Latest Blogs from SBS and Company LLP

    Chapter IX of the Finance Bill, 2016 introduced the Income Declaration Scheme, 2016(“scheme”). It shall come into force from 1stday June, 2016.


    Salient Features of the Scheme:-


    • All persons who have not declared income correctly up to Financial Year 2015-16can come forward and declare such undisclosed income(s);
    • Where income chargeable to tax is in the form of investment in any asset, the cost of acquisition of such asset shall be deemed to be Fair Market Value (FMV) taken into account for the purpose of this scheme1


    • No deduction in respect of expenditure or allowance shall be allowed against the income in respect of which declaration under the scheme is made;


    • The Scheme will remain in force from 1st June, 2016 to 30th September, 2016 for filing of declarations. The payment of taxes, surcharge and penalty must be made by 30th November, 2016;
    • Declaration can be filed online or with the Jurisdictional Principal Commissioner of the Income-tax;


    • Assets specified in the declaration shall be exempt from Wealth Tax;
    • No scrutiny and enquiry under the Income Tax Act or Wealth Tax in respect of such declarations;
    • Immunity from prosecution under the Income Tax Act ,Wealth Tax Act and Benami Transactions (Prohibition) Act,1988 subject to transfer of asset to actual owner;


    • Only one declaration can be made under the scheme by a person. The application may be made of his own or as a representative assessee in respect of income of any other person;


    • Income declared under the scheme is subject to tax @ 45% (30% tax+7.5% surcharge(Krishi Kalyan Cess)+7.5% Penalty);


    • Amount of tax paid (i.e. 45%) shall not be refundable;


    In the following cases the benefit of this scheme is not available:-


    • Where notice have been issued under section 142(1)/143(2)/148/153A/153C;


    • Where a search or survey has been conducted and the time for issuance of notice under the relevant provisions of the Act has not expired;


    • Where the information is received under an agreement with the foreign countries regarding such income;


    • Cases covered under the Black Money Act, 2015;
    • Persons notified under Special Court Act, 1992;
    • Cases covered under Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967,the Prevention of Corruption Act, 1988.






    1The Finance Bill 2016 originally introduced provides that the FMV on the date of commencement of the scheme shall be deemed to be undisclosed income. However, the bill passed by the LokSabha provides the cost of acquisition as FMV for the purpose of the scheme.



    Other Points:


    Where a declaration under the scheme has been made by misrepresentation or suppression of facts, such declaration shall be treated as void.


    In case where any declaration has been made but no tax and penalty referred to the scheme has been paid within in the time specified (on or before 30th November, 2016) the undisclosed income shall be chargeable to tax under the Income-tax Act in the previous year in which such declaration is made.


    Consequences of non-declaration:-


    Where income has accrued or arisen or any asset has been acquired out of such income prior to commencement of the scheme and no declaration in respect of such income is made under the scheme such income shall be deemed to have accrued or arisen or received or the value of asset acquired out of such income shall be deemed to have made in the year in which notice under section 142/143(2)/148/153A/153C of the Act is issued by the Assessing Officer and the provisions of the Act shall apply.


    Undisclosed Income:-


    Income which is chargeable to tax under the Income Tax Act for the Financial Year (s)up to 2015-16 but not charged due to the fact that-


    • No return has furnished under section 139(1);


    • Income has not been disclosed in the return of income;
    • Such income escaped assessment by reason of omission or failure on the part of the person to furnish the return or disclose fully and truly all the material facts necessary for the assessment or otherwise;


    Where undisclosed income is represented by cash (including bank deposits), bullion, investment in shares or any other assets but –


    • In respect of which no return under Wealth Tax Act ,1957 has furnished;


    • Which have not been shown in the return of net wealth furnished by him for relevant assessment year or years;


    • Value of the above has been undervalued in the return furnished for relevant assessment year or years.


    Corporate Governance And Internal Audit

    What is corporate governance?


    The IIA definition of corporate governance, included within the International Standards is Governance is the combination of processes and structures implemented by the board in order to inform, direct, manage and monitor the activities of the organisation towards the achievement of its objectives.


    Although there is no universally accepted definition, the first version of the UK Corporate Governance Code was produced in 1992 by the Cadbury Committee. Sir Adrian Cadbury defines corporate governance as “corporate governance is the system by which companies are directed and controlled”.The proper corporate governance structure specifies the distribution of rights and responsibilities among the different parties in the organization; this includes the board, managers, shareholders and other stakeholders. It will also lay down the rules and procedures for decision-making within the organization.


    Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place. The responsibilities of the board include setting the company’s strategic aims, providing the leadership to put them into effect, supervising the management of the business and reporting to shareholders on their stewardship. The board’s actions are subject to laws, regulations and the shareholders in general meeting.


    Corporate governance is therefore about what the board of a company does and how it sets the values of the company, hence the process of managing corporate governance is usually handled by a board of directors.


    Need for Corporate governance for the following reasons:


    ØChanging Ownership structures ØWidespread of shareholders ØHigherexpectations of society from the corporates ØCorporates scams or scandals ØHostile take overs


    ØSignificant increase in the compensation of Top management ØGlobalisation















    4 | P a g e


    SBS Wiki                                                                                                                                     


    Corporate Governance from India’s perspective


    Objectives of Corporate governance



    The Indian Companies Act of 2013 introduced some progressive and transparent processes which benefit stakeholders, directors as well as the management of companies. Investment advisory services and proxy firms provide concise information to the shareholders about these newly introduced processes and regulations, which aim to improve the corporate governance in India. Corporate advisory services are offered by advisory firms to efficiently manage the activities of companies to ensure stability and growth of the business, maintain the reputation and reliability for customers and clients.


    Corporate governance was guided by Clause 49 of the Listing Agreement before introduction of the Companies Act of 2013. As per the revised Clause 49, SEBI has also approved certain amendments in the Listing Agreement so as to improve the transparency in transactions of listed companies and giving a bigger say to minority stakeholders in influencing the decisions of management. These amendments have become effective from 1st October 2014.


    Importance of Corporate governance in India


    The Indian Companies Act of 2013 introduced innovative measures to appropriately balance legislative and regulatory reforms for the growth of the enterprise and to increase foreign investment, keeping in mind international practices. A company that has good corporate governance has a much higher level of confidence amongst the shareholders associated with that company. Active and independent directors contribute towards a positive outlook of the company in the financial market, positively influencing share prices. Corporate Governance is one of the important criteria for foreign institutional investors to decide on which company to invest in.


    Principles of Corporate Governance:


    Transparency: It is the foundation of corporate governance; which helps to develop a high level of public confidence in the corporate sector. In the context of corporate governance; it implies an accurate, adequate and timely disclosure of relevant information about the operating results etc. of the corporate enterprise to the stakeholders.


    Accountability: It implies the responsibility of the Chairman, the Board of Directors and the chief executive for the use of company’s resources (over which they have authority) in the best interest of company and its stakeholders.


    Independence: Good corporate governance requires independence on the part of the top management of the corporation so that it can take all corporate decisions based on business prudence.










    5 | P a g e

    Corporate Governance and Internal Audit



    SBS Wiki                                                                                                                                     


    Stakeholder expectations of internal audit


    Recent events have highlighted the critical role of directors in promoting good corporate governance. In particular, boards are charged with ultimate responsibility for the effectiveness of their organisations’ internal control systems. These events have highlighted the key role that internal audit can play in supporting the board in ensuring adequate oversight of internal controls and the effectiveness of corporate governance.


    How an organisation designs and practices the principles of effective governance vary depending on the size, complexity, and life cycle maturity of the organisation, its stakeholder structure or legal and cultural requirements.


    The head of internal audit should work with the board and the executive management team, as appropriate; to determine how governance should be defined for internal audit purposes and the extent and expectations of internal audit assurance and consultancy needed to satisfy the internal audit charter.


    Role of Audit Committee


    The Internal audit is an independent and objective source of advice and assurance, separate from the management of a company, when outlining the role of the audit committee in respect to internal audit, the key is to establish the principle that the committee should monitor the independence and objectivity of the internal audit function in order to enable it to provide the support needed by the board.


    The main role and responsibilities of the audit committee should be set out in written terms of reference and should include:


    • to monitor and review the effectiveness of the company’s internal audit function; to review and monitor the internal audit function’s independence and objectivity and the effectiveness of the internal audit process, taking into consideration relevant professional standards;


    • to review and monitor the external auditor’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements.


    • Overseeing of the company’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.


    • To investigate any activity within its terms of reference
    • To seek information from any employee
    • To obtain outside legal or other professional advice


    Role of Internal Audit


    The definition of internal auditing and International Standards identifies that internal audit has a role to play in evaluating and helping to improve governance processes. The internal auditor should, atleast annually, carry out an assessment of the overall effectiveness of the governance, risk and control frameworks of the organisation.


