DIRECTORS DISPUTE AND FILING OF FORM 32

Directors Dispute  and Filling of Form 32

 There is always Mismanagement in some companies due to fraud or Mismanagement by one group of Directors may be with in the family members or relatives .When Mismanagement happens disputes arises and it can be sorted out  under sec 397&398 of the Companies Act 1956..When there is dispute  Form 32 is not filed for the Directors who has resigned . Sometimes the Company removes the Director without the consent of the Director by filing form 32 on its own..

 When there is management dispute the company is required to mandatory file the Form 32 with the ROC concerned irrespective of the  ground of cessation (a) retirement (b) disqualification (c) death (d) resignation (e) vacation of office (f) removal (g) withdrawal of nomination by appointing authority or (h) absence of re-appointment.

In accordance with circular no 17/135/2011-CL V  Dated on 10th February 2012.issued by Department of Company Affairs, where Form 32 is not filed by the Company, any Director is aggrieved with his cessation can file complaint in the Investor Complaint Form in MCA website. On receipt of complaint, the ROC will examine the complaint and mark the company as having management dispute and also issues a letter to the company to settle the matter amicably or get an order/ interim order from a Court. Till such disputes is settled , the documents will not be approved / registered/recorded /will not available for Public viewing.

The measure taken by the Government is welcome and it will help the ignorant Directors to sort out their grievances at earliest .                          Government Of India, Ministry Of Corporate Affairs

                                                                                                 

                                                                           Dated the 10th February 2012                                                                                     

                                                                             

To,

All Regional Directors,

All Registrars of Companies

Sub: Filling of conflicting returns by contesting parties – clarification regarding

Sir,

I am directed to invite a reference to Ministry’s circular No. 19 and 20of 2011 issued on 02.05.2011 laying down certain procedure to regulate cases wherein filing of conflicting returns with regard to appointment of Directors or change of Director/Directors was laid down. In the light of some specific cases wherein it appears that either there was lack of consent of the removed/changed  director or due process of Law were not followed, it has been decided to supersede the circulars.

2. In order to avoid such eventualities wherever there is management dispute, the company is required to mandatorily file the attachment relating to cause of cessation alongwith Form 32 with the ROC concerned irrespective of the ground of cessation,Viz (a) retirement; (b) disqualification;(c) death;(d) resignation;(e) vacation of office u/s 283 or 313 or 260;(f) removal u/s 284;(g) withdrawal of nomination by appointing authority or (h) absence of re-appointment.

3. In case, any Director is aggrieved with his cessation in the company, he may file complaint in the investor Complaint Form. On receipt of Complaint, the ROC Concerned will examine the complaint and mark the Company as having ‘management dispute’. Also, the ROC will issues a letter to the company and the parties to settle the matter amicably or get an order/interim order from a Court or Tribunal of competent jurisdiction. Till such dispute is settled, the documents filed by the company and by the contesting groups of Directors will not be approved/ registered/ recorded and will thus not be available in registry for public viewing.

Yours faithfully

(Monika Gupta) Assistant Director

               

VOLUNTARY WINDING UP PROCEDURES UNDER THE COMPANIES ACT,1956.

I

            

PROCEDURE FOR MEMBERS VOLUNTARY WINDING UP UNDER THE COMPANIES ACT, 1956

The Companies Act 1956 provides for Winding up of the company. The Winding up may be voluntary Winding up or Winding up under supervision of the Court.
The Voluntary Winding up may be members voluntary Winding up or creditors voluntary Winding up.  The procedure for members voluntary Winding up under Section 484 of the Companies Act, 1956, (”hereinafter called the Act”) is given below.

COMMENCEMENT OF WINDING UP

1.      First to convene a Board Meeting, the directors have to make a Declaration of Solvency in Form 149 of the Companies (Court) Rules and forms under section 488 of the Act in a non-judicial stamp paper of requisite value along with a duly verified affidavit which should be signed by two directors or a majority of them. A statement of assets and liabilities at estimated realizable values as on the date of Declaration of Solvency should also be prepared and signed as above. The Declaration should be accompanied by an audited Balance Sheet and Profit & loss account as on nearest practicable date before date of declaration along with Auditor’s Report. The Form 149 and affidavit should be duly notarized and
e-form 62 to be filed with Declaration of Solvency with ROC, the time limit for such filing being 5 weeks before the date of passing of the Special Resolution for winding up in a general meeting of members.

