of ₹5,000 for each day the default continues.

3. Key Resolutions Requiring Shareholder Approval

• Ordinary Resolutions: Require a simple majority (more than 50% of votes).

• Special Resolutions: Require at least 75% of the votes cast in favor.

4. Compliance with Quorum Requirements

Board Meetings:

• Private Companies: Minimum 2 directors.

• Public Companies: One-third of total directors or 2 directors, whichever is higher.

AGM/EGM:

• Private Companies: 2 members personally present.

• Public Companies: Based on the number of members:

  • Upto 1000 members: 5 members.

  • Between 1001 and 5000: 15 members.

  • More than 5000: 30 members.

Compliance with the procedural requirements for board and shareholders' meetings ensures that companies uphold good governance standards and avoid legal repercussions.

Compliance with Board's and Shareholder's Meetings

For Companies

1. Change in Directors or Key Managerial Personnel (KMP)

   • Form DIR-12: Filed when there is an appointment, resignation, or change in the directors or KMP.

   • Due Date: Within 30 days of the event.

   • Penalty for Non-Compliance: Fine of ₹500 per day of delay up to a maximum of ₹2,00,000 for the company and ₹50,000 for each officer in default.

2. Change in Registered Office

   • Form INC-22: For shifting the registered office within the same city, state, or from one state to another.

   • Due Date: Within 15 days of the change.

   • Penalty for Non-Compliance: Fine of ₹1,000 per day up to a maximum of ₹1,00,000.

3. Increase in Authorized Share Capital

   • Form SH-7: Filed for increasing the authorized share capital of the company.

   • Due Date: Within 30 days of passing the resolution.

   • Penalty for Non-Compliance: Additional fee of ₹2 per ₹10,000 of nominal capital for each day of delay.

4. Allotment of Shares

   • Form PAS-3: For the return of allotment when new shares are issued.

   • Due Date: Within 15 days of allotment.

   • Penalty for Non-Compliance: ₹1,000 per day of default up to ₹5,00,000.

5. Creation, Modification, or Satisfaction of Charges

   • Form CHG-1 (Creation or modification) and CHG-4 (Satisfaction of charges).

   • Due Date: Within 30 days of the event.

   • Penalty for Non-Compliance: Additional fees depend on the period of delay; if delayed beyond 300 days, permission from the Central Government is required.

6. Change in Memorandum or Articles of Association

   • Form MGT-14: For special resolutions like alteration of the MoA or AoA.

   • Due Date: Within 30 days of passing the resolution.

   • Penalty for Non-Compliance: Fine of ₹1,000 per day up to a maximum of ₹5,00,000.

7. Filing of Resolutions and Agreements

   • Form MGT-14: For filing special resolutions or agreements under Section 117.

   • Due Date: Within 30 days of passing the resolution or making the agreement.

   • Penalty for Non-Compliance: Same as for change in MoA or AoA.

For LLPs

1. Change in LLP Agreement

   • Form LLP-3: Filed when there is any amendment to the LLP agreement.

   • Due Date: Within 30 days of the amendment.

   • Penalty for Non-Compliance: ₹100 per day of delay without any ceiling.

2. Change in Partners/Designated Partners

   • Form LLP-4: For the appointment, resignation, or change of partners.

   • Due Date: Within 30 days of the change.

   • Penalty for Non-Compliance: ₹100 per day of delay.

3. Change in Registered Office

   • Form LLP-15: For shifting the registered office of an LLP.

   • Due Date: Within 30 days of the change.

   • Penalty for Non-Compliance: ₹100 per day of delay.

4. Filing of Statement of Accounts and Solvency

   • Form LLP-8: Filed annually, but also event-based if there is an alteration.

   • Due Date: Within 30 days from the end of six months of the financial year.

   • Penalty for Non-Compliance: ₹100 per day of delay.

5. Filing of Annual Return

   • Form LLP-11: Filed annually but event-based in case of changes in partners or registered office.

   • Due Date: Within 60 days of the financial year-end.

   • Penalty for Non-Compliance: ₹100 per day of delay.

