These are essential measures to assess the nerves of a company’s money. A statutory audit permits the government to ascertain if a company is providing the financial details in a genuine manner. Companies have for a long time indulged in malpractices, however with such an auditing system, a company’s credibility comes to the fore.
What do you mean by Statutory Audit?
This happens to be a mandatory auditing of the monetary matters of a business entity. Over here, the company’s financial body and deals are evaluated to ascertain if the company is giving genuine details regarding its finances to its shareholders and the government. It comprises detailed checking of all the statements, fiscal statements, bank balance and books of accounts. Consider this check as a means to ascertain if you are providing genuine monetary information to the customers.
How to perform a Statutory Audit?
Being a company director, you are not supposed to audit on your own. You need to appoint an auditor within 30 days of registering your company. The process of statutory audit in India is akin to the same in western countries. Only exception being, according to the Companies (Amendment) Act, 2017, an Annual General Meeting conducted to select an auditor for 5 fiscal years. That’s appropriate. You are not supposed to have the same auditor every year. He needs to be fair and independent.
Who can’t perform your company’s audit?
The Companies Act 2013 contains some clear cut rules that specify the suitability of who can and who cannot be the auditor. Following can’t do the auditing for you:
Any corporate body that ain’t the Limited Liability partnership
An officer and employee of the company.
An individual who happens to be the partner with a worker of the company or the employee of the company’s employee
The person who owes the company an amount bigger than 1000 rupees or a person who has assured the debt of that person.
A person who has held any securities in the company within 1 year after the start of business of that company.
Any individual convicted by the court for an offence and the gap has been less than 10 years since that conviction.
The above bodies/professionals cannot audit your company. Their financial and ethical bearing reflects that they are not infallible and for genuine assessment people with integrity are needed.
Who has to go through a Statutory Audit?
Inside the Statutory Audit Applicability Section, it’s clearly specified that any company whose yearly revenue happens to be over 40 Lakh rupees or the capital contribution is over 25 Lakh rupees must go through statutory audit.
Particulars regarding the Audit report
An audit report happens to be a potent document mentioning all the financial details of a company. They have to be correct and verifiable by the auditors. This kind of report is produced in the Company’s Auditor’s Report Order (CARO), and it has the following information:
Inventories: The items being accounted for?
Fixed Assets: What about the fixed assets of the company?
Internal audit Standards: Specify the standards under which the audit is undertaken.
Statutory dues: The compliances that the company has not filed yet.
Once prepared, the audit report is given to the Ministry of Corporate Affairs for assessment, along with the directors and shareholders of the company.
What if you don’t file the statutory audit?
A statutory audit is a legal requirement that displays your ethical practices. Non-compliance can lead to attracting the unwanted attention of law enforcement agencies. Having said that, in case you have not filed the statutory audit within the due date, you can be levied a fine of 20,000 rupees. Also, every officer guilty of such deference will be imprisoned for a year.
Concluding Thoughts
Statutory Audit happens to be a critical aspect of business. It portrays your responsibility, truthfulness and very ideal for the future of your company. In case you want statutory auditors following the government obligations to give you prompt services, you can get in touch with our business registration experts. We have a dedicated and talented bunch of CAs, CSs and other financial professionals, willing to look into your needs and deliver on time.
Beginning a non-profit organization and assisting people is a magnanimous gesture, however, devoid of an organized form, such benevolence will not last too long. So, the ministry of corporate affairs’ decision to give a “company-like” infrastructure to manage non profit ideals was a step in the right direction. Called Section 8 Company, it has facilitated the entry of various good samaritans to continue with their good deeds.
However, the question remains, why should you choose Section 8 Company? What are the benefits? Before getting into these things let us understand this Section 8 Company.
What do you mean by a Section 8 Company?
A Section 8 Company happens to be a kind of business entity in India whose sole aim is to popularize the arenas such as science, arts, commerce, religion, environment conversation, social welfare and other charitable matters. The profits gained by such a company cannot be meant to be distributed among the members/directors, but utilized to promote the above-mentioned domains.
Reasons to turn Non-Profit Organization into a Section 8 Company
A Section 8 Company apart from providing a proper form to a generous initiative, also provides the advantages you require to aid the number of people.
Benefits of Section 8 Company registration:
Tax benefits: The government gives various tax sops to a Section 8 Company. These are certain sections under which the company avails those:
Section 80G: As per this section, the donors pertaining to a section 8 company seek rebate of up to 50% of the donations given.
Section 11: Under this section, Section 8 Companies can gain deductions of expenses from income.
No least capital needed: In case you are not having any money (apart from the registration fees), you can establish your Section 8 Company comfortably.
A Different Person: Upon incorporation, a Section 8 Company turns an entity which is distinct from its directors.
Reliable: In case your organization has a legal standing of a Section 8 Company, it automatically turns very reliable in the eyes of people.
No Stamp duty for registration: You are not required to incur the cost of stamp duty of Section 8 Company registration.
To give a simple explanation of this legal jargon: Making a non-profit organization into a Section 8 Company turns it better and trustworthy.
The method of Registering a Section 8 Company
The Section 8 Company registration procedure is very convenient. With the procedure being largely online, majority of business registration personnel will be able to assist you in setting up your company within a week or 10 days at most:
Think about the name of your Section 8 Company: Select a different name that would strike a chord among people.
Provide the documents needed:
ID proof, address proof and photo IDs of the directors/members
Address proof of the registered office space. In case you are not having a conventional office to begin your non-profit organization, you can select your own home as the office.
Digital Signature Certificate
Director Identification Number
Draft MOA and AOA: MOA or Memorandum of Association mentions the goals of your Section 8 Company. The AOA or Article of Association explains the rules and regulations of your Section 8 Company.
File the application of Section 8 Company Registration: After providing the documents and drafting the legal articles, you must consult a business professional. They can assist you file and provide your application online at the MCA website.
Certificate of Incorporation: Once the Registrar gets your application, they will evaluate the same for perfection. In case of any issue in your application, you’ll be intimated and have to repeat the entire procedure. In case they accept your application, you’ll get a certificate of incorporation, a document substantiating that your Section 8 Company is set up.
Count on us
In case you are again having queries regarding Section 8 Companyand are pondering over starting such a company our team can help you out. Trust our expertise and experience to turn your dream into reality.
