Updates Under Company Law by the MCA

What’s the latest update by The Ministry of Corporate Affairs (MCA) in India?

The team at Seamless have collected the latest updates in company law of The Ministry of Corporate Affairs (MCA.) Here, you’ll find notifications, amendments, updates, relevant sections, etc. to keep you updated on all the latest changes into the India company law.

What is Company Law?

Company law is a collection of laws that govern the working and conduct of companies. A company is considered to be an artificial person in the eyes of law that is formed by a group of individuals for the purpose of business, so company law is set up as a set of rules and provisions related to companies. It consists of procedures and norms regarding the incorporation, funding, working, and death of the company. Company law states the legal liabilities of the company for a smooth run for a longer period of time. It tells how the parties related to the company will interact with each other and with the company. Company law is also called business law or corporate law.

Indian companies are managed by the Ministry of Corporate Affairs (MCA) and are governed by the Companies Act, 2013. Companies Act consists of all the laws related to companies in detail. There are mainly two types of companies, private companies, and public companies.

What is the Companies Act 2013?

The Companies Act, 2013 consists of 29 chapters divided into 470 sections and further sub-sections detailing the laws related to the conduct of various companies. Non-compliance with the Companies Act by different parties or individuals related to the company can attract penalties, fines, prison, or some other serious punishments according to the criminal or civil offense committed by him. The cases related to companies are heard by the National Company Law Tribunal (NCLT).

Latest Updates:

The Government of India through the Ministry of Home Affairs (MHA) has issued an amendment by which it has added mandatory restrictions on the individuals from land border sharing countries such as Pakistan, China or Hong Kong etc. to obtain security clearance from MHA before they are appointed as directors on boards of Indian companies.

The Ministry of Corporate Affairs (MCA) has notified an amendment in Companies (Appointment and Qualification of Directors) Rules, 2014 and it inserts the restrictions on filing application for Director Identification Number (DIN) by the proposed Directors.

The changes mandate that an individual who is a national of a country that shares a land border with India is required to seek security clearance from the Ministry of Home Affairs (MHA), before making an application for allotment of DIN.

Additionally, the MCA has also amended e-form DIR-3 (Application form for allotment of DIN) and made necessary changes to the declaration by the applicants to declare in form itself whether they are required to seek security clearance from MHA or not. All the proposed directors seeking appointment need to also give such a declaration in their consent letters.

As per the notification issued by the Ministry of Corporate affairs (MCA) on 11th Feb, 2022 (refer below link), every company covered under the Corporate Social responsibility (CSR) provisions of Companies Act, 2013, shall furnish a report on CSR in e-form CSR-2 (yet to be released by MCA) for the preceding financial year as an addendum to Form AOC-4 or AOC 4- XBRL, as the case may be. For the preceding financial year 2020-21,e-Form CSR-2 needs to be filed separately on or before 31^st March, 2022.

https://www.mca.gov.in/content/mca/global/en/home.html

Companies now permitted to hold board meetings for restricted matters via video-conference/audio-visual mode, without time limitation:

In a welcome move, MCA vide its notification dated June 15 has removed Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014, altogether.

As a result, going forward (without the relaxation being time bound) the Board can now transact business matters such as approval of annual accounts, directors’ report, mergers/amalgamations, approval of prospectus and audit committee meeting for accounts approval, in a meeting held via video-conference or another audio-visual mode. Earlier, the relaxation was valid only up to June 30, 2021.

https://egazette.nic.in/WriteReadData/2021/227614.pdf

The Indian Ministry of Corporate Affairs (MCA) had made few amendments in January 2021 via Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 introducing new provisions and compliances. To provide clarity and guidance on various aspects of the new Rules, ICSI held a webinar, post which it released a set of FAQs on 28^th April, wherein various questions raised by stakeholders have been addressed.

The FAQs can be accessed at the below link.

https://www.icsi.edu/media/webmodules/FAQs_on_CSR_28-4-2021.pdf

The FAQs can be accessed at the below link.

https://www.icsi.edu/media/webmodules/FAQs_on_CSR_28-4-2021.pdf

E-form CSR-1 released - Non-profits can now apply for CSR Registration Number

MCA has released e-Form CSR-1 w.e.f.01^st April 2021. This e-form will now enable implementing entities ( Section-8 Companies, Trusts, Societies and NGOs) to register themselves with the Central Government to undertake CSR activities for all CSR projects as stated in the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021.