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Company Law Updates

1. Exemption to companies from publishing certain information

As per the relevant provisions of the Companies Act, 2013, every company is required to maintain a statutory register and file annual returns for each financial year. Further, every company is also required to keep the said statutory register and annual returns or any copies thereof for inspection by its members. Now, the Ministry of Corporate Affairs (MCA) vide Notification No. G.S.R 279 (E) dated 6 April 2022, has stated that while keeping the registers and returns available for inspection, the companies shall not disclose certain private information such as registered address, Unique Identification Number, PAN card and email ID.

2. Declaration to be included in the share transfer form

MCA vide Notification G.S.R 335 (E) dated 4 May 2022 has introduced a declaration to be included in form SH-4 which is filed to record the transfer of securities of a company. In the said declaration, the following will be required to be declared and confirmed either:

the transferee (i.e. the buyer) does not require to obtain a prior government approval as per the relevant provisions of Foreign Exchange Management Act, 1999(FEMA) to give effect to such transfer of securities; or
the transferee is required to obtain a prior government approval as per the relevant provisions of FEMA to give effect to such transfer of securities and the same is enclosed with the said form SH-4.

3. Restrictions on private placement to companies/ individual of India’s neighboring countries

As per the Notification G.S.R 338 (E) dated 5 May 2022 issued by the MCA, in the event that a company opts for private placement for issuing fresh securities, such a company may not be permitted to issue any offer or invitation of its securities to a body corporate or a person belonging to a neighboring country of India unless the body corporate or person have obtained prior government approval and attached the same with the private placement offer/ application Letter.

Furthermore, while filing form PAS -4, the company will be required to declare either:

the applicant (i.e. the proposed shareholder) is not required to obtain a government approval as per the relevant provisions of the FEMA; or
the applicant is required to obtain a government approval prior to subscription of shares and the same has been obtained. In case the applicant (i.e. proposed shareholder) is required to obtain a prior government approval, a copy of such government approval is required to be enclosed with the form PAS-4.

4. Change in format for Form INC-9

As per the relevant provisions of the Companies Act, 2013, the subscribers to the memorandum of the company and the first directors of the company are required to file a declaration in form INC-9 declaring that the said subscriber/ first director has not been convicted for any offences, has not been found guilty of any fraud or misfeasance, has provided correct and complete information for company formation.

MCA vide Notification dated 20 May 2022 has changed the format of the said form INC-9 and has now included an additional declaration requiring the subscriber/first director to confirm if prior government approval has been obtained for subscription of shares or the said approval is not required to be obtained.

5. Merger between an Indian Company and a body corporate of a neighboring country of India

MCA vide Notification G.S.R. 401 (E) dated 30 May 2022 states that in case of a merger or compromise or demerger or an arrangement between an Indian company and a body corporate from a country sharing land borders with India, the said Indian company shall be required to submit a declaration in form CAA 16 whereby the said Indian company shall declare that either the said foreign company does not require to obtain a prior government approval as per the provisions of FEMA, or the said foreign company requires to obtain a prior government approval, and same has been obtained and enclosed with said form CAA 16.

6. Declaration to be submitted by directors belonging to neighboring countries of India

MCA vide Notification G.S.R. 410 (E) dated 1 June 2022, has stated that in case a person proposed to be a director in an Indian company is a national of a country sharing land borders with India, such proposed director will be required to obtain necessary security clearances from the Ministry of Home Affairs (MHA), and the same shall be attached with the written consent (in form DIR 2) of the proposed director. Further, as per the said Notification, the proposed director will be required to declare in the said written consent (Form DIR 2) and application for obtaining Director Identification Number (in form DIR 3) that either the said proposed director does not require to obtain the security clearance from MHA or the said proposed director requires to obtain the security clearance from the MHA and the same has been obtained and enclosed with the respective form.

7. Restoration of name of independent director in the databank

In order to ensure the integrity of independent directors, every individual who has been or intends to be appointed as an independent director shall apply online to Indian Institute of Corporate Affairs (Institute) for inclusion of his name in the Institute’s databank and shall pass a self-assessment proficiency test within 2 years of such name inclusion, failing which such individual’s name shall be removed from the Institute’s databank. Now, MCA vide Notification G.S.R. 439 (E) dated 10 June 2022 has stated that in case an individual’s name has been removed from the databank for the above mentioned reason, such individual may apply for name restoration on payment of fee of INR 1,000/- and the Institute will restore the name on certain conditions stated in the relevant provisions of Companies Act, 2013 and rules thereof.

8. Conducting AGM and EGM via video conference (VC) or other audio video means (OAVM)

MCA vide circular (2/2022) and circular (no. 3/2022) dated 5 May 2022 has allowed companies to conduct annual general meetings (AGM) and extra-ordinary general meetings (EGMs) through VC or OAVM till 31 December 2022. The modalities of conducting such EGM shall remain the same as provided in General Circular 14/2020 and the modalities of conducting AGM shall remain same as provided in General Circular 20/2020.

Company Secretarial (CS) Compliance for Private Limited Companies

Below is the summary of the compliances which need to be adhered to in the next quarter (July – September 2022)

Particulars	Due Date
Filing of Annual Return on Foreign Liabilities and Assets (FLA)	15 July 2022
Hold at least one Board Meeting in quarter July 2022- September, 2022	30 September 2022
Hold subsequent Annual General Meeting (AGM) (For companies whose financial year has ended on 31 March 2022)	30 September 2022
Form DIR-3 KYC	30 September 2022
ECB-2 Returns	In case External Commercial Borrowings, that is, commercial loans are availed by eligible resident entities from recognized non-resident lenders, such resident entities are required to file Form ECB-2 return within 7 working days from the close of the month.

Updates by the Ministry of Labour and Employment

1. Amendment in the Shop and Establishment law by the Tamil Nadu Government

The Governor of Tamil Nadu vide order (no. No. II(2)/LWSD/435(a)/2022) dated 2 June 2022 amended the Tamil Nadu Shops and Establishment Act 1947 and has stated that all shops and establishments having 10 or more employees are permitted to keep open for 24*7 on all days of the year for 3 years commencing from 5 June 2022, subject to complying with certain compliances under the Tamil Nadu Shops and Establishment Act 1947.

2. Ease of Compliance of EPF provisions under the Unified Portal for contract workers

Earlier an electronic facility on Employer Interface of EPFO's (Employees' Provident Fund Office) Unified Portal was launched for Principal Employers (PEs) to declare and monitor compliances of their contractors in respect of contract workers under Employees’ Provident Fund & Miscellaneous Provisions Act, 1952(EPF Act) .

On 27 April 2022 Ministry of Labour and Employment provided for ease of compliance for the PEs for complying with the EPF provisions towards the contract workers. The Ministry of Labour and Employment stated that the State Labour Departments shall issue certificate of registration to the PEs which include the details of the contractors, nature of work, maximum number of contract workers to be employed during the contract. Further, separate licenses shall be issued to the contractors regarding information of the PEs, the period of license and the maximum number of contract workers.

As per the said Ministry of Labour and Employment, collation of the information regarding the PEs and contractors at the state level, and issuing the certificate of registrations and separate licenses to the PEs and the Contractors respectively will help improve the progress of registration of the contracts through the PEs and vice versa over the Unified Portal and consequently lead to improved compliance provided under the provisions of the Contract Labour (Regulation & Abolition) Act, 1970 and thus ensure extension of social security to the eligible workforce.

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