Copyright happens to be the sole right of ownership of the creator for their piece of work. In order to legalize copyright, registration is a must. While registering, if there are any objections in the claim of ownership or in the event of any discrepancies in the application, the applicant will be duly informed. To the same, the applicant needs to respond to the objection pertaining to copyright. This write up helps you in replying to such a notice.
Method of Registration
The Copyright Act, 1957 and the Copyright Rules, 2013 guide the Copyright Registration procedure in India. Any real or authentic or original artistic endeavor, be it cinematographic film or music composition or literary/dramatic work or sound recording or software, can be sought protection from violation through copyright, however, the work must be the result of your organic creation. The necessary fee has to be part of the application meant for registration. Also, the application should have the essential signatures and Power(s) of Attorney.
As for objections, 30 days waiting period applies, post filing. In case of no objections, the authority will forward the application to a scrutinizer. The registration process comes to an end with the scrutinizer not finding any hiccups in the application.
The whole process can take 8-9 months, depending on objections and discrepancies.
Objections and Inconsistencies
A copyright objection comes up if a third-party files an application saying the work resembles an old or already existing idea belonging to them. Both the parties then want a reply to copyright objection to clarify the issues raised, and get the outcomes in letters. In some cases, the Registrar may call for a hearing where the registration could either be accepted or rejected. The applicant then waits for 30 days of submission for any objection(s) regarding the work.
A copyright discrepancy occurs when the copyright department finds causes to put a query on the application in the form of letters to the applicant in exchange for an explanation during the course of the examination. An objection could be hoisted for a lot of reasons such as no uniqueness or any wrong particulars being identified by the copyright evaluator.
Replying to an Objection/Discrepancy is a must
After a detailed scrutiny, the Registrar tells the applicant about the presence of objection(s), if any, and seeks documents to confront the same. Also, it is mandated by law to file a query to the copyright objection letter. In case of no response, the Registrar could annul the copyright application and term it ‘rejected’. In order to bypass such rejections and get the legal rights to one’s work, a swift response is very essential.
The Response
The feedback to a copyright opposition or discrepancy letter happens to be a legal document. Writing the same needs fundamental legal knowledge and drafting skills. But, there are two manners, to respond – by the creator himself if requisite knowledge and skills needed to provide an explanation regarding their work are there or by getting the services of a legal team to do the same.
We suggest seeking professional help, as the response to an objection/discrepancy notice is a legal document and the ownership is at stake.
However, there is no basic structure with regard to drafting a response to a copyright objection letter, there are some things you should possess:
Attach documents with the reply
Copyright Registration Application Copy
Affidavit for the reply, if needed
Documents substantiating reply
Power of Attorney by the Applicant
Copy of discrepancy letter issued by the Registrar
Depending on whether or not the Registrar is happy with the supporting documents of the response letter, a hearing could be scheduled.
The reply warrants professionalism to the core as the result of the copyright objection can have severe consequences on your personal life. The reply given to copyright objection is only a formality and does not assure the registration of one’s copyright.
Also, while drafting the response, the creator has to check with the relevant department at the Registry to ensure that process is completed quickly. If an objection is filed, it takes up one month more to ascertain whether the copyright can be registered or not. Additionally, as getting copyright is critical to legally prove ownership, utmost caution is needed to ensure good outcome with the Copyright Application. Hence, do not hesitate to avail legal aid whenever required.
In India during festive periods a lot of gifts are exchanged among family members, friends etc. Getting and giving gifts are quite usual during the festivals. This is the way Indians show their love and compassion among themselves. Did you get any gifts during the ongoing festive season? In this write up, we will be touching upon the taxes on gifts during the festive season. Gifts can easily warm the cockle of your hearts but they come with certain strings attached. You have to report any income apart from salary (like a gift, the bonus from the employer, prize, lottery etc) to the taxation department in your IT Returns. Several taxpayers generally confront problems while filling particulars of such receipts in ITR. This write up can easily clear any such confusion.
How Gifts are taxed?
The Income Tax Act 1961 clarifies every kind of receipts as personal earnings and the same holds true for gifts as well. In case the value of the gifts you get in a fiscal year goes beyond Rs 50,000, the amount comes under the ambit of taxation. The gifts could be of any kind- jewellery, cash, shares, movable/immovable property etc. If you have got any gift (in cash or kind), it has to be reported in the ‘income from other sources’ section in your IT Returns. Such receipts will be levied cess according to the tax slab relevant to you. This apart, 4% of cess will be levied on them. There is no provision of allowance or deduction (u/s 80 C or 80 D) on such an income.
Tax-free Gifts
But, one important thing you need to look into. The above-given regulation is not applicable if you get the gifts from your relative as presents. However, this does not imply that you can address the ‘giver’ as your relative even if he or she happens to be not. To clear the air, there are Income Tax rules that clarifies relatives from whom you can take ‘tax-free’ gifts. These include:
Parents
Spouse
Brothers and sisters of you/ your spouse
Brothers and sisters of your parents
Straight descendants of you/ your spouse
Consider these as well
Assuming that you got a car from your relative for your wedding. It is essential to ensure that the date specified in the gift deed is the date of your marriage or a date in close proximity. Any gift you get due to inheritance (or via a will) cannot be taxed. But, if you happen to produce any rental or other income out of such a gift (property or house), the same can be taxed under the section ‘income from other sources’.
The Aadhaar Card, India’s important ID and address proof, happens to be a significant document for all Indians. The Aadhaar card has a novel 12-digit number that acts as an identification number for every Indian resident. Also, the card contains particulars about demographic and biometric, to safeguard against forgery and duplication. Hence, over the years, the number of services linked to Aadhaar was maximized by the government. Issued by the Unique Identification Authority of India, the appeal and criticality of Aadhaar has prompted the government to build a system to secure Aadhaar from nefarious hands. Through this article, we will explore the way to set up an Aadhaar Card password.
What do you mean by an Aadhaar Card Password?
After registering for the Aadhaar with success, giving all the particulars, then the officials will initiate the procedure of verification. Following this, you get the option of downloading an E-Aadhaar from the UIDAI’s official website. Users can even download their Aadhaar card online through the website. But, while downloading you will see that the e-Aadhaar PDF is secured by a password.
The password has eight characters and protects your Aadhaar details from stealth. Your name’s initial four letters in the capital, followed by your year of birth serves as the password set by the government. For example, if your name is Tanya Nair, and you were born in 1987, then your Aadhaar card password would be TANY1987. In case your name has initials, it is also a valid letter. For example, if your name is P.K. Siva and your birth year is 1974, then your Aadhaar card password would be P.K.1974.
