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Amendment to Companies Act



Amendment to Companies Act 
Section 135 of the Companies Act, 2013 mandates every company above a certain threshold to formulate a Corporate Social Responsibility (CSR) Policy, and to ensure that the company spends at least 2% of its average net profits made during the preceding three financial years, on CSR activities. Schedule VII of the Act, enlists the activities that can be undertaken by the companies under their CSR policies. Item No. (viii) of Schedule VII covers ‘relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women’ as eligible CSR activities. 


Section 135 of the Act, Schedule VII and Companies CSR Policy Rules, 2014 read with General Circular dated 18.06.2014 issued by the Ministry of Corporate Affairs, provide the broad contour within which eligible companies are required to formulate their CSR policies including activities to be undertaken and implement the same in the right earnest. The decision to allocate CSR fund across various items of Schedule VII is taken by the Board of the Company under the provisions of the Act.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today. 
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Time taken for registration of a company cut by 50% as a part of ‘ease-of-doing business’ effort by the Ministry of Corporate Affairs; Ministry to soon introduce a new version of Form INC29 incorporating suggestions received from the stakeholders allowing up to 5 directors to be appointed and greater flexibility in proposing a name for a company 
Ministry of Corporate Affairs, Government of India has, during the past one year, taken a number of steps, and is in the process of further streamlining processes and the regulatory framework, to reduce the overall time taken for incorporating of a company as a part of ‘ease-of-doing business’ effort of the Ministry. The introduction of an integrated incorporation Form INC29 and tighter monitoring of Registrar of Companies’ (ROCs’) performance has resulted in faster approvals and lesser number of clarifications being asked from the stakeholders. The Ministry will soon introduce a new version of Form INC29 incorporating suggestions received from the stakeholders allowing up to 5 directors to be appointed and greater flexibility in proposing a name for a company. This will allow an even more wider use of this integrated Form, which is already gaining in popularity. The rules with regard to reserving and approving of names for companies are also being simplified, and a centralized new process will be introduced soon for strictly time bound approval of names for companies.

As a result of many steps taken by the Ministry, the average number of days taken for incorporation of a company has come down significantly from 9.57 days in December 2014 to 4.51 days in November 2015. It is targeting that the average number of days would be further reduced to one to two days for approval in normal cases. The Ministry would welcome feedback from companies and professionals to countercheck the system introduced. 
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National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) 
The provisions of the Companies Act, 2013 regarding constitution of National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) had been challenged in the Supreme Court and the matter was decided by the Hon’ble Court by judgment dated 14th May, 2015. The process of setting up of these bodies has been initiated and these are likely to become functional from the next financial year.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today. 
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Enrolment of Foreign Companies with the Registrar of Companies 
Every foreign company, as defined under Section 2(42) of Companies Act, 2013 (the Act), is required to get itself registered with Registrar of Companies, New Delhi within 30 days of its establishing a place of business in India in accordance with Section 380 of the Act. Such foreign companies also include those which have a place of business in India established through electronic mode.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today. 
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Serious Fraud Investigation Office (SFIO) 


                          The numbers cases investigated by Serious Fraud Investigation Office (SFIO) during each of the last three years and the current year are as follows:

Year
No. of companies assigned for investigation
No. of companies where investigations completed
2012-13
45
22
2013-14
83
22
2014-15
71
39
2015-16 (till 30-11-2015)
35
23

            As on 30-11-2015, investigations into the affairs of 127 companies were in progress with SFIO and investigation of one company has been stayed by Court. Further, during the last three years and current year (till 30-11-2015), SFIO has been able to secure convictions in 16 cases through courts and Disciplinary Action Committees of the Institute of Chartered Accountants of India.

            In an effort to identify fraudulent activities at an early stage, Market Research & Analysis Unit (MRAU) of SFIO analyses information in public domain as well as inputs received from various other sources. Such alerts have necessarily to be corroborated through examination of books of account and other records by the field level offices of the Ministry for detection or identification of fraud. Further, forensic lab set up in MRAU assists investigating teams with digital data analysis. No separate fund has been allocated for MRAU. Government has taken a number of measures to check cases of corporate frauds, including:

(i)             'Fraud' as a substantive offence has been introduced in the Companies Act, 2013.
(ii)           Statutory status to the SFIO has been granted under the said Act.
(iii)         Stricter norms of Corporate Governance and their implementation have been granted under the Companies Act, 2013.
(iv)         Increasing application of technology for early/ preliminary identification of cases involving frauds through data analysis and usage of forensic tools, etc.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.

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High Level Committee constituted by the Government to suggest measures for monitoring the progress of implementation of Corporate Social Responsibility (CSR) 




The High Level Committee constituted by the Government to suggest measures for monitoring the progress of implementation of Corporate Social Responsibility (CSR) policies has submitted its Report to the Government.

The report alongwith its recommendations has been placed on the Ministry’s website (www.mca.gov.in).

The Government does not proposes uniformity in tax exemption for CSR expenditure to all eligible activities

The Companies Law Committee is examining the issues related to amendments required, if any, in the Companies Act, 2013 and rules thereunder.

The Companies are required to formulate their CSR policies, if applicable, under the provision of Section 135 of the Companies Act, 2013, Schedule VII of the Act and Companies CSR Policy Rules, 2014 read with General Circular dated 18.06.2014 issued by the Ministry of Corporate Affairs.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today.

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Welfare activities under the Corporate Social Responsibility (CSR) and the Companies Act, 2013 
The provisions of Corporate Social Responsibility (CSR) under Section 135 of the Companies Act, 2013 and rules made thereunder have come into force with effect from 01.04.2014. The year 2014-15 was the first year of implementation of CSR policies by companies under the legislation. The Board of the company, eligible to comply with the CSR provisions of the Act, is mandated to make annual disclosure on CSR in the Board’s report. The companies are still in the process of filing their Annual Reports with the Ministry. Details of companies complying with CSR provisions of the Act for the financial year 2014-15, are expected to be available after requisite filings are made by companies.

The Ministry of Corporate Affairs has not received any specific complaint regarding misuse of CSR funds by companies. Further, Department of Public Enterprises have informed that no complaints regarding misuse of funds by Central Public Sector Enterprises have come to their notice.

The provisions for non-compliance of Section 135 of the Act are prescribed under Section 134 (8) of the Act.

Government has no proposal to constitute any monitoring authority in order to regulate and monitor the activities of CSR.

This was stated by Shri Arun Jaitley, Minister of Corporate Affairs in written reply to a question in the Lok Sabha today. 


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