Good news:My proposal to exempt pvt ltd co from filling MGT14 has been placed in parliament:CA Nitesh More 1) The final draft notification now proposes to fully exempt private companies from sec. 117 (3)(g), consequent to which private companies will not be required to file MGT 14 pursuant to board meetings. 2) I am thankful to professionals who have made thousands of similar comments & as a result such exemption is proposed. 3) Collectively we can do. CA NITESH MORE ---------- Forwarded message ---------- From: Nitesh More Date: Tue, Jul 1, 2014 at 10:11 AM 12 SUGGESTIONS TO BE EMAILED TO [email protected] TO SAVE CORPORATE ENVIRONMENT FACTS IN INDIA 1) In India, small & medium private limited company & unlisted public ltd companies are just like the partnership firms incorporated by the family members & friends together. 2) The process of formation, maintenance of such companies should be simple & economical. 3) Kindly note that formation of companies has already decreased by at least 90% during recently. 4) The complex process of raising capital, loan & maintenance of these companies will further discourage the process of formation of companies in India. This suggestions has been prepared by CA Nitesh More on the basis of suggestions invited from 1.5 lakhs professionals. PROBLEMS & SUGGESTION: A) Relevant Sec 117(3), 179(3), Rule 8 of Chapter XII& other Sections & other Rules: MGT14 is required to be filed in more than 60 cases. Private Ltd Co having paid up capital upto 50 crores should be exempted from filling requirement of MGT 14 as such requirements will unnecessary increase their cost of maintaining Pvt Ltd Cos. Alternatively, it can be exempt for companies having less than 50 members. B) Any penalty & prosecution under various Chapters: In case of Private Ltd Co upto paid up capital of 50 crores , the prosecution provisions should not be applicable. Penalty for these co. should not be levied more than Rs. 1 Lakh or amount of default. C) CHAPTER III, Part II: Section 42, Chapter IV, clause (a) of sub-section (1) of section 62) and sub-section (2) of section 62: 1) Requirement of Special Resolution, Separate Bank Account and Valuation of Shares seems to be create additional hardship & is almost impracticable for small private Ltd Cos & small unlisted public Ltd companies . 2) These companies usually receive the money only from closely held persons. 3) Such requirements will unnecessary increase their cost of raising capital & further complex the process to raise capital. 4) These will discourage the process of formation of companies in India. 5) In India the private limited company are just like the partnership firms incorporated by the family members together. 6) Kindly note that formation of companies has already decreased by at least 90% during recently. Suggestion: It is requested to exempt Pvt Ltd & unlisted public Ltd co companies having paid up capital of less than 50 crores or 100 crores of turnover from such requirements. D) Chapter XII, section 185: 1) In private limited & unlisted public companies, shareholders are mostly closely held group companies also. 2) It is almost impossible to find a company without corporate shareholdings. 3) It should not be applicable companies having for paid up capital upto 50 crores. Suggestion :It shall not apply to Private companies & unlisted public companies- (a) which have borrowings from banks or financial institutions or any bodies corporate not more than twice of their paid up capital or Rs. 50 crore, whichever is more; and (b) in whose share capital no other body corporate has invested any money”. E) Chapter V, sub-section (2) of section 73: Suggestion : 1) Borrowing from members should be allowed upto twice of Net worth. Banks also allow these companies to borrow until they maintain debt equity ratio of 2:1. 2) It shall not apply to private companies & unlisted public companies having 50 or less number of members if they accept monies from their members not exceeding two hundred per cent of aggregate of the paid up capital and free reserves and which inform the details of such monies to the Registrar in the prescribed manner. 3) These companies should also be exempted from filing quarterly forms etc. as it is well disclosed in audit report as per the requirement of AS-18. F) RELIEF SHOULD EXTEND TO UNLISTED CLOSELY HELD COMPANY: Some provisions would raise quantum of unnecessary procedures and prove draconian for all kinds of small companies, with limited resources. These will only disturb business environment In India. Thus we suggest the notification be made applicable to small public companies as well. G) CHAPTER III PART -I, CLAUSE (B) OF SUB-SECTION 2 OF SECTION 23: Private companies generally receive monies from closely held persons. Therefore this clause be made applicable without compliance of Part II of this Chapter. H) CHAPTER V SUB-SECTION (2) OF SECTION 73: Private companies are solely dependent on their shareholders and directors for their business financial needs. It is not always possible or advisable to approach banks etc. for their day-to-day financial requirements. We therefore suggest that such companies shall have full liberty to raise funds from shareholders, directors and all their relatives. I) CHAPTER IX SUB-SECTION 3 OF SECTION 129: Small Companies and Private Limited companies be exempt from provisions of Consolidated Financial Statement. J) CHAPTER-XIII PROVISO TO CLAUSE (A) OF SUB SECTION 3 OF SECTION 196: Age limit of 70 years does not seem logical in this case. We suggest to remove this upper age limit. H) DISCLOSURE OF INTEREST U/S 184: Disclosure of interest u/s should only be of interest in unlisted public companies & private companies & of interest in listed co only if shareholding is more than 2%. Change of holding of a director by even 1 share in a listed company is hardly a matter of concern, but filing MBP-1 on every such change will increase tremendous paperwork for a director & for companies too. I) DEFINITION OF DEPOSITS: Loan from members was not treated as deposit under the old Companies Act, but bringing such transaction in the definition of deposit will cause genuine hardship to small companies. If a company is not allowed to accept loan from members, how it will survive because the bankers are also reluctant to part with their money for such small companies. PREPARED BY CA NITESH MORE ON THE BASIS OF SUGGESTIONS INVITED FROM 1.5 LAKHS PROFESSIONALS.
Posted on: Tue, 15 Jul 2014 14:52:21 +0000
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