News from the desk of Ministry of Corporate Affairs (MCA) and Law & Justice

Ministry of Corporate Affairs (MCA) had on 19^th day of August, 2021 issued a notification for the purpose of amending the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Rules”) by amending sub-rule (4) of rule 6 of the Rules which is produced as under:-

• In the Rules, rule 6 provides compliance requirements for a person willing to be appointed an independent director who is required to pass an online proficiency self-assessment test (“Test”) conducted by the Indian Institute of Corporate Affairs at Manesar (“Institute”) within a period of 02 years from the date of inclusion of his name in the data bank, failing which, his name shall stand removed from the databank of the institute unless that individual has served for a total period of not less than three years on the pay scale of Director or above in the Ministry of Corporate Affairs or the Ministry of Finance etc. on the date of inclusion of his name in the data bank;
• This abovementioned exemption criteria has been redefined to include the individuals willing to be appointed an independent director who is not required to pass Test in case he has served for a total period of not less than three years on the pay scale of Director or above in:-
  • the matters relating to commerce, corporate affairs, finance, industry or public enterprises; or
  • the affairs related to Government companies or statutory corporations set up under an Act of Parliament or any State Act and carrying on commercial activities.”.

• A new proviso has been inserted which provides that the following individuals shall not be required to pass the online proficiency self-assessment test, who are or have been, for at least ten years:-
  • an advocate of a court; or
  • in practice as a chartered accountant; or
  • in practice as a cost accountant; or
  • in practice as a company secretary,

The said rules shall be effective from date of its publication i.e. 19^th day of August, 2021.

The complete text of the Rules may be viewed at below link:

https://www.mca.gov.in/bin/dms/getdocument?mds=Sf52IemSEdMs25q%252FsXMq5Q%253D%253D&type=open

News from the desk of Ministry of Law and Justice

The Legislative department of the Ministry of Law and Justice on 13^th day of August, 2021 published Limited Liability Partnership (Amendment) Act, 2021 (“Amendment Act”) for the purpose of amending the Limited Liability Partnership Act, 2008 (“Act”):-

The key changes in the Act are as under:-

• Section number 18 (Application for direction to change name in certain circumstances), 73 (Penalty on non-compliance of any order passed by Tribunal) & 81 (Transitional provisions) of the Act have been omitted
• A new clause has been added to define “Regional Director” which would mean a person appointed by the Central Government for the purposes of Act;
• A new concept has emerged which is defined as “small limited liability partnership” means an LLP contribution of which, does not exceed INR 25,00,000/- or such higher amount, not exceeding five crore rupees, as may be prescribed; and the turnover of which, as per the Statement of Accounts and Solvency for the immediately preceding financial year, does not exceed forty lakh rupees or such higher amount, not exceeding fifty crore rupees, as may be prescribed; or which meets such other requirements as may be prescribed, and fulfils such terms and conditions as may be prescribed by the Central Government;
• In section 10 (which provides punishment for contravention of Liabilities of designated partners & Changes in designated partners) of the Act punishment has been increased from INR 10,000/- to INR 100/- for each day in case of continuing contravention which may extend to INR 5,00,000/-;
• The penalty in section 21 (Publication of name and limited liability) for contravention of the provision of this section of the Act, have been modified and now stands at ten thousand rupees;
• Penalty in section 25 (Registration of changes in partners) (4) & (5) of the Act, for contravention of the provisions of this section by an LLP have been modified to a penalty of ten thousand rupees;
• Section 34 A has been inserted in the Act according to which the Central Government may (a) prescribe the standards of accounting; and (b) prescribe the standards of auditing, as recommended by the Institute of Chartered Accountants of India, for a class or classes of LLPs;
• Section 67 A has been inserted in the Act according to which the Central Government may, for the purpose of providing speedy trial of offences under this Act, establish or designate as many Special Courts as may be necessary;
• Section 67 B has been inserted in the Act for the purpose of providing clarity that all offences specified section 67 A shall be heard only by the Special Court established or designated for the area;
• Section 68 A has been inserted in the Act according to which the Central Government may appoint Registrars, Additional Registrars, Joint Registrars, Deputy Registrars and Assistant Registrars as it considers necessary, for the registration of LLPs and discharge of various functions under this Act;
• Under section 69 (which provides payment of additional fee for any document or return required to be filed), different fee or additional fee may be prescribed for different classes of limited liability partnerships or for different documents or returns required to be filed under this Act or rules made thereunder
• Section 76 A has been inserted in the Act for the purpose of adjudging penalties under this Act. The Central Government may appoint as many officers of the Central Government, not below the rank of Registrar, as adjudicating officers;

The complete text of the Amendment Act may be viewed at below link:

https://www.mca.gov.in/bin/dms/getdocument?mds=8ylTG8LOgTgQPakjVO2fRg%253D%253D&type=open

Article contributed by:

Munesh Gaur

Senior Associate- Legal

MBG Corporate Services