Tuesday, 23 December 2014
Monday, 8 December 2014
Key Action in New Companies act 2013
List of issues and actions which needs immediate attention of the Board in reference to provisions of the new law:
Preliminary
- Identification of new provisions which are applicable to your company including provisions based on criteria of capital, turnover, profit etc for instance Women Director, Internal Audit etc.
Timelines
- Identifying filing date for key events
- Identifying timelines for issue of share certificates
- Compliances with the transition period
- Reworking on the Corporate Structure
- Identification of Holding/Subsidiary & Associate Company based on the change in definition of Total Share capital
- Checking companies which may be converted to Dormant Company
Charter Documents & Registers
- Alteration of MOA where other objects are undertaken
- Alteration of AOA or Adoption of Table F
Fund Raising
- Consideration of altered Private placement norms
- Repayment of Deposits by specified companies
- Acceptance of Deposits by Private Company from Shareholders and Relatives of Directors; out of the exempted category
Statutory Audit
- Review of the term of the Auditor
- Review of services provided by the Auditor
- Review of eligibility of Auditor to continue services in the company
Other audit requirements
- Cost audit
- Secretarial audit for financial year 2013-14
- Internal Audit
Board Meetings
- Notice of Board Meeting (facility of Video Conferencing)
- Electronic Dispatch with receipt acknowledgement due
- Quorum (Disinterested Directors even for Private Limited Company)
- Resolution by Circulation –changed norms
Board Constitution
- Reconstitution of the Board
- Women Director
- Independent Director
- Resident Director (if required)
- Appointment &Designation of KMP
- Consideration of separation of position of MD & Chairman Determining Directors liable to retire by rotation
- Determining Directors liable to retire by rotation
- Maximum number of directorship to be reviewed
Board Processes
- New disclosure of Interest from Director
- Disclosure of Independence from Independent Directors
- Checking of Directors' disqualifications (for instance, if the person is the director of the Company which has not filed financial statements or annual returns for any continuous period of three financial years)
- Powers of the Board (items to be conducted in the Board meetings)
- Informing new restrictions to Directors
- Restriction on non cash transaction
- Forward Dealing
- Insider Trading
- Circulation of new roles and responsibilities, do's and dont's to Directors and KMPs
- Resignation of Director – requirement to forward their resignation to ROC
Related Party Transactions
- Framing the list of Related party as per new law
- Related party transactions (fresh or renewal requires new procedure)
- Immediate shareholders approval requirements for certain related party transactions which were earlier exempted
- Restructuring of transfer of funds within group
- Restrictions on loan to directors.
Remuneration& Appointment of Directors
- Consideration of Remuneration limits for executive and non-executive directors (for FY 2013-14)Remuneration of Non-Executive
- Sitting fees for Independent Directors
- Reconstitution of
- Audit Committee
- Stakeholders Committee
- Nomination and Remuneration Committee
- Constitution of CSR Committee
- Framing of charters of committees
Framing Policies & documents
- Framing Vigil Mechanism
- CSR Policy
- Code of conduct for Independent Directors
- Remuneration Policy
- Policy on Performance Evaluation of Independent Directors
- Policy on Related Party Transactions
- Policy on Selection Criteria of Independent Directors (as required to be formulated by Nomination and Remuneration Committee)
- Contract of appointment of MD / WTD
- Appointment Letter of Independent Directors
General Meetings
- Quorum (Non Participation of interested shareholder)
- Proxy
- E-voting requirements
- Disclosure in Notices, Explanatory Statement etc
Accounts
- Books of Accounts (may be prepared in electronic mode)
- Realignment of financial year
- Financial statement - to include Cash Flow Statement
Stationary & others
- Print of name etc before the registered office
- Change in office stationary eg. business letters, billheads, letter papers etc
- Company Name and address
- Corporate Identity Number
- Telephone number, fax number, if any, e-mail and website addresses, if any
- Publication of authorised capital, subscribed capital and paid up share capital at documents
Documentation
- Preparation of Statutory Registers in new format (Register of members. etc) Maintenance of any document, record, register, minutes, etc. in electronic form
- Maintenance of any document, record, register, minutes, etc. in electronic form
List of resolutions , which are recommended to be passed at the forthcoming Annaul General meeting of the Company:
- Alteration of Articles of Association or adoption of table F.
- Alteration of Memorandum of Association where other objects are undertaken
- The appointment of Women Director, Resident Director and Independent Director is to be approved by the Company in a general meeting
- Approvals for related party transactions
- Approval for limits under section 186- Loans and Investments by companies
- Appointment/ ratification of statutory auditors and fixing their remuneration
- Approval for managerial remuneration
- Approval for borrowing limits under section 180.
- Appointment of Statutory Auditor
Friday, 5 December 2014
Clarification regarding availment of CENVAT credit after six months-
Clarification regarding availment of CENVAT credit after six months-
Attention is invited to the Notification of the Government of India in the Ministry of Finance, Department of Revenue No. 21/2014-CE (NT) dated 11.07.2014, vide which, inter alia, amendment was made in Rule 4(1) and 4(7) of CENVAT Credit Rules, 2004 (CCR, 2004) to prescribe that manufacturer or output service provider shall not take CENVAT credit after six months of the date of issue of any of the documents specified in sub-rule (1) of Rule 9.
