MCA CIRCULAR DATE 31ST JULY 2018 – CHANGES IN BOARD’S REPORT FOR OPC AND SMALL COMPANIES

MCA CIRCULAR DATE 31^ST JULY 2018 – CHANGES IN BOARD’S REPORT FOR OPC AND SMALL COMPANIES

MCA has further amended the Companies (Accounts) Rules, 2014. These rules are now referred as the Companies (Accounts) Amendment Rules, 2018.

COMPANIES (ACCOUNTS) AMENDMENT RULES, 

2018

New Rule 8A of the COMPANIES (ACCOUNTS) AMENDMENT RULES, 2018 prescribed  abridged form of Directors Report for One Person Company and Small Company.

New Rule 8A

MCA has introduced new Rule 8A after rule 8 under Section 134 of Companies Act, 2013

MEANING OF ONE PERSON COMPANY

One Person Company is defined in Sub-Section 62 of Section 2 of Companies Act, 2013, which reads: "One Person Company means a company which has only one member". Under this type of Business Entity, there is no need for mandatory minimum two directors, as is the case in Private Limited Company incorporation.

MEANING OF A SMALL COMPANY

Section 2(85) of the Companies Act, 2013 defines “Small Company” in the following manner:

Small company’’ means a company, other than a public company,-

1.   paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed which shall not be more than five crore rupees;

2.   turnover of which as per its last profit and loss account does not exceed two crore rupees or such higher amount as may be prescribed which shall not be more than twenty crore rupees:Provided that nothing in this clause shall apply toA) a holding company or a subsidiary company;

B) a company registered under section 8; or

C) a company or body corporate governed by any special Act;

“Matters to be included in Board’s Report for One 

Person Company and Small Company”

Rule 8A: As per rule 8A “Matters to be included in Board’s Report

 for One Person Company and Small Company:

NO REQUIREMENT OF MGT-9 FOR OPC AND A SMALL COMPANY

Now , OPC and a Small Company need not to prepare MGT-9 and to enclose along with the Board’s Report .

“STAND ALONE FINANCIAL STATEMENT”

Director’s report of OPC and Small Company shall be prepared on the basis of “Stand Alone Financial Statement” of the Company.

INFORMATION TO BE CONTAINED IN THE DIRECTORS REPORT OF OPC AND SMALL COMPANY.

Annual Return in the Director’s Report	There is no need to attach MGT-9 along with the Directors Report of OPC and Small Company. It is adequate that the web link, if any, where annual return referred to in sub-section (3) of section 92 has been placed;
Number of Board Meetings held	Details of the number of Meeting of Board of Directors
Directors Responsibility Statement	Directors responsibility statement as referred in sub-section 5 of section 134
Details of the Frauds Reported in the Auditor’s Report.	Details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government.
Board’s Comment on Auditor’s Qualification	Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report.
The state of the Company’s affairs;	Details discussion about the company’s affairs in the Directors report.
The financial summary and highlights;	To provide synopsis of financial metrics of the company
Details about material changes if any in the company during the year	Material changes from the date of closure of the financial year in the nature of business and their effect on the financial position of Company.
The details of directors who were appointed or have resigned during the year;	Appointment of Directors or resignation of directors during the year.
Outcome of Litigations	The details or significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operation in future.
FORM AOC-2	The report shall contain the particulars of contracts or arrangements with related parties referred to in sub section (1) of section 188 in the form AOC-2.