2.      Next, the Company has to pass at its General Meeting a Special Resolution called Resolution for Voluntary Winding Up and appointment of Liquidator(s).

3.       To Publish a Public notice regarding Voluntary Winding up (section 485) and the appointment of liquidator (s) and fix their remuneration.

4.      Publication of text of Special resolution and Form 151 (Notice of appointment of Liquidator) in the Official Gazette and in two newspapers circulating in the district, where the registered office of the Company is situated. One in English and another in regional language. Though the Act does not stipulate two papers, this has been the normal existing practice. This is required to be made with in 14 days of passing of Special Resolution.

5.      Form 23 to be filed for Special resolution passed and Liquidator appointment – 30 days;

6.      Form 62 [Others] category– Intimation of Liquidator appointment – Section 493 -- 10 days from appointment

7.      Form 62 – Form 152 – Intimation by Liquidator- 30 days from appointment date –

8.      In the above forms, Gazette notice copy, newspaper cuttings, EGM notice, true copy of SR passed have to be attached.

9.      To obtain a Statement of Affairs of the Company in Form-57  duly verified by Affidavit in form-58 from the Directors within 21 days of commencement of winding up to the liquidator.

The Statement of Affairs primarily includes:-

1.      Details of Assets, liabilities and debts due to the company. A liquidator to take steps determines the Creditors / liabilities of the company and discharges the same out of the funds available with the company and to call for a General Meeting. To do the process of collection from Assets and payments to Creditors.

2.      The liquidator is then required to do the following things namely speedy realization of assets, preparation of list of creditors, admission of proof, statement of list of contributories, making of such calls as are necessary, payment to secured creditors of costs including the liquidator’s own remuneration, payment of preferential claims and distribution of surplus after meeting all the claims of creditors and after adjusting all rights and claims.

3.      The Liquidator to intimate about the commencement of liquidation process of the company to the Income Tax department under section 178 of the Income Tax Act 1961.

4.      The liquidator has to file various forms under The Companies (Court) Rules, 1959 in connection with member’s voluntary winding up with ROC in form 62 electronically. The details of the forms are given below which are to be filed before Final meeting are:

          a. Form 149- Declaration of Solvency- Statement of Assets and Liabilities.

          b. Form 152- Notice of appointment of Liquidator

AFTER COMMENCEMENT OF WINDING UP

1.      Liquidator to realize all assets and pay of all liabilities possible and distribute the available surplus to all existing members proportionately.

2.      If winding up extends beyond one year of passing Special Resolution, Liquidator to file the following returns.

3.      Form 153- Statement of Accounts- to be filed only if winding up is not completed within a year

4.      Form 154- Affidavit verifying the account- only if required Form 153 is filed

FINAL MEETING 

After winding up is completed the liquidator should convene Final meeting of members to lay Liquidation Account, to dispose of books and accounts and to explain the winding up procedure to the members. Advertisement about the meeting shall be published not less than one month before the meeting in the official Gazette and also in some newspaper circulating in the district where the registered office of the company is situated(sec 497).

1.      Form 155- Notice for convening final meeting.- To be published both in Official Gazette and two news papers – English and regional language – at least 30 days before Final meeting.

2.      Form 156- Liquidator to prepare Statement of Account of the Winding up- Member’s voluntary winding up.

     Liquidator to hold the Final Meeting of members.

AFTER FINAL MEETING

1.      Form 62 – Form 156

2.      Form 62 – Form 157 – Return of Winding up

3.      Form 23 – Resolutions passed at the Final meeting along with Minutes of meeting

4.      In the above forms, Gazette notice copy, newspaper cuttings, have to be attached

5.      Liquidator has a duty in accordance with Section 496 of the act to call a General Meeting at the end of each year.

6.      To submit documents, books and accounts to official liquidator for verification.

7.      Official Liquidator has to verify the statements and submit his report to the court.

8.      The High Court will issue the order for liquidation of the company.

9.      To file copy of order of High Court in Form -21 with ROC Within 30 days from the receipt of order from the High Court and with this the liquidation process is over.

