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LIMITS BASED PROVISIONS WITH CONSEQUENCES ON NON-COMPLIANCE UNDER COMPANIES ACT, 2013 |
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Dear All,
Greetings for the day!!!!
During these days most of the professionals in our stream remains engaged with statutory audits. A part of statutory audit includes due verification of compliance under various laws. With the introduction of the Companies Act, 2013, numerous compliances are made applicable on Companies on the basis of quantum of their paid up share capital, turnover, amount of deposits, loan from financial institutions etc. Non compliance with these provisions shall cause penal implications over the compnay, officers in default, professionals and prosecutorial over the officer in default or professionals.
In this document, I have tried to summarise most of those provisions along with the consequences on non compliance. This document will assist both the professionals and students too. |
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Sl No |
Particulars |
Relevant Sec(s) |
Rule(s) |
Rule No |
Class of Companies |
Exemption/ Non Applicability |
Share Capital |
Turnover |
Net Profit |
Net Worth |
Loan/ Debentures/ Deposits |
Defaulter |
Penalty/ Imprisonment on Non compliance |
Additional Note |
|
1 |
Appointment of Key Managerial Person (Whole Time KMP) i.e., MD, CEO, Manager, WTD, CFO
Form MR. 1, Return of Appointment within 60 days, MR 2, DIR 12 |
203(1) |
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 |
8 |
Every Listed and every other Public Company with Paid up share Capital of Rs. 10 Cr. Or more. |
Public Company with Paid up Capital below Rs. 10 Cr and every other Private Limited Company |
Rs. 10 Cr |
NA |
NA |
NA |
NA |
Sec 203(5) Company, Every Director, KMP in Default |
Sec 203(5) Company Rs. 1 Lac to 5 Lacs
Directors/ KMP upto Rs. 50K, if continuing one Rs. 1K for every day. |
---- |
|
2 |
Appointment of Company Secretary
Form MR. 1 Return of Appointment within 60 days |
203 |
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 |
8A |
Company with Paid up share capital of Rs. 5 Cr or more and not covered under Rule 8 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 |
Company with Paid up share capital below Rs. 5 Cr |
Rs. 5 Cr |
NA |
NA |
NA |
NA |
Sec 203(5) Company, Every Director, KMP in Default |
Sec 203(5) Company Rs. 1 Lac to 5 Lacs
Directors/ KMP upto Rs. 50K, if continuing one Rs. 1K for every day. |
---- |
|
3 |
Secretarial Audit Report given by PCS, to be annexed with Directors Report
Form MR 3 |
204(1) |
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 |
9 |
Every Listed or Every other Public Company with Paid up share Capital of Rs. 50 Cr. more or every other Public Company with Turnover of Rs. 250 Cr. or more |
Public Company with Paid up Capital below Rs. 50 Cr and Public Company with Turnover below Rs. 250 Cr and every other Private Limited Company |
Rs. 50 Cr |
Rs. 250 Cr |
NA |
NA |
NA |
Company, Officer of the Company, PCS |
Rs. 1 Lac to Rs. 5 Lacs |
---- |
|
4 |
Appointment of Woman Director on Board
Form DIR 2, DIR 12 |
149(1) |
Companies (Appointment andand Qualification of Directors) Rules, 2014 |
3 |
Every Listed and every other Public Company with Paid up share Capital of Rs. 100 Cr. more or every other Public Company with Turnover of Rs. 300 Cr. or more, as on last Balance Sheet date |
Unlisted Public Company with Paid up Capital below Rs. 100 Cr or Public Company with Turnover below Rs. 300 Cr and every other Private Limited Company |
Rs. 100 Cr |
Rs. 300 Cr |
NA |
NA |
NA |
Company |
RS. 50K to Rs. 5 Lacs |
---- |
|
5 |
Appointment of Independent Director on Board, atleast 2
Form DIR 2, DIR 12 |
149(4) |
Companies (Appointment and Qualification of Directors) Rules, 2014 |
4 |
Every Public Company with Paid up share Capital of Rs. 10 Cr. more or every other Public Company with Turnover of Rs. 100 Cr. or more, or Public companies with aggregate outstanding Loans, Deb, Deposits exceeding Rs. 50 Cr |
Public Company with Paid up share Capital below Rs. 10 Cr. and every other Public Company with Turnover below Rs. 100 Cr. , and Public companies with aggregate outstanding Loans, Deb, Deposits not exceeding Rs. 50 Cr, or
Every Private Company |
Rs. 10 Cr |
Rs. 100 Cr |
NA |
NA |
Rs. 50 Cr |
Company |
Rs. 50K to Rs. 5 Lacs |
---- |
|
6 |
Certification of Annual Return by PCS
Form MGT 7 (Annual Return) & MGT 8 (Certification by PCS) |