General Guidelines

• Additional Fees: MCA imposes additional fees for late filings, which increase with the delay duration.

• Rectification: If event-based filings are delayed beyond the prescribed period, the company or LLP may need to seek condonation of delay through Form CG-1.

Timely compliance with event-based filings helps companies and LLPs maintain transparency and avoid regulatory penalties.

Event Based Filings

Advisory on Corporate Governance

Advisory on Corporate Governance focuses on guiding companies to adhere to the best practices, rules, and regulations that ensure transparency, accountability, and fairness in their operations. Corporate governance primarily revolves around the roles and responsibilities of the board of directors, management, shareholders, and other stakeholders. Here's an elaboration on corporate governance advisory, including key elements, due dates, and applicable limits:

Key Elements of Corporate Governance Advisory

1. Board Composition and Responsibilities:

   • Advisory on Board Structure: Ensuring the board includes a balanced mix of executive, non-executive, and independent directors.

   • Duties of Directors: Advising on statutory duties, fiduciary responsibilities, and compliance with laws.

   • Board Committees: Setting up necessary committees like Audit Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility (CSR) Committee, as per legal requirements.

2. Meetings and Disclosures:

   • Board Meetings: Ensuring the company holds the requisite number of board meetings and maintains proper minutes.

   • AGM and EGM: Advising on the conduct of Annual General Meetings (AGMs) and Extraordinary General Meetings (EGMs) with adherence to statutory requirements.

   • Quarterly Results: Guidance on the preparation and disclosure of quarterly financial results, particularly for listed companies.

3. Compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

   • For listed companies, ensuring compliance with continuous disclosure requirements, including the publication of price-sensitive information.

4. Risk Management and Internal Controls:

   • Developing robust internal control systems.

   • Implementing risk management policies and advising on regular risk assessments.

5. CSR and Sustainability:

   • Advising on CSR policy formulation, spending, and reporting as per Section 135 of the Companies Act, 2013.

   • Guiding on sustainability reporting and adherence to environmental, social, and governance (ESG) norms.

6. Stakeholder Relations:

   • Enhancing communication with shareholders and other stakeholders.

   • Ensuring fair treatment of minority shareholders.

Due Dates and Applicable Limits in Corporate Governance

1. Board Meetings:

   • Due Dates: Private companies should hold at least two board meetings per year with a minimum gap of 90 days, while public companies need at least four board meetings annually, with no more than 120 days between two meetings.

   • Penalties: Non-compliance can attract a penalty of ₹25,000 for the company and ₹5,000 for each officer in default.

2. Annual General Meeting (AGM):

   • Due Date: Within 6 months from the end of the financial year, but not later than 15 months from the previous AGM.

   • Penalties: Failure to hold an AGM can result in a fine up to ₹1,00,000 for the company and ₹5,000 for each day the default continues for the officer in default.

3. Quarterly Financial Results (for listed companies):

   • Due Dates: Results should be filed within 45 days from the end of each quarter, except the last quarter, which should be filed within 60 days.

   • Penalties: Non-compliance with SEBI regulations can result in penalties including suspension from trading.

4. Corporate Social Responsibility (CSR) Reporting:

   • Due Date: CSR activities must be reported annually in the board’s report.

   • Applicable Limits: Companies with a net worth of ₹500 crore or more, a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more are required to spend 2% of their average net profits over the preceding three years on CSR.

   • Penalties: Non-compliance results in a penalty of twice the amount required to be transferred to the CSR fund, or ₹1 crore, whichever is less.

5. SEBI Disclosure Requirements:

   • Due Date: Continuous disclosure of material events or price-sensitive information.

   • Penalties: Non-disclosure can attract fines from SEBI, including significant monetary penalties and restrictions on trading.

6. Director's Disclosures:

   • Due Date: Directors must disclose their interest in any contract or arrangement in Form MBP-1 at the first board meeting of the financial year or whenever there is a change.

   • Penalties: Failure to disclose interest can result in penalties up to ₹50,000.

