Circulars issued by the Ministry of Corporate Affairs till-date, since the commencement of Companies Act, 2013.

1.                   General Circular No. 35/2014 dated August 27, 2014. It is a Clarification regarding AS-10 - Capitalization of Cost.

AS-10 and AS-16 prescribes principles of capitalization of various costs on the underlying principle that expenditure should be capitalized as

form a part of the cost of fixed assets which increase the worth of assets. Cost incurred during the extended delay in commencement of commercial production after the plant is otherwise ready, but which does not increase the worth of assets, should not be capitalized.

AS 16 guides with regard to part capitalization, where some units of a project are complete. Costs should be capitalized in relation to that part which is ready for commercial production.

Further clarified that AS-10 and AS-16 are applicable irrespective of whether the power projects are "Cost-Plus Projects" or "Competitive-Bid Projects".

2.                   General Circular No. 34/2014 dated 12/08/2014 which details the Company Law Settlement Scheme, 2014 released by the Ministry of Corporate Affairs.

1. Inactive companies can now get themselves declared as "Dormant Companies" at reduced filing fees.

2. Scheme to be operative from 15th August, 2014 to 15th October, 2014.

3. Belated Documents should have been due for filing till June 30, 2014.

4. Statutory Filing Fees + 25%Additional Fees

5. Before filing for issuance of Immunity Certificate, Any appeal filed by the Company against any notice issued or complaint filed before the competent court for violation of the provisions of Companies Act, 1956 or Companies Act, 2013 shall have to be withdrawn.

6. Application for seeking immunity be filed in e-Form CLSS-2014 which shall be available from 1st September, 2014 and can be filed till January 15, 2015.

7. Scheme applicable only in case of - Form 20B,Form 21A, Form 23AC, Form 23ACA, Form 23AC-XBRL, Form 23ACA-XBRL, Form 66, Form 23B.

8. Scheme not applicable where application has been made for striking off name of companies or the proceedings have been initiated, application for dormant status has been made, vanishing companies.

9. Scheme for Inactive Companies -
EITHER apply simultaneously for application o get themselves declared as Dormant Company at 25% of the fee
OR Apply for striking off of the name of the company by filing Form e-Form FTE at 25% of the Filing Fees.

3.                   General Circular No. 33/2014 dated July 31, 2014. It is clarified that the new Act does not alter the position with regard to audit of deemed Government companies through C&AG and thus such companies are covered under sub- section (5) and (7) of section 139 of the New Act.

It will primarily be the responsibility of the company concerned to intimate to the C&AG about its incorporation along with name, location of registered office, capital structure of such a company immediately on its incorporation. It is also incumbent on such a company to share such intimation to the relevant Government so that such Government may also send a suitable request to the C&AG.

4.                   General Circular No. 32/2014 dated July 23, 2014 is a Clarification on transitional period for resolutions passed under the Companies Act, 1956.

It is clarified that resolutions approved or passed by companies under relevant applicable provisions of the Old Act during the period from 1st September 2013 to 31st March 2014, can be implemented, in accordance with provisions of the Old Act, notwithstanding the repeal of the relevant provision subject to the conditions that -
(a) the implementation of the resolution actually commenced before 1st April 2014 and 
(b) this transitional arrangement will be available upto expiry of one year from the passing of the resolution or six months from the commencement of the corresponding provision in the Companies Act 2013 ("New Act"), whichever is later. 

It is also clarified that any amendment of the resolution must be in accordance with the relevant provision of the New Act.

5.                   General Circular No. 31/2014 dated July 19, 2014 is with regards to “Extension of validity of reserved names”

Validity of 1930 names out of 9522 cases pointed out by service provider of MCA-21, have been increased up to August 18, 2014, to enable filing of incorporation forms under Companies Act, 2013.

Professionals/ Stakeholders to check the respective SRNs to check their eligibility.

6.                   General Circular No. 30/2014 dated July 17, 2014 is a clarification on matters pertaining to Related Party Transactions.

Related party referred to in second proviso to Section 188(1), shall be construed only as such related party as may be a related party in the context of the contract or arrangement for which the said special resolution is being passed.

Transactions arising out of Compromises, Arrangements and Amalgamations dealt with under specific provisions of the Companies Act, 1956/Companies Act, 2013, will not attract the requirements of section 188 of the Companies Act, 2013.

Contracts entered into by companies, after making necessary compliance under Section 297 of the Companies Act, 1956, which already came into effect before the commencement of Section 188 of the Companies Act, 2013, will not require fresh approval under the said section 188 till the expiry of the original term of such contracts. Only in the event of modifications in such contracts made on or after 1st April, 2014, the requirements under section 188 will have to be complied with.

