Now , the Subscribers to the Memorandum of Association of the Company cannot delay the infusal of their money in respect of the shares subscribed by them .

Now , the Subscribers to the Memorandum of Association of the Company cannot delay the infusal of their  money in respect of the shares subscribed by them .

WHEN THE SUBSCRIPTION AMOUNT HAS TO BE REMITTED?

Until now, Companies Act is silent as to when the payment in respect of the shares agreed to be subscribed by them.

The subscribers would be deemed to have agreed to become members of the company and on its registration the name of subscribers is required to be entered as members in the register of members of the company.

WISHING YOU A HAPPY , PROSPEROUS , LUCKY NEW YEAR 2019

NO NEED TO FILE PAS-3 IN CASE OF INITIAL ALLOTMENT

Thus, there is no need to allot shares in the names of subscribers to the memorandum of association in respect of the shares agreed to be subscribed by them in subscription clause of the MOA.

Thus, in case of initial subscription,  no PAS-3 need to be filed.

FORM –INC-20A TO BE FILED AUTHENTICATING THAT INITIAL SUBSCRIPTION MONEY HAS BEEN RECEIVED.

Now , the Companies (Incorporation)Fourth Amendment Rules, 2018 which came into effect from 18th December, 2018  requires the following:

Declaration at the time of commencement of business.-The declaration under section 10A by a director shall be in Form No.INC-20A and shall be filed as provided in the Companies (Registration Offices and Fees) Rules, 2014 and the contents of the said form shall be verified by a Company Secretary or a Chartered Accountant or a Cost Accountant, in practice:

FORM INC-20A HAS TO BE FILED FOR THE FOLLOWING:

·      Subscribers Proof of Payment for value of shares.

· Certificate of Registration issued by RBI in case of NBFC companies

·   Approval if any required by  Securities and Exchange Board of India, (SEBI) .

COMPANY CANNOT COMMENCE THE BUSINESS

It may be noted that the Form INC 20A is required to be filed by every Company incorporated after 2nd November, 2018 within 180 days from the date of incorporation along with the evidence of receiving initial subscription money. Without this, the Company can’t commence its business operations.

NOW ,100% FDI under automatic route is permitted only in marketplace model of e-commerce and FDI is not permitted in inventory based model of e-commerce.

NOW ,100% FDI under automatic route is permitted  only in marketplace model of e-commerce and     FDI is not permitted in inventory based model of e-commerce.

Review of policy on Foreign Direct Investment (FDI) in e-commerce 

1.0       To provide clarity to FDI policy on e-commerce sector, Para 5.2.15.2 of the Consolidated FDI Policy Circular 2017 will now read as under:

5.2.15.2 E-commerce activities

Sector/Activity	% of Equity/FDI Cap	Entry Route
E-commerce activities	100%	Automatic

5.2.15.2.1 Subject to provisions of FDI Policy, e-commerce entities would engage only in Business to Business (B2B) e-commerce and not in Business to Consumer (B2C) e-commerce.

5.2.15.2.2 Definitions:

i)    E-commerce- E-commerce means buying and selling of goods and services including digital products over digital & electronic network.

ii)   E-commerce entity-     E-commerce entity means a company incorporated under the Companies Act 1956 or the Companies Act 2013 or a foreign company covered under section 2 (42) of the Companies Act, 2013 or an office, branch or agency in India as provided in section 2 (v) (iii) of FEMA 1999, owned or controlled by a person resident outside India and conducting the e-commerce business.

iii)  Inventory based model of e-commerce- Inventory based model of e-commerce means an e-commerce activity where inventory of goods and services is owned by e-commerce entity and is sold to the consumers directly. 

iv)  Marketplace based model of e-commerce- Marketplace based model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital & electronic network to act as a facilitator between buyer and seller.

5.2.15.2.3 Guidelines for Foreign Direct Investment on e-commerce sector

i)          100% FDI under automatic route is permitted in marketplace model of e-commerce.

ii)         FDI is not permitted in inventory based model of e-commerce.

5.2.15.2.4          Other Conditions

i)          Digital & electronic network will include network of computers, television channels and any other Internet application used in automated manner such as web pages, extranets, mobiles etc.

ii)         Marketplace e-commerce entity will be permitted to enter into transactions with sellers registered on its platform on B2B basis.

iii)        E-commerce marketplace may provide support services to sellers in respect of warehousing, logistics, order fulfillment, call centre, payment collection and other services.

iv)        E-commerce entity providing a marketplace will not exercise ownership or control over the inventory i.e. goods purported to be sold. Such an ownership or control over the inventory will render the business into inventory based model. Inventory of a vendor will be deemed to be controlled by e-commerce marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies. 

 v)        An entity having equity participation by e-commerce marketplace entity or its group companies, or having control on its inventory by e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such marketplace entity.

