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Jul 16, 2012

MCA & SEBI Updates

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MCA Updates
Enforcement of certain provisions of Companies (Second Amendment) Act, 2002
Companies (Second Amendment) Act, 2002, which proposes to bring about several regulatory and procedural changes in Companies Act, 1956 through insertion of provisions in the Act and amendment in various sections of Companies Act, 1956, is not effective till date.
Section 2 of the Amendment Act states that Central Government may appoint a date, by notification in the Official Gazette to bring into force the amendment Act, provided that different dates may be appointed to give into effect different sections of the amendment Act. Drawing its authority from this section, the Ministry of Corporate Affairs, vide Notification S.O. (E) dated July 10, 2012 has notified August 12, 2012 as the effective date of Companies (Second Amendment) Act, 2002, w.r.t. certain sections of Companies Act, 1956. This is for the first time that a date has been notified for any of the sections of the amendment Act, as none of its sections has taken effect till date.
Sections of Companies Act, 1956 which fall under the purview of the Notification and in respect to which the date has been notified are detailed as follows:
Section 17, Section 18 and Section 19 of Companies Act, 1956
Section 17 provides for alteration in Objects Clause of Memorandum of Association and change in Registered Office of companies from one State to another and matters related thereto. The effective amendment calls for the substitution of the text of section with the amended text as provided in Section 7 of the Amendment Act, whereby the authority governing the change in Registered Office from one State to another will be shifted from Company Law Board to Central Government.
Sections 18 prescribes for registration of the Order passed under section 17 and Section 19 specifies the effect of failure to register the same. and in this context the amendment, substitutes the word “Company Law Board” has been substituted with the word “Central Government” in both these sections, as provided in Section 8 of the Amendment Act.
However, it is to be further noted that the Ministry through another Notification S.O.(E) dated July 10, 2012, has further delegated powers of Central Government under the aforementioned sections to the concerned Regional Directors.
Section 141 of Companies Act, 1956
This Section provides for rectification of Register of Charges.In this respect, the effective amendment calls for the substitution of the text of section with the amended text as provided in Section 20 of the Amendment Act, which shifts the authority, to whom application for such registration to be made from “Company law Board” to “Central Government”. Again, these powers of Central Government has further been delegated to the concerned Regional Directors through another Notification S.O.(E) dated July 10, 2012.
Section 188 of the Companies Act, 1956
This section provides for the circulation of members resolution, whereby the requisitionists may ask the company to forward a statement to the members along with the notice of the meeting, provided that in this respect, an application may be made either by the company or of any other person, who claims to be aggrieved by the statement, not to circulate the same to the members. Such an application is at present made before Company Law Board, but the amendment when effective will shift this authority to Central Government. Moreover application may also be made to provide for the costs of the meeting, in whole or in part by the requisitionists, and in this respect also the authority has been transferred from Company Law Board to Central Government. The word “Company Law Board” has therefore been substituted with the words “Central Government” as provided in Section 25 of the Amendment Act.
Again, these powers of Central Government has further been delegated to the concerned Regional Directors through another Notification S.O.(E) dated July 10, 2012.
Ministry of Corporate Affairs through another Notification G.S.R. (E) dated July 10,2012 has in furtherance to the above context made amendment in Companies (Central Government’s) General Rules and Forms Rules, 1956 through Companies (Central Government’s) General Rules and Forms (Amendment ) Rules,2012, effective from August 12th, 2012. The amendment has been made as a result of shifting of authority from Company Law Board to Central Government under sections 17, 18, 19, 141 and 188 of the Companies Act, 1956. It is to be noted that earlier since the petitions were being made before Company Law Board, the detailed procedure was prescribed in the Company Law Board Regulations, 1991, but due to the shifting of authority as mentioned aforesaid, the procedure of making petition under the respective sections has been inserted in Companies (Central Government’s) General Rules and Forms Rules, 1956 through this amendment.
The Rules that has been inserted through this amendment is as follows:

  • A new Rule 4BBB has been inserted after Rule 4BBA, detailing the procedure of petition to be made under Section 17 to the Regional Director- The text that has been inserted in the Companies (Central Government’s) General Rules and Forms Rules, 1956 is same as provided in Regulation 36 of the Company Law Board Regulations, 1991, except the following alterations as follows:
    1. The words “Bench Officer” has been substituted with “Regional Director”. The substitution is inevitable, with the shifting of authority from Company Law Board to Regional Director.
    2. The petition for change in registered office from one state to another has to be made in Form 1 as referred in Annexure “E” along with Form 24AAA as referred in Annexure ‘A’ to the Rules.
    3. Instead of the district, now the newspaper publication of the notice of shifting of registered office from one state to another has to be published in the state where the registered office is situated.
    4. Petition to be made under this Section shall contain a list explicitly stating the names and addresses of the creditors and debenture-holders. Earlier sub-regulation (6) of Regulation 6 didn’t specifically provided the details to be mentioned in the list. Moreover, now the list made up shall not precede the date of filing the petition by more than 1 month, whereas earlier it was 2 months. .
    5. Extracts of the duly authenticated copy of the list of creditors and debenture holders maintained kept at the registered office may be taken by any person on payment of Fifty (50) Rupees to the company, whereas earlier it was Ten (10) Rupees.
  • Rules 6C and 6D have been inserted after Rule 6B, which details on petition to be made under Section 141 and Section 188 of the Companies Act, 1956 respectively.
  • Rule 6E detailing out the content of petition to be filed under Rule 6 has been inserted after Rule 6D. the petition shall set forth the details as follows:
    1. The name of the company, with its status
    2. Date of incorporation
    3. The address of its registered office
    4. Authorized capital paid-up capital with division of different classes of shares and terms of issue of any in the case of preference shares
    5. Main objects in brief for which the company was formed
    6. Present business activities of the company
    7. Grounds for such petition and the nature of relief (s) prayed for.
  • Rule 6F has been inserted which prescribes that documents specified in annexure E shall accompany the petition made under section 17,141 or 188 of the Companies Act, 1956. Further requirements are as follows:
    1. The accompanying documents may be attested by the party or the authorized representative or the advocate.
    2. Where the petition is filed by the authorized representative, memorandum of appearance shall be appended to the petition as in form 2 as referred in annexure E”
  • In Annexure A to the Rules, new form e-form 24AAA has been inserted through which the petition shall be filed to the Regional Director under Sections 17, 18, 19, 141 and 188 of the Companies Act, 1956. Earlier the petition was required to be made in e-form 61.
  • Annexure ‘E’ has been inserted, which contains the following:
    1. “Form 1”, i.e. the form for filing petitions under section 17, 141 and 188 of the Companies Act, 1956
    2. Form 2- Memorandum of Appearance
    3. Documents to be attached with the Petition made under sections 17(2), 141(1) and (3) and 188(5) of the Companies Act, 1956.
MCA notifies new rules for LLP Windingup & Dissolution
MCA vide Notification dated 10th July 2012 has notified the Limited Liability Partnership (Windingup & Dissolution ) Rules 2012. The new rules will supersede the existing Limited Liability Partnership (Windingup & Dissolution ) Rules 2010.
SEBI Updates
Amendment to the Equity Listing Agreement – Platform for E-Voting by Shareholders of Listed Entities
1. As per the Companies Act, Buy Back Regulations, Delisting Regulations etc the listed companies have to conduct certain businesses only by way of postal ballot with an option to pass any other businesses as well by postal ballot.
2. Further, as per section 192A of the Act, a postal ballot also includes voting by electronic mode in order to provide opportunities for wider shareholder participation in important decisions of the companies
3. In line with the same and with an intent to provide wider participation of shareholders, SEBI, at its Board Meeting held on 26th June 2012 took the decision to make e voting mandatory for Top 500 listed companies at BSE and NSE, based on market capitalization basis, to provide for e-voting facilities in respect of those businesses to be transacted through postal ballot.
4. In Accordance with the same, SEBI has now inserted Cl 35 B to the Equity Listing Agreement.
5. As per the new Clause, with effect from 1st October 2012, for any postal ballot notices issued after that date, It shall be mandatory for the listed companies to enable e-voting facility also to their shareholders, in respect of those businesses which are transacted through postal ballot.
6. Those shareholders, who do not have access to e-voting facility, can continue to send their assent or dissent in writing on a postal ballot, as per the Postal Ballot Rules.
7. As mentioned above, to begin with, this requisite is applicable to Top 500 BSE & NSE listed Companies.

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