10.  To check the status of the company in MCA to find out and confirm the status of the company is changed to liquidated. 

Other points for information 

t was learnt  that as on 11-4-2013  that there were 4,988 companies awaiting dissolution in various High Courts out of which 1,046 companies are pending dissolution for more than 20 years. There were 728 companies which had no assets.

 Delay in winding up of companies and distribution of dues to claimants not only discourages further investment in the industrial sector domestically but also sends negative signals to investors abroad. He assured all help from the Ministry for providing skilled manpower, technical up gradation and capacity building of personnel assisting official liquidators for adoption of newer techniques like e-Governance and

 e Auctions.

INCORPORATION OF A PRIVATE LIMITED COMPANY AS A WHOLLY OWNED SUBSIDIARY COMPANY BY A FOREIGN COMPANY

Incorporating a private limited company as Wholly owned

 subsidiary company by a foreign company

The following requirements need to be fulfilled before incorporating Private limited company.

Under Indian Companies Act, 1956

For incorporating a private limited company, minimum two directors are required and 2

members/shareholders also known as Promoters/subscribers are required. Other

requirements are given below:

1. To obtain Director Identification Number (DIN) from Ministry of Corporate Affairs for each person who intends to become the First Director of the new company. This is mandatory requirement.

Incorporating a private limited company as subsidiary company by foreign company

The following requirements need to be fulfilled before incorporating Private limited company.

Under Indian Companies Act, 1956

For incorporating a private limited company, minimum two 

directors are required and 2

members/shareholders also known as Promoters/subscribers 

are required. Other requirements are given below:

1. To obtain Director Identification Number (DIN) from Ministry of Corporate Affairs for each person who intends to become the First Director of the new company. This is mandatory requirement. 

Documents required

a. A valid Pass Port

b. For Address proof - a valid driving license or latest credit card,statement or latest bank statement or any latest utility bill.

c. Passport size colour Photographs for each Director 2 copies

 

Other requirements

The above documents are to be notarized or chief executive officer of the company has to certify the documents and attest on the photographs.

2. Digital Signature for filing the documents on-line

An application form has to be signed for obtaining the digital signature for the purpose of

signing the forms with Ministry of Corporate Affairs. This is mandatory for one of the Directors

Documents required

a. A valid Pass Port 

b. For Address proof - a valid driving license or latest credit card 

statement or latest bank statement 

c. Passport size colour Photograph of the Applicant 2 copies 

Other requirements

  The above documents are also to be notarized.

  

Name availability - Six names in order of preference

Documents required

 a. Corporate/board resolution by the foreign company duly signed by an

Authorized Signatory

b. Power of attorney from the Authroised Signatory in favour of a

person to perform acts in India

To be notarized and attested by Indian Embassy

Other requirements

Board resolution by the Foreign company giving no objection for incorporating the company in India with foreign company's name.

To be notarized and attested by Indian Embassy.

Drafting the Memorandum and Articles of Association  

Information required

1. Proposed objects of the company

2. Proposed authorized capital of the company.

3. Place of registered office in India

Signing of Memorandum of Association and Articles of Association can be done only

after name is approved by the Registrar of Companies.

Documents required

If the documents are signed by the Authorized Signatory in the foreign country it should be notarized and attested by Indian Embassy/Consulate.

If the documents are signed in India it should be signed by the power of attorney holder in India authorized by the foreigners. 

Incorporation of company and obtaining Certificate of Incorporation 

Documents required

Signed copies of Memorandum of Association, Articles of Association, and declarations and power of attorney.

 Obtaining Certificate of Incorporation from Registrar of Companies.

The entire incorporation can be completed within 7 days

Under Foreign Direct Investment

 1. To check whether the investment by the foreign company is coming under automatic

route or approval route. If it is approval route to apply to Ministry of Commerce, Government of India, and obtain approval for investment.

2. To open the bank account after the company is incorporated.

3. To remit the money which was agreed by the Promoters at the time of incorporation

for the share capital of the company

4. To intimate the bank in annexure 6 regarding receipt of foreign remittance by the

Indian company along with KYC particulars of remitter.

