ROC Compliances
Alteration of objective clause means change in a company’s Memorandum of association. Object clauses are altered by companies if they have any expansion plans. If a Company wants any changes in objective clause then changes will be in the form of adding, deleting, substituting, modifying etc. To change the objective clause the company needs to pass a special resolution. The memorandum of association consists of five clauses (NAME CLAUSE, SITUATION CLAUSE, OBJECTIVE CLAUSE, CAPITAL CLAUSE, SUBSCRIPTION CLAUSE). A Company which has raised funds through public prospectus cannot make any alteration to its Memorandum if it still has any unutilized amount of money so raised unless a Special Resolution has been passed.
Appointment & resignation of directors is possible at any time during the period as and when required. It will be done either willingly or in accordance with demand. If board requires any expert with proper knowledge then such appointment or resignation of directors takes place. Adding or replacing a director requires legal paperwork, a board resolution, and the submission of papers with the Registrar of Companies. Appointment of directors will be done through FORM DIR-2 & for resignation of directors will be done through FORM DIR 11.
The name of a private, public or One Person limited company can be changed at any time even after it’s incorporation. A special resolution is to be passed for any change in name of the company & we also need permission from the MCA. A company’s name change does not result in the formation of a new company or organization. Generally the name change takes place because of rebranding. A firm that has not submitted annual reports or financial statements with the Registrar, or that has failed to pay or refund matured deposits or debentures, or interest thereon, will not be allowed to change its name.
Authorized share capital is the maximum amount of the capital for which shares can be issued by the company to their shareholders. Normally such changes can be done through memorandum clause. A company can raise investment through equity shares only up to the share capital prescribed in the MOA so that it will have an incremental effect on overall company share capital. If the company’s authorized capital increases then the company’s overall net value also increases with the borrowing capacity of the company.
A rights issue is an offering of rights to the existing shareholders of a company which gives them an opportunity to buy additional shares directly from the company at a discounted price instead of buying them in the secondary market. The number of additional shares that can be bought depends on the existing holdings of the shareowners. The number of extra shares that can be purchased is determined by the shareowners’ current holdings. When a firm wishes to raise more capital from current shareholders, rights issue method is used where the number of shares available is determined on a pro-rata basis.
The registered office address of the company determines the place of incorporation of the company. The location defines the ROC (Registrar Of Companies) and the change in the registered office of the company needs to be notified to the respective ROC within 15 days. Apart from registered office address a company can be a Corporate office, branch office or factory, etc. It is mandatory for all the companies like Private Limited, Public limited, One Person companies to have a registered office address. It can also be a residential address or a working space address. Change of registered office within same city or Change of registered office from One city to Another city within same state or Change of registered office from one state to another.
The company must issue share certificates to the shareholders or promoters within 60 days from the date of Incorporation. This is mandatory compliance as per the Companies act 2013. Any amount received for the purpose of subscription of shares and if shares are not allotted within 60 days of time, the money should be returned to the investor within 15 days or else it will be treated as deposits. The person listed on the certificate owns the shares of the company mentioned on the certificate. Share certificate have the benefit of providing a greater rate of return than a standard savings account. Thus Share certificate serves as an important document for shareholders to prove ownership in a company.
An employee stock option plan is a plan that gives workers ownership interest in the company. It gives benefits to both the company and the shareholders. It is a strategic planning of the Private Limited Company by allowing employees to buy shares of the company. ESOP shares are part of the employee compensation package. The shares offered to the employees are given at a discounted price. The company will decide to offer shares to each employee, and the proportion of those shares will be offered to employees for their years of service. If the employee decides to resign or retire, the company may buy back the shares from the employee. ESOP motivates employees to give their best as it makes them owner of the company. Organizations can avoid cash compensations as an incentive with the use of ESOP by saving the instant Cashflows. An offer of shares in the company will be enough to retain them for a longer period.
Share Transfer refers to the voluntary transfer of ownership of shares from one party to another. Transfer of shares requires payment of a stamp duty depending on the market value of the shares. a company can only register the transfer of its shares and other securities if a valid instrument for transfer of shares is filed as stipulated in Form No. SH 4. Within 60 days of the date of completion of the share transfer agreement, the transferor or transferee of the shares must deliver Form SH 4 to the firm. If there is no share transfer certificate then within two weeks after receiving a notification, the buyer must provide a No Objection Letter. These shares can be transferred or sold for profits.
