All posts by Anupama

E-KYC of Directors: In a nutshell

Form DIR-3 KYC

Ministry of Corporate Affairs (India) would be conducting KYC of All the directors of companies annually through a new e-form à DIR-3 KYC.

This exercise covers all DIN’s (Director Identification Number) issued up to March 31, 2018. Indian directors as well as Non-resident directors on the boards of Indian companies, Disqualified directors, Individuals with active DIN’s, all are required to file this form on or before August 31st, 2018.

Listed below are the frequently asked questions in this regard: –

 

                                                                      FAQ’S Form DIR-3 KYC
S. No. FAQ’S Replies
 

1.

 

Who is required to file?

 

 At present: Every individual who has already been allotted DIN on or before March 31, 2018 and the current status of DIN is “Approved”.

Subsequently: Every individual who has been allotted DIN as on March 31st of respective year.

* It also includes “disqualified directors” and individuals holding DIN but “not appointed as director” in any company.

2. Timeline?

 

At present: On or before August 31st, 2018

Subsequently: April 30th (Every year)

3. Filing Fee? Zero, if filed within time
4. Consequences of

Non-Filing?

Deactivation of DIN

And thereby director cannot file any other form.

5. Penalty on late filing? Rs. 5000/- from the first day after the due date
6. Pre- requisites? A valid Digital Signature Certificate (DSC):

Indian nationals should have PAN encrypted DSC and

For Foreign nationals, name in the DSC should match the name in the passport.

7. Personal details & documents required?

 

  • Indian Residents

 

1.   Copy of Aadhar Card;

2.   Copy of Passport – Mandatory, if individual holds a valid passport;

3.   Copy of Permanent Address Proof;

4.   If permanent address and present address are different, copy of Present address proof should also be provided;

5.   PAN number;

 

For verification through OTP (One Time Password)

6.   Personal Mobile number of the respective director;

7.   Personal Email-id of the respective director.

 

 

  • Non- Residents
1.   Copy of Passport;

2.   Permanent Address Proof

3.   If permanent address and present address are different, copy of Present address proof should also be provided;

 

For verification through OTP (One Time Password)

1.   Personal Mobile number (Foreign No.) with country code;

2.    Personal Email-id of the respective director.

 

* Note: –

§  Mobile number and email ID must be unique such that it is not already linked with some other person in the DIN holders’ database.

§  In case of non-residents, foreign address and foreign number shall only be allowed.

 

8. Authentication of the Documents? Ø  All the documents attached with the form should be self-attested and duly certified by professionals (CS/CA/CMA) or notarized/ apostilled if the person is residing outside India.

 

Striking off a Company/LLP: Simplified

Particulars Relevant Section/ Rules Action Points
Strike off a Company

 

 

 

 

 

 

 

 

 

 

 

 

Sec. 248 of CA 2013

 

 

 

 

 

 

 

 

 

 

 

 

  1. A company can be struck off, if it has failed to commence business within one year of its incorporation or has not been doing business or operations for last two financial years.
  2. For striking off a company, an e -form named STK-2 is required to be filed along with its necessary attachments.
Filing Fees: – 5,000/-
Documents required: –

  1. Copy of Board resolution authorizing the filing of this application;
  2. A statement of accounts showing the assets and liabilities of the Company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant. One of the eligibility criteria for strike off is that the company should not have any assets or liabilities, i.e.. Nil assets and nil liabilities.
  3. Shareholder’s approval , either by special resolution or consent of 3/4th
  4. In the case of a company regulated by any other authority, approval of such authority shall also be required.
  5. Indemnity bond [to be given individually or collectively by the director(s)]
  6. Affidavits
Strike off a LLP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rule 37 of LLP Rules, 2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  1. A LLP can be struck off if it is not carrying on the business or operation for a period of 1 (one) year
  2. For striking off a LLP, an e-form 24 is required to be filed along with its necessary attachments.
Filing fees: – 500/-
Documents required: –

  1. Copy of Authority letter to make the application, signed by all the partners
  2. Statement of Accounts Certified by CA disclosing nil assets and nil liabilities; It should not be older than thirty days before the date of application
  3. Copy of acknowledgement of latest ITR (Income Tax Return) filed
  4. Copy of initial LLP Agreement, if entered into and not filed
Some other Pointers:

  1. Non-Requirement of filing Form 3 LLP before filing for strike off: LLP is not required to File form 3 LLP if it has not commenced business or commercial operations since Incorporation.
  2. Non-Requirement of filing Form 8 & Form 11 (Annual Filings) before filing for strike off: LLP is not required to file Form 8 & Form 11 if it has not commenced business or commercial operations since Incorporation.
  3. By LLP Amendment Rules, “The LLP shall, file overdue returns in Form 8 and 11 up to the end of the financial year in which the LLP ceased to carry on its business or commercial operations before filing of form for strike off”.
  4. Note:- The date of cessation of commercial operation is the date from which the LLP ceased to carry on its revenue generating business and the transactions such as receipt of money from debtors or payment of money to creditors, subsequent to such cessation will not form part of revenue generating business.

P.S.: – For more details you may please visit our blogs: –

1.Strike Off Under Companies Act, 2013

2. How to close an LLP in India/Easy Exit/Strike Off

 

 

 

FIPB abolished : Road ahead for FDI (under approval route)

 

In the light of easing FDI policies a recent step taken by Government of India is to abolish 25 year old FIPB [Foreign investment and promotion board]. The proposed mechanism i.e. applicable from year 2017-18, has been introduced to make India a far more investor-friendly destination and to reduce unnecessary administrial hassle in the route of FDI.