Aadhaar Card Password Requirement
The UIDAI keeps the e-Aadhaar as a password-protected PDF because PDFs are a very secure kind of digital media. Also, the password increases the entire security surrounding the system, keeping your details fortified from any kind of intrusion. As the Aadhaar card acts as authentication and verification factors for certain services, it becomes pertinent to safeguard them. So, all Aadhaar card holders should be cautious while using their Aadhaar and make sure their biometric details are secure as well.
The Manner of Downloading the Aadhaar Card Online
Visit the official website of the UIDAI: https://uidai.gov.in/
In the segment of Personal Details select the right option between your Enrolment ID and Aadhaar number.
If you don’t have an enrolment ID, you can get the same from the acknowledgement slip you got immediately after your Aadhaar registration.
In case you select the enrolment ID option, key in the 14-digit number and if you choose the Aadhaar option, then enter your 12-digit unique Aadhaar ID.
After this, enter your name exactly as that of the Aadhaar card and your PIN code.
Next, type the concerned CAPTCHA code for verification together with your registered mobile number.
Post clicking the Get OTP button, you will get an OTP on your registered mobile number.
Type this into the relevant field on the Enter OTP and Download e-Aadhaar section.
Click on Validate and Download to finish the procedure and download your copy of the e-Aadhaar PDF.
If you are downloading the Aadhaar via a PC or laptop, you have to go through a face authentication process. You need to on your webcam and permit the system to authenticate your face prior to downloading the e-Aadhaar.
Post Downloading the e-Aadhaar PDF how to open the same
As your PDF is protected by password, you should take these steps given below to obtain your e-Aadhaar post downloading the same.
You can open the PDF with two different methods.
First, type the PIN code of your postal address in the password box.
If this does not work, then key in the first four letters of your name in the capital, followed by your year of birth.
After opening the e-Aadhaar post verification, you can print the same to get a different physical copy.
Further, as the password is a fixed combination, you can rest easy as losing or forgetting becomes immaterial.
Benefits of E-Aadhaar Card
Easily indicate all the fresh updates and changes effected in your Aadhaar details. So, post doing the required tweaks in your details, you can download the e-Aadhaar online rather than paying a visit to an Aadhaar enrolment centre for the same.
Permit several downloads, allowing you to have a safe digital copy of your Aadhaar
Ridiculously simple to download.
Helps users to swiftly and smoothly verify and authenticate their identities online.
With the government ruling in favour of linking Aadhaar with several things like mobile etc, the e-Aadhaar has turned essential for partaking in several government schemes and benefits. By linking your bank account with Aadhaar, you can get the Direct Benefit Transfer scheme. Also, the Aadhaar aids in executing a biometric attendance system in government offices and also helps you expedite your passport application.
The Securities and Exchange Board of India (SEBI) has passed the SEBI (Credit Rating Agencies) Regulations, 1999 by the powers given under Section 30 read with Section 11 of the SEBI Act, 1992 on 07th July, 1999.
List of Amendments
SEBI (Investment Advice by Intermediaries) (Amendment) Regulations, 2001
SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2003
SEBI (Credit Rating Agencies) (Second Amendment) Regulations, 2003
SEBI India (Criteria for Fit and Proper Person) Regulations, 2004
SEBI (Intermediaries) Regulations, 2008
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2010
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2011
SEBI (Credit Rating Agencies) (Second Amendment) Regulations, 2011
SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2011
SEBI (Payment of Fees) (Amendment) Regulations, 2014
SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016
SEBI (Payment of Fees and Mode of Payment) (Amendment) Regulations, 2017
SEBI (Credit Rating Agencies) (Amendment) Regulations, 2018
Significant Definitions
Associate in respect of a credit rating agency that comprises a person who directly or indirectly, personally, or along with relatives, owns or possesses shares not less than 10% of the voting rights of the credit rating agency, or with regard to whom the credit rating agency, directly or indirectly, by itself, or together with other persons, owns or possesses shares having not less than ten percent of the voting rights, or most of the directors of which, own or control shares carrying not less than ten percent of the voting rights of the credit rating agency, or whose director, officer or employee is also a director, officer or employee of the credit rating agency.
Certificate means a certificate pertaining to registration given by the Board under these regulations or conditions.
Change in Control with regard to a credit rating agency as a body corporate, implying that, if its shares are listed on any authorized stock exchange, change in control as explained under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and in any other case, alteration in the controlling interest in the body corporate. Controlling interest in this context means an interest, direct or indirect, of minimum 51% of voting rights in the body corporate.
Client implies any person whose securities are rated by a credit rating agency.
Credit Rating Agency is a body corporate involved in the function of rating of securities given through public or rights issues.
Economic Offence is an offence to which the Economic Offences (Inapplicability of Limitations) Act, 1974 is applicable.
Fraud has the meaning similar to given under the Indian Contract Act, 1872.
Issuer happens to be a person whose securities are supposed to be rated by a credit rating agency.
Net Worth happens to be the total value of the paid up equity capital and free reserves (not including reserves carved out of revaluation), minus the cumulative value of accumulated losses and deferred expenditure not written off, comprising several expenses that have not been written off.
Rating is an opinion concerning securities, explained by way of standard symbols or in any other specified way, tasked by a credit rating agency and used by the issuer of such securities, to adhere to the condition mentioned by these regulations.
Rating Committee is a committee created by a credit rating agency to give rating to a security.
2. Registration of Credit Rating Agencies
2.1 Usual Process
1. Any person wanting to start any task as a credit rating agencyon or post the date of beginning of these regulations has to apply in writing to the Board for the issuance of a certificate of registration for the same.
2. The Board will not entertain an application unless the applicant is backed by a person from any of the following categories, which are a public financial institution, as mentioned under the Companies Act, 2013, a scheduled commercial bank included for the time being in the Second Schedule to the Reserve Bank of India Act, 1984, a foreign bank functioning in India with the stamp of the Reserve Bank of India, a foreign credit rating agency incorporated in a Financial Action Task Force (FATF) Member jurisdiction and recognized under their law, possessing at least 5 years experience in rating securities or any company or a body corporate, with regular total worth of at least INR 100 crores as per its audited annual accounts for the last 5 years before filing of the application with the Board for the issuance of certificate under these regulations.
