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CA STUDY NOTES

PAPER – 2: CORPORATE AND OTHER LAWS

PART – I: ANNOUNCEMENTS STATING APPLICABILITY FOR MAY, 2023 EXAMINATIONS

Applicability for May, 2023 examinations

The Study Material (September 2021 edition) is applicable for May, 2023 examinations. This study material is updated for all amendments till 30th April, 2021.

Further, all relevant amendments/ circulars/ notifications etc. in the Company law part for the period 1st May, 2021 to 31st October, 2022 are mentioned below:

THE COMPANIES ACT, 2013

I. Chapter 1: Preliminary

Notification G.S.R. 700(E) dated 15th September, 2022

The Central Government has amended Companies (Specification of definition details) Rules, 2014, through the Companies (Specification of definition details) Amendment Rules, 2022.

Amendment:

In the Companies (Specification of definition details) Rules, 2014,

in Rule 2, in sub-rule (1), for clause (t), the following clause shall be substituted, namely:-

“(t) For the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small company shall not exceed rupees four crore and rupees forty crore respectively.”.

Old Law (Pg 1.22)

As per the Companies (Specification of Definitions Details) Rules, 2014, for the purposes of sub-clause (i) and sub-clause (ii) of clause (85) of section 2 of the Act, paid up capital and turnover of the small company shall not exceed rupees two crores and rupees twenty crores respectively.

II. Chapter 2: Incorporation of company and matters incidental thereto

Notification S.O. 2904(E) dated 22nd July, 2021

The Central Government has amended section 16 of the Companies Act, 2013, through the Companies (Amendment) Act, 2020.

Amendment:

In section 16 of the Companies Act, 2013:

1. in sub-section (1), in clause (b), for the words “period of six months”, the words “period of three months” shall be substituted;

2 INTERMEDIATE EXAMINATION: MAY, 2023

1. for sub-section (3), the following sub-section shall be substituted, namely:—

“(3) If a company is in default in complying with any direction given under sub-section (1), the Central Government shall allot a new name to the company in such manner as may be prescribed and the Registrar shall enter the new name in the register of companies in place of the old name and issue a fresh certificate of incorporation with the new name, which the company shall use thereafter:

Provided that nothing in this sub-section shall prevent a company from subsequently changing its name in accordance with the provisions of section 13.”

[Enforcement Date: 1st September, 2021]

For point (i)- Old Law (Pg 2.39) (b) on an application by a registered proprietor of a trade mark that the name is identical with or too nearly resembles to a registered trade mark of such proprietor under the ……….. it may direct the company to change its name and the company shall change its name or new name, as the case may be, within a period of 6 months from the issue of such direction, after adopting an ordinary resolution for the purpose. For point (ii)- Old Law (Pg 2.39) If a company makes default in complying with any direction—
	Liable person	Penalty/punishment
	Company	Fine of 1,000 rupees for every day during which the default continues
	Every Officer who is in default	Fine varying from 5,000 rupees to 1 lakh rupees.

III. Chapter 3: Prospectus and Allotment of Securities

Notification G.S.R. 338(E) dated 5th May, 2022

The Central Government has amended the Companies (Prospectus and Allotment of Securities) Rules, 2014, through the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022.

Amendment:

In the Companies (Prospectus and Allotment of Securities) Rules, 2014, ―

in rule 14, in sub-rule (1), after the fourth proviso, the following proviso shall be inserted, namely:-

“Provided also that no offer or invitation of any securities under this rule shall be made to a body corporate incorporated in, or a national of, a country which shares a land border with India, unless such body corporate or the national, as the case may be, have obtained Government

PAPER – 2: CORPORATE AND OTHER LAWS 3

approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 and attached the same with the private placement offer cum application letter.”.

Old Law (Pg 3.39)

The proviso is newly inserted after the fourth proviso to Rule 14(1), “in case of offer ……. such buyers during the year”.

IV. Chapter 5: Acceptance of Deposits by Companies

Notification G.S.R. 663(E) dated 29th August, 2022

The Central Government has amended the Companies (Acceptance of Deposits) Rules, 2014, through the Companies (Acceptance of Deposits) Amendment Rules, 2022.

Amendment:

In rule 16, after the words ― “auditor of the company”, the words, letters and figure ― “and declaration to that effect shall be submitted by the auditor in Form DPT-3” shall be inserted.

