INSIGHTS
New Year Resolution:
No (more) Non- Compliance!
Taking stock
Our October, 2017 edition provided a detailed insight into the objective, modus operandi, timing and enormity of the government initiative in cracking down on shell companies which illegally laundered money. At that time, it was estimated that 2.17 lakh companies were struck off from their respective RoC jurisdictions for defaulting in annual filings for 3 years or more. Consequently, 3.19 lakh directors stood disqualified for being on board of such defaulting companies. Such disqualified directors could not be directors in other existing companies or new companies for a period of 5 years from the date of their disqualification.
Collateral damage
There was collateral damage – disqualified directors were also directors on boards of other existing, active companies which were compliant with the AGM requirements of the Companies Act. This put a question mark on the legality of day to day management and transactions carried on by such disqualified directors in existing active companies. As a result, active companies and its Directors were up in arms.
DIY measures
Directors of active companies who were disqualified approached various legal forums such as submitting petition to the National Company Law Tribunal (NCLT) and High Courts. They submitted petition to the NCLT to restore / revive such struck off companies. The various benches of the NCLT has been hearing such cases - proceeding with caution, lest the whole objective of the clamping down on shell companies not be lost. There have been many instances where the NCLT has refused to revive companies purely on merit of the facts.
The Directors then, began approaching the High Court’s seeking relief from such disqualification. The High Courts have been granting relief by way of an interim stay on director disqualification. It has issued show cause notice to the RoCs and the Central government. In effect, this will enable them to legitimately carry on business in other active and compliant companies in which they are directors. The number of writ petitions being filed in the High Courts of Madras, Karnataka, Mumbai, Delhi and Kerala has been on the rise.
Government to company’s rescue
In order to provide relief to defaulting yet active companies (whose name have not yet been struck off the RoC), the Central government, on 19th December, 2017, announced the “Condonation of Delay Scheme, 2018”.
A look at the key take aways for directors / companies from this scheme:
Effective date of CODS, 2018
The scheme shall be effective from 1st January, 2018 until 31st March, 2018
Applicability of CODS, 2018
Modus Operandi of CODS, 2018
- The scheme shall be applicable to all those companies which have defaulted in annual filings for a period of 3 years or more and yet are active companies. (“Defaulting companies”)
- The scheme shall not be applicable to those companies that have already been struck off the RoC’s for failure or default in filing annual returns for a period of three year or more.
- The scheme shall applicable only for AGM / annual filing Forms and compliance and not any other Forms / compliance.
- The scheme shall be applicable for default in filing all AGM / annual filing compliance upto 30th June, 2017.
- During the 3 month window (01.01.2018 – 31.03. 2018), the DIN of the disqualified directors shall be re-activated.
- Once the DIN re-activates, the directors of such companies shall ensure that all AGM related annual filing / compliance shall be completed by filing Forms online with the RoC.
- On completion of filing all AGM/ annual filing documents, the company shall file online to the RoC, a condonation Form (Form e-cods 2018) by paying a sum of Rs. 30,000 and condone the delay.
- The RoC of the respective jurisdiction, shall withdraw prosecutions pertaining to documents filed under this scheme.
- On the expiry of the 3 month period (on 31st March, 2018) even if the defaulting companies have not completed filing, the DIN of directors shall be de-activated.
- In case of defaulting companies which have already approached the NCLT, DIN of such directors can be re-activate only after the revival order passed by NCLT, subject to company filing overdue documents.
The end result
The government continues to remain undeterred in weeding out shell companies. At the same time, it is also keen on providing solutions to those companies which are on the brink of being struck off. As a result, the government has sent out a simple yet strong message: comply cost effectively within time or cough up money and comply. The crux of the matter shall be to ensure compliance at all times. With the Parliament clearing the Companies Amendment Bill as well, the focus has been (and will continue to be) the ease of doing business in India. The CODs, 2018 is also indicative of the same.
A tête-à-tête with
N. Ramesh Rajan, Managing Partner
of LeapRidge Advisors LLP
Q&A
What is the most valuable lesson learnt so far?
To trust my Intuition
What is the most important factor in resolving conflicts?
Empathy
What is the most important indicator of performance of an organization?