7.                   General Circular No. 29/2014 dated July 11, 2014 has directed the Registrar of Companies to ensure that names allotted to Companies and Limited Liability Partnerships should not be in contravention of the provisions of Emblems and Names (Prevention of Improper Use) Act, 1950.

8.                   General Circular No. 28/2014 dated July 9, 2014 has put Form MGT-14 in Straight Through Process (STP) mode.
All cases except for change of Name, change of object, resolution for further issue of capital and conversion of companies will be STP Mode.

9.                   General Circular No. 27/2014 dated June 30, 2014 granted extension of 2 months upto 31-08-2014 without any additional fee in terms of Section 403 of the Act to enable the companies for filing of statement under Form DPT-4 with the Registrar.

10.               General Circular No. 26/2014 dated June 27, 2014 clarifies that the use of the word "Commodity Exchange" may be allowed only where a "No Objection Certificate" from the Forward Markets Commission (FMC) is furnished by the applicant. The certificate from Forward Markets Commission will also be required in cases of companies registered with the words "Commodity Exchange' before the issue of this circular.

11.               General Circular No. 25/2014 dated June 26, 2014 clarifies that the ‘residency requirement’ would be reckoned from the date of commencement of section 14 of the Act i.e. 1^st April, 2014, The first previous calendar year, for compliance with these provisions would, therefore, be Calendar year 2014. Therefore, on a proportionate basis, the number of davs for which the director(s) would need to be resident in India, during Calendar year 2014, shall exceed 136 days.

Regarding newly incorporated companies it is clarified that companies incorporated between 1.4.2014 to 3O.9.2O14 should have a resident director either at the incorporation stage itself or within six months of their incorporation. Companies incorporated after 30.9.2014 need to have the resident director from the date of incorporation itself.

12.               General Circular No. 24/2014 dated June 25, 2014 clarifies that the shares held by a company in another company in a 'fiduciary capacity' shall not be counted for the purpose of determining the relationship of 'associate company' under section 2(6) of the Companies Act, 2013.

13.               General Circular No. 23/2014 dated June 25, 2014 clarifies that there is no bar in the new Act for a company incorporated outside India to incorporate a subsidiary either as a public company or a private company. An existing company, being a subsidiary of a company incorporated outside India, registered under the Companies Act, 1956, either as private company or a public company by virtue of section 4(7) of that Act, will continue as a private company or public company as the case may be, without any change in the incorporation status of such company.

14.               General Circular No. 22/2014 dated June 25, 2014 clarifies that Form MGT-7 shall not apply to annual returns in respect of companies whose financial year ended on or before 1st April, 2014 and for annual returns pertaining to earlier years. These companies may file their returns in the relevant Form applicable under the Companies Act, 1956.

15.               General Circular No. 21/2014 dated June 18, 2014 in relation to Clarifications with regard to provisions of Corporate Social Responsibility under section 135 of the Companies Act, 2013” clarifies that the entries in the said Schedule VII must be interpreted liberally so as to capture the essence of the subjects enumerated in the said Schedule. The items enlisted in the amended Schedule VII of the Act, are broad-based and are intended to cover a wide range of activities.

CSR activities should be undertaken by the companies in project/ programme mode. One-off events shall not qualify.

Expenses incurred by companies for the fulfillment of any Act/ Statute of regulations (such as Labour Laws, Land Acquisition Act etc.) would not count as CSR expenditure

Salaries paid by the companies to regular CSR staff as well as to volunteers of the companies (in proportion to company’s time/hours spent specifically on CSR) can be factored into CSR project cost as part of the CSR expenditure.

“Any financial year” referred under Sub-Section (1) of Section 135 of the Act read with Rule 3(2) of Companies CSR Rule, 2014, implies ‘any of the three preceding financial years’.

Expenditure incurred by Foreign Holding Company for CSR activities in India will qualify as CSR spend of the Indian subsidiary if, the CSR expenditures are routed

through Indian subsidiaries and if the Indian subsidiary is required to do so as per the Act.

Contribution to Corpus of a Trust/ society/ section 8 companies etc. will qualify as CSR expenditure as long as (a) the Trust/ society/ section 8 companies etc. is created exclusively for undertaking CSR activities or (b) where the corpus is created exclusively for a purpose directly relatable to a subject covered in Schedule VII of the Act.