Any application regarding a certificate, which is incomplete in every way or does not follow the requisite regulation or instructions given in Form A can be rejected by the Board. Prior to the rejection, the applicant should be provided a chance to do away with, within 30 days of the date of receipt of relevant communication, from the Board such objections as mentioned by the Board. The Board may, after giving adequate reason, extend the time for eliminating the objections by such further time, not exceeding 30 days, as the Board may deem fit to assist the applicant to do away with such objections.
3. The Board might want the applicant to provide such further information or clarification as the Board might consider fit, for the sake of processing the application.
4. The Board, if it feels like, might direct the applicant or its authorised representative to be present before the Board, for personal representation with regard to the grant of a certificate.
5. The Board, after finding the applicant to be eligible, needs to grant a certificate of registration in Form B and has to dispatch an intimation to the applicant. The certificate of registration granted will be in force till it is revoked or annulled by the Board.
6. The credit rating agency which has already been given certificate of registration by the Board, before the commencement of the SEBI(Change in Condition of Registration of Certain Intermediaries) (Amendment) Regulations, 2016 has to be deemed to have been granted a certificate of registration.
7. The grant of a certificate of registration totally hinges on registration fee payment as mentioned under Part A of Second Schedule in the way given in Part B.
In case, after looking into an application given, the Board feels that a certificate of registration cannot be given, it may, after providing the applicant a good chance of being heard, reject the application.
8. The Board’s decision of not giving a certificate of initial or permanent registration, as the case may be, has to be intimated by the Board to the applicant within 30 days of such decision, specifying reason for the same.
9. Any applicant unhappy with the decision of the Board to reject the application may, within a period of 30 days from the date of receipt by him of the intimation of rejection, apply to the Board in writing to consider the decision again.
10. When an application for reconsideration is given, the Board has to look at the application and inform the applicant its decision in writing, as early as possible.
2.2 Eligibility Aspects
1. The applicant is established and registered as a company under the Companies Act, 2013.
2. The applicant has, in its memorandum of association, mentioned rating activity as one of its chief objects.
3. The applicant must have at least net worth of INR 25 crores.
4. The applicant has sufficient infrastructure, to help it to offer rating services as per the provisions of the Act and these regulations.
5. The applicant and the promoters of the applicant, have professional ability, financial strength and good degree of fairness and honesty in business dealings, to the satisfaction of the Board.
6. Neither the applicant, nor its promoter, nor any director of the applicant or its promoter, should be involved in any legal proceeding regarding the securities market, which might have a negative effect on the interests of the investors.
7. Neither the applicant, nor its promoters, nor any director, of its promoter has at any time before been convicted of any offence regarding moral turpitude or any economic offence.
8.The applicant has employed persons with enough professional and other concerned experience to the contentment of the Board.
9. Neither the applicant, nor any person directly or indirectly linked with the applicant has before been rejected by the Board a certificate following these regulations or subjected to any proceedings for a contravention of the Act or of any rules or regulations made under the Act. For the sake of this clause, the expression directly or indirectly linked person implies any person who happens to be an associate, subsidiary, inter-connected or group company of the applicant or a company under the same management as the applicant.
10. The applicant, in every respect, has to be a healthy and proper person for the issuance of a certificate.
11. Certificate issued to the applicant has to be in sync with the interest of investors and the securities market.
12. The promoter of the credit rating agency, has a least shareholding of 26% in the credit rating agency.
2.3 Conditions Pertaining to Certificate of Registration
1. The credit rating agency must follow the provisions of the Act, the regulations created thereunder and the rules, directives, circulars and instructions given by the Board from time to time on the subject of credit rating.
2. Where any information or particulars given to the Board by a credit rating agency is turn out to be untrue or misleading in any material particular or has gone through a change later to its furnishing during the application for a certificate, the credit rating agency has to intimate the same to the Board in writing.
3. Where the credit rating agency seeks change in control, it should get beforehand approval of the Board for remaining to act similarly post the change.
4. The credit rating agency must, at every time keep a least cumulative worth of INR 25 crores (Given that a credit rating agency already registered with the Board under SEBI (Credit Rating Agencies) Regulations, 1999, having a collective worth of less than INR 25 crores, has to spike its net worth to the required amount within a period of 3 years from the date of notification of the SEBI (Credit Rating Agencies) (Amendment) Regulations 2018.
5. The promoter of the credit rating agency, has to have at least shareholding of 26% in the credit rating agency for a minimum period of 3 years from the date of issuance of registration by the Board.
6. A credit rating agency is not supposed to perform any activity other than the rating of securities provided via public or rights issue. Nothing in these regulations can bar a credit rating agency from involving in any other activity in so far as it may be needed by a financial sector regulator as specified under the Insolvency and Bankruptcy Code, 2016. In case a credit rating agency is into tasks other than the ones meant for a financial sector regulator, such activity has to be classified as a different entity within a period of 2 years from the date of notification of SEBI (Credit Rating Agencies) (Amendment) Regulations 2018.
3. General Obligations of Credit Rating Agencies
1. All credit rating agencies have to follow the Code of Conduct in the Third Schedule.
Every credit rating agency has to get into a written agreement with every client whose securities it seeks to rate, and all such agreements have to contain the rights and liabilities of each party with regard to the rating of securities in a specified form, the fee levied by the credit rating agency, the client must agree to a periodic review of the rating by the credit rating agency during the period of the rated instrument, the client must cooperate with the credit rating agency to enable the latter to ascertain, and upkeep, a genuine rating of the client’s securities and has to, especially provide to the latter, true, sufficient and timely information for the aim, the credit rating agency has to reveal the client, the rating given to the securities of the latter via usual procedures of dissemination, notwithstanding the acceptance of rating by the client, the client must agree to reveal, in the offer document, the rating given to the client’s listed securities by any credit rating agency in the last 3 years and any rating provided with regard to the client’s securities by any other credit rating agency, which was not accepted by the client and the client must acquire a rating for any issue of debt securities as per the concerned regulations.
2. Every credit rating agency must, during the lifetime of securities rated by it, regularly track the rating of such securities, till the rating is revoked.
3. Every credit rating agency must provide information related to freshly allotted ratings, and changes in previous rating precisely through press releases and websites, and, with regard to case of securities issued by listed companies, such information has to also be offered simultaneously to the relevantregional stock exchange and to every stock exchanges where the concerned securities are listed.
4. Every credit rating agency must perform periodic reviews of all published ratings during the validity of the securities, till the rating gets withdrawn.