Old Law (Pt 20 on Pg 5.16) and (Pt 19 on Pg 5.24)

The words are to be inserted in pt 20 on page 5.16 and in pt 19 on page 5.24

A duly audited return of deposits in DPT-3 (containing particulars as on 31st March of every year) shall be filed with the Registrar of Companies along with requisite fee on or before the 30th June of that year.

V. Chapter 6: Registration of Charges

1. Notification S.O. G.S.R. 320 (E) dated 27th April, 2022

The Central Government has amended the Companies (Registration of Charges) Rules, 2014, through the Companies (Registration of Charges) Amendment Rules, 2022.

Amendment:

In rule 3, after sub-rule (4), the following sub-rule shall be inserted, namely:—

“(5) Nothing contained in this rule shall apply to any charge required to be created or modified by a banking company under section 77 in favour of the Reserve Bank of India when any loan or advance has been made to it under sub-clause (d) of clause (4) of section 17 of the Reserve Bank of India Act, 1934.”

Old Law (Pg 6.6)

Sub- rule (5) is newly inserted

1. Notification G.S.R. 664 (E) dated 29th August, 2022

The Central Government has amended the Companies (Registration of Charges) Rules, 2014, through the Companies (Registration of Charges) Second Amendment Rules, 2022.

4 INTERMEDIATE EXAMINATION: MAY, 2023

Amendment:

In the Companies (Registration of Charges) Rules, 2014, after rule, 12, the following rule shall be inserted, namely:-

“13. Signing of charge e-forms by insolvency resolution professional or resolution professional or liquidator for companies under resolution or liquidation.-

The Form No.CHG-1, CHG-4, CHG-8 and CHG-9 shall be signed by Insolvency resolution professional or resolution professional or liquidator for companies under resolution or liquidation, as the case may be and filed with the Registrar.”

Old Law

Rule 13 is newly inserted

VI. Chapter 7: Management and Administration

Notification S.O. G.S.R. 279(E) dated 6th April, 2022

The Central Government has amended the Companies (Management and Administration) Rules, 2014, through the Companies (Management and Administration) Amendment Rules, 2022.

Amendment:

in rule 14, after sub-rule (2), the following sub-rule shall be inserted, namely: —

“(3) Notwithstanding anything contained in sub-rules (1) and (2), the following particulars of the register or index or return in respect of the members of a company shall not be made available for any inspection under sub-section (2) or for taking extracts or copies under sub-section (3) of section 94, namely: —

1. address or registered address (in case of a body corporate);
2. e-mail ID
3. Unique Identification Number
4. PAN Number

Old Law (Pg 7.21)

Sub- rule (3) of Rule 14 is newly inserted

PAPER – 2: CORPORATE AND OTHER LAWS 5

VII. Chapter 8: Declaration and Payment of Dividend

Notification No. G.S.R. 396(E) dated 9th June, 2021

The Central Government has amended the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, through the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2021.

Amendment:

In rule 3, in sub-rule (2), after clause (f), the following shall be inserted, namely:-

“(fa) all shares held by the Authority in accordance with proviso of sub-section (9) of section 90 of the Act and all the resultant benefits arising out of such shares, without any restrictions;”

Old Law (Pg 8.21)

Clause (fa) is newly inserted

VIII. Chapter 9: Accounts of Companies

The Ministry of Corporate Affairs has made clarifications with respect to CSR:

General Circular No. 09/2021 Dated 5th May, 2021

• 1. In continuation to this Ministry’s General Circular No. 10/2020 dated 23.03.2020, wherein it was clarified that spending of CSR funds for COVID-19 is an eligible CSR activity, it is further clarified that spending of CSR funds for ‘creating health infrastructure for COVID care’, ‘establishment of medical oxygen generation and storage plants’, ‘manufacturing and supply of Oxygen concentrators, ventilators, cylinders and other medical equipment for countering COVID-19’ or similar such activities are eligible CSR activities under item nos. (i) and (xii) of Schedule VII of the Companies Act, 2013 relating to promotion of health care, including preventive health care, and, disaster management respectively.
  2. Reference is also drawn to item no. (ix) of Schedule VII of the Companies Act, 2013 which permits contribution to specified research and development projects as well as contribution to public funded universities and certain Organisations engaged in conducting research in science, technology, engineering, and medicine as eligible CSR activities.
  3. The companies including Government companies may undertake the activities or projects or programmes using CSR funds, directly by themselves or in collaboration as shared responsibility with other companies, subject to fulfillment of Companies (CSR Policy) Rules, 2014 and the guidelines issued by this Ministry from time to time.

