Event based Compliance for Private Limited Company
We have already discussed the ROC compliances that have to be undertaken by a private company on incorporation and the compliances that have to be undertaken irrespective of any event happening or limits being breached. Please click here to access the following writeups:
ROC Compliance by A Private Limited Company (PLC)
ROC Compliances by One Person Company (OPC)
We have also discussed on the ROC compliances that will be triggered when certain limits relating to turnover, paid up capital, etc are breached.Please click here to read this article:
Limit based definitions and ROC compliances for private limited companies
Under the Companies Act, 2013 and the Rules thereunder, certain sections and their provisions are applicable to a company only when certain events happen in the company.
In this article, we will be highlighting these events that will attract the provisions of certain sections.
Registered office and changes therein
Section 12
If at the time of incorporation, the SPICe forms were not filed with Registered office address but with a communication address, then this Company will have to file Form INC-22 within 30 days of the date of incorporation with the ROC.
File details of change in registered office
Within the same local limits- After intimating the ROC with the registered office address, if thereafter any company wants to change its registered office within the same local limits, then it has to file INC-22 within 15 days of such change. To know more click here and purchase the service at great prices
Outside the local limits but within the same ROC - File forms MGT-14 and INC-22. To know more click here and purchase the service at great prices
Within same state but from the jurisdiction of one ROC to another - Many states have 2 ROCs in one state, like the states of Maharashtra (ROC Mumbai and ROC Pune) and tamil Nadu (ROC Chennai and ROC Coimbatore)- File forms MGT-14, RD-1, INC-28 and INC-22
From one state to another- power rests with the Central Government (delegated to RD) for shifting of registered office from one state to another.
Further issue of securities as Rights, preferential issue, bonus or under private placement
Section 42 read with Rule 14 of the Companies (Private Placement) Rules, 2014
Private placement of shares- when shares are issued to person(s who are ot existing shareholders of the company, it is called private placement. A company mayissue shares by this method by taking approval by a special resolution ata general meeting, registered and merchant banker valuation reports and by opening a separate bank account.
PAS-4 has to be issued. MGT-14 has to be filed. PAS-3 to be filed within 15 days of allotment.
The process has to be duly followed as stated under Section 42 read with the rules. For understanding the process better, book an expert call here.
Section 62 (1)(a)
Rights issue- existing shareholders of the company are only entitled to this kind of a fresh issue. Valuation report not required. Opening of a separate bank account is not required. Board resolution mandatory. If the existing shareholders do not take up the shares in rights, they can renounce to any other person (this person need not be an existing shareholder of the company).
If they do not renounce, then the Board can allot the shares to whomever they think will be in the interest and betterment of the company.
The process has to be duly followed as stated under Section 62. For understanding the process better, book an expert call here.
Once allotment is done, PAS-3 has to be filed within 30 days of the allotment.
Section 62(1)(c) read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014
Preferential issue- a private company can issue shares to just one or a few of the existing shareholders or employees or to any other person if a Special resolution has been passed in a general meeting. In such a method of issue of further shares, valuation report from a registered valuer is mandatory. Opening of a separate bank account is mandatory.
Remember to check if Merchant Banker valuation report will be required for Income tax Act, else the company has to pay tax on the premium that it will charge, if the valuation of the shares are more than its face value.
The process has to be duly followed as stated under Section 62 read with the rules. For understanding the process better, book an expert call here. MGT-14 has to be filed.
Once allotment is done, PAS-3 has to be filed within 15 days of the allotment.
Section 63 read with Rule 13 of the Companies (Share Capital and Debentures) Rules, 2014
Bonus shares- in all the above methods of further issue, the shareholder has to bring in funds into the company. In case of a bonus issue, no money exchanges hands. Rather in the books of the company, it is a matter of capitalising certain accounts- like free reserves, share premium or CRR (capital redemption reserve account). The articles of association must authorise issue of bonus shares. If the articles do not have such a provision, get in touch with our Expert to understand the process for alteration of articles.
The process has to be duly followed as stated under Section 63 read with the rules. For understanding the process better, book an expert call here.
Issue of shares to employees (ESOPs) or senior management/ directors as (Sweat equity)
A. Section 62(1)b read with Rule 12 and 16 of the Companies (Share Capital and Debentures) Rules, 2014
A private company may allow the employees of the company to partake of its growth journey in the form of securities being allotted to them at an offer price. Employees will take up such an issue if they know that in future the company will be valued highly and they will get an exit option.
ESOPs can be issued either directly or through a Trust (that is created by the Company)
The process has to be duly followed as stated under Section 62 read with the rules. For understanding the process better, book an expert call here.
B. Section 54 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014
A private company may issue shares to its directors or employees in lieu of cash or at the market price for cash s consideration, if a special resolution has been passed to this effect, the articles of association allows the company for such an issue.
The process has to be duly followed as stated under Section 54 read with the rules. For understanding the process better, book an expert call here.
Reduction of Share Capital and/or Buyback of Shares
A. Section 66 read with applicable NCLT Rules
A company may reduce its share capital by making an application to the National Company law tribunal (NCLT) under whose jurisdiction the Company falls. By reducing share capital, it is understood that the company is going to use the multiple methods made available u/s 66 of the Cos Act, 2013.