Best Practices for Corporate Governance Advisory

• Regular Training: Directors and officers should be regularly trained on governance practices and legal updates.

• Ethics Policies: Companies should develop and implement ethics policies to guide behavior.

• Performance Evaluations: Conduct regular evaluations of the board’s performance and effectiveness.

Corporate governance advisory ensures that companies operate within the legal framework while also adopting practices that promote long-term sustainability and stakeholder confidence.

XBRL (eXtensible Business Reporting Language) Filing

XBRL (eXtensible Business Reporting Language) Filing is a standard for digital business reporting that is mandatory for certain types of companies in India under the Companies Act, 2013. It ensures transparency, standardization, and automation in financial reporting by enabling companies to submit their financial statements in a machine-readable format. Here’s an elaboration on XBRL filing, including its due dates and applicable limits:

1. Applicability of XBRL Filing

XBRL filing is mandatory for the following entities:

• Listed Companies.

• Public Companies with a paid-up capital of ₹5 crore or more.

• Public Companies with a turnover of ₹100 crore or more.

• Companies that are required to prepare their financial statements in accordance with Companies (Indian Accounting Standards) Rules, 2015.

2. Forms Used for XBRL Filing

• Form AOC-4 XBRL: For filing financial statements in XBRL format.

• Form CRA-4: For filing cost audit reports in XBRL format (if applicable).

3. Details Required for XBRL Filing

• Financial Statements including:

  • Balance Sheet.

  • Profit and Loss Account.

  • Cash Flow Statement.

  • Notes to Accounts.

  • Auditor’s Report.

• Director’s Report.

• Corporate Social Responsibility (CSR) report (if applicable).

4. Due Dates for XBRL Filing

• Form AOC-4 XBRL: Must be filed within 30 days from the date of the Annual General Meeting (AGM). If the AGM is held by 30th September, the due date for filing would be 30th October.

• Form CRA-4: For cost audit reports, the due date is within 30 days from the receipt of the cost audit report by the company, and the cost audit report should be received within 180 days from the end of the financial year.

5. Penalties for Non-Compliance

• Late Filing Fees: Additional fees are applicable based on the number of days of delay. The MCA imposes additional fees as follows:

  • ₹100 per day of delay.

• Fines: For persistent non-compliance, the company may be liable for fines ranging from ₹1,00,000 to ₹5,00,000, and every officer in default may face fines up to ₹50,000 or imprisonment for up to 6 months, or both.

6. Benefits of XBRL Filing

• Standardization: Ensures that financial information is reported in a standard format, making it easier to analyze and compare.

• Automation: Facilitates automated data collection and analysis by regulatory authorities.

• Transparency: Enhances transparency by providing detailed financial data in a structured format.

7. Preparation for XBRL Filing

• XBRL Conversion Software: Companies need to use software that converts their financial statements into XBRL format.

• Validation Tool: The MCA provides an XBRL validation tool to ensure that the converted documents meet the prescribed standards.

• Training and Capacity Building: It is advisable for companies to train their finance and compliance teams on XBRL filing procedures.

By adhering to these requirements, companies ensure compliance with the regulatory standards set by the MCA, thereby avoiding penalties and contributing to improved corporate governance and transparency in financial reporting.

Filing of Charge Documents

Filing of charge documents is a critical compliance requirement under the Companies Act, 2013, which mandates that companies register charges created on their assets with the Registrar of Companies (RoC). This ensures that stakeholders, including creditors and the public, are informed about the encumbrances on the company’s assets. Here’s an elaboration on the filing of charge documents, including due dates and applicable limits:

1. Types of Charges

Charges can be created for securing loans or obligations and can include:

• Mortgage on immovable properties.

• Hypothecation of movable assets.

• Pledge of securities.

• Any other charge on assets of the company.

2. Relevant Forms for Filing Charges

• Form CHG-1: For creating or modifying charges (other than those related to debentures).

• Form CHG-9: For creating or modifying charges related to debentures.

• Form CHG-4: For the satisfaction of charges (i.e., when the charge is fully repaid or satisfied).

