New Rules for Private Companies
The Memorandum of Association of a company contains the “Object Clause.”This defines the business and activities that the entity will undertake. Prior to the enforcement of the Companies Act 2013, a board resolution was enough to undertake other business activities, apart from those mentioned in the main Object Clause. However, the new Act requires companies to alter the Object Clause to include any new activities. So, if such changes are not adhered to, these business activities (apart from the primary activities mentioned) will be treated as ultra-virus in the purview of law. There are other rules that the Act mandates as well.
Three Changes for Private Companies
Companies should be aware of the new compliance changes and take necessary action. Also, organizations can look at the Ministry of Corporate Affair’s website for the latest updates.
1. Company Identity
Section 12(3) (c) of the Companies Act 2013, states that every company must print the following information in all its documents, such as business letters, letter papers, bill heads and other official publications and notices; for identification purposes:
• Name
• Registered Office Address
• Corporate Identity Number (CIN)
• Telephone number
• Fax number
• E-mail
• Website Addresses
Failure to state the CIN number will attract a penalty of Rs 1,000 for each day of non-compliance. This will be imposed on the defaulting company, as well as every officer at default.
2. Unsecured Loan
Private firms were permitted to accept unsecured loans from a relative of one of the directors or from a stakeholder, according to the rules of the old Act. However, according to the Companies Act 2013, these companies must immediately refund such unsecured loans. Such loans can only be accepted from the director of the company. Otherwise, a statement needs to be filed with the Registrar of Companies (RoC). Failure to do so could attract prosecution under Section73 - 76 of the Companies Act 2013. The new Acts also states certain norms regarding deposits that are taken from the public. The outstanding deposits and the interest attached must be filed with the RoC.
3. Borrowing Money
According to the provisions under Section 180 of the Companies Act 2013,any private company that needs to borrow money beyond the limits of the up capital and reserves needs to pass a Special Resolution. Failure to do so might attract a fine of up to Rs 10,000.
It is important to access the details of the new Act to ensure that your firm is in compliance with all the regulations before you become liable to pay a penalty.
The Memorandum of Association of a company contains the “Object Clause.”This defines the business and activities that the entity will undertake. Prior to the enforcement of the Companies Act 2013, a board resolution was enough to undertake other business activities, apart from those mentioned in the main Object Clause. However, the new Act requires companies to alter the Object Clause to include any new activities. So, if such changes are not adhered to, these business activities (apart from the primary activities mentioned) will be treated as ultra-virus in the purview of law. There are other rules that the Act mandates as well.
Three Changes for Private Companies
Companies should be aware of the new compliance changes and take necessary action. Also, organizations can look at the Ministry of Corporate Affair’s website for the latest updates.
1. Company Identity
Section 12(3) (c) of the Companies Act 2013, states that every company must print the following information in all its documents, such as business letters, letter papers, bill heads and other official publications and notices; for identification purposes:
• Name
• Registered Office Address
• Corporate Identity Number (CIN)
• Telephone number
• Fax number
• Website Addresses
Failure to state the CIN number will attract a penalty of Rs 1,000 for each day of non-compliance. This will be imposed on the defaulting company, as well as every officer at default.
2. Unsecured Loan
Private firms were permitted to accept unsecured loans from a relative of one of the directors or from a stakeholder, according to the rules of the old Act. However, according to the Companies Act 2013, these companies must immediately refund such unsecured loans. Such loans can only be accepted from the director of the company. Otherwise, a statement needs to be filed with the Registrar of Companies (RoC). Failure to do so could attract prosecution under Section73 - 76 of the Companies Act 2013. The new Acts also states certain norms regarding deposits that are taken from the public. The outstanding deposits and the interest attached must be filed with the RoC.
3. Borrowing Money
According to the provisions under Section 180 of the Companies Act 2013,any private company that needs to borrow money beyond the limits of the up capital and reserves needs to pass a Special Resolution. Failure to do so might attract a fine of up to Rs 10,000.
It is important to access the details of the new Act to ensure that your firm is in compliance with all the regulations before you become liable to pay a penalty.
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