2. Concerns have been expressed by trade that in view of above changes, the re-credit taken in following three situations may be hit by the time limit of six months prescribed:
i. 3rd proviso to Rule 4(7) of CCR, 2004 prescribes that if the payment of value of input service and service tax payable is not made within three months of date of invoice, bill or challan, then the CENVAT Credit availed is required to be paid back by the manufacturer or service provider. Subsequently, when such payment of value of input service and service tax is made, the amount so paid back can be re-credited.
ii. According to Rule 3(5B) of CCR, 2004, if the value of any input or capital goods before being put to use on which CENVAT Credit has been taken, is written off or such provisions made in Books of Account, the manufacturer or service provider is required to pay an amount equal to credit so taken. However, when the inputs or capital goods are subsequently used, the amount so paid can be re-credited in the account.
iii. Rule 4(5)(a) of CCR, 2004 prescribes that in case inputs sent to job worker are not received back within 180 days, the manufacturer or service provider is required to pay an amount equal to credit taken on such inputs in the first instance. However, when the inputs are subsequently received back from job worker, the amount so paid can be re-credited in the account.
3. The matter has been examined. The purpose of the amendment made by Notification No. 21/2014-CE (NT) dated 11.07.2014 is to ensure that after the issue of a document under sub-rule (1) of Rule 9, credit is taken for the first time within six months of the issue of the document. Once this condition is met, the limitation has no further application. It is, therefore, clarified that in each of the three situations described above pertaining to Rule 4(7), Rule 3(5B) or Rule 4(5) (a) of CCR, 2004, the limitation of six months would apply when the credit is taken for the first time on an eligible document. It would not apply for taking re-credit of amount reversed, after meeting the conditions prescribed in these rules
S. No.
Issues
Clarification
1
Whether service tax is payable on remittance received in India from abroad?
No service tax is payable per se on the amount of foreign currency remitted to India from overseas. As the remittance comprises money, it does not in itself constitute any service in terms of the definition of 'service' as contained in clause (44) of section 65B of the Finance Act 1994.
2
Whether the service of an agent or the representation service provided by an Indian entity/ bank to a foreign money transfer service operator (MTSO) in relation to money transfer falls in the category of intermediary service?
Yes. The Indian bank or other entity acting as an agent to MTSO in relation to money transfer,facilitates in the delivery of the remittance to the beneficiary in India. In performing this service, the Indian Bank/entity facilitates the provision of Money transfer Service by the MTSO to a beneficiary in India. For their service, agent receives commission or fee. Hence, the agent falls in the category of intermediary as defined in rule 2(f) of the Place of Provision of Service Rules, 2012.
3
Whether service tax is leviable on the service provided, as mentioned in point 2 above, by an intermediary/agent located in India (in taxable territory) to MTSOs located outside India?
Service provided by an intermediary is covered by rule 9 (c) of the Place of Provision of Service Rules, 2012. As per this rule, the place of provision of service is the location of service provider. Hence, service provided by an agent, located in India (in taxable territory), to MTSO is liable to service tax.
The value of intermediary service provided by the agent to MTSO is the commission or fee or any similar amount, by whatever name called, received by it from MTSO and service tax is payable on such commission or fee.
Whether service tax would apply on the amount charged separately, if any, by the Indian bank/entity/agent/sub-agent from the person who receives remittance in the taxable territory, for the service provided by such Indian bank/entity/agent/sub-agent
Yes. As the service is provided by Indian bank/entity/agent/sub-agent to a person located in taxable territory, the Place of Provision is in the taxable territory. Therefore, service tax is payable on amount charged separately, if any.
Whether service tax would apply on the services provided by way of currency conversion by a bank /entity located in India (in the taxable territory) to the recipient of remittance in India?
Any activity of money changing comprises an independent taxable activity. Therefore, service tax applies on currency conversion in such cases in terms of the Service Tax (Determination of Value) Rules. Service provider has an option to pay service tax at prescribed rates in terms of Rule 6(7B) of the Service Tax Rules 1994.
Whether services provided by sub-agents to such Indian Bank/entity located in the taxable territory in relation to money transfer is leviable to service tax?
Sub-agents also fall in the category of intermediary. Therefore, service tax is payable on commission received by sub-agents from Indian bank/entity.
Thursday, 4 December 2014
Companies (Amendment) Bill 2014
The Union Cabinet has approved the introduction of the Companies (Amendment) Bill, 2014 in Parliament to make certain amendments in the Companies Act, 2013.
The Companies Act, 2013 (Act) was notified on August 29, 2013.
Out of 470 sections in the Act, 283 sections and 22 sets of Rules corresponding to such sections have so far been brought into force.
In order to address some issues raised by stakeholders such as Chartered Accountants and professionals, following amendments in the Act have been proposed:
1. Omitting requirement for minimum paid up share capital, and consequential changes. (For ease of doing business)
2. Making common seal optional and consequential changes for authorization for execution of documents. (For ease of doing business)
3. Prescribing specific punishment for deposits accepted under the new Act. This was left out in the Act inadvertently. (To remove an omission)
4. Prohibiting public inspection of Board resolutions filed in the Registry. (To meet corporate demand)
5. Including provision for writing off past losses/depreciation before declaring dividend for the year. This was missed in the Act but included in the Rules.
6. Rectifying the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend(s) has been claimed. (To meet corporate demand)
7. Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold, it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board's Report. (Demand of auditors)
8. Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks by subsidiaries. (This was provided under the Rules but being included in the Act as a matter of abundant caution).
9. Empowering Audit Committee to give omnibus approvals for related party transactions on annual basis. (Align with SEBI policy and increase ease of doing business)
10. Replacing 'special resolution' with 'ordinary resolution' for approval of related party transactions by non-related shareholders. (Meet problems faced by large stakeholders who are related parties)
11. Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders. (corporate demand)
12. Bail restrictions to apply only for offence relating to fraud u/s 447. (Though earlier provision is mitigated, concession is made to Law Ministry and ED)
13. Winding Up cases to be heard by 2-member Bench instead of a 3-member Bench. (Removal of an inadvertent error)
14. Special Courts to try only offences carrying imprisonment of two years or more. (To let magistrate try minor violations). (ANI)