3. Due Dates for Filing

• Creation or Modification of Charge:

  • Form CHG-1/CHG-9: Must be filed within 30 days from the date of creation or modification of the charge.

  • A company can file the form within an additional 30 days with payment of an additional fee, and beyond that, with an application for condonation of delay with the Central Government up to a maximum of 300 days.

• Satisfaction of Charge:

  • Form CHG-4: Must be filed within 30 days from the date of satisfaction of the charge.

4. Penalties for Non-Compliance

• Additional Fees: If there is a delay in filing the charge beyond 30 days, additional fees are levied based on the delay duration.

  • Up to 30 days: Twice the normal filing fee.

  • Between 31 to 60 days: Four times the normal filing fee.

  • Between 61 to 90 days: Six times the normal filing fee.

• Condonation of Delay: If the delay exceeds 90 days, an application for condonation of delay under Section 87 of the Companies Act, 2013 must be filed, accompanied by Form CHG-8.

• Penalties:

  • For the company, a fine ranging from ₹1,00,000 to ₹10,00,000.

  • For officers in default, a fine ranging from ₹25,000 to ₹1,00,000 or imprisonment up to 6 months, or both.

5. Importance of Filing Charge Documents

• Transparency: It ensures that any encumbrance on the company’s assets is publicly disclosed, which is critical for creditors and investors.

• Legal Protection: Proper registration of charges gives legal protection to creditors in case of the company’s insolvency.

• Priority in Repayment: Registered charges typically have priority over unregistered ones in the event of liquidation.

6. Steps to File Charge Documents

1. Creation/Modification:

   • Obtain a copy of the charge instrument.

   • Fill and file Form CHG-1 or CHG-9 with details of the charge, such as the amount secured, terms of the charge, and particulars of the property charged.

   • Attach the charge instrument and the relevant supporting documents.

   • Submit the form electronically to the RoC.

2. Satisfaction:

   • Once the charge is satisfied (repaid), prepare the satisfaction of charge letter.

   • File Form CHG-4 with details of the satisfaction.

   • Attach necessary documents such as a no-dues certificate from the creditor.

Timely filing of charge documents ensures compliance with the statutory requirements, maintains the credibility of the company, and provides transparency to stakeholders regarding the financial obligations of the company.

Assistance with Dematerialization of Securities

Assistance with Dematerialization of Securities involves helping companies transition their physical share certificates into electronic form, which is a mandate under the Companies Act, 2013 for certain categories of companies. This process is crucial for enhancing the efficiency, transparency, and security of securities transactions. Here's an elaboration on the dematerialization of securities, due dates, and applicable limits:

1. Applicability of Dematerialization

As per Section 29 of the Companies Act, 2013 and the relevant rules, dematerialization is mandatory for:

• Listed Companies: All listed companies must issue and maintain their securities in dematerialized form.

• Unlisted Public Companies: Effective from October 2, 2018, all unlisted public companies must:

  • Issue securities in dematerialized form.

  • Facilitate dematerialization of all existing securities.

• Private Companies (applicable from October 27, 2023): With exceptions for small companies and government companies, private companies are also required to comply within 18 months from the end of the financial year 2023, i.e., by September 30, 2024.

2. Steps in the Dematerialization Process

1. Appointment of RTA (Registrar and Transfer Agent): Companies appoint RTAs to manage the dematerialization process.

2. Adopting Demat System:

   • Register with a depository such as NSDL (National Securities Depository Limited) or CDSL (Central Depository Services Limited).

   • Obtain an International Securities Identification Number (ISIN) for each security.

3. Notification to Shareholders: Inform existing shareholders about the dematerialization process and encourage them to convert their physical shares to electronic form.

4. Submission of Securities:

   • Shareholders submit their physical certificates to their Depository Participant (DP), who forwards them to the RTA.

   • The RTA verifies the certificates and converts them into dematerialized form.

3. Filing Requirements

• Form PAS-6: Unlisted public companies must file this form half-yearly to report the reconciliation of share capital with the depositories.