    The International Standards make specific reference to assessing and making recommendations for:


    • promoting appropriate ethics and values within the organisation


    • ensuring effective performance management and accountability
    • communicating risk and control information
    • coordinating the activities of the board, external and internal auditors and management, and communicating what they do


    The internal audit charter should make reference to the scope of the work of internal audit and this should include corporate governance activities and processes.




    The ultimate responsibility for corporate governance in most organizations lies directly with the board of directors. Internal auditors are charged with ensuring that corporate processes and associated controls are functioning as intended. They also can determine if a process of the corporation could be improved and could save the corporation money or could become more efficient. Ensuring that resources of the corporation are used effectively is a major role of internal auditors.




    One of the most important tasks of the internal auditor is the detection of fraud. Left alone, fraud can cause a corporation millions of dollars in lost revenue, and also can affect a corporation’s public image. The boards of directors of many corporations depend solely on the internal audit team to reveal instances of fraud and abuse.


    Type of Internal Audits


    Different types of internal audits can be performed throughout the year. They may focus on financial controls, operating controls or and information technology controls. A board of directors may decide to test in all of these areas, or it may focus on only one.


    Time Frame


    The internal audit function in most corporations is a year-round process conducted by employees. Typically, an audit manager drafts an annual audit plan, and the board of directors approves the plan. Most corporate audits are focused and scheduled according the level of risk. Higher-level risk areas often receive the most attention from the internal audit function in order to ensure that corporate governance objectives are being met.



    The internal audit activity must assess and make appropriate recommendations for improving the governance process in its accomplishment of the following objectives:


    • Promoting appropriate ethics and values within the organisation.


    • Ensuring effective organizational performance management and accountability.
    • Communicating risk and control information to appropriate areas of the organisation
    • Coordinating the activities ofand communicating the information among the board, external and internal auditors and management.


    Auditing governance – recommended approach


    1. Develop framework for oversight and accountability by defining roles and responsibilities of the of the Board and executive officers.


    1. Value addition by organizing the Board, board shall consists of Directors who will contribute to its effectiveness with attention to competencies, independent, objective and sound judgment.


    • Mechanism shall be developed by the Board to assess its members to ensure that directors, individually and collectively have the necessary competencies and other attributes.


    1. IV) Efforts shall be made to improve board’s performance continuously for which board shall have the processes to improve its performance and that of its committees.


    1. The board shall actively promote ethical and responsible behavior and decision making which includes laws, regulation and ethical standards.


    1. VI) A sound mechanism shall be developed by the Company to determine any potential conflict of interest.


    VII) The board shall supervise the strategy development process, resulting strategy and plan for its implementation.


    VIII)Evaluate the Organization performance by the Board in the best interest of the Company and its shareholders.


    1. IX) The board should approve the significant transactions ensuring that they are supportive of the organisations strategic direction.


    1. X) The board shall oversee and evaluate the activities of the Internal and External auditors.


    The key factor for internal audit is to determine how it has factored in the governance in its audit plans, the priority it assigns to the various governance elements, and the appropriate framework, methodology and measures to auditing governance elements. In a well regulated Organization the more focused approach is expected on governance.

    This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

    An Overview Of India - DTTA - Protocol


    Ever since the Entry into force of Indo-Mauritius treaty in 1983, there has been a lot of hue and cry on the Capital gains exemption and the treaty shopping being planned around it. The government has been proposing several initiatives including Circular No. 789, dated 13-4-2000 and Circular No. 1/2003, dated 10-2-2003 (specifying the mode of proof of residence of an entity in Mauritius -TRC). However, the government has finally come up with a Press Note referring to the Protocol amending the prevailing residence based tax regime under the India-Mauritius DTAA and gives India a source based right to tax capital gains which arise from alienation of shares of an Indian resident company acquired by a Mauritian tax resident.


    The Central Board of Direct Taxes (CBDT), the apex administrative body of direct taxes in India, has issued a press release dated 10 May 2016, on signing of the protocol amending the tax treaty between India and Mauritius. In the past there had been media reports, of talk between the two governments to revise the tax treaty. The protocol was signed by both countries on 10 May 2016 at Port Louis, Mauritius. The key features of the protocol are as under 

    Capital gains taxation:

    With effect from Financial Year (FY) 2017-18 (tax year 1 April 2017 to 31 March 2018), India shall have taxation rights on capital gains arising from alienation of shares of an Indian resident company, acquired on or after 1 April 2017.For shares acquired prior to 1 April 2017, the exemption from tax in India as currently available would continue to apply.