vi)        In marketplace model goods/services made available for sale electronically on website should clearly provide name, address and other contact details of the seller. Post sales, delivery of goods to the customers and customer satisfaction will be responsibility of the seller.

vii)       In marketplace model, payments for sale may be facilitated by the e-commerce entity in conformity with the guidelines of the Reserve Bank of India.

viii)      In marketplace model, any warrantee/ guarantee of goods and services sold will be responsibility of the seller.

ix)        E-commerce entities providing marketplace will not directly or indirectly influence the sale price of goods or services and shall maintain level playing field. Services should be provided by e-commerce marketplace entity or other entities in which e-commerce marketplace entity has direct or indirect equity participation or common control, to vendors on the platform at arm’s length and in a fair and non-discriminatory manner. Such services will include but not limited to fulfillment, logistics, warehousing, advertisement/ marketing, payments, financing etc. Cash back provided by group companies of marketplace entity to buyers shall be fair and non-discriminatory. For the purposes of this clause, provision of services to any vendor on such terms which are not made available to other vendors in similar circumstances will be deemed unfair and discriminatory.

  x)       Guidelines on cash and carry wholesale trading as given in para 5.2.15.1.2 of Consolidated FDI Policy Circular 2017 will apply on B2B e-commerce.

xi)        e-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.

xii)       e-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to Reserve Bank of India, confirming compliance of above guidelines, by 30th of September of every year for the preceding financial year.

            Subject to the conditions of FDI policy on services sector and applicable laws/regulations, security and other conditionalities, sale of services through e-commerce will be under automatic route.

3.0       The above decision will take effect from 01 February, 2019.

 How recent FDI policy changes in e-commerce will impact E-Commerce Operators in India .

It will be a major jolt to Walmart’s $16 billion acquisition of Flipkart and Amazon’s $5 billion bet on India, the government announced changes to the foreign direct investment (FDI) policy for the e-commerce sector that could trigger a shakeup in the way leading platforms such as Amazon and Flipkart conduct business in the country.

The move should mollify brick-and-mortar retailers, which have had a longstanding grievance against ecommerce sites for offering discounts to win over customers.

A new rule inserted in the policy bars any entity related to ecommerce platforms from selling on that site and imposes a limit on how much one vendor can sell on a particular portal.

The policy also prohibits e-commerce platforms from giving any preferential treatment to any supplier.

NOW ROC OR REGIONAL DIRECTOR IS EMPOWERED TO IMPOSE PENALTY UNDER COMPANIES ACT 2013 FOR NON-COMPLIANCES OF THE FOLLOWING PROVISIONS UNDER THE COMPANIES (AMENDMENT) ORDINANCE, 2018

NOW ROC OR REGIONAL DIRECTOR IS EMPOWERED TO IMPOSE PENALTY UNDER COMPANIES ACT 2013 FOR NON-COMPLIANCES OF THE FOLLOWING PROVISIONS UNDER THE COMPANIES (AMENDMENT) ORDINANCE, 2018

The Companies (Amendment) Ordinance, 2018 which has been signed by President of India on 2 November 2018 has reclassified  certain offense from Fine to Penalty under Companies Act 2013.

 Thus, Registrar of Companies (ROC) and Regional Director (RD) can now levy      penalties directly after issuing Show Cause Notice (SCN) , instead of going to judiciary for imposing fines or for following procedure for composition of offenses.

Even though , President has given his approval for the above ordinance , it is yet to be notified. 

Description	Section	PENALTY
Prohibition of Issue of shares at a discount	53(3)	Company and any officer in default being liable to a penalty
Notice to be given to Registrar for alteration of  share capital	64(2)	The company and any officer in default being liable to a penalty, instead of being punishable with fine
Annual Return	92(5)	1.The company being liable to a penalty, instead of being punishable with fine; 2. Every officer in default being liable to a penalty.
Statement to be annexed to Notice	102(5)	Every promoter, director, manager or other key managerial personnel who is in default being liable to a penalty.
Proxies	105	Every officer in default being liable to a penalty.
Resolutions and Agreements to be filed	117(2)	The company and every officer in default including liquidator of a company, if any, being liable to a penalty.
Report on annual general meeting	121(3)	The company and every officer in default being liable to a penalty.
Copy of financial statement to be filed with Registrar	137(3)	(i)              1.The company being liable to a penalty, instead of being punishable with fine; and (ii) The managing director and the Chief Financial Officer of the company, if any, and, in the absence of the managing director and the Chief Financial Officer, any other director who is charged by the board of directors with the responsibility of complying with the provisions of Section 137, and, in the absence of any such director, all the directors of the company, being liable to a penalty.
Removal, resignation of auditor and giving of special notice	140(3)	The auditor being liable to a penalty.
Company     to    inform     Director    Identification     Number     to Registrar	157(2)	The company and every officer in default being liable to a penalty.
Punishment for Contravention  – in respect of DIN	159	Non-compliance with Section 152 (Appointment of directors), Section 155 (Prohibition to obtain more than one Director Identification Number) and Section 156 (Director to intimate Director Identification Number) shall result in any individual or director of a company in default being liable to a penalty.
Number of Directorships	165(6)	If a person accepts appointment as a director in contravention of sub-section (1) of Section 165 such person shall be liable to a penalty.
Payment to Director for Loss of Office	191(5)	Director of the company being liable to a penalty.
Overall maximum managerial remuneration and managerial remuneration in case of absence or inadequacy of profits	197(15)	Any person in default being liable to a penalty.
Appointment of Key Managerial Personnel	203(5)	The company, every director and key managerial personnel of the company who is in default being liable to a penalty,
Registration of the offer of scheme involving transfer of shares	238(3)	The director being liable to a penalty, in