5. To obtain Unique Identification Number from Reserve bank of India

6. To allot the shares within 6 months from the date of receipt of money

7. To file FCGPR with Reserve bank of India within 30 days from the date of allotment and obtain approval from the Reserve Bank of India.

 

Income Tax requirements under Income Tax Act.

When a company earns income after all expenses even if it is one rupee tax has to be paid to the Government. The Current income tax for the corporate is 30%.

Labour Laws:

Incorporated Company has to comply with  Labour Laws like Factories Act,1948 ,Provident Fund Act.

Central Excise and Service Tax and Commercial Tax:

The Incorporated company has to comply with Central Excise, Service Tax, Value Added Tax  wherever applicable.

.

.

CONVERSION OF PARTNERSHIP FIRM INTO A LIMITED COMPANY UNDER SECTION 565 OF THE COMPANIES ACT,1956.

Conversion of Firm under Part IX  of the Companies Act, 1956

The firm may be converted into a company by following the provisions of Part IX of the Companies Act, 1956. Sections 565 to 581 deal with conversion of firms into a company under the Companies Act, 1956.

For the purpose of Part IX so far as it relates to the registration of companies limited by shares, a joint stock company means a company having a permanent paid up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in the one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons. Such a company, when registered with limited liability under the Companies Act, 1956 shall be deemed to be a company limited by shares.

A company cannot be registered under part IX unless the assent of majority of its members as are present in person or where proxies are allowed, by proxy, at a general meeting summoned for the purpose is obtained.

Since the liability of the members of the firm is unlimited, when a firm desires to register itself as a company under Part IX as a limited company, the majority required to assent as aforesaid shall consist of not less than ¾ of the members as are present in person or where proxies are allowed, by proxy, at a general meeting summoned for the purpose.

Registration of Company:

1.Resolution by the Partners. 

• On obtaining the approval of name , file the following documents with the registrar of Companies within 60 days from the date of name approval 

                    Memorandum of Association
                    Articles of Association
                    Revised Partnership Deed.
                   
Thereafter these documents are required to be executed by the promoters in their own hand in the presence of professionals after the date of Stamping of Memorandum & Article of Association in duplicate stating their full name, father’s name, residential address, occupation, number of shares subscribed for & Signature etc.

• However, if any director is foreigner and not present in India after the date of Stamping of the Memorandum & Article of Association, in that case, his signature should be attested in Indian Embassy located in his home country.
• Form No. 1 – This is a declaration to be executed on a non-judicial stamp paper by one of the directors of the proposed company or other specified persons such as Chartered Accountants, Company Secretaries, Advocates, etc. stating that all the requirements of the incorporation have been complied with. (Annexure 2)
• Form No. 18 – This is a form to be filed by one of the directors of the company informing the ROC the registered office of the proposed company. (Annexure 3).
• Form No.: 32 – This is a form stating the fact of appointment of the proposed directors on the board of directors from the date of incorporation of the proposed company and is signed by one of the proposed directors. (Annexure 4).
• Power of Attorney signed by partners authorizing one of the subscribers or any other person to act on their behalf for the purpose of incorporation and accepting the certificate of incorporation.
• Form No. 37 along with Form No. 39 (Annexure 5 & 6).
• Declaration by two partners verifying the particulars set forth in the above mentioned documents.
• Consent letters from Directors
• Filing fees as may be applicable
• Other information to be submitted:

i) A list showing the names, addresses and occupations of all persons who on a day named in the list, not being more than 6 clear days before the date of registration were members of the company, with the addition of the shares or stock held by them respectively, distinguishing, in cases where the shares are numbered, each share by its number.

ii) If the company is intended to be registered as a limited company, a statement specifying the following particulars :-

a) the nominal share capital of the company and the number of shares into which it is divided or the amount of stock of which it consists

b) the number of shares taken and the amount paid of each share

c) the name of the company, with the addition of the word “Limited” or “Private Limited” as the case may be, as the last word / words, in case the company is being registered with limited liability.