    Transition Period:

    For a transition period of 1 April 2017 to 31 March 2019, the tax rate will be limited to 50% of the domestic tax rate of India, subject to the fulfilment of the Limitation of Benefits (LOB) article as introduced by the Protocol.Taxation in India at full domestic tax rate will take place from FY 2019-20 onwards.

    Limitation of benefits:

    A Mauritius resident (including a shell/ conduit company) will not be eligible for the benefit of 50% reduction in tax rate during the transitory period if it fails to fulfil the main purpose test and the bonafide business test.

    A resident is deemed to be a shell/ conduit company, if its total expenditure on operations in Mauritius is less than INR 2.7 million (Mauritian Rupees 1.5 million) in the immediately preceding 12 months 

    Interest taxation :

    The Protocol revises the tax rate on interest arising in India to Mauritius resident banks to state that such streams of income shall be subject to withholding tax in India at the rate of 7.5% in respect of debt claims and loans made after March 31, 2017. At present such streams of income are exempt from tax in India under the India-Mauritius DTAA

    Exchange of Information:

    The Protocol also provides for updation of Exchange of Information Article as per international standard, provision for assistance in collection of taxes, source-based taxation of other income, amongst other changes.

    Impact of this protocol on the India-Singapore DTAA:

    Article 6 of the protocol to the India-Singapore DTAA states that the benefits in respect of capital gains arising to Singapore residents from sale of shares of an Indian Company shall only remain in force so long as the analogous provisions under the India-Mauritius DTAA continue to provide the benefit.

    Now that these provisions under the India-Mauritius DTAA have been ammended, a concern that arises is that while the Protocol in the Mauritius DTAA contains a grandfathering provision which protects investments made before April 01, 2017, it may not be possible to extend such protection to investments made under the India-Singapore DTAA.

    Consequently, alienation of shares of an Indian Company (that were acquired before April 01, 2017) by a Singapore Resident after April 01, 2017, may not necessarily be able to obtain the benefits of the existing provision on capital gains as the beneficial provisions under the India-Mauritius DTAA would have terminated on such date.

    Fees for Technical Services: 

    The Protocol has introduced a provision relating to taxation of fees for technical services, largely on similar lines as in various other treaties entered into by India. Fees for technical services arising in India and paid to a resident of Mauritius may be taxed in India, but the tax cannot exceed 10% of the gross amount of fees for technical services if the beneficial owner of the fees for technical services is a resident of Mauritius

    Other Income:

    As per the treaty, income not expressly dealt with by any other provision of the treaty is taxable in the country of residence of the recipient of income. The Protocol has amended the treaty to provide that such income may also be taxed in the country in which the income arises. In other words, any income arising in India to a Mauritius resident would be subject to tax in India, unless it is expressly dealt with by a specific provision of the treaty.


    The Protocol has widened the scope of the term permanent establishment (PE) to include the activity of furnishing of services, including consultancy services. Such activities would constitute a permanent establishment if the activities continue for a project (or two or more related projects) for a period aggregating to more than 90 days within any 12-month period.

    Exchange of Information:

    The Protocol modifies the existing provisions in the treaty relating to Exchange of Information and assistance in tax collection.

    Concluding Remarks:

    Future Impact on Investments:

    As mentioned above, while investments in shares of an Indian Company made before April 01, 2017 shall receive the benefit of the erstwhile provisions of the India-Mauritius DTAA, such benefits shall be curtailed for investments made during the Transition Period. Such investments shall be subject to tax in India at the rate of 50% of the tax rate prevailing in India provided the investments are realized before March 31, 2019. All investments made after April 01, 2017 which are also realized after March 31, 2019 shall be subject to full taxation as per the domestic tax rate in India.

    However, investments that are made through hybrid instruments such as compulsory convertible debentures may still be eligible to claim residence-based taxation as the Press Release only refers to allocation of taxation rights in respect of shares and the Protocol restricts the shift to source based taxation only to such transactions.

    Thus though this should be looked at as a positive initiative by the government there might be a lot of dent to the future investments to India.

    This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.



    SA530 deals with Audit sampling. It came into effect from 1st April 2009. It deals with the Auditor’s use of statistical and non-statistical Sampling when designing and selecting the audit sample and evaluating results from the sample. 