  • Due Dates:

    • For the half-year ending March 31, the form must be filed by April 30.

    • For the half-year ending September 30, the form must be filed by October 31.

  • Penalty for Non-Compliance: ₹10,000 plus ₹100 for each day the default continues.

4. Benefits of Dematerialization

• Reduction in Risks: Eliminates the risk of loss, theft, or damage to physical certificates.

• Ease of Transfer: Facilitates easy and faster transfer of securities without physical movement.

• Enhanced Transparency: Enables better tracking of shareholding patterns and ensures compliance with corporate governance norms.

5. Penalties for Non-Compliance

• Monetary Penalties: Non-compliance with dematerialization requirements can attract fines up to ₹1,00,000 for the company and ₹5,000 per day for the continuing default for officers in default.

• Restriction on Issuance: Companies that fail to comply may be restricted from issuing new securities in physical form, affecting their capital-raising abilities.

6. Continuous Compliance

• Companies must ensure that all future issuances of securities, whether by public issue, rights issue, or private placement, are in dematerialized form.

• Maintenance of Demat Accounts: Companies should maintain their accounts with a depository to ensure that any change in ownership is electronically recorded and updated.

Our Assistance in Dematerialization

• Advisory Services: Guide companies on the legal requirements and best practices for dematerialization.

• Liaison with Depositories: Assist in registering with depositories like NSDL or CDSL and obtaining ISINs.

• Coordination with RTAs: Help in appointing and coordinating with RTAs for smooth processing of demat requests.

• Training: Train the company’s staff on handling demat transactions and compliance requirements.

By ensuring compliance with dematerialization mandates, companies can improve the efficiency of their securities transactions, enhance corporate governance, and align with global best practices.

Compliance under the Foreign Exchange Management Act (FEMA), 1999

Compliance under the Foreign Exchange Management Act (FEMA), 1999, is crucial for companies engaged in foreign exchange transactions in India. FEMA regulates the external trade and payments to maintain foreign exchange market stability. Below is an elaboration on key compliance requirements, due dates, and applicable limits:

1. Key Compliance Areas under FEMA

1. Foreign Direct Investment (FDI) Reporting:

   • Form FC-GPR: Filed for the reporting of the issue of shares to foreign investors.

     • Due Date: Within 30 days from the date of issue of shares.

   • Form FC-TRS: Filed for the transfer of shares between resident and non-resident entities.

     • Due Date: Within 60 days of receipt of consideration.

   • Form FLA (Annual Return on Foreign Liabilities and Assets): Filed to report foreign liabilities and assets.

     • Due Date: By 15th July every year.

2. External Commercial Borrowings (ECB):

   • Form ECB-2: Monthly return filed to report ECB transactions.

     • Due Date: Within 7 working days from the end of the month to which it relates.

   • Limits: ECB can be raised up to a prescribed limit, subject to specific conditions depending on the borrower’s eligibility and purpose.

3. Overseas Direct Investment (ODI):

   • Form ODI: Filed for making investments in a foreign entity by an Indian company.

     • Due Date: Filing before making any financial commitment in the foreign entity.

   • Annual Performance Report (APR): Filed to report the performance of the overseas entity.

     • Due Date: By 31st December each year.

4. Liaison, Branch, and Project Offices:

   • Annual Activity Certificate (AAC): Submitted by liaison/branch/project offices.

     • Due Date: Within 30 days from the end of the financial year.

5. Import and Export of Goods and Services:

   • Importers must submit the Bill of Entry for imported goods, and exporters must file the Shipping Bill.

   • Due Dates: Payment against imports must be settled within 180 days. Export proceeds must be realized within 9 months from the date of export.

2. Penalties for Non-Compliance

• Compounding of Offences: FEMA violations can be compounded by the Reserve Bank of India (RBI) or the Directorate of Enforcement (DoE).

• General Penalty: For non-compliance, a penalty of up to thrice the sum involved in the contravention or ₹2,00,000 (whichever is higher), and if the contravention continues, an additional fine up to ₹5,000 for every day the contravention continues.

