FAQS ON PROCESS OF APPOINTMENT OF DIRECTOR THROUGH ROC BACK OFFICE

 

FAQS ON PROCESS OF APPOINTMENT OF DIRECTOR
THROUGH ROC BACK OFFICE

 

1.    What is the regulatory provisions for backend appointment of Directors under the Companies Act, 2013 (the Act)?

As per Section 168(3) of the Act, when all the directors are disqualified under Section 167 of the Act, then the Central Government (ROC/ RD) shall appoint the required number of directors based on the request received from the Promoters.

 

2.    How shall we decide as to under whose ROC jurisdiction we have to file the application?

Application shall be filed with the ROC under whose jurisdiction the registered office of the company is situated.

 

3.    Can a Company which is struck off for non-filing of Annual accounts and Annual return and because of which the Directors are disqualified appoint Directors through back end process?

A Struck off Company need to first file a Petition for revival under Sec.252 to NCLT and if Hon’ble NCLT is convinced that there is a fit and proper case, it may order for the revival of the Company. Though the Company is revived, the disqualification will still continue for the Directors. In this case, the Company may either approach High Court for removal of Disqualification of the Directors or appoint different Directors who are not disqualified through the back end.

 

4.    Typically which are the Companies which may require its Directors to appoint through back end.

A Company might have filed all its statutory returns like AOC 4, MGT 7 in time. But the Directors of the Company may be part of another Company and it has not filed its Annual accounts and Annual return for the past three years. The Directors of the Active Company will be disqualified because of the non-filing of returns by the other Company in which they are Directors. In this case, the Directors have the option to either approach the High court for removal of disqualification or appoint Directors through ROC office back end process.

 

5.    How much time does it take for the entire process of appointment of Directors through back end?

It usually takes 15-30 days for appointment of director through back end based on the facts and circumstances.

 

6.    Is there any statutory fee for appointment of Director through backend?

No, there is no statutory fee for appointment of Director thorough backend

7.    How can the documents be submitted to ROC?

Original signed copy of all the documents in Legal or A4 sheet and Soft copy of the documents in PDF format in a CD with a file size not exceeding 2.5 MB shall be submitted with ROC office.

 

8.    As all the directors disqualified then whose DSC will affix on the form?

DIR-12 need to be filled and printed; in this printed physical copy of DIR 12, both the new director and the promoter will sign and submit.

 

9.    Who have the authority to propose the appointment of new director?

Promoters holding major shares of the Company can appoint the Director at the General Meeting of the Company.

 

10.   How can the promoters of the Company be identified?

Promoters of the Company shall be the person who is named as such in the Annual Return or who has control over the Company. Generally, in a closely held private company, the Shareholders may be the promoters of the Company.

 

11.   Who can call for EGM when all the directors are disqualified?

Shareholders of the Company shall call for the extra ordinary General Meeting as per Section 100 of the Act.

 

12.    Whether the procedure is similar to all the ROC in India?

There will be minor changes in the documents required and procedures to be followed from ROC to ROC. But the overall procedure remains the same in all the ROC.

 

13.    How many directors can be appointed through back end?

ROC can be approached for appointment of only one director. If ROC is satisfied with the documentary proofs submitted, then name of one director will be updated in its record and the same will be reflected on MCA website.

 

14.    Can the other Directors be appointed through E-filing of Form DIR-12?

Once the ROC appoints the first director through backend, the Company can file E-Form DIR-12 for appointment of other Director by using DSC of first Director.

 

- A Mohan Kumar & 

  Vidhyesvari

 

SIGNIFICANT BENEFICIAL OWNERSHIP- BEN 2

SIGNIFICANT BENEFICIAL OWNERSHIP

What is E-Form BEN-2 all about?

When the Company has any non-individual (eg: An Indian Company or Foreign Company) as a member and this member is holding 10% or more shares  in the Indian Company, then the Indian Reporting Company (RC) is required to file E-Form BEN-2 with the ROC. 

Significant Beneficial Owner (SBO):

SBO means an Individual who alone or jointly, either:

Holds indirectly, or along with other direct holdings, not less than 10% shares or 10% voting rights or 10% total distributable dividend in the Indian Company (RC); or has been vested with the right of exercising significant influence or control.

If the individual does not hold right or entitlement indirectly as above, he shall not be a SBO.

S. No.	Where the member of the RC is a	Individual Holding Right or Entitlement
1.	Body Corporate (registered in India or abroad)	i. Holds majority stake in that member; ii. Holds majority stake in the ultimate holding company of such member;
2.	A HUF (through Karta)	Individual is the Karta of HUF
3.	A partnership entity (through itself or a partner)	i. Individual is a Partner ii. Individual holds a majority stake in the body corporate, which is a partner of the partnership entity iii. Individual holds a majority stake in the ultimate holding company of body corporate, which is a partner of the partnership entity
4.	A trust (though trustee)	i. the trustee – if it’s a discretionary or charitable trust ii. the beneficiaries – if it’s a specific trust iii. the author or settler – if it’s a revocable trust.