                                   ***************************************

INCORPORATION OF A PRIVATE LIMITED COMPANY IN INDIA

        Procedure for Incorporation of a Private Limited Company

Persons desirous of forming a Private limited company must follow the procedures as detailed below:-

1. Selection of type of the company.

2. Selection of name.

3. Requirement for having DIN and Digital Signature

4. Preparation of the Memorandum of Association (MOA) and

    Articles of Association (AOA)

5. Filing of documents with the Registrar

6. Payment of registration fees for a new company

7. Certificate of Incorporation and Commencement of Business

8.. Activities after incorporation

1. Selection of the type of company

            The Promoters of a company may be individual entrepreneurs or body corporate engaged in efforts to incorporate a company. Incorporated, proposed scale of operations, the promoters can select type of the company as they wish to form themselves into viz. private company, public company, non-profit making company, etc.

2. Selection of name

       Six names are required to be selected in order of preference after taking notes of numerous provisions, clarifications circulars and rules made by the Ministry of Corporate Affairs, etc. Even single name can be given for name availability. In case key word is required, significance of each key word should be given in Form INC-1.

 An application shall be in Form INC-1.as prescribed by Notification No. GSR 56(E) dated 10th Feb., 2006 duly digitally signed by any one promoter or managing director or director or manager or secretary of the company along with the required fee for ascertaining whether the selected name is available for adoption by the promoters of the proposed company.

After receipt of completed application in Form INC-1, the Registrar shall intimate whether the proposed name is available for adoption or not. The confirmation of the name made available by the Registrar shall be valid for a period of two months.

3. Requirement for having DIN and Digital Signature.

Before submission of Form INC-1 all the directors of the proposed company must ensure that they are having DIN and if they are not having DIN, it should be first obtained. 

Specific care should be taken that a person cannot have more than one DIN, therefore, a DIN once obtained shall serve the requirement for all the companies in which he is a director or intended to be a director.

Requirement for having digital signatures

Every document prescribed under the Companies Act is required to be filed with the digital signature of the managing director or director or manager or secretary of the Company, therefore, it is compulsorily required to obtain digital signatures of at least one director to sign the Form INC-1 and other documents

4. What are the forms to be filed?

Spice 32 is the required form in connection with incorporation of the Company. The details of the Directors, the Subscribers to the memorandum details and the registered office address details shall be furnished in this form.

5. Preparation of the Memorandum of Association (MOA) and Articles of Association (AOA)

    Previously separate MOA and AOA need to be attached in incorporation form (INC-7). Now for MOA, Spice 33 and for AOA Spice 34 are need to be filled up and which are to be filed along with spice 32 as link forms.

 Spice 33 and Spice 34 need to be signed by the Digital Signatures.

6. PAN and TAN

In Spice 32, the particulars of the area zone and Jurisdiction of the Income Tax Department are to be given and immediately after filing the Spice 32, the PAN application in Form 49A and for TAN application in Form 49B has to be uploaded. Once the incorporation forms are accepted and approved, the certificate of incorporation generated will contain the PAN and TAN for the Company.

7. Payment of registration fees for a new company

The fees payable to the Registrar at the time of registration of a new company varies according to the authorized capital of a company proposed to be registered as per Companies Act. Fees can be calculated by the MCA portal under Calculate Fees.

7. Certificate of Incorporation and Commencement of Business

The approval for incorporation of the company will be intimated by Government through e-mail and the e-mail contains certificate of incorporation.

On receipt of certificate of incorporation the private limited companies can commence business activities after obtaining the Board Resolution.

8. Activities after incorporation

a)     Display name board outside the premises

b)      To hold first Board Meeting.

c)     To bring the subscribers share money within 30 days.

d)     To appoint Statutory Auditor within 30 days.

e)     Open Bank account

f)      Make  common seal of the company

g)     Issue of share certificate

h)    Apply for GST

i)       Maintaining statutory register

Note: The above procedure for incorporation of the company is with Indian Directors and Indian Subscribers to the Memorandum of Association.

For Foreign Directors and Foreign Subscribers to the Memorandum of Association of an Indian Company, the procedure will be different.

                                                            ********

          

MANAGING DIRECTOR FOR LIFE TIME

For Private Limited company a managing director can be appointed for life time as the provisions of the companies act,1956 are not applicable to private limited companies. However for public limited companies a managing director can be appointed for maximum period of five years or in some cases three years when Schedule XIII of the Companies Act is applicable. The Articles of Association of Private Companies normally contains a clause on Life Time managing director or may be stated that the directors are not liable to retire by rotation.