3. Reporting Forms and Returns

• Form FC-GPR: For reporting the issue of shares to foreign investors.

• Form FC-TRS: For transfer of shares from a resident to a non-resident and vice versa.

• Form FLA: Annual reporting of foreign liabilities and assets.

• Form ODI: For investments in overseas entities by Indian entities.

• Form ECB-2: For reporting external commercial borrowings monthly.

4. Compliance Process

1. For FDI:

   • After receiving FDI, file FC-GPR within 30 days.

   • Any transfer of shares involving foreign investors should be reported via FC-TRS within 60 days.

   • Maintain proper records of all transactions and ensure timely submissions to avoid penalties.

2. For ECB:

   • File ECB-2 monthly, even if there is no transaction, to ensure compliance.

   • Adhere to the borrowing limits and end-use restrictions specified by RBI.

3. For ODI:

   • Ensure Form ODI is filed before making the investment.

   • Submit the APR annually to report the financials of the foreign entity.

4. For Liaison/Branch Offices:

   • Ensure the AAC is filed timely to report the activities of these offices.

5. Practical Tips for Compliance

• Monitoring Deadlines: Maintain a compliance calendar for all FEMA-related filings.

• Documentation: Keep comprehensive records of all foreign exchange transactions.

• Periodic Review: Regularly review compliance status and update the management on any changes in FEMA regulations.

• Expert Consultation: Engage experts for complex transactions like ECBs, ODIs, or large FDI transactions to ensure correct interpretation and compliance with FEMA.

By adhering to FEMA compliance requirements, companies can avoid significant penalties and ensure smooth international transactions.

Assistance in the Closure of Companies and LLPs

1. Closure of Companies

There are two primary methods for closing a company under the Companies Act, 2013:

A. Voluntary Strike Off (Fast Track Exit)

This method allows companies to voluntarily apply for closure if they have no liabilities and have not been operational for a significant period.

1. Eligibility:

   • No pending liabilities or debts.

   • No ongoing litigations.

   • Companies that haven't commenced business within one year of incorporation or have been inactive for two consecutive financial years.

2. Procedure:

   • Board Resolution: Pass a resolution to close the company.

   • Form STK-2: File the application for strike off with the RoC.

     • Attach necessary documents, including indemnity bonds, affidavits from directors, and financial statements.

   • Publication: RoC will publish the notice in the official gazette and provide a 30-day window for objections.

3. Due Dates:

   • File Form STK-2 at any point when the company decides to close.

   • No specific due date, but it's advisable to act promptly to avoid annual compliance filings and penalties.

4. Applicable Limits:

   • Fee for STK-2: ₹10,000.

   • If there are any pending compliances, additional fees and penalties might apply before closure can be processed.

B. Compulsory Winding Up

This method is court-driven and is applicable under specific circumstances such as insolvency, inability to pay debts, or any directive from the Tribunal.

1. Eligibility:

   • Inability to pay debts.

   • A special resolution passed by the company for winding up.

   • Tribunal orders due to business being conducted in a fraudulent manner.

2. Procedure:

   • File a petition for winding up with the National Company Law Tribunal (NCLT).

   • Appoint a liquidator to settle liabilities and distribute remaining assets.

3. Due Dates:

   • No fixed dates, as this depends on the court's proceedings and directives.

4. Penalties:

   • Non-compliance with Tribunal orders can lead to severe penalties, including fines and disqualification of directors.

2. Closure of LLPs

The closure process for LLPs under the LLP Act, 2008 includes both voluntary and compulsory closure mechanisms.

A. Voluntary Strike Off

1. Eligibility:

   • LLP should not have any liabilities.

   • Should not have carried out any business for at least one year.

2. Procedure:

   • Resolution by Partners: Partners must pass a resolution for closure.

   • Form LLP-24: File the application for strike off with the RoC.

     • Attach a statement of accounts showing nil assets and liabilities and an affidavit from partners.

   • Publication: RoC will publish the notice, and there will be a 30-day period for objections.

