Browse Month: January 2017

Corporate Social Responsibility

“ARE YOU A GOOD CORPORATE CITIZEN?”

CSR might be defined as corporate strategic philanthropy, even narrowed to “effective public relations” where the excellence of the organization and build accommodating relationships with stakeholders. It can be viewed as cause-related marketing. At best, it can be conceived of as knowing, achieving, and communicating about higher standards of performance in the public or community interest.

Consideration of corporate social responsibility is as old as organizations themselves. The central question always has been this: Does each organization, as it strives to achieve its mission and vision, add value to the society which explores its existence? Long before consideration focused on business, especially large corporations, questions about CSR addressed the rationale and acceptability by the government.

Here are the related provisions that are dealt with Corporate Social Responsibility in accordance with Companies (corporate social responsibility) Rules 2014.

Sl.no     Provisions Description/ explanations
1. Governance
  • Sec.135 of Companies Act,2013
2. Applicability

To

  • Every Companies having net worth of Rs.500 crores or more. (or)
  • Every companies having turnover of Rs.1000 crores of more. (or)
  • Every companies having net profit of Rs.5 Crores or more.
3. Minimum limit for Spending
  • Atleast 2% of their Average net profits accrued over last 3 years.
  • List of Activities may be initiated on CSR projects have been specified in schedule 7 of the Act, along with board’s approval.

4. Methods of implementation
  • On Suo-motto basis

  • Via Not for profit venture setup.

  • Collaborating or pooling their resources with other companies.

5. Domains where CSR activities are carried in
  • Education
  • Communication Ecology and health care
  • Business sustainability
  • Diversity.
6. Benefits/Advantages
  • Enhances business relationships with clients

  • It encourages both professional and personal development.

  • Ability to have positive impact in the society.

  • Cost Reduction

  • Employee retention.

7. Critics/Disadvantages
  • Larger companies take advantage as that costs would be included in cost of production, which inturn burdens the end customers.

  • Costs and expenses are needed for CSR Committee to set-up.

8. Disclosure
  • Disclosure of the reason for not spending the said amount is a compliance of the provisions. Non-disclosure, or absence of the details about the CSR policy and its implementation in the Boards’ report would attract penalties
9. Penalty for Contravention
  • For Companies: Failure to comply fine of not less than 50,000 which may extend to 25 lakhs.

  •  For Officer-in-default:  Imprisonment upto 3 years or with fine of not less than 50,000 which may extend upto 25 lakhs for every officer-in-default or with both.

 

CHARGES

Meaning of Charges

As per Section 2 (16) of the Companies Act, 2013 , charges means an interest or lien created on the property or assets of the company or any of its undertakings or both as security and includes a mortgage.

Essential Features of Charges

There should be 2 parties:- creator of charge and chargeholder. There should be a subject matter of charge, which may be current or future assets. The intention of borrower, in respect of repayment of borrowed money plus interest at agreed rate, should be displayed by an agreement entered by him.

Registration of Charges

All types of charges are required to be registered whether:

  • Created within or outside India.
  • Created on property or assets or any of the company’s undertaking.Creation is tangible or otherwise, situated in or outside India.

 

**If the company fails to register the charges within 300 days of creation or modification or within 30 days of satisfaction, then it may seek extension from Central Government to condone the delay.

Satisfaction of charges

The company shall give intimation to the Registrar within 30 days of payment or satisfaction of charges.

** The Registrar shall issue a notice to the charge-holder within 14 days, if the satisfaction form (i.e. Form CHG-4) is not signed by the holder or if it is not satisfied with intimation made by the company. If no response comes from the holder then the Registrar shall record the same and inform the company.

Consequences of Non-Registration Of Charges

Following are the consequences of non-registration:-

  • Charge becomes void.
  • Charge holder becomes unsecured.
  • Debt is still recoverable.
  • Company is penalized for the same.

Penalty for Non-Registration Of Charges

Applicable to Fines and penalties
Company Rs 1,00,000 to Rs 10,00,000
Officer in default

Imprisonment- Upto 6 months

Or

Fine- Rs. 25,000 to Rs. 1,00,000

Or

Both

 

Particular of charges

The following particulars in respect of each charge are required to be filed with the Registrar:

(a) date and description of instrument creating charge;

(b) total amount secured by the charge;

(c) date of the resolution authorizing the creation of the charge; (in case of issue of secured debentures

only);

(d) general description of the property charged;

(e) a copy of the deed/instrument containing the charge duly certified

or

if there is no such deed, any other document evidencing the creation of the charge to be enclosed;

(f) list of the terms and conditions of the loan; and

(g) name and address of the charge holder.