According to The Companies Act 2013, every company must file its annual accounts and annual return within 30 days and 60 days, respectively, after the completion of the Annual General Meeting by disclosing the details of its shareholders, directors, etc., to the registrar of companies. Form MGt-7(Annual return) must be filed Within 60 days of the annual general meeting and A private limited company must file Form AOC-4 (Financial Statements) with the balance sheet, statement of profit and loss account, and Director report within 30 days. It is a proof of existence of the company and it avoids penality.
The person who is a director or who wants to be a director or partner in an Limited Liability Partnership, Holds a unique Identification number called DIN (Directors Identification Number). DIN is allocated to an individual after filing the e-form DIR-3. It is mandatory for all directors who hold a DIN to submit their KYC details in e-form DIR-3 KYC Every year. File DIR-3 e-form KYC for the first time when an individual becomes director and if there is a change in phone number, address, email. in which a Digital Signature Certificate (DSC) is mandatory. File DIR-3 Web-KYC if directors already filed DIR-3 KYC the previous year and do not have any updates in their personal details. Such as Phone no, address, email, etc. It is done to avoid penality by the government.
According to the Companies Act, 2013, every company is legally required to have MOA and AOA of the company. These are basically the legal documents of the company containing all the key points related to the functioning of company such as object of company, role, responsibilities of directors and members, name, registered address, authorized & paid up share capital of company and so on. MOA contains the clauses that govern the external affairs of company while AOA contains the clauses that govern the internal affairs and constitution of company. Sometimes, these clauses are required to be altered due to various reasons like change in object clause or change in authorized share capital then these documents are required to be altered.
Limited Liability Partnership (LLP)
The nature of business activities, rights, duties, and obligations of partners are all specified in the LLP agreement and all these information can be changed or altered. A Limited Liability Partnership (LLP) agreement is a legal contract that controls the management and administration of the Limited Liability Partnership. This document is recorded with the Registrar of Companies, and it is also registered with the MCA after 30 days of LLP incorporation. Pass a resolution and file Form 3 with the Registrar of Companies within 30 days of the agreement’s alteration. Changes in the registered location, the profit-sharing percentage, and the amount contributed including name can be done through alteration.
Every LLP should have at least two partners, with two of them acting as designated partners who can operates the day-to-day operations that can be changed, removed, or appointed after they have been assigned. A new Partner must fill out Form 6 and notify the LLP of his or her willingness to join and the LLP must file Form 4 within 30 days of the day he or she joins the LLP which should be signed by the designated partner. A certificate from a practicing Company Secretary or Chartered Accountant is also required, stating that the CS/CA has examined the facts of the Partner addition, including the LLP’s books and records. The permission of all current Partners is necessary to add a new Partner to an existing LLP.
Partners can simply be admitted or removed from a Limited Liability Partnership (LLP) without affecting the LLP’s structure by giving notice of resignation in writing to the other Partners in the LLP for at least 30 days. The removal or resignation of a Partner must be properly documented, and the necessary filings with the Ministry of Corporate Affairs must be submitted. If a Partner in an LLP cannot be dismissed by a majority of the other Partners then he can withdraw from an LLP by filing FORM-4.
LLP or the Limited Liability Partnership is a hybrid combination of a Private limited company and partnership Firm. Minimum two partners are required to incorporate an LLP, there is no such upper limit. Every LLP has to file certain mandatory returns. The LLP Annual Filing requirements will vary based on the date of registration of LLP. Filing these returns is mandatory even where LLP was not doing any business. In case LLP has been incorporated on or after 1st October of financial year, then LLP can close its first financial year for filing of ROC returns (Form-11 & Form-8) either on the coming or next 31st March i.e. LLP can files ROC Returns of its first F.Y details for 18months. Annual returns required to be filed by a LLP such as Income Tax Return, DIR-3 KYC, Form-11, Form-8.