3. Due Dates:

   • File Form LLP-24 at any point after meeting the eligibility criteria.

4. Applicable Limits:

   • Fee for LLP-24: ₹5,000.

   • Penalties for pending filings (e.g., Form LLP-8 or LLP-11) must be cleared before the strike-off application is processed.

B. Compulsory Winding Up

This is initiated by creditors, partners, or the Tribunal when the LLP is unable to pay its debts or acts against public interest.

1. Procedure:

   • File a petition with the Tribunal.

   • Appoint a liquidator for asset distribution and debt settlement.

2. Due Dates:

   • Based on Tribunal timelines and legal proceedings.

3. Penalties:

   • Failure to comply with Tribunal directions can lead to fines and other legal consequences.

Key Points for Assistance:

• Document Preparation: Help in preparing and filing necessary resolutions, forms, and affidavits.

• Clearance of Dues: Ensure that all statutory dues and filings are completed before applying for closure.

• Coordination with Authorities: Liaise with the RoC and Tribunal to expedite the process.

• Stakeholder Communication: Notify stakeholders, creditors, and regulators about the closure.

Assisting in the closure of companies and LLPs ensures a smooth transition, avoiding future liabilities and ensuring compliance with all legal requirements.

MSME Registration and Compliance

MSME Registration and Compliance under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 provides benefits to businesses classified as Micro, Small, or Medium Enterprises (MSMEs) in terms of financial support, tax benefits, and other government incentives. Here's an elaboration on MSME registration and the compliance requirements, along with due dates and applicable limits:

1. MSME Classification (Effective from July 1, 2020)

MSMEs are classified based on investment in plant and machinery or equipment and annual turnover:

CategoryInvestment in Plant & Machinery/EquipmentAnnual TurnoverMicroUp to ₹1 croreUp to ₹5 croreSmallUp to ₹10 croreUp to ₹50 croreMediumUp to ₹50 croreUp to ₹250 crore

2. MSME Registration (Udyam Registration)

1. Procedure:

   • Udyam Registration is the official process for registering an enterprise as an MSME.

   • Registration is done online through the Udyam Registration Portal.

   • The process is based on self-declaration without the need to upload documents, except for Aadhaar and PAN.

2. Details Required:

   • Aadhaar number of the proprietor, partner, or director.

   • PAN and GSTIN (if applicable).

   • Details of the business activity, investment, and turnover.

3. Benefits of Registration:

   • Access to government schemes and subsidies.

   • Easier access to bank loans at lower interest rates.

   • Protection against delayed payments.

   • Concession on utility bills and priority sector lending.

3. MSME Compliance

1. Filing of Memorandum (Section 8 of the MSMED Act):

   • MSMEs are required to file a memorandum with the appropriate authorities, now simplified through Udyam Registration.

2. Annual Return on MSME Payments (Form MSME-1):

   • Companies and LLPs are required to file Form MSME-1 to report the outstanding payments to MSME suppliers for supplies of goods or services.

   • Due Dates:

     • For the half-year ending 30th September, by 31st October.

     • For the half-year ending 31st March, by 30th April.

   • Penalty for Non-Compliance: Fine up to ₹25,000 for the company and ₹25,000 to ₹3,00,000 for officers in default.

3. Filing of Udyam Update:

   • MSMEs are required to update their Udyam registration details annually, including turnover and investment figures.

   • Due Date: By 31st March of each year.

4. Filing of Returns under Other Laws:

   • MSMEs must comply with applicable tax laws like GST and Income Tax, filing returns within the stipulated deadlines.

   • GST Returns: Monthly/Quarterly depending on turnover and return type.

   • Income Tax Returns: By 31st July (non-audit cases) or 30th September (audit cases).

4. Penalties for Non-Compliance

• For Non-Registration: While there is no direct penalty for non-registration under MSME, missing out on registration can lead to the loss of various government benefits and protections.

• For Delayed Payments: Buyers who delay payments to MSME suppliers beyond 45 days are liable to pay interest three times the bank rate notified by RBI.