92(2) |
Companies (Management and Administration) Rules, 2014 |
11 |
Every Company shall prepare Annual Return in form MGT 7, but every Listed Company or Public/Private company with paid up share capital of Rs. 10 cr or more or Turnover of Rs. 50 cr or more shall obtain certificate in MGT 8 from PCS |
Public/Private company with paid up share capital below Rs. 10 cr and Turnover below Rs. 50 cr |
Rs. 10 Cr |
Rs. 50 Cr |
NA |
NA |
NA |
PCS---If certifies the Return, which is not in confirmity with the requirements of provisions. |
Rs. 50K to Rs. 5 Lacs |
Every Ccompany has to file annual return under Sec 92(4), within 60 days of AGM---On failure Penalty Rs. 50K to Rs. 5 Lacs on Company and on Officer in Default
Imprisonment upto 6 months |
|
7 |
Manner of Circulation of Financial Statements---In electronic mode or by dispatch of physical copies through any recognised mode of delivery
AOC 3, (Also Refer Schedule 3 and Annexure to Companies (Accounts) Rules, 2014 |
136(1) |
Companies (Accounts) Rules, 2014 |
11 |
Every Listed Company and Public Company with Net Worth of more than Rs. 1 Cr and Turnover more than Rs. 10 Cr |
Public Company with Net Worth of Rs. 1 Cr or less and Turnover Rs. 10 Cr or less and Every Private Limited Company |
NA |
Rs. 10 Cr |
NA |
1 Cr |
NA |
Company and Officers of the Company |
Company Rs. 25K and every officer in default of the Company Rs. 5k |
---- |
|
8 |
Appointment of Internal Auditor |
138(1) |
Companies (Accounts) Rules, 2014 |
13(1) |
Every Listed Company, or Public Company having paid up share capital of Rs. 50 Cr or more, or Turnover Rs. 200 Cr or more, or outstanding loans or borrowings from Banks, PFI exceeding Rs. 100 Cr or more at any time during preceding year, or outstanding Deposits of Rs. 25 Cr or more at any time during previous year, or
Private Limited Company having Turnover of Rs. 200 Cr or more during preceding year or outstanding Loan from Banks, PFI exceeding Rs. 100 Cr or more at any point during preceding year. |
Public Company with paid up share capital below Rs. 50 Cr, and Turnover below Rs. 200 Cr and outstanding loan upto Rs. 100 Cr and outstanding deposits below Rs. 25 Cr.
For Private Limited Companies having Turnover below Rs. 200 Cr and outstanding Loan upto Rs. 100 Cr |
Rs. 50 Cr |
Rs. 200 Cr |
NA |
NA |
Rs. 100 Cr./ Rs. 25 Cr |
Company and Officers of the Company |
Company and every officer in default of the Company upto Rs. 10k
In case of continuing default, fine may extend to Rs. 1k for every day after first default |
---- |
|
9 |
Appointment of Rotational Auditor
For Individual Auditor---5 Years
For Firm of Auditors---10 Years
Form ADT 1 |
139(2) |
Companies (Audit and Auditors) Rules, 2014 |
5 |
Every Listed Company, Unlisted Public Company with Paid up share capital of Rs. 10 Cr or more, all Private Limited Companies with Paid up Share Capital of Rs. 20 Cr or more, ALL companies having Public borrowings from FI, Banks, Deposits of Rs. 50 Cr or more |
Unlisted Public Company with Paid up Share Capital below Rs. 10 Cr, Private Company with Paid up share capital below Rs. 20 cr, or ALL Companies with Borrowings, Deposits below Rs. 50 Cr or OPC or Small Companies |
For Public Companies Rs. 10 Cr,
For Private Companies Rs. 20 Cr. |
NA |
NA |
NA |
Rs. 50 Cr |
Auditor/ Company |
In case of Auditor---Rs. 25k to Rs. 5 Lacs, but if wilfull contravention to deceive---Rs. 1 Lac to Rs. 25 Lacs
Imprisonment--If wilfull contravention by Auditor---upto 1 Year |
If contravention on behalf of Company--- Fine on Company Rs. 25k to Rs. 5 Lacs, on Every Officer in Default Rs. 10K to Rs. 1 Lac and/or Imprisonment which may extend to 1 Year |
|
10 |
Constitution of Auditors Committee (Mini of 3 Directors with majority of Independent Directors) |
177(1) |
Companies (Meetings of Board and its Powers) Rules, 2014 |
6 |
Every Listed Company, Unlisted Public Limited Company with Paid up share capital of Rs. 10 Cr or more, Public Companies having Turnover of Rs. 100 Cr or more, Public Company having Public borrowings from FI, Banks, Deb, Deposits of Rs. 50 Cr or more |
Unlisted Public Company with Paid up Share Capital below Rs. 10 Cr and Public Company with Turnover below Rs. 100 Cr and Public Companies with Borrowings, Deb, Deposits below Rs. 50 Cr and Private Companies |
Rs. 10 Cr |
Rs. 100 Cr |
NA |
NA |
Rs. 50 Cr |
Company, Officer of the Company |
Company-- Mini. Rs. 1 Lac, Maxi upto Rs. 5 Lacs and for Officer in Default Mini. Rs. 25k, Maxi upto Rs. 1 Lac.