    The application of audit procedures to less than 100% of items within a population of audit relevance such that all sampling units have a chance of selection in order to provide the Auditor with a reasonable basis on which to draw conclusions about the entire population. 

    The objective of the Auditor, when using audit sampling, is to provide a reasonable basis for the Auditor to draw conclusions about the population from which the sample is selected.

    The Companies Amendment Bill,2016 [Bill 73 Of 2016]- A Review Part-1

    The provisions of the Companies Act, 2013, came in to force with effect from 12.09.2013, and out of the 470 sections, 282 sections are in force, mostly effectivefrom 01.04.2014. The rest of the sections are still to be notified.


    With in a period of 15 months of the commencement, on the pretext of ease of doing business in India, and to overcome some practical difficulties as to implementation of the provisions,some amendments were proposed to the Companies Act, 2013, and accordingly, the Companies Amendment Act, 2015, came in to force, and 29.05.2015 was the appointed date for coming in to force of the Sections 1 to 12, 15 to 23, and 14.12.2015, as the commencement date for Section 13 and 14 of the said Amendment Act.


    Even after the above amendment, there were lot of provisions which required amendments/relaxations, and accordingly the Ministry had come with 4 notifications Dt:05.06.2015, giving exemptions/relaxation from the applicability of various provisions of the Act to Government Companies, Private Companies, Section 8 Companies and Nidhi Companies.


    To sort out any further difficulties, the Ministry had constituted a Corporate Law Committee, to obtain opinion from the various sections in the industry and recommend amendments to the Act. The Committee submitted its report on 01.02.2016.


    Based on the recommendation of the Corporate Laws Committee, the Ministry had come up with an Amendment Bill with nearly 86 amendments , and the said bill was introduced in the Loksabha on 16.03.2016. The bill was referred to the parliamentary standing committee on 12.04.2016. The committee is to submit its report with in a period of 3 months.














    Section(s) under the CA,

    Clause No. in the


    Proposed amendment relating to





    2013, amended/Altered






    Amendment bill




































    Amendment to Section 2


    (6)-Associate Company- Inclusion of an explanation to the






    (6), (28), (30), (41), (46),






    definitions of associate company, to include the basis of

    remove ambiguity.





    (49), (51), (57), (71), (76),





    control for joint venture.







    (85), (87), (91)




















    (6)-Associate Company- Inclusion of an explanation to the








    definitions of associate company, to include the basis of

    remove ambiguity.








    control for joint venture.









    (30)-Debentures- Inclusion of proviso to the debentures

    Exemption  proposed  to







    definition,  so  as  not  to  term  certain  instruments  as

    given to some companies







    debentures, i.e., instruments under CH-III-D of the RBI act,









    and other instruments as may be prescribed by the CG in









    consultation with RBI.









    (41)- Financial Year- inclusion of the word associate company








    in the proviso to the financial year definition to make an

    remove ambiguity.








    application to the Tribunal to follow different financial year,









    than of the other associate company/holding/subsidiary









    company, for the sake of consolidation of a/cs









    (46)- Holding Company - inclusion of a proviso stating that for








    this clause, “Company” includes any Body Corporate.

    remove ambiguity.



















    (47) – The definition interested director omitted









    (51)-KMP- inclusion of clause expanding the scope of officers

    Expanding  the








    under the definition of key managerial personnel, (Officers

    applicability,  for








    under full time employment, not more than 1 level below the

    operations and also to fix up






    directors, and designated as KMP by the Board.)



















    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to





    2013, amended/Altered





    Amendment bill


































    (57)-Networth-inclusion to the definition of net worth, so as








    to include the debit and credit balances of P&L account.

    remove ambiguity.







    (71) – Public Company - punctuation correction to the








    definition of Public Company.

    remove ambiguity.







    (76)-related party – expanding the scope of related party










    under the head “body corporate”, an investing company or











    the venturer of the company.











    (85)-Small Company- The maximum prescribed limit of paid-










    up capital stands increased from Rs. 5 crores to Rs.10 Crores.

    applicability. Cushion to Govt to







    prescribe the limit upto Rs. 10






    Change in the wordings as to the P&L account requirement.











    i.e., “last P&L account” to “P&L of immediately preceding FY”











    The turnover to be prescribed by the govt, is proposed to be








    increased from 20 crores to 100 crores.

    remove ambiguity. Expanding







    the  scope









    Cushion to Govt to prescribe







    the turnover limit upto Rs. 100

















    (87)- subsidiary company- amendment to alter the holding of




    to  basis







    more than 51 % in the “voting power” rather than “total share

    s u b s i d i a r y,

    f r o m  a s








    percentage of share capital to







    “voting power”















    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to




    2013, amended/Altered




    Amendment bill
























    To omit the proviso to the definition. Proviso not notified till














    To omit explanation (d) regarding “Layer”.