List Of E-Filing Under Charge

Sl. No. E-Form                      Purpose
1 CHG-1 Creating or modifying the charge (for other than Debentures)
2 CHG-2 Certificate of registration
3 CHG-3 Certificate of modification of charge
4 CHG-4 Intimation of the satisfaction to the Registrar
5 CHG-5 Memorandum of satisfaction of charge
6 CHG-6 Notice of appointment or cessation of receiver or manager
7 CHG-7 Register of charges
8 CHG-8 Application for condonation of delay shall be filed with the Central Government
9 CHG-9 Creating or modifying the charge in (for debentures including rectification)
10 CHG-10 Application for delay to the registrar

DIFFERENCE BETWEEN PRIVATE LIMITED COMPANY V/S ONE-PERSON COMPANY (OPC) V/S LIMITED LIABILITY PARTNERSHIP (LLP)

What kind of business you should Start off with?????

There are several platforms which are available, to Choose one’s plan of owning a business and deriving maximum benefits out of it. However, one need to make a proper analysis of the risks and returns of which they are anticipating of such occurrence before venturing into a new project or certainly the outcome from it.

Here’s the quick analysis of the 3 different forms of organization.

There are various criteria which distinguishes Private ltd company, OPC & LLP.

 

Aspects Private Ltd Company One-person Company(OPC) Limited Liability partnership(LLP)
Governed by Companies Act 2013 Companies Act 2013 Limited Liability partnership Act 2008
Minimum No of Members Min.2 members (Can be body corporate also) 1 member who is resident of India, and 1 nominee should be present. LLP should have a minimum of 2 members. There is no limit on maximum number of members.
Minimum No of Directors Min.2 Directors out of which 1 Director has to be present in India. 1 Director who has to be a resident of India. 2 Designated partners out of which 1 director has to be present in India.
Name shall include Name of the Private Company to end with “Private Limited”. “One-person Company” shall be mentioned in brackets below the name of such company. Name to end with LLP (Limited Liability partnership)
Minimum Capital No minimum requirement No minimum requirement No minimum requirement
Taxation Taxed at 30% + Surcharge + Cess. Taxed at 30% + Surcharge + Cess. Taxed at 30% + Surcharge + Cess.
Annual filings Annual accounts and annual returns to be filed with ROC. Financial Statements and Annual return to be filed with ROC. Annual statement of Accounts and Solvency & Annual Return has to be filed with ROC.
Statutory Audit Compulsory Compulsory If Contribution is >than 25 lakhs, or turnover is

>40 lakhs.

Minimum Number of Meeting (Including Board & AGM)
  • Atleast 4 Board Meetings, 1 in each quarter & the gap between 2 meetings should not be more than 120 days.
  • AGM to be held within 6 months from closure of Accounts (usually in the month of September of every year)
  • Atleast 1 Board Meetings, 1 in each half year & the gap between 2  meetings should not be less than 90 days.
  • No requirement of AGM.
  • No specified Limits.
Suitability More suitable for businesses, trade, manufactures, large industrial establishments etc. Suitable for Individuals whose Capital requirements are less than 50 lakhs or Turnover is less than 2 Cr. More suitable for professionals like CA, CS, Advocates etc.
Conversion Can be converted into LLP. Can be converted only after the expiry of 2 years from the date of incorporation. Can be converted into Company/Firm.
Time taken for Registration 5-7 days 7-10 days 10-15 days
Procedure for Incorporation
  • Obtain Director Identification Number(DIN).
  • Obtain Digital Signature Certificate(DSC)
  • Name Approval
  • Filing of Various Documents & forms required for Incorporation
  • Obtain Director Identification Number(DIN).
  •   Obtain Digital Signature Certificate(DSC)
  •   Name Approval
  •   Filing of Various Documents & forms required for Incorporation
  •   Filing Nominee Details.
  • Obtain Director Identification Number(DIN).
  •   Obtain Digital Signature Certificate(DSC)
  •   Name Approval
  •   Filing of Various Documents & forms required for Incorporation
  • File LLP Agreement.
Liability Limited Liability Limited Liability Limited Liability

Conclusion:

  • One-person Company is a new concept that has been introduced in India. Still there are lot of Changes having to be undergone and lot more review for the improvement of OPC Company is required.
  • In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. This is an important difference from the traditional unlimited partnership under the partnership Act, in which each partner has joint and several
  • Private Limited Company the business owners hold all shares of the company privately. Shareholders may operate the business themselves, or hire directors to manage the Company on their
  • Forming a private limited Company results in protection of personal assets, access to more resources, financial assistance and greater