If the client refuses to cooperate with the credit rating agency to enable the credit rating agency to follow its obligations, the credit rating agency must perform the review in line with the best available information or in the way as clarified by the Board from time to time. If due to lack of cooperation, a rating has been as per the best available information, the credit rating agency has to divulge the same to the investors.
5. A credit rating agency is not supposed to withdraw a rating till the obligations as per the security rated by it are outstanding, except where the company whose security is rated is closed or merged with another company, or as may be specified by the Board from time to time.
6. Every credit rating agency must draft apt procedures and systems for tracking the security trading by its employees in the securities of its clients, to avoid violating the SEBI (Insider Trading) Regulations, 1992, SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the Securities Market) Regulations, 1995 and other laws concerning trading of securities.
7. Every credit rating agency must publicize the contours of the relevant rating, along with the symbol and has to mention that the ratings do not signify suggestions to purchase, hold or sell any securities.
8. Every credit rating agency must provide to the general public, information regarding the reason of the ratings, which must encompass an evaluation of the several factors validating a favourable assessment, and factors prompting a risk.
If any information is sought for by the Board from a credit rating agency regarding these regulations, including any report related to its activities, the credit rating agency must furnish the information to the Board within a particular time mentioned by the Board or in case the period is not specified, then within a reasonable time.
9. Every credit rating agency must, at the end of each accounting period, provide to the Board copies of its balance sheet and profit and loss account.
10. Every credit rating agency must follow such guidelines, directives, circulars and instructions issued by the Board from time to time, on the subject of credit rating.
11. Every credit rating agency must elect a compliance officer who will be tasked with tracking the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc. given by the Board or the Central Government.
12. The compliance officer must quickly and independently report to the Board, any violation seen by him
13. Every credit rating agency must maintain, for at least 5 years, the books of accounts, records and documents, which must have a copy of its balance sheet, as on the conclusion of each accounting period, a copy of its profit and loss account for every accounting period, a copy of the auditor’s report on its accounts for each accounting period, a copy of the agreement entered into, with each client, information provided by every client, correspondence with each client, ratings given to various securities such as upgradation and downgradation (if any) of the ratings so allotted, rating notes looked at by the rating committee, record of decisions of the rating committee, letter allotting rating and details of fees levied for rating and such other records as the Board may specify from time to time.
14. Every credit rating agency must inform the Board, the location where the books of account, records and documents needed to be kept as per these regulations are being maintained.
15. Every credit rating agency must, within 2 months from the date of the auditor’s report, take measures to correct the flaws if any, occurred in the auditor’s report, insofar as they relate to the activity pertaining to the rating of securities.
16. Every credit rating agency has to consider, as confidential, information given to it by the client and no credit rating agency should divulge the same to anyone, except in cases such disclosure is needed or allowed under or any law for the time being in force.
17. Every credit rating agency must specify the rating method, file a copy of the same with the Board for record and file with the Board any changes or inclusions made therein from time to time.
18. Every credit rating agency must, in every case, adhere to a good rating method.
19. Every credit rating agency should have professional rating committees with members, who are sufficiently qualified and aware to provide a rating.
20.All rating decisions, including the ones pertaining to changes in rating, have to be made by the rating committee.
21. Every credit rating agency must haveanalysts capable to perform a rating assignment.
22. Every credit rating agency must intimate the Board about new rating instruments or symbols brought in by it.
23. Every credit rating agency must, while rating a security, be fully aware to make sure that the rating provided by the credit rating agency is fair and apt.
24. A credit rating agency is not allowed to rate securities issued by it.
Rating definition, and the form for a particular rating product, cannot be altered by a credit rating agency, without informing the Board in advance.
25. A credit rating agency has to disclose to the concerned stock exchange through press releases and websites for general investors, the rating assigned to the securities of a client, after periodic review, including changes in rating, if any.
26. A credit rating agency is not supposed to, directly or indirectly, hold 10% or more shareholding and/ or voting rights in any other credit rating agency or represent the Board of any other credit rating agency. A credit rating agency may, with the beforehand accent of the Board, obtain shares and/ or voting rights beyond 10% in any other credit rating agency only if such procurement leads to change in control in the credit rating agency whose shares are being bought over. According to the prior approval sought by the acquirer, the Board may consent to the acquisition keeping in mind the interest of investors, market integrity and stability.
27. A shareholder with 10% or more shares and/ or voting rights in a credit rating agency is not supposed to hold 10% or more shares and/ or voting rights, directly or indirectly, in any other credit rating agency. The said limitation is not meant for holdings by Pension Funds, Insurance Schemes and Mutual Fund Schemes.
4. Limitation pertaining to Securities’ rating Given by Promoters or Certain Other Persons
No credit rating agency is allowed to rate security issued by its promoter.
If the promoter happens to be a lending institution, its Chairman, director or employee cannot be a Chairman, director or employee of the credit rating agencyor its rating committee.
No credit rating agency is permitted to rate a security issued by an enterprise, which happens to be a borrower of its promoter or a subsidiary of its promoter or an associate of its promoter, if there are similar Chairman, Directors between credit rating agency and these entities or there are common employees or common Chairman, Directors, Employees on the rating committee.
No credit rating agency is supposed to rate a security issued by its associate or subsidiary, in case the credit rating agency or its rating committee has a Chairman, director or employee who is also a Chairman, director or employee of any such entity. The credit rating agency may, rate a security issued by its associate with a usual independent director with it or rating committee only if the independent director in question is not a participant in the discussion on rating decisions and the credit rating agency reveals in the rating announcement of such associate (regarding the presence of common independent director) on its Board or of its rating committee, and that the common independent director has not participated in the rating procedure or in the meeting of its Board of Directors or in the meeting of the rating committee, when the securities rating of such associate was deliberated upon.
These prohibitions will not apply to securities whose rating has been already performed by a credit rating agency prior to the enactment of these regulations, and such securities may, depending on the provisions of these regulations, remain to be rated, without the need of following the limitations enforced by the regulations contained here.
5. Powers vested with the Board
Power to issue certificate of registration to a credit rating agency.
Power to not issue a certificate of registration to a credit rating agency.
Power to elect inspecting officers to perform enquiries and inspections.
Power to issue and give notice prior inspection or probe.
Power to take action in line with enquiry, inspection or investigation report.
Power to punish a credit rating agency for contravention.