    (91)-turnover- a new definition substituting the existing

    Amendment/inclusion  to







    remove ambiguity of the earlier







    turnover definition.











    Amendment to section 3.


    A new Section 3(A) is proposed in connection with, if the

    New provision to fix liability on






    minimum number of members are reduced in a Public

    the members of for the debts by






    Company/Private Company to what is prescribed under the

    non-complying companies.






    Act i.e., 7 & 2 respectively, and the company carries on the







    business for a period of more than 6 months, then for the







    debts for the said period, the said members shall be severally







    liable and they may be sued severally.












    Amendment to Section 4


    Amendment of Section 4(1)(c) to allow companies an

    Welcome amendment.






    unrestricted object clause, to engage in any lawful act or







    activity, rather than fixed objects.







    Amendment to Section 4(5) as to the validity of the name

    The same is not welcome, as






    from 60 days to 20 days, from the date of allotment

    the period is too short.






    Insertion of new sub-sections (6A) and (6B) regarding the

    Will  result  in  creation  of






    model Memorandum of Association.

    u n i f o r m i t y  i n  t h e



















    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to





    2013, amended/Altered





    Amendment bill

























    Amendment to Section 7-


    Amendment to Section 7(1)(c) in connection with the

    Will result in simplification of




    Incorporation of Company

    requirement for incorporation of a company. To replace the

    the incorporation process.












    obtaining of affidavit from subscribers and directors and to








    replace the same with declarations from them with reference








    to incorporation of company.













    Section 12-


    Amendment of Section 12 (1) as to requirement of having

    W e l c o m e  a m e n d m e n t




    Registered office

    Registered  office  by  a  company  within  30  days  of

    increasing the time lines for










    incorporation from the present 15 days.

    intimation to ROC.







    Amendment of Section 12 (4) as to increase of time frame








    within which the change in registered office to be intimated to








    ROC, increased from 15 days to 30 days.














    Section 21-Authentication


    Amendment to include even an employee of the company to

    W i l l  r e s u l t  i n  e a s e

    o f




    of documents

    authenticate the documents for and on behalf of the Board, in














    addition to KMP and other officer.














    Section – 26 – Matters to


    Omission of sub-clauses (a) & (b) of Section 26(1), and

    Probably  simplification





    be disclosed in prospectus


    inclusion of new clause in its place, in connection with the








    contents of the prospectus with respect to information and








    reports on financial information. Post the amendment, the








    information shall be in such manner, as specified by SEBI in








    consultation with Central Government.








    Further,  amendment  also  provides  that  till  the  new








    requirements are specified by SEBI, the existing requirements








    as per SEBI act, shall apply.















    Section(s) under the CA,

    Clause No. in the


    Proposed amendment relating to




    2013, amended/Altered





    Amendment bill





























    Section 35- Civil Liability



    New Clause- Insertion to include a sub-clause to hold experts

    Burden on professionals to be




    liable for their statements made by them forming part of the

    more  cautious  while  giving




    for  mis-statement  in







    prospectus, and to provide immunity to Directors from

    statements  /certifications  in











    liability, as the directors had relied on the statements made







    by the experts, and do not result in misstatement by director





















    Section  42  –  Private



    Replacement with new section




















    Offer letter to be issued to selected persons, not exceeding 50








    Compliance will become very






    or such high number as may be prescribed, in a financial year,







    whose names are to be recorded by the Board.







    Private placement offer does not carry renunciation right.







    Offer to more than the prescribed number will amount to







    public offer and compliance of section 23 is to be done.







    Amounts to be received through Cheque/DD or other normal







    Banking channels.







    Allotment to be done within 60 days from the receipt of







    money, and filing to be completed with in 15 days of allotment







    and only after that monies can be used.







    If return not filed with ROC with 15 days, then the Company,







    the promoters, Directors shall be liable for penalty of







    Rs.2,000/- for each day, during which the default continues







    but not exceeding Rs.25,00,000/-, for each default.