Other Compliances
The ESI or Employees State Insurance Scheme is an insurance cover provided to the workers to aid them in uncertain and challenging times. It is a contributory fund governed by the Employee State Insurance Corporation and comes under the ESI Act, 1948. As per the ESI act, all establishments with more than 10 employees are covered under the ESI Act and have to maintain the ESI fund. All the factories, shops and establishments are covered under ESI Act unless otherwise specified by the Act. Also, the employees are covered only if their salary is below Rs. 21,000 per month and the organizations which are covered under ESI. The ESIC act, 1948, has fixed the percentage contribution of the employer at 3.25% of the wages and that of the employee at 0.75% of the wages. The establishments registered under the ESIC Act, 1948 are required to file ESI returns. The employers can download Form 1 from ESIC’s official website in PDF format, fill it and submit it online.
The Provident Fund (PF) is a pension fund that helps people regularly save a portion of their salary to provide enough money for a good and healthy lifestyle after retirement. This program is provided by the Employment Provident Fund Organization (EPFO). All companies with more than 20 members can apply for the EPF scheme. Long-term savings is a big commitment, but they need to be done to increase benefits and future emergencies. The provident fund are of 4 types such as Statutory Provident Fund, Recognized Provident Fund, Unrecognized Provident Fund, Public Provident Fund. Each employee’s whether in the public or private sector and earns a basic salary of Rs.15000/- has to register themselves with EPF. The Annual returns of the Provident Fund is a must and it has to be filed by the 30th of April every year. Form 3A and Form 6A are the two forms used to file annual Provident Fund return.
Professional tax is a direct tax that applies to individuals earning an income by way of employment, practicing their profession, or trading. A practicing professional includes a lawyer, teacher, doctor, chartered accountant, etc. The tax is deducted from the individual’s monthly salary by their employer and is deposited to the state governments. Professionals apart from salaried employees pay it directly to the government. Such professionals can claim a tax deduction for the professional tax paid during the financial year as per the Income Tax Act 1961. In the case of a salaried employee, the employer must deduct professional tax from their salary every month and deposit it to the government. The employer needs to get a Registration Certificate from the concerned authorities to deposit the deducted tax. Whereas, the self-employed individuals who carry out their profession or trade and fall into eligibility criteria are required to pay the professional tax themselves to the state government. They need to obtain a Certificate of Enrolment from the concerned state’s prescribed authority. Every state/UT has a commercial tax department that collects professional tax based on predetermined income slabs.
In India, the foreign transactions are regulated by the Foreign Exchange Management Act, 1999 and are governed by the Reserve Bank of India as FEMA acts as an important factor for growth of various sectors in India. The main objective of FEMA is to assist in external trade, making balance payments, promoting orderly development, and maintaining the foreign exchange market in India. Due to the extent of various industrial segmental regulations by the Central and state government, Corporate and the Individuals are continuously facing challenges to comply with the regulations within the stipulated time and manner. The importance of Foreign Exchange Management Act, 1999 (FEMA)/ Reserve Bank of India (RBI) Compliances has increased due to globalization which includes Company Secretary and Chartered Accountants Certifications for the transactions prescribed in the said regulations, making the applications to Reserve Bank of India for as specified under FEMA and RBI regulated transactions, also the advisory services related matters. Generally, in India the foreign investment is attracted in the form of Foreign Direct Investments. The Reserve Bank of India has specifically initiated the process of reporting through the SINGLE MASTER FORM (SMF)unless specifically stated. There are various forms like FC-GPR, FC-TRS, FORM DI etc depending upon the type of transaction carried out, Where an entity issues capital instruments or securities in respect of the foreign investment received from a person resident outside India then such Indian entity is required to file Form FC-GPR (Foreign Currency Gross Provisional Return) within 30 days of issue of such securities or capital instruments. It has to duly signed by MD or any director or CS of the company and to be submitted to the Authorized Dealer and who will forward the same to RBI. The capital instruments are transferred either by a person resident in India to a person resident outside India, the Indian resident is required to file Form FC-TRS within 60 days from either from date of transfer of remittance or from the date of transfer whichever is earlier to the Authorized Dealer Bank.