6. Schedule I
Form A
Application for Grant of Certificate of Registration
Applicant’s Name
CONTACT NAME:
TELEPHONE NO:
FAX NO:
INSTRUCTIONS FOR FILLING UP FORM
Applicants must present to the Board, a finished application form along with relevant documents. The Supporting documents has to be duly attested by a notary public.
This application form must be filled as per the regulations.
Application for registration will be entertained, provided it is complete.
All answers must be keyed in.
Information to be given in detail may be provided on different sheets which should be attached to the application form.
All signatures on the application must be original.
All pages in the form and every additional sheet has to be signed by the authorised signatory of the applicant.
DETAILS OF THE APPLICANT
Name, address of the registered office, address for correspondence, telephone numbers, fax numbers and names of the contact person of the company. Address of branch offices, if any.
Date of incorporation of the Applicant company (enclose certificate of incorporation and memorandum and articles of association). Mention Objects (Main & Ancillary) of the Applicant company, Authorized, issued, subscribed and paid up capital.
Category regarding the Applicant company: Limited company – Private/Public or Unlimited company.
If listed, names of Stock Exchanges and latest share price to be given.
Category pertaining to the Applicant company ie.Company already in the business of performing rating activities or Company wanting to take up rating activities for the first time.
ELIGIBILITY CRITERIA
Category regarding promoters of the Applicant company.
Name of the promoters and their shareholding in the company.
Enclose a Chartered Accountant’s certificate notifying the regular net worth of INR 100 crores for 5 years, in case the promoter.
Total worth of the company according to last audited accounts not before 3 months from the date of application.
Enclose a Chartered Accountant’s certificate specifying the same.
Details OF DIRECTORS/ KEY PERSONNEL
Particulars of Directors of the company, which must have name, qualification, experience, shareholding in the company and directorship in other companies.
Particulars of Chief Personnel of the company, which must have name, designation in the company, qualification, past positions held, experience, date of appointment in the company and functional zones.
INFRASTRUCTURE
Details pertaining to infrastructure such as computing facilities, provisions for research and databases available with the company and whether the current infrastructure is sufficient to sustain the rating activities said to be undertaken by the company. Any more plan for additional/ improved infrastructure must be indicated.
MAJOR SHAREHOLDERS
List of major shareholders (holding 5% and above of applicant directly or along with associates) Shareholding as on: ______________
Name of Shareholder
Number of Shares Held
Percentage of Total Paid Up Capital of the Company
ASSOCIATE CONCERNS
Details of associate companies/concerns which must contain name, address, kind of activity tackled, kind of interest of the Applicant company in the associate, nature of inclination of promoters of the applicant in the associate.
If the Board has given/ refused registration as a credit rating agency to any associate of the applicant. Give particulars such as date of application, date of refusal/registration, reasons for refusal etc.
BUSINESS INFO REGARDING THE COMPANY
History, major events and current activities. Particulars of Exposure in Credit Rating jobs and other related activities.
If the company is planning to involve in credit rating activities for the first time, the business plan of the company with estimated volume of activities and revenue for which registration is sought to be specifically given.
Securities Rating activities handled during the last three years as per the table below-
Name of Client
Type of Security
Size of Issue
Year of Issue
Security/ Instrument Rated
Listed/ Unlisted
FINANCIAL INFORMATION ABOUT THE APPLICANT
Net Worth (INR in Lakhs)
Items
Year before the Preceding Year of the Current Year
1. Please attach audited annual accounts for the last 3 years. Where unaudited reports are given, provide reasons. If the least net worth criteria has been obliged after last audited annual accounts, audited statement of accounts of a later date has to be submitted.
Name and Address of the Principal bankers of the Applicant company.
Name and address of the Auditors.
OTHER INFORMATION
Particulars of all pending litigations against the applicant company, directors and employees.
Kind of dispute, name of the party and status.
Accusation or involvement in any fraud or economic offences by the applicant or any of its Directors, or Key Managerial Personnel, in the last 3 years.
DECLARATION
Give the following declarations signed by two directors:
I/We hereby apply for registration.
I/We warrant that I/We have sincerely and entirely answered the questions above and given all the information which might reasonably be considered relevant for the purposes of my registration. I/We declare that the information supplied in the application form is complete and correct.
For and on behalf of
(Name of Applicant)
Director Director
Name in Block Letters Name in Block Letters
Date Date
Form B
Certificate of Registration
In exercise of the powers conferred by sub-section (1) of Section 12 of the Securities and Exchange Board of India Act, 1992 made thereunder the Board hereby grants a certificate of registration to ___as a credit rating agency in accordance with and subject to the conditions in the regulations to carry out the activity of the credit rating agency.
Registration Code for the credit rating agency is CRA/ / /
This certificate of registration is valid unless it is suspended or cancelled by the Board.
Place:
Date:
By
Order
Sd/-
For and behalf of
Securities and Exchange Board of India
7. Schedule II
Fees
Part A
Amount to be Paid as Fees
1.
Application Fee for Grant of Registration
INR 50,000
2.
Registration Fee
INR 26,66,700
3.
Recurring Registration Fee (For Every 3 Years)
INR 15,00,000
PART B
A credit rating agencywhich has been given a certificate of registration, needs to pay fees, as mentioned under Part A, within 15 days from the date of receipt of intimation from the Board.
A credit rating agency which has been given certificate of registration, to maintain its registration, must pay fee as specified in Part A, for every 3 years from the sixth year of the date of grant of certificate of registration or of the date of grant of certificate of initial registration given before the commencement of the SEBI (Change in Conditions of Registration of Certain Intermediaries) (Amendment) Regulations, 2016, as the case be.
The fee mentioned above, must be paid by directly crediting in the bank account via NEFT/RTGS/IMPS or any other mode permitted by the Reserve Bank of India or through a bank draft in favour of Securities and Exchange Board of India payable at Mumbai.
8. Schedule III
Model of Conduct
1. A credit rating agency must go the whole hog toprotect the interests of investors.
2. A credit rating agency, while carrying out its business, must observe high standards of honesty, sincerity and fairness in the performance of its business.
3. A credit rating agency must meet its conditions promptly, ethically and professionally.
4. A credit rating agency must follow due diligence, ensure good care and portray independent professional judgment to accomplish and upkeep objectivity and independence in the rating procedure.
5. A credit rating agency must have adequate knowledge to rate. It has to also maintain records to back its calls.
6. A credit rating agency must have a rating process that meets global rating standards and should be consistent.
7. A credit rating agency cannot involve in any kind of unethical business practice or can it take away the clients of any other rating agency by promising a higher rating.