    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to




    2013, amended/Altered




    Amendment bill






























    If, allotment not in compliance with the provisions, then the









    Company, the promoters, Directors shall be liable for penalty









    of equalling to amounts raised or Rs.2 Crores which ever is









    lower. Company to refund the amounts with in 30 days of the









    order imposing the penalty.









    Any offer not made in compliance with the provisions of the









    Section shall be deemed to be public offer and all the









    provisions of SCRA & SEBI Act, shall be applicable.














    Section  -  47  –  Voting


    Amendment  as  to  inclusion  of  section  188(1),  in  the

    Amendment/inclusion to






    restriction of voting rights, in addition to the existing Section

    remove ambiguity.






    43 and Section 50.
















    Section  - 53 – Issue of


    Amendment of a grammatical error.







    Shares at Discount


    Insertion of a new Sub-section 2(A) permitting issue of shares at a

    Welcome amendment.











    discount to creditors pursuant to settlement/restructuring scheme









    under directions/regulations specified by RBI under RBI Act or the









    Banking regulation Act.














    Section – 54 – Issue of


    Deletion of Section 54 (1) (c), the requirement being  the

    W e l c o m e  a m e n d m e n t ,




    Sweat Equity Shares

    company  could  issue  sweat  equity  shares  only  after


    the period, thereby










    completion of 1 year from the date the company was eligible



    companies  to






    to commence business

    issue  sweat

    equity  shares,









    limitation  of






































    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to




    2013, amended/Altered




    Amendment bill






















    Section – 62 – Further


    Section 62(1) (c), is proposed to be amended to include the

    Welcome amendment.




    issue of Share Capital


    compliance of the Chapter III i.e., Section 42 and such other







    conditions as may be prescribed.







    Insertion as to the mode of dispatch ofRights issue offer letter.







    “Courier or any other mode having proof of delivery”, is







    proposed to be included.












    Section 73 - Deposits


    Amendment to increase the amounts to be deposited in the

    Welcome amendment in the










    deposit repayment reserve account, from 15 % to 20 % of the

    interest of the depositors.






    deposits  maturing  during  the  following  financial  year.







    Amount to be deposited on or before 30 of April each year.







    Omission as to requirement of deposit insurance.







    Amendment of one of the condition to accept deposits, as to







    stricter certification from the company side that it has not







    committed any default in repayment of deposits and where







    defaults have taken place, the company has made good the







    default, and a period of 5 years has lapsed since the date of







    making good the default.












    Section 74- Repayment of


    Amendment as to the term of repayment of deposits

    Relief to some companies, who




    Deposits accepted before


    accepted under the old act, from 1 year to 3 years of the

    had obtained deposits under




    commencement  of  the


    commencement of the new act or on or before expiry of the

    the old act.






    period for which the deposits were accepted, whichever is










































    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to




    2013, amended/Altered




    Amendment bill






























    S e c t i o n

    7 6  A



    Amendment as to the increase of the minimum fine on the

    Welcome amendment in the









    company for non-compliance of the deposit rules either at

    interest of the depositors.




    for contravention



    the time of taking the deposit or its repayment, then the





    of section 73 or



    minimum fine shall be Rs. 1 Crore or two times of the deposit





    section 76.





    accepted, whichever is lower, and the maximum fee Rs.10

























    Section 77




    Insertion of a new proviso after the existing 3rd proviso to

    Welcome amendment.




    Register Charges


    Section 77 (1), providing non-applicability of the section for
















    some charges, as may be prescribed in consultation with RBI.














    S e c t i o n

    7 8


    Amendment of the section in line with Section 77, to include

    No comment




    A p p l i c a t i o n  f o r


    the period of filing of 30 days.





    registration of Charge






















    S e c t i o n

    8 2


    Amendment to provide time lines for filing of satisfaction of

    W e l c o m e  a m e n d m e n t ,




    Satisfaction of Charge

    Charge by the Company or Charge holder with in a period of

    because,  now,  we  need  to













    300 days of satisfaction of the charge, and upon payment of

    approach for condonation if









    additional fees, as may be prescribed.

    delayed more than 30 days.











    Section 89 – Beneficial


    Insertion of a new Sub-section (10), to section 89 which

    Welcome amendment defining








    defines the term “beneficial interest” for the purposes of

    the term, thereby making it









    Section 89 and Section 90.

    more clear.