General Circular 13/2021 dated 30th July, 2021

The Ministry of Corporate Affairs vide General Circular 10/2020 dated 23.03.2020 clarified th at spending of CSR funds for COVID- 19 is an eligible CSR activity. In continuation to the said

6 INTERMEDIATE EXAMINATION: MAY, 2023

circular, it is further clarified that spending of CSR funds of COVID- 19 vaccination for persons other than the employees and their families, is an eligible CSR activity under item no. (i) of Schedule VII of the Companies Act, 2013 relating to promotion of health care including preventive health care and item no. (xii) relating to disaster management.

General Circular 08/2022 dated 26th July, 2022

Subject: Clarification on spending of CSR funds for ‘Har Ghar Tiranga’ campaign reg.

‘Har Ghar Tiranga’, a campaign under the aegis of Azadi Ka Amrit Mahotsav, is aimed to invoke the feeling of patriotism in the hearts of the people and to promote awareness about the Indian National Flag. In this regard, it is clarified that spending of CSR funds for the activities related to this campaign, such as mass scale production and supply of the National Flag, outreach and amplification efforts and other related activities, are eligible CSR activities under item no. (ii) of Schedule VII of the Companies Act, 2013 pertaining to promotion of education relating to culture.

The companies may undertake the aforesaid activities, subject to fulfilment of the Companies (CSR Policy) Rules, 2014 and related circulars/ clarifications issued by the Ministry thereof, from time to time.

Old Law (Pg 9.47)

The clarifications are newly inserted

1. Notification No. G.S.R. 107(E) dated 11th February 2022

The Central Government has amended the Companies (Accounts) Rules, 2014, through the Companies (Accounts) Amendment Rules, 2022.

Amendment:

in rule 12, after sub-rule (1A), the following sub-rule shall be inserted, namely: —

“(1B) Every company covered under the provisions of sub-section (1) to section 135 shall furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding financial year (2020-2021) and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be:

Provided that for the preceding financial year (2020-2021), Form CSR-2 shall be filed separately on or before 31st March 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.”

Old Law (Pg 9.54)

Rule (1B) is newly inserted

PAPER – 2: CORPORATE AND OTHER LAWS 7

1. Notification No. G.S.R. 235(E) dated 31st March 2022

The Central Government has amended the Companies (Accounts) Rules, 2014, through the Companies (Accounts) Second Amendment Rules, 2022.

Amendment:

In the Companies (Accounts) Rules, 2014,-

1. in the proviso to sub-rule (1) of rule 3, for the figures, letters and words “1st day of April, 2022”, the figures, letters and words “1st day of April, 2023” shall be substituted;
2. in the proviso to sub-rule (1B) of rule 12, for the figures, letters and word “31st March, 2022”, the figures, letters and word “31st May, 2022” shall be substituted.

For point (i)- Old Law (Pg 9.5)

Provided that for the financial year commencing on or after the 1st day of April, 2022, every company which uses accounting software for maintaining its books of account….

For point (ii)- Old Law

As covered above in point B.

Provided that for the preceding financial year (2020-2021), Form CSR-2 shall be filed separately on or before 31st March 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

1. Notification No. G.S.R. 407(E) dated 31st May 2022

The Central Government has amended the Companies (Accounts) Rules, 2014, through the Companies (Accounts) Third Amendment Rules, 2022.

Amendment:

In the Companies (Accounts) Rules, 2014, in rule 12, in sub-rule (1B),-

1. for the figures, letters and word “31st May, 2022”, the figures, letters and word “30th June, 2022”, shall be substituted;
2. after the proviso, the following proviso shall be inserted, namely:-

“Provided further that for the financial year 2021-2022, Form CSR-2 shall be filed separately on or before 31st March, 2023 after filing Form AOC-4 or AOC-4 XBRL or AOC- 4 NBFC (Ind AS), as the case may be”.

For point (i)- As covered above in point C.

8 INTERMEDIATE EXAMINATION: MAY, 2023

Provided that for the preceding financial year (2020-2021), Form CSR-2 shall be filed separately on or before 31st May, 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.

For point (ii)- Old Law

The proviso is newly inserted.

1. Notification No. G.S.R. 624(E) dated 5th August, 2022

The Central Government has amended the Companies (Accounts) Rules, 2014, through the Companies (Accounts) Fourth Amendment Rules, 2022.