Thus, before ordinance section 117(2) states about Fine and after ordinance, the above sections state about Penalty.

Therefore, before ordinance default can be make good by petition in NCLT by filing compounding application Suo Moto or after receipt of notice form ROC/ MCA.

However, the Companies (Amendment) Ordinance, 2018 empowers more power to ROC & RD to levy penalty by issuing ‘Show Cause Notice’ without any petition to NCLT or any other authorities.

We can say now work burden of NCLT has been reduced by empowering more powers to levy Penalty to ROC or RD as the case may be. 

HEAVY PENALTY IS AWAITING IF MGT-14 IS NOT FILED BY COMPANIES

HEAVY PENALTY IS AWAITING IF MGT-14 IS NOT FILED BY COMPANIES

Penalty Payable for non-filing of MGT-14 

Section 117 - In case MGT-14 not  filed with in  30 days  should liable to a penalty .

The Company has to apply for condonation of delay u/s 460 and the Condonation fees and additional fees needs to be paid with the e-form MGT-14.

Company  Rs. 1 lakh + 500/day ( Max 25 lacs)

Officer Rs. 50,000 +500/day ( Max 5 lacs)

Section 117(1) of Company Act, 2013 with Rule 24

Even though , President has given his approval for the above ordinance , it is yet to be notified. 

Resolution or Agreement to be filed: Section 117(1) of Company Act, 2013 with Rule 24 of Companies (Management & Administration) Rule 2014 [w.e.f 01.04.2014]

A copy of every resolution or any agreement in mentioned section 117 (3) together with the explanatory statement under section 102 shall be filed with the Registrar within thirty days of the passing of resolution in Form No. MGT-14 along with Fee.

Name of Resolution or Agreement to be filled: Section 117(3) of Companies Act, 2013

The provisions of this section shall apply to—

1.Special resolutions;

2. Resolutions which have been agreed to by all the members of a company, but which, if not so agreed to, would not have been effective for their purpose unless they had been passed as special resolutions;

3. Any resolution of the BOD of a company or agreement executed by a company, relating to the appointment, re-appointment or renewal of the appointment, or variation of the terms of appointment, of a managing director;

4.Resolutions or agreements which have been agreed to by any class of members but which, if not so agreed to, would not have been effective for their purpose unless they had been passed by a specified majority or otherwise in some particular manner; and all resolutions or agreements which effectively bind such class of members though not agreed to by all those members;

5. Resolutions passed by a company according consent to the exercise by its BOD of any of the powers under section 180 (1) (a) and 180(1) (c) ;

6. Resolutions requiring a company to be wound up voluntarily passed by member of company in section 304;

7. Resolutions passed by BOD in pursuance of section 179(3); and

8. Any other resolution or agreement as may be prescribed and placed in the public domain

BOARD RESOLUTION LIST FOR WHICH MGT-14 HAS TO BE FILED

S. No.	List Of Board Resolution Required To Be Filed With Roc In Form MGT-14 BY COMPANY OTHER THEN   “PRIVATE LIMITED COMPANY”
1.	To issue securities, including debentures, whether in or outside India. (In case of shares issue of security means issue of Letter of Offer).
2	To Borrow Monies. (Borrow Money from any sources including Director)
3	To invest the funds of the Company. (Also follow provisions of Section 186)
4	To grant loans or give guarantee or provide security in respect of loans. (Also follow provisions of Section 186)
5.	To approve financial statement and the Board’s report.
6	To appoint internal auditors.
7	To appoint Secretarial Auditor.
8	To appoint or remove key managerial personnel (KMP). {KMP includes (MD, WTD, CEO, CFO & CS)}
9	To make Political Contributions.
10	To make calls on shareholders in respect of money unpaid on their shares.
11	To authorize buy-back of securities under section 68.
12	To Diversify the business of the company.
13	To approve Amalgamation, Merger or Reconstruction.
14	Take over a company or Acquire a controlling or substantial stake in another company.