Imprisonment---Upto 1 year |
Paid up Share Capital or Turnover, Outstandig Loan, Borrowings, Debentures or Deposits, as existed on the date of last audited Financial Statements shall be taken into account. |
|
11 |
Nomination and Remuneration Committee |
178(1) |
Companies (Meetings of Board and its Powers) Rules, 2014 |
6 |
Every Listed Company, Unlisted Public Company with Paid up share capital of Rs. 10 Cr or more, Public Companies having Turnover of Rs. 100 Cr or more, Public Company having Public borrowings from FI, Banks, Deb, Deposits of Rs. 50 Cr or more |
Unlisted Public Limited Company with Paid up Share Capital below Rs. 10 Cr and Public Company with Turnover below Rs. 100 Cr and Public Limited Companies with Borrowings, Deb, Deposits below Rs. 50 Cr and Private Limited Companies |
Rs. 10 Cr |
Rs. 100 Cr |
NA |
NA |
Rs. 50 Cr |
Company, Officer of the Company |
Company-- Mini. Rs. 1 Lac, Maxi upto Rs. 5 Lacs and for Officer in Default Mini. Rs. 25k, Maxi upto Rs. 1 Lac.
Imprisonment---Upto 1 year |
Paid up Share Capital or Turnover, Outstandig Loan, Borrowings, Debentures or Deposits, as existed on the date of last audited Financial Statements shall be taken into account. |
|
12 |
Establishment of Vigil Mechanism---For their Directors and Employees to report their genuine concerns and grievances,
The Companies which are required to constitute an audit committee shall oversee through the Committee,
In case of other Companies, 1 Director among BOD shall play the role of Audit Committee for Vigil Mechamism. |
177(9) |
Companies (Meetings of Board and its Powers) Rules, 2014 |
7 |
Every Listed Company or Companies which accepts deposits from Public or Companies which have borrowed money from Banks and PFI in excess of Rs. 50 Cr |
Unlisted Companies which have not accepted Deposits from Public and which have not borrowed money from Banks and PFI in excess of Rs. 50 Cr. |
NA |
NA |
NA |
NA |
Rs. 50 Cr |
Company, Officer of the Company |
Company-- Mini. Rs. 1 Lac, Maxi upto Rs. 5 Lacs and for Officer in Default Mini. Rs. 25k, Maxi upto Rs. 1 Lac.
Imprisonment---Upto 1 year |
Paid up Share Capital or Turnover, Outstandig Loan, Borrowings, Debentures or Deposits, as existed on the date of last audited Financial Statements shall be taken into account. |
|
13 |
Related Party Transactions---Pass Resolution (Annex Explanatory Statement) to enter into Related Party Contract, Arrangement, Transaction(s)
MBP 1 and MBP 4 |
188(1) |
Companies (Meetings of Board and its Powers) Rules, 2014 |
15(3) |
All Companies |
Transactions entered into by the Company in its ordinary course of business at Arms' Length Price |
NA |
10%, Rs. 100 Cr, Rs. 50 Cr, |
NA |
10%, Rs. 100 Cr, 1% |
NA |
Any Director or any Employee who entered into contract or authorised such contract or arrangement in violation |
In case of Listed Company--- Rs. 25k to Rs. 5Lacs
In case of other Companies--- Rs. 25k to Rs. 5 Lacs
Imprisonment---In case of Listed Company--- upto 1 Year
In case of other Companies--- No Imprisonment |
Sale/Purchase of goods directly or through agent exceeding 10% of Annual Turnover or Rupees 100 Cr, whichever is lower;
Disposinig, buyinging property of any kind directly or through agent exceeding 10% of Net Worth or Rs. 100 Cr, whichever is lower;
Leasing property of any kind exceeding 10% of Net Worth or exceeding 10% of Turnover or Rs 50 Cr, whichever is lower
Availing or rendering services directly or through agent exceeding 10% of Turnover or Rs. 50 Cr, whichever is lower;
Appointment to any place of profit in Company, its Subsidiary, its Associate at a monthly Remuneration exceeding Rs. 2, 50, 000/-,
Remuneration for underwriting the subscription of Securities or Derivatives of the Company exceeding 1% of Net worth of the Company |
|
14 |
Corporate Social Responsibilty Committee (CSR), consisting 3 or more Directors, with atleast 1 Independent Director (Unlisted Public or Private Company not required to appoint Independent Director)---Spend atleast 2% of average net profit (Sec 198) made during 3 immediately preceding years, Activities Schedule VII |