Employee Attrition
What is the most important factor to foster innovation?
Understanding and Encouragement
What is a key factor in building and maintaining a strong team?
Transparency & Fairness
If you are given an opportunity to live all over again what would you have done?
Pursued a Legal career
What is that one thing that you wish to change in this world using your talent and potential?
Providing equal opportunity to all
How important is legal affairs to an organization and what should organizations do to attend to their legal affairs?
Seek proper and timely legal advice
What is one professional tip that you would like to share?
Lead by example
What has been the turning point of your life?
Starting and building the Bangalore Practice of Lovelock & Lewes in 1988
What do you consider your greatest achievement?
Being elected as Chairman & CEO of PwC, India
What is the one principle that has carried you this far?
Integrity
What is the one character trait or strength of yours that you admire the most?
Common sense
What is the best indicator of your leadership?
Gaining the confidence of my colleagues
What is your definition of success?
Earning the trust and support of my colleagues / clients
What are your top two regular practices that have helped you in life?
Inclusiveness / Collaboration
What is your most important advice for time management?
Prioritizing
What is the single most important factor that clinches a deal?
Trust
In the fortnightly podcast, Mr. A.K Mylsamy shares details, judgement and anecdotes on Vishnu Sudha textiles vs Shri Nagananda mills. Listen in!
AT THE HELM OF AFFAIRS
INFOGRAPHIC
LEGAL-EASE
A mark put upon a thing to distinguish from another. originally and literally, a mark upon the ear; a mode of marking a sheep and other animal. Property is said to be ear-marked when it can be identified or distinguished from other property of the same nature.
To set apart from others.
Money has no ear-mark,but it is an ordinary term for a privy mark made by any one on a coin.
Face of Judgement
The sum of which it was rendered,exclusive of interest.
Gabel
An excise; a tax on moveables;a rent,custom,or service. A tax,impost,or excise duty especially in continental Europe. Formerly, in France,such term referred specifically to the tax on salt,but also applied to taxes on other industrial products.
Habeas corpus ad respondendum
A writ which is usually employed in civil cases to remove a person out of the custody of one court into that of another,in order that he may be sued and answer the action in the latter.
MCA
SEBI
FEM
- Rules dated 20.12.2017 - Companies (Cost records and audit) second Amendment Rules, 2017
- Rules dated 07.12.2017 - Companies (Cost records and audit) Amendment Rules, 2017
- Rules dated 04.12.2017 - Companies (Filing of Documents & Forms in Extensible Business Reporting Language), Second Amendment, Rules, 2017
- Cir.dt. 19.12.2017 - Disclosure of holding of specified securities and Holding of specified securities in de-materialized form
- Cir.dt. 20.12.2017 - Investments by FPIs in Government Securities
- Cir.dt. 22.12.2017 - Exemption application under Regulation 11 (1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011
CIRCULARS &
NOTIFICATIONS
Lawlipops
Released in 1993, Philadelphia was the first mainstream Hollywood movie that tackled the (until then) taboo issue of HIV/ Aids, Homosexuality and the myths surrounding them. Tom Hanks played the path breaking role of Andrew Beckett, a senior associate at a powerful Philadelphia law firm.
Being gay, he hides his homosexuality and HIV/ Aids. However, he is unceremoniously fired by the law firm after a colleague discovers his HIV/ Aids. He then begins a historic legal battle teaming up with a small time lawyer (Denzel Washington), the only one willing to help. How his case changes the stigma and misconception surrounding HIV/ Aids and homosexuality and how he wins the case forms the rest of the story. Tom Hanks won the Oscar for best actor. This film was known to have been inspired by the real lives of two attorneys in the U.S, who sued their law firms for firing them from work due to discrimination of AIDS. One of the lawyers won the case just before his death.
In 1989, two brothers – Lyle and Erik Menendez murdered their wealthy parents at point blank range. Their arrests and subsequent legal battle got national attention when their trial was broadcast on TV in 1993. Both brothers were found guilty and convicted for life sentence without parole in 1996. This soap is the first of a series on television that tracks the history, the motive, the family history and the media attention surrounding the murder, the arrests and the trial thereafter.
(P)REVIEW
It always seems impossible until its done.
Nelson Mandela
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