January 07, 2020
Summary of notifications issued by MCA and IBBI on 03/01/2020 and 06/01/2020 respectively.
1. MCA notifies amendment on increase in paid-up share capital threshold for appointment of Company Secretary and insertion of a criteria for conducting Secretarial Audit by Companies
MCA has amended Rule 8A (Appointment of Company Secretaries in companies not covered under Rule 8) and Rule 9(Secretarial Audit Report) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, to notify the following changes respectively, which shall come into effect from the financial year starting 01/04/2020:
- All Listed Companies and Unlisted Public and Private Companies with paid-up share capital of 10 Crores or more to appoint Company Secretaries,
- Every company having outstanding loans or borrowings from banks or public financial institutions of one hundred crore rupees or more are required to undergo Secretarial Audit and annex Secretarial Audit report issued by a practising Company Secretary to the Boards Report as provided in Section 204(1) of the Companies Act, 2013.
This is in addition to the existing criteria to undergo Secretarial Audit by public companies with paid-up share capital of fifty crore rupees or more or turnover of two hundred fifty crore rupees or more. For this purpose, the amendment provides that paid-up share capital, turnover, or outstanding loans or borrowings as the case may be, as on the last date of latest audited financial statement shall be considered to determine the applicability of this Rule.
2. IBBI notifies revised procedure on realisation of security interest by a secured creditor and maintenance of Corporate Liquidation Account under Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.
Through this notification, IBBI has amended procedure to realise the security interest by the secured creditor, and timeline to pay the liquidator, in case of realisation of amount over and above his/her dues.
Further, other key provisions of this amendment include-
- Laying down of procedure and timeline for liquidator deposits unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process along with any income earned thereon till the date of deposit into the Corporate Liquidation Account, as prescribed under Regulation 46, before submission of Final Report under Regulation 45.
- Liquidator shall also submit Form I, whose format is also notified, containing nature of the amount deposited into the Corporate Liquidation Account, evidence of deposit of the amount and names and last known addresses of the stakeholders entitled to receive the unclaimed dividends or undistributed proceeds.
- A corporate debtor may apply to the Board in Form J, in the said format, for an order for withdrawal of the amount from the Corporate Liquidation Account.
- Any amount remaining unclaimed /undistributed for a period of 15 years from the date of order of dissolution of the corporate debtor and any amount of income or interest received or earned in the Corporate Liquidation Account shall be transferred to the Consolidated Fund of India