A credit rating agency must monitor all critical changes regarding the client companies and has to build efficient and responsive systems to get timely and accurate ratings. Also, a credit rating agency has to also observe closely all concerned factors that might dent the creditworthiness of the issuers.
8. A credit rating agency has to reveal its rating procedure to clients, users and the public.
9. A credit rating agency must, wherever required, divulge to the clients, possible point of conflict of duties and interests, which can damage its capacity to give fair, objective and unbiased ratings. It has to weed out any conflict of interest existing between any member of its rating committee taking part in the rating evaluation, and that of its client.
10. A credit rating agency is not allowed to give any boisterous statement, whether oral or written, to the client either regarding its qualification or its ability to provide certain services or its achievements related to the services given to other clients.
11. A credit rating agency should not provide any false statement, conceal any material fact or make any manipulations in any documents, reports, papers or information given to the Board, stock exchange or public at large.
12. A credit rating agency has to make sure that the Board is properly intimated about any action, legal proceedings etc., taken against it alleging any material breach or non-compliance of any law, rules, regulations and directions of the Board or of any other regulatory body.
13. A credit rating agency must have good knowledge and ability, and follow the provisions of the Act, regulations and circulars, which may be applicable and relating to the activities performed by the credit rating agency. The credit rating agency has to also follow the award of the Ombudsman passed under the SEBI (Ombudsman) Regulations, 2003.
14. A credit rating agency must ensure the avoidance of misuse of any classified information including advance knowledge of rating decisions or changes .
15. A credit rating agency or any of his employees cannot is not supposed to provide, directly or indirectly any investment suggestion regarding any security in the publicly accessible media. A credit rating agency should not provide fee-oriented services to the rated entities, beyond credit ratings and research.
16. A credit rating agency must make sure any modification in registration status/any penal action taken by the Board or any material change in financials which may drastically affect the interests of clients/investors is properly communicated to the clients and any business remaining outstanding is transferred to another registered person as per any instructions of the affected clients/investors.
17. A credit rating agency should detach ties between its credit rating activity and any other activity.
18. A credit rating agency must draft its own internal code of conduct for looking after its internal operations and prescribe its protocols regarding proper conduct for its employees and officers in performing their duties inside the credit rating agency and as a part of the industry. Such a code should be expanded to the upkeep of professional integrity and standards, confidentiality, objectivity, avoidance of conflict of interests, disclosure of shareholdings and interests, etc. Such a code must make provisions for procedures and guidelines regarding the set up and conduct of rating committees and duties of the officers and employees serving on such committees.
19. A credit rating agency must offer enough freedom and authority to its compliance officer to perform his duties ably.
20. A credit rating agency must ensure that the senior management, especially decision makers get all concerned information regarding the business in a timely manner.
21. A credit rating agency must enforce excellent corporate policies and governance
22. A credit rating agency should not generally usually and especially regarding issue of securities rated by it, be party to or make efforts to create fake market, price fixing or manipulation or disclosing any yet to be published price sensitive information with regard to securities which are listed and proposed to be listed in any stock exchange, unless needed, as reason for the rating provided.
Your company is on an upward trajectory and you are getting busier day by day. But the cash in your hand is not in sync with the success of yours, so what would you do? on top of this you are loosening your purse strings too much and on things that are hardly helping you company to grow. Like accounting, for example. We have dealt with several entrepreneurs. They happen to be salespeople and inventors but not accountants. They realize the significance of cash and have created businesses with an intention to generate cash. At a particular point, however, a business evolves beyond intuition. It requires financial processes and systems in order to flourish. Here are 5 signs indicating that your business might have touched that point.
Tough to get data you require
Majority of startups utilize QuickBooks. It’s an ideal weapon for the companies which have just begun their journey. It’s normally established by a tax accountant to aid him or her prepare tax returns without any issues. The problem happens to be getting good data into QuickBooks to take out meaningful data from it. In the beginning getting the data to operate your business won’t be tough. However, as you evolve you’ll get more transactions and complexity will increase in your accounting. How do you find what is significant for you and what isn’t?
Not having adequate cash
This happens to be the major cause of concern with our new clients.They have a good feel for the growth and sink of their cash balances however, they can’t track cash on a regular basis. They want more predictability and firmness with regard to their cash flow so they can take confident calls. They also require access to capital – so as to absorb the ups and downs.
Adhering to a financial plan is a must
It is common knowledge that the business that indulge in planning performs well. You realize the potential of making a financial plan, but, you have to find time for the same as well. Once it is accomplished, you need to track and gauge performance against it.
You need a financial “sounding board”
It is a good thing to have someone to speak about your business. It could be friends, advisors or mentors who can help you out with valuable inputs. However, at times you have to get into the details about critical things: how much do I pay someone? What should be the price of a new product? What all risks can drastically affect my business? It would be better to have help at hand for all these things.
Want more time to work on your business
Several business owners consume a lot of time working in their business, particularly on their books. You want things in a particular way, but the bookkeeper is unable to get the books where they ought to be. Hence, the owner does not have any options, but to spend good time getting things in order instead of focussing on building the business.
Lastly
If the above-mentioned points ring true to your business, then the time is ripe for hiring a Virtual CFO. He is someone who can aid you with his financial and accounting expertise, knowledge and systems. This is an economical manner to get more time to focus on growth of your business.
In case you have begun to earn, you have to file ITR or Income Tax Returns. Receipts regarding your income tax returns are important documents that aid you while investing. These happen to be some benefits of filing ITR prior to the due date.
Avail tax refunds comfortably
Usually, the Income Tax Department owes refunds to people. If your refund is due, then you can only claim by filing an income tax return in a timely manner.
Issue credit cards devoid of any hiccups
Banks won’t give credit cards if you can’t furnish a copy of your latest ITR. In case you have filed your income tax return prior to the deadline, then the receipts serve the purpose of proof, which will make the bank grant your request for a credit card.
Losses are carried forward
In case you take your losses of one year to other years, you can then adjust the same against your income of those years. But, this is possible only if you have filed ITR prior to the expiry of deadline.
Loans are disbursed smoothly
Several banks seek income tax returns prior to granting any loan, especially home or vehicular loans. In case you have filed income tax return on time, then you should be having copies of the receipts to be furnished when the need arises. This expedites loan disbursal swiftly.
Address and income proof
Income tax return receipts can easily be your proof of address or your income, particularly if you happen to be self-employed or a freelancer. In case you have filed ITR on time, then you can use the copy as proof if the need arises.