    S e c t i o n

    9 0


    The existing Section 90 to be substituted with a new section

    Welcome amendment in order to




    I n v e s t i g a t i o n

    o f


    and in a much more detailed way detailing who has to give

    have a control as to who are the




    beneficial ownership of


    notice of having beneficial ownership and who is not

    real owners of the company, and




    shares in certain cases.


    required,  maintenance of register and other incidental

    who are acting/representing them









    matters, and the heading of the Section  to be renamed as

    in disguise and the reason for the









    “Register of significant beneficial owners in a company”.
























    Section(s) under the CA,

    Clause No. in the


    Proposed amendment relating to




    2013, amended/Altered





    Amendment bill































    Section  92  –  Annual



    Omission of provisions relating to

    Welcome amendment, since, it









    will  reduce

    the  time  of







    (i) information as to indebtedness of the company.

    p r e p a r i n g

    d u p l i c a t e






    (ii) Names, address and other details of the FII.















    CG to prescribe Abridged form of Annual Return to OPC and








    small company.








    Annual Return need not be part of the Board Report, but the








    same shall be placed in the website of the company, if any, and








    a web-link to be provided in the Board’s Report.















    Section 93 – Filing of



    The section is proposed to be omitted, and accordingly, the

    Welcome change. Because the




    return with ROC in case



    requirement of filing MGT-10, by a listed company, whenever,

    company any how files return




    of change in promoters


    there is  increase or decrease of 2 % or more in the

    to Stock Exchanges.






    shareholding position of promoters and top ten shareholders







    of the company in each case, will no longer be required.






















    Section 94



    Omission of the requirement that prior intimation/service of

    Welcome amendment in the






    the Special resolution to keep the registers or copies of return

    interest of company operations






    is to be given.

    and ease of doing business.






    Insertion of a proviso that Government may prescribe that








    certain registers, index, return shall not be available for








    inspection or copies of the same can be obtained.



































    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to




    2013, amended/Altered




    Amendment bill



























    Section  96

    –  Annual


    Insertion of proviso enabling unlisted companies to hold their

    Welcome amendment.




    General Meeting


    AGM any place in India, subject to consent in writing or









    through electronic mode from all the members in advance.












    Section 100 – Calling of


    Pursuant  to  rule  18  of  Companies  (Management  and

    Welcome amendment in view




    Extra-Ordinary General


    Administration Rules), 2014, EGM of a company can be held

    of  the  practical  difficulties








    only India.

    faced by the companies.















    The proposed amendment provides that EGM of a Company









    other than a WOS of a company incorporated out side India,









    shall be held in India i.e., EGM of WOS of a company









    incorporated out side India, can take place outside India.












    Section 101 – Notice of


    Insertion of a proviso relating to hold of AGM & EGM at

    Removal of ambiguity as in the








    shorter  Notice  after  obtaining  consent  from  95  %

    principal  act,  there  was  no








    shareholders, entitled to vote at the meeting in case of

    mention as to AGM or EGM, but








    company having capital and in case of no share capital then

    only as GM








    with the consent of the members holding not less than 95 % of









    the voting power.













    Section  110-



    Insertion of a Proviso to Section 110 (1) to conduct the

    Welcome amendment.  It will








    meeting in the form of a general meeting and not by postal

    reduce  the  expenditure  and








    ballot, and pass the resolutions through electronic voting.

    waste of stationery.












    S e c t i o n

    1 1 7  –


    Amendment (reduction) of the minimum penalty for non

    Welcome amendment.




    R e s o l u t i o n s

    a n d


    filing of resolutions with ROC:





    agreements to be filed


    On the company: from Rs.5 Lakhs to Rs.1 Lakh

















    Every Officer: From Rs.1 Lakh to Rs.50,000/-.






















    Section(s) under the CA,

    Clause No. in the

    Proposed amendment relating to



    2013, amended/Altered


    Amendment bill



















    The requirement of filing of various resolutions that are

    Reduction in filings.





    required to be done have been omitted, except for voluntary






    winding up petition and resolutions passed under Section






    179(3) (which any how is not applicable to private companies






    pursuant to the exemption notification Dt:05.06.2015)






    Insertion of a proviso that the clause shall not be apply to a






    resolution passed by Banking company for grant of loans or






    providing security, in its ordinary course of business.











    1 Lakh = 100,000; 10 Lakhs = 1 Million; 1 Crore = 10 Millin; 10 Crore = 100 Million; 100 Crore = 1 Billion


    Since there are many amendments proposed , due to paucity of space, we will bring up other amendements in the subsequent bulletins.

    This article is contributed by Partners of SBS and Company LLP – Chartered Accountant Company You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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