FIPB a brief history:

FIPB was the inter-ministerial body housed in Finance Ministry formed following liberalisation policy in early 1990’s. The primary function of FIPB was to recommend, in consultation with the ministries concerned, on FDI proposals under the government approval route. So FDI proposals had to deal with several players to get the approval i.e. Ministry of commerce, DIPP, FIPB, RBI, Ministry of Finance which resulted as a time consuming process.

Road ahead:

In a move to reduce red tape in government and to promote the ‘Maximum Governance and Minimum Government’ principle, the government had recently abolished the Foreign Investment Promotion Board (FIPB). During the last three years, 91-95% of foreign direct investment (FDI) into India came through the automatic route. Only in 11 sectors, like Defense, Retail, Banking, etc there is need for prior government approval. Now onwards FDI via prior approval route will be dealt by the departments of the respective ministries. Going forward instead of going to multiple bodies FDI proposals will be handled by one concerned department and that department will take the final decision on the application received.

Highlights:

  • Applications for FDI be now handled by the concerned Ministries/Departments in consultation with the Department of Industrial Policy & Promotion (DIPP) Ministry of Commerce,
  • The Standard Operating Procedure (SOP) for processing of applications has been issued by DIPP on June 29th 2017 for processing the FDI proposal.
  • In respect of applications in which there is a doubt as to which is the concerned Administrative Ministry/Department, DIPP shall identify the Administrative Ministry/Department where the application will be processed for decision.
  • DIPP or Department of Economic Affairs will undertake a quarterly review of FDI proposals
  • Proposals that are pending before the FIPB will be sent back to departments concerned for approval
  • While foreign investments by non-resident Indians and FDI in retail and export oriented units will be approved by DIPP, FDI in banks will be approved by the Department of Financial Services
  • All FDI from Pakistan and Bangladesh and FDI proposals requiring approval in Private Security Agencies and manufacture of small arms, Investments in Broadcasting, Telecommunication, Satellites to be approved by Ministry of Home Affairs.
  • Now the FIPB portal would be linked with the e-business portal

 

New procedure for proposing FDI:

  • Now proposals for foreign investment in sectors/activities requiring Government approval would be filed online on the revamped FIPB portal, rechristened as Foreign Investment Facilitation Portal. http://fipb.gov.in/Authenticate/Login.aspx
  • After the proposals are filed online, DIPP will identify the concerned Administrative Ministry/Department and e-transfer the proposal to the concerned Administrative Ministry/Department (Competent Authority) within 2 days.
  • Ministries/Departments consulted on the proposal shall upload their comments on the portal within 4 weeks from the online receipt of the proposal. Approval letters have to be issued by the Competent Authority in the format prescribed
  • Comments by Ministry of Home Affairs on proposals for investment in sectors requiring security clearance would be provided to the Competent Authority within 6 weeks from the online receipt of such proposals.
  • Timelines has been fixed for approving applications regarding FDI by competent authorities and a rejection by the department concerned has been made difficult as it now will mandatorily require concurrence of DIPP
  • It also said FDI proposals would be cleared within 60 days of the application.
  • Detailed list of documents and procedure has been provided under SOP issued by DIPP. Below is the link to get all the information in this regards.

Link-Standard Operating Procedure (SOP) for Processing FDI Proposals

 

FLA Return under FEMA : four important points

FLA (Foreign Liabilities and Asset) Return under FEMA (Foreign Exchange and Management Act, 1999) is Annual Return required to be submitted by all the India resident companies, Partnership firms, Branches or Trustees which have received FDI and/ or made overseas investment in any of the previous year(s), including current year.

 

Four important points that one should  know about FLA Returns:

  • Due Date:- FLA is required to be submitted by July 15 every year. In case FLA filed on the basis of provisional accounts, revised FLA is to be filed based on audited accounts before September end.
  • Non Compliance:- Non-filing of the return before due date will be treated as a violation of FEMA and penalty clause may be invoked for violation of FEMA. The penalty as prescribed under the FEMA is “THRICE” the sum involved in contravention or Rs. 2 lakh if the offence is non-quantifiable and if the contravention is continuing every day, then Rs. Five Thousand for every day after the first day during which the contravention continues.
  • Compounding for delay in filing:- The powers to compound the contraventions have been delegated to all Regional Offices of RBI (except Kochi and Panaji) without any limit on the amount of contravention.
  • Exemptions:-
    1. Where Indian company does not have any outstanding investment in respect of inward and outward FDI as on end-March of reporting year
    2. If a company has received only share application money and does not have any foreign direct investment or overseas direct investment outstanding as on end-March of the reporting year
    3. Companies which have issued the shares to non-resident only on Non-repatriable basis are not required to submit the FLA Return.

 

Procedure of Filing:-

  • The FLA Return has to be submitted in excel based format, which has inbuilt checks and validations, any other attachment should not be forwarded along with the FLA return.
  • Company’s financial details along with other relevant details needs to be filled in the return based on the audited financial accounts.
  • After filling in the requisite details, the Company can file the FLA Return by e-mailing the same to the RBI at [email protected] from an official E-mail address of any authorized person.
  • On submission of the FLA return, an acknowledgement will be forwarded to the E-mail address of the authorised person
  • The latest format of FLA Return is available on RBI’s web site at the following link: https://www.rbi.org.in/Scripts/BS_ViewFemaForms.aspx
  • Any query regarding filling of FLA return should be sent to email [email protected]. You may also contact RBI person handling FLA return.

 

Note:- Partnership firms, Branches or Trustees which are having FDI as on end of the reporting year, then the same are also required to file excel based FLA Return. These persons should send a request mail to get a dummy CIN number which will enable them to file the Excel based FLA Return. If any entity has already got the dummy CIN number from the previous year, they should use the same CIN number in the subsequent years also.