Reduction of share capital means reducing either by cancelling the total amount of shares and returning the amount received from the shareholder or to partly reduce the amount paid up per share- For ex. Reduce from rs.10/- per share to rs.6/- per share.
The process has to be duly followed as stated under Section 66 read with the rules. For understanding the process better, book an expert call here.
To understand whether your company should go for a reduction of share capital or for Buyback of shares, book an expert call here.
B. Section 68 read with Rule 17 of the Companies (Share Capital and Debentures) Rules, 2014
A Company may buy back its own shares out of the free reserves or securities premium account or such other accounts as allowed as a price that is reached after a valuation of the company is done. The buy back can only be done if the Articles of Association allow it. To purchase the service for alteration of AoA, click here
A Company can only buy back upto 25% of its share capital and free reserves in a year, after approval from its shareholders via a special resolution has been taken (not reqd if buyback upto 10% only). Certain ratios have to be maintained like that of secured and unsecured debts of the company. The shares to be bought back have to be fully paid up.In one f.y. A company can offer only once to buy back shares from shareholders. Multiple buy backs in a year not allowed.
The process has to be duly followed as stated under Section 68 read with the rules. For understanding the process better, book an expert call here.
Issue of Debentures
Section 71 read with Rule 18 of the Companies (Share Capital and Debentures) Rules, 2014
A private company can raise funds by issue of debentures. The debentures can be secured or unsecured. They may be convertible or non- convertible. Debentures do not carry voting rights. A company does not even have the option to issue debentures with voting rights.
These are a type of loan that is raised by a Company. It carries interest. A company has to be careful to issue debentures carrying such interest so that they do not fall under the purview of Deposits.
The process has to be duly followed as stated under Section 71 read with the rules. For understanding the process better, book an expert call here.
Filing of DPT-3 for loans from directors or other deposits
Rule 16 of the Companies (Acceptance of Deposits) Rules, 2014
A private company that has taken deposits or loan from the Director, any loan from another company, advances received during the course of business or any other exempted deposit, has to file Form DPT-3 for information as on 31-March, by 30-June after the end of the financial year.
Filing of declarations for ultimate shareholding
Section 90
If the company has shareholders other than individuals like Trust, HUF, Partnership LLP, OPC, Company/ body corporate, return of significant beneficial owners of the company has to be filed by every company in E-Form BEN-2, within 30 days of receiving BEN-1. Later on, if any changes happen, then again the filing has to be done within 30 days of receiving the intimation of such change.
Further, if an individual exerts control/ significant influence along with other individuals, even in such a case these forms come into the picture.
Filing of resolutions, agreements etc with ROC
Section 117 read with 179 read with Rule 8 of the Companies (Meeting of Board and its Powers) Rules, 2014
File specified resolutions in E-form MGT-14 within 30 days of them being passed. Many of the provisions under these sections and rules are exempted for a private company. Though in some instances resolutions have to be filed in Form MGT-14 under other section - like section 42 for private placement.
Certain resolutions to be filed within 15 days. To know more, book your 15 minutes free call with an Expert. Click here
Filing of Consolidated Financial statements (CFS)
Section 137
File the consolidated financial statements along with the required attachments in E-form AOC-4 CFS with the registrar within 30 days from the adoption of them at the AGM, if the accounts of the company are required to be consolidated.
OPC will file the financial statements within 180 days from the close of its financial year (as an OPC is not required to hold an AGM)
Certain resolutions to be filed within 15 days. To know more, book your 15 minutes free call with an Expert. Click here
Appointments, resignations, vacancies of Directors
Sections 161
A director has to be appointed by shareholders as it is the shareholders who have put in the money to run the business and they should have a say as to who makes the decisions that will run the company. Still, the Act gives limited power to the Board of the company to appoint a director at a meeting of the board till the next Annual General Meeting (understand that it is not an Extraordinary General Meeting). This kind of director is called an ‘additional’ director. To know more click here
A director already appointed to the Board can opt to have another person to act as director in his/ her stead if the director will be not be absent from meetings due to any reason for a period of at least 3 months. Such a person is known as an ‘alternate’ director. To know more about such appointment visit our website by clicking here.
A company can also appoint a nominee director- nominee means representing another entity- like that of a Bank from whom the company has taken a loan.To know more click here
If an office of a director is vacated say due to resignation of a director or due to the demise of a director, then the Board can appoint another director in the vacancy so caused and is called as a director appointed in ‘casual vacancy’. Such a director will hold office till the original director would have he;d office.
In all the above instances the articles of association of the Company has to allow the Board/ Company to make such appointments. If the articles do not authorise, then appointments can be done only after altering the Articles. To purchase the service for alteration of AoA, click here.
Form DIR-12 has to be filed in all instances alongwith the consent and disclosures of interest by the director.
Disclosure of Interest from a director
Section 184
Disclosure of Interest from a director in Form MBP-1
If during the year there are any changes in the directorships, firms, LLPs,partnership firms or in shareholding of the directors in companies, intimation about such changes have to be given by the director immediately and the Company should make note of the changes in the register maintained for the purpose.
To seek clarifications and help in maintenance of the registers etc, click here or book a free Expert call
We will be updating this article in due course of time.
