MCA and Government have made many amendments under the Companies Act, 2013, which came into effect from 01st April 2021 and impacted the financial year 2021-22.
Brief gist of the same is summarized below:
- Definition of Small Company:
The Companies (Specification of Definitions Details) Amendment Rules, 2021, passed on 01 February 2021 effective from 01 April 2021. These amendments have changed the definition of a Small Company.
‘‘Small Company’’ means a company, other than a public company –
- Having, i.e., the paid-up capital of Rs. 2 Crore or less or the turnover as per the last statement of profit & loss should be Rs. 20 Crore or less.
- Earlier before the amendment, the limits prescribed were paid-up capital of Rs. 50 lakhs and the turnover as per the last statement of profit & loss of Rs. 2 Crore or less.
- Changes in the concept of One Person Company:
The Companies (Incorporation) Second Amendment Rules, 2021 passed on 1st February 2021; through these rules, MCA has made amendments in many provisions of One Person Company like:
- This Rules came into effect from 1st April 2021.
- NRI can incorporate One Person Company in India.
- It is not mandatory to convert a Person Company to another type of company irrespective of Turnover i.e., the conversion criteria are removed.
- The process of OPC in another type of company has been completed amended; now, the two-year window is removed
- OPC can convert to another type of company after incorporation without any transition period
- The residence status for OPC formation was changed and reduced from 182 days to 120 days
- Changes in Definition of Listed Company:
The Companies’ definition of Listed Company has been changed (Specification of Definitions Details) Second Amendment, Rules 2021 and is effective from 01st April 2021.
Following companies shall not be considered as Listed Company-
- Public companies which have not listed their equity shares on a recognized stock exchange but have listed there:
- Non-convertible debt securities issued on a private placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or
- Non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or
- Both categories of (i) and (ii) above.
- Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
- Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified.
- Financial statement (Schedule III):
The amended Schedule III to the Companies Act, 2013, was made effective from the 1st day April 2021, for F.Y 2021-2022, which was passed by the Ministry of Corporate Affairs vide Notification dated 24 March 2021Ministry by this amendment has added many new disclosures in Notes to accounts of Balance Sheet and P&L including but limited to the following:
- Rounding off figures
- Shareholding of Promoters
- Trade payable ageing Schedule
- Trade receivables ageing schedule
- Title deeds of Immovable Property not held in name of the Company
- Disclosure on revaluation of Assets vii. Disclosure on Loans/ Advance to Directors
- Details of Borrowing
- Wilful Defaulter
- Transactions with Struck off Companies
- Registration of charges or satisfaction with Registrar of Companies
- Compliance with number of layers of companies
- Disclosure of Ratios
- Undisclosed Income (Reconciliation of Income Tax and Companies Act)
- CSR disclosures
- Loan and advances to directors/ KMP/Related parties.
- Introduction to E-form CSR-1:
Ministry of Corporate Affairs has launched CSR-1 form on their website w.e.f. 1st April 2021. E-form CSR-1 is required to be filed pursuant to Section 135 of the Companies Act, 2013 and Rule 4 (1) and (2) of the Companies (Corporate Social Responsibility Policy) Rules, 2014 by followings:
- Registered Public Trust
- Registered Society
- Section 8 Company
- Annexure of CSR to Directors Report:
MCA has introduced “Companies (Corporate Social Responsibility Policy), Amendment Rules, 2021. These rules came into effect on 22 January 2021, as the same has been published in the official gazette on the same date. Therefore, these amended rules are applicable on the financial year 2020-21 (subject to the specific date of some regulations).
The company shall annex an annual report on CSR with its board report in a format as prescribed in Annexure-I for F.Y.20-21 and Annexure-I for F.Y. 21-22 onwards.