16.               General Circular No. 20/2014 dated June 17, 2014 is a clarification on Rules prescribed under Companies Act, 2013 -Clarification with regard to Voting Rights through Electronic Means-reg.

Section 108 read with rule 20 of the Companies (Management and Administration) Rules, 2014: “Exercise of right to vote by members by electronic means (e-means).”

The provisions seek to ensure wider shareholder’s participation in the decision making process in companies. It has been decided not to treat the relevant provisions mandatory till 31st December, 2014.

The relevant provisions pertains to compliance with procedural requirements, engagement of Depository Agencies and the need for clarity on matter like demand for poll/postal ballot etc will take some more time.

17.               General Circular No. 19/2014 dated June 12, 2014 is a clarification on matters relating to share capital and debentures.

Any share transfer forms executed before April 1, 2014 and submitted duly to the company within the prescribed time, under the relevant section of the Companies Act, 1956; needs to be accepted by the companies for registration of transfers. In case of delay in submission, the company needs to satisfy itself suitably with regard to justification in delay. In case a company decides not to accept the share transfer form, it shall convey the reasons for such non-acceptance within time provided under Section 56(4)(c) of the Act.

Committee of Directors may exercise powers, subject to any regulations imposed by the Board in this regard with regard to issue of duplicate share certificates.

18.               General Circular No. 18/2014 dated June 11, 2014 clarifies that with respect to difficulties being faced in filing Form No. INC-27 for conversion of companies from public to private under the Companies Act, 2013 -  the relevant provisions of Companies Act, 2013 have not yet been notified. The Companies Act, 1956 is in force for the said provisions/ purpose and powers stand delegated to Registrar of Companies, as before.

19.               General Circular No. 17/2014 dated June 11, 2014 clarifies that Form MGT-10 has to be filled physically and certified by a practicing professional thereon and thereafter filed as an attachment to eForm GNL-2 till the time eForm MGT-10 is made available.

20.               General Circular No. 16/2014 dated June 10, 2014 which clarifies that a Resident Director shall have to furnish PAN details at the time of incorporation of a company. A Foreign National who shall be a subscriber/promoter, and does not possess PAN shall submit a declaration in the said regard as an attachment to Form INC-7.

21.               General Circular No. 15/2014 dated June 09, 2014 clarifies that register maintained under section 372A(5) of the Companies Act, 1956 may continue as per requirements under these provisions and the new format prescribed vide Form MBP2 shall be used for particulars entered in such registers on and from April 01, 2014.

22.               General Circular No. 14/2014 dated June 09, 2014 clarifies that only Appointment of Independent Directors under the new Act would need to be finalized through a letter of appointment.

In view of the provisions of Section 188 which take away transactions in the ordinary course of business at arm’s length price, from the purview of related party transactions, an “ID” will not be said to have a pecuniary relationship. It also does not include receipt of remuneration, from one or more companies as sitting fees, reimbursement of expenses for participation in the Board and other meetings and profit related commission approved by the members, in accordance with the provisions of the Act. {Section 149(6)(c)}

Section 149(10) provides for a term of “upto five consecutive years” for an ID and any term of less than five years, shall constitute as one term under Section 149(10) of the Act. Further, under Section 149(11), no person can hold office of ID for more than “two consecutive terms”, and shall have to demit office, even if the total number of years in the two consecutive terms is less than ten years. He shall be eligible for re-appointment only after the requisite cooling off period of three years.

23.               General Circular No. 13/2014 dated May 23, 2014. There is a further extension of validity period for names reserved as on March 31, 2014 by another 15 days from the date of the above-mentioned circular i.e. till June 5, 2014.

The same is in continuation with General Circular No 11/2014

24.               General Circular No. 12/2014 dated May 22, 2014 clarifies that PAN details are mandatory only for those foreign nationals who are required to possess "PAN" in terms of provisions of the Income Tax Act, 1961 on the date of application for incorporation. Where the intending Director who is a Foreign National is not required to compulsorily possess PAN, it will be sufficient for such a person to furnish his/her passport number, alongwith undertaking stating that provisions of mandatory applicability of PAN are not applicable to the person concerned.

25.               General Circular No. 11/2014 dated May 12, 2014 mentioned a one time opportunity for extension of period of Reservation of names.

For those stakeholders, whose expiry of 60 days period of reservation of names for incorporation of companies, was falling in the period April 1, 2014 to April 28, 2014; the validity of such names have been extended till May 31, 2014. Those stakeholders, falling in this category, are advised by MCA, to file the relevant E-forms under Companies Act, 2013 before May 31, 2014.