135(1),
198, 381(1) |
Companies (Corporate Social Responsibility Policy) Rules, 2014 |
3, 5 |
Every Company having Net Worth of Rs. 500 Cr or more, or
Every Company having Turnover of Rs. 1000 Cr or more, or
Every Company having Net Profit of Rs. 5 Cr or more |
Company with Net Worth less than Rs. 500 Cr and Turnover less than Rs. 1000 Cr and Net Profit less than Rs. 5 Cr |
NA |
Rs. 1000 Cr |
Rs. 5 Cr |
Rs. 500 Cr |
NA |
Company and Officers of the Company |
Company and every officer in default of the Company upto Rs. 10k
In case of continuing default, fine may extend to Rs. 1k for every day after first default |
Disclosure in Boards Report and Companys' Website, if any |
|
15 |
Extensible Business Reporting (XBRL)
Form 23AC-XBRL and Form 23ACA-XBRL |
137 |
Companies (Accounts) Rules, 2014 |
12(2) |
Every Listed Company, or
Subsidiaries of Listed Companies, or
Every Company having paid up Capital of Rs. 5 Cr or more,
Every Company having Turnover of Rs. 100 Cr or more |
Every Unlisted Company with paid up Capital less than Rs. 5 Cr and Turnover less than Rs. 1000 Cr, or
Banking Companies, or
Insurance Companies, or
Power Compaines, or
Non Banking Financial Companies |
Rs. 5 Cr |
Rs. 100 Cr |
NA |
NA |
NA |
Company, MD, CFO, Other Director charged with the reponsibility |
Company---Rs. 1,000/- per day, Maxi upto Rs. 10 Lacs
MD, Directors, CFO---Mini. Rs. 1Lac but Maxi upto Rs. 5 Lacs.
Imprisonment---Upto 6 months |
---- |
|
16 |
Companies Audit Report Order, 2015 |
Sec 143(11) |
Companies (Auditor's Report) 2014 |
1, 2 |
Every Company including Foreign Company as defined Sec 2(42) of Companies Act, 2013 |
Banking Company,
Insurance Company,
Company Licensed under Sec 8,
One Person Company,
Private Limited Company with paid up share capital Rs. 50 Lacs or less and outstanding Loan of Rs. 25 Lacs or less and Turnover not exceeding Rs. 5 Cr |
Rs. 50 Lacs |
Rs. 5 Cr |
NA |
NA |
Rs. 25 Lacs |
Auditor/ Company |
In case of Auditor---Rs. 25k to Rs. 5 Lacs, but if wilfull contravention to deceive---Rs. 1 Lac to Rs. 25 Lacs
Imprisonment---If wilfull contravention by Auditor---upto 1 Year |
If contravention on behalf of Company--- Fine on Company Rs. 25k to Rs. 5 Lacs, on Every Officer in Default Rs. 10K to Rs. 1 Lac and/or Imprisonment which may extend to 1 Year |
|
17 |
Cash Flow Statement---Sec 2(40) "Every Company is required to prepare "CASH FLOW STATEMENT" along with Balance Sheet & Statement of Profit and Loss" |
Sec 2(40), 129 |
Companies (Accounts) Rules, 2014 |
Annexure to Rules |
Every Company is required to prepare CFS |
One Person Company, or
Small Company , or
Dormant Comapany,
Holding or Subsidiary Company,
Section 8 Companies,
Company/ Corporate governed by any Special Act |
Rs. 50 Lacs |
Rs. 2 Cr |
NA |
NA |
NA |
MD, DOF, CFO, Person charged by BOD with the responsibility |
RS. 50K to Rs. 5 Lacs
Imprisonment---Upto 1 Year |
Small Company (Private Company with paid up share Capital of Rs. 50 Lacs or less and Turnover not exceeding Rs. 2 cr),
Dormant Comapany (Incorporated for future project or to hold any assest or Intellactual property and has no significant accounting transactions---application to ROC) |
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Welcome to the value additions to the article. |
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Thanks & Regards |
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Govind Narayan Sharma |
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On the auspicious festival of Rakshabandhan, I dedicate this article to my 4 sweet Sisters. |
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Author can be reached through mail: govindnaraynsharma@gmail.com |
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Disclaimer : The contents of this document are solely for informational purpose. It does not constitute professional advice. Author do not accepts any liability for any loss or damage of any kind arising out of any information in this document nor for any action taken in reliance thereon. |
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