LIST OF SPECIAL RESOLUTION REQUIRED TO BE FILE WITH ROC IN FORM MGT-14

S. No.	Section	List Of Special Resolution Required To Be File With Roc In Form MGT-14
1	Section – 3	Conversion of Private Limited Company into One Person Company.
2	Section – 5	Alteration in AOA of the public limited Company for providing the specified clauses can be altered only if conditions restrictive than those applicable in case of special resolution are met.`
3	Section – 8	For a company registered under Section- 8 to convert itself into a company of any other kind or alteration of its Memorandum or Articles.
4	Section – 12	Change of location of registered office in the same State outside the local limits of the city, town or village where it is situated.
5	Section – 13	Change of registered office from the jurisdiction of one Registrar to that of another Registrar in the same State.
6	Section – 14	Amendment of Articles of a private company for entrenchment of any provisions. (To be agreed to by all members in a private company).
7	Section – 14	Amendment of Articles of a public company for entrenchment of any Provisions.
8	Section – 13	Change in name of the company to be approved by special resolution.
9	Section – 13(8)	A company, which has raised money from public through Prospectus and still has any unutilized amount out of the money so raised, shall not Change its objects for which it raised the money through prospectus unless a special resolution is passed by the company.
10	Section – 27(1)	A company shall not, at any time, vary the terms of a contract referred to in the prospectus or objects for which the prospectus was issued, except subject to the approval of, or except subject to an authority given by the company in general meeting by way of special resolution.
11	Section – 271 (A)	A company may, after passing a special resolution in its general meeting, issue depository receipts in any foreign country in such manner, and subject to such conditions, as may be prescribed. (Section still not applicable).
12	Section – 48(1)	Where a share capital of the company is divided into different classes of shares, the rights attached to the shares of any class may be varied with the consent in writing of the holders of not less than three-fourths of the issued shares of that class or by means of a special resolution passed at a separate meeting of the holders of the issued shares of that class.
13	Section – 54	Issue of Sweat Equity Shares.
14	Section – 55	Issue of preference shares.
15	Section – 62 (1) (c)	Private offer of securities requires approval of company by special resolution.
16	Section – 66 (1)	Reduction of Share Capital.
17	Section – 67(3)(b)	Special resolution for approving scheme for the purchase of fully-paid shares for the benefit of employees. EXEMPTED TO PRIVATE LIMITED COMPANY
18	Section – 68 (2)(b)	Buy Back of Shares.
19	Section – 71 (1)	A company may issue debentures with an option to convert such debentures into shares, either wholly or partly at the time of redemption: Provided that the issue of debentures with an option to convert such debentures into shares, wholly or partly, shall be approved by a special resolution passed at a general meeting.
20	Section – 94	Keep registers at any other place in India.
21	Section – 140	Removal of Auditor.
22	Section – 149(10)	Re-appointment of Independent Director.
23	Section – 165(2)	Subject to the provisions of sub-section (1), the members of a company may, by special resolution, specify any lesser number of companies in which a director of the company may act as directors.
24	Section – 180(a)	to sell, lease or otherwise dispose of the whole or substantially the whole of the undertaking of the company or where the company owns more than one undertaking, of the whole or substantially the whole of any of such undertakings. EXEMPTED TO PRIVATE LIMITED COMPANY
25	Section – 180(b)	To invest otherwise in trust securities the amount of compensation received by it as a result of any merger or amalgamation. EXEMPTED TO PRIVATE LIMITED COMPANY
26	Section – 180(c)	to borrow money, where the money to be borrowed, together with the money already borrowed by the company will exceed aggregate of its paid-up share capital and free reserves, apart from temporary loans obtained from the company’s bankers in the Ordinary Course of Business. EXEMPTED TO PRIVATE LIMITED COMPANY
27	Section – 180(d)	To remit, or give time for the repayment of, any debt due from a director. EXEMPTED TO PRIVATE LIMITED COMPANY
28	Section – 185	For approving scheme for giving of loan to MD or WTD.
29	Section – 186	Loan & Investment by company exceeding 60% of paid up share capital or 100% of free reserve.
30	Section – 196	Appointment of a person as Managerial Personnel if, the age of Person is exceeding 70 year.
31	Schedule V	Remuneration to Managerial personnel if, profits of company are Inadequate.
32	Section – 271 (1) (b)	Special Resolution for winding up of the company by Tribunal.
33	Section – 271 (1) (b)	Special Resolution for winding up of company.
34	Rule 7(1) Chapter- I	Conversion of private company into One Person Company.
35	Section- 455	Special resolution is required by the Company for making an application to the Registrar for obtaining the status of Dormant Company.