Amendment:

In the Companies (Accounts) Rules, 2014, in rule 3,-

1. in sub-rule (1), for the words “accessible in India”, the words “accessible in India, at all times,” shall be substituted;
2. in sub-rule (5), in the proviso, for the words “periodic basis”, the words “daily basis” shall

be substituted;

1. in sub-rule (6), after clause (d), the following clause shall be inserted, namely:-

“(e) where the service provider is located outside India, the name and address of the

person in control of the books of account and other books and papers in India.”.

For point (i) – Old Law (Pg 9.5)

(1) The books of account and other relevant books and papers maintained in electronic mode shall remain accessible in India so as to be usable for subsequent reference.

For point (ii) – Old Law (Pg 9.5)

(5) The back-up of the books of account and other books and papers of the company maintained in electronic mode, including at a place outside India, if any, shall be kept in servers physically located in India on a periodic basis.

For point (iii) – Old Law (Pg 9.6)

(e) is newly inserted in point (6)

1. Notification No. G.S.R. 715(E) dated 20th September, 2022

The Central Government has amended the Companies (Corporate Social Responsibility Policy) Rules, 2014, through the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2022.

PAPER – 2: CORPORATE AND OTHER LAWS 9

Amendment:

• 1. In the Companies (Corporate Social Responsibility Policy) Rules, 2014, in rule 3, –
     1. in sub-rule (1), after the proviso, the following proviso shall be inserted, namely: –

“Provided further that a company having any amount in its Unspent Corporate Social Responsibility Account as per sub-section (6) of section 135 shall constitute a CSR Committee and comply with the provisions contained in sub-sections (2) to (6) of the said section.”;

• • 1. sub-rule (2) shall be omitted.

For point (i) – Old Law (Pg 9.35) The proviso is newly inserted For point (ii) – Old Law (Pg 9.36)

Exclusion of Companies [Rule 3(2) of the Companies (CSR) Rules, 2014]

Every company which ceases to be a company covered under subsection (1) of section 135 of the Act for three consecutive financial years shall not be required to-

1. constitute a CSR Committee; and
2. comply with the provisions contained in sub-section (2) to (6) of the said section, till such time it meets the criteria specified in sub-section (1) of section 135.
   1. In the Companies (Corporate Social Responsibility Policy) Rules, 2014, in rule 4, for sub- rule (1), the following sub-rule shall be substituted, namely: –

‘(1) The Board shall ensure that the CSR activities are undertaken by the company itself or through, –

1. a company established under section 8 of the Act, or a registered public trust or a registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C) of section 10 or registered under section 12A and approved under 80 G of the Income Tax Act, 1961, established by the company, either singly or along with any other company; or
2. a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or
3. any entity established under an Act of Parliament or a State legislature; or
4. a company established under section 8 of the Act, or a registered public trust or a registered society, exempted under sub-clauses (iv), (v), (vi) or (via) of clause (23C)

10 INTERMEDIATE EXAMINATION: MAY, 2023

of section 10 or registered under section 12A and approved under 80 G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.

Explanation.- For the purpose of clause (c), the term “entity” shall mean a statutory body constituted under an Act of Parliament or State legislature to undertake activities covered in Schedule VII of the Act.’.

Old Law (Pg 9.42)

The Board shall ensure that the CSR activities are undertaken by the company itself or through-

• 1. a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80 G of the Income Tax Act, 1961, established by the company, either singly or along with any other company, or
  2. a company established under section 8 of the Act or a registered trust or a registered society, established by the Central Government or State Government; or
  3. any entity established under an Act of Parliament or a State legislature; or
  4. a company established under section 8 of the Act, or a registered public trust or a registered society, registered under section 12A and 80G of the Income Tax Act, 1961, and having an established track record of at least three years in undertaking similar activities.
  5. In the Companies (Corporate Social Responsibility Policy) Rules, 2014, in rule 8, in sub- rule (3), in clause (c),-
     1. for the words “five percent”, the words “two per cent.” shall be substituted;
     2. for the words “whichever is less”, the words “whichever is higher” shall be substituted.

Old Law (Pg 9.44)

(c) A Company undertaking impact assessment may book the expenditure towards Corporate Social Responsibility for that financial year, which shall not exceed five percent of the total CSR expenditure for that financial year or fifty lakh rupees, whichever is less.

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