Lawyer Monthly Magazine - April 2020 Edition

17 APR 2020 | WWW.LAWYER-MONTHLY.COM under the Companies Act, 2013) has been substituted with a revised Form GNL-2. Companies (Incorporation) Amendment Rules, 2020 The MCA, on 18 February 2020, notified the Companies (Incorporation) Amendment Rules, 2020 (“Incorporation Amendment Rules”) to amend the Companies (Incorporation) Rules, 2020. With effect from 23 February 2020, the Incorporation Amendment Rules has inter alia introduced the following amendments: (a) The form RUN (Reserve Unique Name), which was earlier used for reservation of names for companies (i.e. existing companies or companies yet to be incorporated), has now been amended to be applicable only for requesting a change of name of existing companies; (b) The erstwhile e-form INC-32 (SPICe) has been substituted with the revised form INC-32 (SPICe+), which is an integrated web form which offers multiple services from three different ministries (i.e. Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance); (c) The e-form INC-35 (AGILE) has been substituted with Form INC-35 (AGILEPRO), which also enables professional tax registration and opening of bank account, in addition to the earlier registration facilities; and (d) The erstwhile Form INC-9 (which was an offline form to be manually executed by the concerned director, and thereafter filed along with the SPICe) has been substituted with the e-form INC-9, which is required to be verified by the concerned director by affixing his/her digital signature certificate (DSC). Companies (Auditor’s Report) Order, 2020 On 25 February 2020, the MCA notified the Companies (Auditor’s Report) Order, 2020 (“Order”) in supersession of the Companies (Auditor’s Report) Order, 2016. The Order provides that every report made by the auditor under section 143 of the Companies Act, 2013 on the accounts of every company audited by him, for the financial years commencing on or after 1 April 2019, shall additionally contain the matters specified under this Order. The key matters to be included in the auditors’ report are mentioned below: (a) Details regarding the plant, property and equipment including quantitative details, revaluation, maintaining proper records etc. (b) Details regarding proceedings against a company under Benami Transactions (Prohibition) Act, 1988. (c) Details about inventory, proper verification of records, proper returns filed or not etc. (d) Details regarding loans and advances given by the company, outstanding loans, renewal of loans and loans given without specifying terms of repayment. (e) Details of loan taken by the company and whether loans were used for the purpose for which it was taken, loans taken to meet the obligation of subsidiaries, joint ventures (JV) or associates and whether such loans are taken by pledging shares of subsidiaries, JV and associates. (f) Details on the treatment of undisclosed income disclosed in a current year during tax assessments. (g) Details on the internal audit system, if applicable. (h) Details on cash loss in the previous year or immediate preceding year. (i) Compliance of corporate social responsibility under section 135 of the Companies Act, 2013, if applicable. (j) Details on the material uncertainty of a company to meet its short term financial liabilities- the same needs to be ascertained using ratios, ageing analysis and expected dates of realisation of financial assets. of the Government of India’s (GoI) earlier notification dated 27 January 2020 notifying the Common Application Form (CAF) for the purpose of: • The registration of Foreign Portfolio Investors (FPIs) with SEBI; • The allotment of Permanent Account Number (PAN); and • Carrying out of Know Your Customer (KYC) for the opening of bank and Demat accounts. Micro, Small and Medium Enterprises (MSME) Sector – Restructuring of Advances On 11 February 2020, the Reserve Bank of India (“RBI”) extended the timeline for a one-time restructuring of existing loans granted to MSMEs classified as ‘standard’, without a downgrade in the asset classification, subject to the following certain conditions: (a) Aggregate exposure of banks and Non-Banking Financial Companies (NBFCs) to such borrowers not exceeding INR 25 crore as on 1 January 2020; (b) Restructuring of the borrower account being implemented on or before 31 December 2020; (c) Borrowing entity being Goods and Services Tax (GST) registered (if applicable) on the date of implementation of the restructuring; and (d) The relevant borrower’s account not already being restructured in terms of the circular issued on 1 January 2019. Companies (Registration Offices and Fees) Amendment Rules, 2020 On 18 February 2020, the MCA, notified the Companies (Registration Offices and Fees) Amendment Rules, 2020 which amends the Companies (Registration Offices and Fees) Rules, 2014, pursuant to which the existing Form GNL-2 (i.e. the form to be filed for submission of documents with the Registrar of Companies, for which no e-form is prescribed under the various rules REGULATORY UPDATE OF THE MONTH - INDIA