10 Company Law Amendments effective from 01st April 2021Amendment No. 1Change in Definition of Small Company
‘‘Small Company’’ means a company, other than a public company,
Having i.e. the paid-up capital should Rs. 2 Crore or more or the turnover as per last statement of profit & loss should Rs. 20 Crore or more. If any of the given limits crossed at any point of time then such a Company shall be out of the preview of a Small Company.Amendment No. 2
Concept of One Person Company
MCA has made amendment in many provisions of One Person Company like:
1. NRI can incorporate OPC in India.
2. If the OPC crosses the thresholds it would still continue to be an OPC.
3. OPC can convert in other type of Company any time after incorporation without any transition period.
4. Reduced the limit for determining residential status from 182 days to 120.
Amendment No. 3
Change in Definition of Listed Company
Following companies shall not be considered as Listed Company.
Public companies which have not listed their equity shares on a recognized stock exchange but have listed their –
1. Public companies which have not listed their equity shares on a recognized stock exchange but have listed their –
I. non-convertible debt securities issued on private placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or
II. non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or
III. Both categories of (I) and (II) above.
2. Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
3. Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section (3) of section 23 of the Act.
Amendment No. 4
Applicability of new Caro
Ministry of Corporate Affairs has notified the Companies (Auditor’s Report) Order, 2020 (CARO, 2020) which shall be applicable for the eligible companies for the financial year commencing on or after 1st April, 2021.
There are in total 21 clauses in CARO 2021 in comparison to 16 clauses in CARO 2016. As 1 old clause deleted, 1 clause is merged with other and 7 new clauses are inserted.
Therefore, while preparing the auditor report for the F/Y 2021-22, Auditors have to use the new CARO.
Amendment No. 5
Financial statement (schedule iii) with new clauses
Ministry by this amendment has added many new disclosures in Notes to accounts of Balance Sheet and P&L like:
1) Rounding off of figures
2) Shareholding of Promoters
3) Trade payable ageing Schedule
4) Trade receivables ageing schedule
5) Title deeds of Immovable Property not held in name of the Company
6) Disclosure on revaluation of Assets
7) Disclosure on Loans/ Advance to Directors/ KMP/ Related parties
8) Details of Benami Property held
9) Details of Borrowing
10) Willful Defaulter
11) Relationship with Struck off Companies
12) Registration of charges or satisfaction with Registrar of Companies
13) Compliance with number of layers of companies
14) Disclosure of Ratios
15) Undisclosed Income (Reconciliation of Income Tax and Companies Act)
16) CSR Disclosure
Amendment No. 6
Disclosures of Directors Report
First Amendment in Rule 3 i.e, Manner of Books of Account to be kept in Electronic Mode. in Rule 3, in sub-rule (1) the proviso shall be inserted:
New Proviso: Provided that for the financial year commencing on or after the 1st day of April, 2021, every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of:-
• Recording audit trail of each and every transaction,
• Creating an edit log of each change made in books of account along with,
• The date when such changes were made and
• Ensuring that the audit trail cannot be disabled.
Audit Trail means, an audit trail is defined as a step-by-step sequential record which provides evidence of the documented history of financial transactions to its source. An auditor can trace every step of, the financial data of a particular transaction right from the general ledger to its source document with the help of the audit trail.
Provision of Audit Trail, Rules shall come into effect from 01st April, 2022.
Second Amendment in Rule 8 i.e. Matters to be Included in Board’s Report. In rule 8, sub rule 5 after clause x, two new clauses added.
New Clauses: (applicable w.e.f. 01.04.2021)
(xi) the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 during the year along with their status as at the end of the financial year.
(xii) the details of difference between the amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
Disclosure on above mentioned two clauses are required to be given in Directors Report of Companies along with other disclosures.
Amendment No. 7
Disclosures of auditor’s report:
The Ministry of Corporate Affairs vide Notification dated 24 March 2021 has amended Companies (Audit and Auditors) Amendment Rules,, 2021, which shall be effective from the 1st day of April 2021 for f.y. 2021-22 except clause (g).
Amendment in Rule 11 i.e. Other Matters to be Included in Auditors Report. In Rule 11.
• Existing clause (d) shall be omitted.
• New Clause (e), (f) & (g) inserted.
New Clause
• (e) (i) Whether the management has represented that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
• (ii) Whether the management has represented, that, to the best of it’s knowledge and belief, other than as disclosed in the notes to the accounts, no funds have been received by the company from any person(s) or entity(ies), including foreign entities (“Funding Parties”), with the understanding, whether recorded in writing or otherwise, that the company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (“Ultimate Beneficiaries”) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
• Note: Auditor have to check the details in notes to account and take a representation from director about such clause and check all the transaction of Company in respect of loan and advance received by company & their respective documents.
• (iii) Based on such audit procedures that the auditor has considered reasonable and appropriate in the circumstances, nothing has come to their notice that has caused them to believe that the representations under sub-clause (i) and (ii) contain any material mis-statement. (applicable w.e.f. 01.04.2021)
• (f) Whether the dividend declared or paid during the year by the company is in compliance with section 123 of the Companies Act, 2013. (applicable w.e.f. 01.04.2021)
• (g) Whether the company has used such accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has been operated throughout the year for all transactions recorded in the software and the audit trail feature has not been tampered with and the audit trail has been preserved by the company as per the statutory requirements for record retention.]
Amendment No. 8Annual Return Of One Person Company and Small Company
Amendment in Rule 11 i.e. “Annual Return”: in rule 11 sub rule 1 has been substituted
New Rule:
Every company shall file its annual return in Form No.MGT-7 except
• One Person Company (OPC) and
• Small Company.
One Person Company and Small Company shall file annual return from the financial year 2020-2021 onwards in Form No.MGT-7A.
Amendment No. 9
Introduction Of E-Form Csr-1
E-form CSR-1 is required to be filed pursuant to Section 135 of the Companies Act, 2013 and Rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 by followings:
• Registered Public Trust
• Registered Society
• Section 8 Company
Unique CSR registration no:
Every entity who is covered under these rules, who intends to undertake any CSR activity, shall register itself with the CG by filing the e-form CSR-1 with the ROC w.e.f. 01 April 2021. On filing of CSR -1, one ‘Unique CSR Registration Number’ shall be generated by the system automatically.Amendment No. 10
New annexure of CSR with directors report:
“Companies (corporate social responsibility policy), amending rules, and 2021,” according to the MCA. These regulations came into effect On january 22, 2021, after being published in the official gazette on that date. As a result, these new rules will be in effect for the fiscal year 2020-21. (subject to specific date of some rules).
Directors report: The company shall annex with its board report an annual report on CSR in format of annexure-i (for f.y. 2020-21) or in annexure ii (w.e.f. F/Y 2021-22).
Mobirise free software - Get more