5. Practical Tips for MSME Compliance

• Regular Updates: Keep financial data updated and ensure timely renewal of Udyam registration.

• Monitor Payments: Track payments due to MSME suppliers to ensure compliance with Form MSME-1 filing.

• Leverage Benefits: Take advantage of the benefits available to registered MSMEs, such as subsidies, tax exemptions, and loan schemes.

By registering under the MSME framework and adhering to compliance requirements, businesses can avail of government support and protect their interests, especially concerning payments and financial assistance.

Corporate Social Responsibility (CSR) Compliance

Corporate Social Responsibility (CSR) Compliance under Section 135 of the Companies Act, 2013 mandates certain companies to spend a portion of their profits on social development activities. Here's an elaboration on CSR compliance, including due dates and applicable limits:

1. Applicability of CSR

CSR provisions apply to companies meeting any of the following criteria in the preceding financial year:

• Net worth of ₹500 crore or more.

• Turnover of ₹1,000 crore or more.

• Net profit of ₹5 crore or more.

2. CSR Committee Formation

1. CSR Committee Composition:

   • Public Companies: Minimum of three directors, with at least one independent director.

   • Private Companies: At least two directors.

   • Unlisted Companies: No independent director required.

   • Companies not required to appoint an independent director can have their CSR committee without one.

2. CSR Policy:

   • The CSR Committee formulates a CSR policy, recommending it to the board, which includes projects or programs to be undertaken.

   • The policy should also detail monitoring mechanisms and implementation schedules.

3. CSR Expenditure Requirement

1. CSR Spending:

   • Companies are required to spend at least 2% of the average net profits made during the three immediately preceding financial years.

   • If the company fails to spend the prescribed amount, the board must specify the reasons in the board report.

2. Eligible CSR Activities:

   • Eradicating hunger, poverty, and malnutrition.

   • Promoting education and gender equality.

   • Ensuring environmental sustainability.

   • Protection of national heritage.

   • Support for armed forces veterans.

   • Contribution to government funds like PM CARES Fund, among others.

4. Reporting and Disclosure

1. Board Report:

   • The board’s annual report must include a detailed disclosure of CSR initiatives undertaken, the amount spent, and reasons for any unspent amount.

2. Form CSR-2:

   • Filing Requirement: Companies must file Form CSR-2 as an addendum to Form AOC-4, reporting their CSR activities for the financial year.

   • Due Date: Same as the due date for filing financial statements (typically 30th October for companies with a financial year ending 31st March).

5. Transfer of Unspent CSR Amount

1. Ongoing Projects:

   • If the CSR obligation relates to ongoing projects, the unspent amount should be transferred to a separate bank account called "Unspent CSR Account" within 30 days from the end of the financial year.

   • The amount must be spent within the next three financial years.

2. Non-Ongoing Projects:

   • For amounts not related to ongoing projects, the unspent amount should be transferred to a fund specified under Schedule VII of the Act, such as PM CARES Fund, within six months from the end of the financial year.

6. Penalties for Non-Compliance

1. Non-Spending of CSR Funds:

   • If the company fails to spend or transfer the unspent amount as required, the company is liable to a penalty twice the amount required to be transferred or spent, or ₹1 crore, whichever is lower.

   • Every officer in default may face a penalty up to one-tenth of the amount required to be transferred or spent, or ₹2 lakh, whichever is lower.

2. Non-Disclosure in Board Report:

   • Failure to disclose CSR activities in the board report can attract penalties under Section 134 of the Companies Act.

7. Practical Compliance Tips

• Regular Review: Periodically review the CSR policy and spending to ensure alignment with statutory requirements.

• Documentation: Maintain detailed records of CSR activities, amounts spent, and approvals.

• Stakeholder Engagement: Involve stakeholders in selecting impactful CSR projects.

• Monitoring: Establish robust mechanisms to monitor the implementation and effectiveness of CSR initiatives.

By adhering to CSR compliance requirements, companies contribute to societal development while ensuring they meet legal obligations, thus enhancing their corporate reputation and stakeholder trust.