26.               General Circular No. 10/2014 dated May 07, 2014 has been released by the Ministry of Corporate Affairs on Certification of E-forms/non e-forms under Companies Act, 2013 by the Practicing Professionals.

CAUTION : Further Stringency : Section 447, 448, 449 of Companies Act, 2013

“Where any instance of filing of documents, application or return or petition etc. containing false or misleading information or omission of material fact or incomplete  information is observed, the Regional Director or the Registrar as the case may be, shall conduct a quick inquiry against the professionals who certified the form and signatory thereof including an officer in default who appears prima facie responsible for submitting false or misleading or incorrect information pursuant to requirement of above said Rules; 15 days notice may be given for the purpose.

The Regional Director or the Registrar will submit his/her report in respect of the inquiry initiated, irrespective of the outcome, to the E-Governance cell of the Ministry within 15 days of the expiry of period given for submission of an explanation with recommendation in initiating action u/s 447 and.448 of the Companies Act, 2013 wherever applicable and also regarding referral of the matter to the concemed professional Institute for initiating disciplinary proceedings.

The E-Gov cell of the Ministry shall process each case so referred and issue necessary instructions to the Regional Director/ Registrar of Compalies for initiating action u/s 448 and 449 of the Act wherever prima facie cases have been made out. The E-Gov cell will thereafter refer such cases to the concerned Institute for conducting disciplinary proceedings against the errant member as well as debar the concerned professional from filing any document on the MCA portal in future.”

27.               General Circular No. 09/2014 dated April 25, 2014 is in relation to Availability of E-forms and non-e-forms under Companies Act, 2013. 

In addition to the Public Notice issued in the newspapers on 25th April, 2014, the circular states that w.e.f. April 28, 2014, stakeholders can also file application for seeking extension of date of AGM/ Accounting period by filing form GNL-l. Documents in respect of Companies under liquidation will also be allowed to be filed along with form GNL-2. Documents in respect of particulars of person(s) or Directors charged or specified for the purpose of section 2(60) of the Companies Act, 2013 will be allowed to be filed along with form GLN-3, Documents/ forms for filing petitions to Central Government will be allowed to file with form RD-2.

The Circular also mentions that the physically attached forms will be scrutinized to check all fields before accordingly approval to the respective forms.

28.               General Circular No. 08/2014 dated April 04, 2014 is in relation to Commencement of provisions of the Companies Act, 2013 with regard to maintenance of books of accounts and preparations/adoption/filing of financial statements, auditors report, Board’s report and attachments to such statements and reports- Applicability with regard to relevant financial year.

It was notified that the financial statements (and documents required to be attached thereto), auditor’s report and Board's report in respect of financial years that commenced earlier than 1st April, 2014 shall be governed by the relevant provisions/Schedules/rules of the Companies Act. 1956. Reference in the Circular via example has been drawn to Schedule II & Schedule III.

29.               General Circular No. 06/2014 dated March 28, 2014 was in relation to Phased roll-out plan of new forms has been released. Some key points from the same are :

It has been decided to waive fees for all event based filing whose due date falls between 01/04/2014 to 30/04/2014.

From 01/04/2014 to 14/04/2014 except existing e-forms (some of the said Form are Form 66, 14LLP, 20B, 23AC, 23ACA, 23AC-XBRL, 23ACA-XBRL to name a few) no other e-forms will be available for filing. From 01/04/2014 to 13/04/2014 the period will be used for clearing pending e-forms already filed under the provisions of Companies Act, 1956.

From 14/04/2014, 39 new e-forms will be available on MCA portal for upload. Test version of these forms will be available from 28/03/2014 onwards. Final forms will be available from 14/04/2014.

There are 5 general e-forms and 2 e-forms which will be available for filing w.e.f. 28/04/2014 will be available for filing 24 notified forms/events which will be made available for individual e-filing at a later date, can be attached with these 7 e-forms and filed.

30.               General Circular No. 05/2014 dated March 28, 2014 was in relation to online payment of stamp duty and court fee stamp for issue of certified copies.

The Ministry has enabled payment of Stamp Duty as well as Court Fee online through MCA Portal to avoid the delay in sending certified copies of documents applied for. Court Fee would be added per SRN irrespective of number of documents applied for. Stamp duty would be calculated based on document, number of copies applied, and the state where the registered office of the Company is situated. Separate SRN for payment of Stamp Duty will be generated, acknowledgement of which will have to be appended to the certified copy of the document. The copies would be sent to the address of the applicant mentioned in the challan; within 15 days.