Big-ticket Insurance can be availed
Several insurance companies want to see ITR receipts. Reason is to find out whether you are paying your taxes or not. In case you have filed income tax returns on time and provide evidence regarding the same, then you will be able to avail good insurance policies.
Penalties can be bypassed
You can be penalized by tax officials for not filing ITR on time. In several scenarios, you have to file income tax returns prior to the due date, and if you do not follow these rules, you might be handed a heavy fine. This can be a red mark on your track record and will severely dent your credibility.
Visa processing becomes convenient
While applying for a Visa, the majority of embassies or consulates seek your income tax returns belonging to the last two years. In case you file ITR on time, then you can easily provide documents proving the same, and this helps you in obtaining a visa with ease.
Avoid paying extra amount
In case you don’t file ITR on time, then additional interest will be levied to the tax amount. Hence, you will have to pay an additional amount. That is why it is essential to pay the taxes before the expiry of the deadline.
Conclusion
So, filing the income tax returns is a must as it has several benefits and not filing the same can land you in several problems. The above-mentioned points make it amply clear the benefits of filing ITR on time. Therefore, pay your taxes on time and avoid some severe headaches.
E-commerce, a rising industry in India, has provided humongous investments in infrastructure and logistics in the last 10 years. It has even generated innumerable number of direct and indirect jobs, and assisted money generation in the entire country, with chief effects witnessed in Tier II and Tier III cities. Evolving at a quicker rate, the e-commerce has attracted unwanted attention of regulators and led to imposition of more taxes and compliance burden. The sector has seen a large number of regulations being thrust into the earlier stage itself. This has to be stopped as there is a requirement to liberalize policy-making for e-commerce and internet companies to back the sector’s growth as it has generated a lot of jobs.
The Finance Act 2020 has included a fresh section 194-O in the Income Tax (IT) Act regarding payment by an e-commerce operator (or operator) to an e-commerce participant (or online seller(s)). This warrants the e-commerce operators to reduce income tax (TDS) at the rate of 1 per cent from the cumulative amount of sale of goods/ services/ both, during credit of the amount of sale in the account of the e-commerce participant.
Online retail (or e-commerce) in terms of percentage of entire retail in India comes to around 3 per cent, meaning a minor online seller base. Section 194-O also exempts online sellers from gross merchandise sale of less than Rs 5 lakh from the last year. This leads to a minority seller base (as a percentage of overall retail) that would give the concerned TDS and thereby defeat the whole objectives. Implementation in the present manner can be looked into by reducing the concerned TDS rate (to say 0.25 per cent) to cut down cash flow impact for MSME. This will aid in bringing down the amount of working capital that gets blocked and critically in these pandemic times, it will do a world of good.
The government can look towards changing the base for TDS calculation from Gross to Net Sales Consideration which is exclusive of GST and fees to operators. The proposed calculation of TDS on Gross Sale Amount, which includes GST, is a case of enforcing a tax-on-a-tax. Along with TCS, the combined impact on blocked working capital would be greater than two percentage points. This would put online sellers working under a high-volume, low-margin model under immense pressure.
TCS collection as the GST law is computed at 1 per cent of the total value of taxable supplies, which even factor in returns (which happened to be roughly 30 per cent for e-commerce companies). In a bid to have consistency in provisions, the Government of India might go for the same Net Sale Consideration (excluding GST and fees/ charges payable to operators) after returns. Together with the consideration in (2) this would also assist in reducing the amount of working capital of online sellers getting blocked while following the no tax-on-tax principle.
The Finance Act 2020 has even included a new clause 1h in Section 206-C of the Income Tax (IT) Act which mandates that all sellers getting sale consideration for goods beyond Rs 50 lakh in any preceding years shall take it from the buyer TCS of 0.1 per cent of the sale consideration going above Rs 50 lakh. This multiplication in taxation will result in strict compliance and blocking of working capital. This can lead to a super hike in the cost of doing business across the whole supply chain of supplier, wholesaler/trader and seller.
The data gathered on sellers via TCS collected by operators, together with data on sellers (offline and online) as per the extended scope of Section 206-C will be an adequate measure for the income tax authorities to curb tax avoidance across majority sellers. So, the Government of India has to reassess the implementation of 206-C (1h) in a bid to reduce the amount of taxable transactions to improve the Ease of Doing Business.
The government has to understand the importance of these e-commerce platforms as they happen to be the distribution medium of India’s biggest job provider- the MSME sector. Therefore, it should look at offering and developing an ecosystem having convenient Tax Regulations. E-commerce sector has to be accommodated the way the IT Sector has been in India.
Winding-up happens to be a circumstance where the life of a company has ended and property is administered so as to benefit the shareholders & creditors.
Form of Winding-Up
By court ( NCLT)/ mandatory Winding-up
Voluntary Winding-up (provisions regarding voluntary winding-up have been abrogated and has now been moved to Insolvency & Bankruptcy code).
Voluntary Winding-Up: The Insolvency and Bankruptcy Code, 2016 regarding re-organization and insolvency resolution of companies, partnership firms and individuals in a timely way.
The Insolvency and Bankruptcy Code, 2016 pertains to substances regarding the insolvency and dissolving of a company where the least amount of the defaulting is Rupees one lakh at present but it might be hiked up to Rupees one crore by the Government, via notification).
Compulsory (Tribunal) winding up
The winding up procedure is carried out by the tribunal. Also called tribunal winding up, this procedure is single-handedly performed by the tribunal and the company has minor or zilch say in the process. Hence, a company will be reduced to a mere spectator and will not follow any directions.
Conditions regarding voluntary wind up:
If the Company is not able to pay back its debts.
A special resolution will be passed by the company for closure.
If a company acts contrary to the principles/interests/sovereignty of the nation.
If the company has jeopardized ties with other nations.
If financial statements or annual returns for the last 5 years has not been filed.
If the tribunal deems it fit and fine to dissolve the company.
If the company has been involved in illegal business or illicit practices.
Any member, part of the founding committee of the firm, is found guilty of wrongdoing.
By transfer of a company’s undertaking to some other as per a scheme of reconstruction or amalgamation, in such a scenario, the transfer or entity will be dissolved by an order of the Tribunal without wind up; and
With the liquidation of the company, whereby assets of the company are liquidated and given for paying its liabilities. The rest, if any, is distributed among the members of the company, in line with their rights.