 

The above SBO, must make a declaration to the RC in Form BEN-1.

The RC must report in E-Form BEN-2 to the ROC, along with the declaration as attachment (in Form BEN-1).

Responsibility of the Reporting Company:

1. The Indian Company (RC) is required to identify the SBO associated with it by issuing notice to a member in Form BEN-4. RC Shall File a Return in E-Form BEN-2 with ROC along with the declaration made by a SBO or any changes in the SBO in Form BEN-1, within a period of 30 days of receipt of such declaration. Since E-FORM BEN-2 has been deployed on 1.07.2019, E-FORM BEN-2 shall be filed within 30 days of deployment i.e., 30.07.2019.  

2. RC is required to maintain a register of SBO in Form BEN-3. This shall include details of SBO’s respective names, addresses, date of birth and details of ownership.

In case of failure of the Member Company or SBO to disclose the beneficial owner, RC can file application to NCLT to impose restriction on the respective shares.

What are the Responsibility of the SBO 

Every SBO shall file a declaration in Form BEN-1 to the respective member company within 30 days of acquiring the status of SBO or any change therein.

What is the Penalty for non-compliance? i.e., Non-filing of this Form:

1. SBO’s not giving intimation Form BEN-1 would be imposed a fine ranging between Rs. 1,00,000 to Rs. 10,00,000; And for continuing offence, an additional fine of Rs. 1000 for every default.

2. Companies not complying with respective norms would be liable with a sum of Rs. 10,00,000 to Rs.50,00,000 and for continuing offence, an additional fine of 1,000 for every default.

What are the mandatory attachment while Filing Form BEN-2

BEN-1 - Declaration under Section 90 is a mandatory attachment.

Who shall sign the Form? Whether Certification of professional is mandatory?

The Form must be signed by either the Director or CS of the company and must also be certified by a practicing professional – Company Secretary / Chartered Accountant / Cost Accountant in practice.

What is the fees payable for filing the Form?

Applicable as per the Authorized capital of the Company. Approximately Rs. 300 to Rs. 600. Minimum of 2 times additional Fees will be payable if E-Form BEN-2 is filed beyond 30 days.

 

 

CS Family - Mr Pradeep and Mrs Vasumathy

CS Family - Mr. Pradeep Ramakrishnan, GM, SEBI &  Mrs Vasumathy Vasudevan, Practising Company Secretary 

1.    How did you start doing CS?

 Pradeep: ​1996 immediately after my Class 12.

Vasumathy: Started in ​1996 after my Class 12, on attending the Career Awareness Programme conducted by the SIRC of ICSI at my school.

 

2.    Where did you meet your spouse? Any sweet memories worth sharing?

​Pradeep: SMTP Training, 2001

We weren't destined to undertake the training at RoC. I was to have done it at the Madras Stock Exchange. But after her persuasion, the RoC agreed to accommodate, which changed life! 

 

Vasumathy: ​SMTP Training, 2001. We had never conversed during the 15 day training period. On the last day, when we gifted a water dispenser to the SIRC of ICSI and I was carrying the same upstairs to the office of SIRC, he offered me help and talked for the first time....After that it continued at ROC Training as he said and what was destined happened! Helping continues!! We got married in March 2002.

 

3.    Please tell how each of your career progressed..

 

​ Pradeep: I worked initially with Madras Fertilizers and later with Kothari Petrochemicals Limited, Chennai, the latter as full time CS. I joined SEBI in February 2002. Each portfolio has been a learning experience. 

 

​ Vasumathy: My Management Training was at Taj Coromandel (Oriental Hotels Limited), just opposite Kothari Petrochemicals Limited, Chennai, where he was working as CS. But we had never met then!  My first job was in 2001 as a CS at ETA General Private Limited, Chennai, Manufacturer of O’General Air Conditioners. Had been with Trading Member / Stock Brokers in Mumbai as Compliance Officer and Company Secretary..., listed company, then into practise from 2010. All have been a different learning and grooming experience.

 

4.    Do you discuss Companies Act or SEBI LODR at home?

 

​ Pradeep: At times, Sometimes, All the time!

 

Vasumathy: Sometimes, when it calls for a healthy discussion and to understand opinion of each other in a catch situation.

 

5.    Plus and Minus of being both in the same profession

 Pradeep: I don't see any negative​s, as long as you are sure of yourself.

 Vasumathy: Nothing at all as long as mutual respect and admiration continues...

 6.    Your relationship with ICSI /contribution...

 

Pradeep: I ​have been part of the Secretarial Standards Board (SSB) and the ICSI Vision Committee. I worked with the institute on the guidance note on the Secretarial Compliance Report - they have excellent staff. I address seminars at ICSI when time permits. 

 

Vasumathy: Have been an Examiner for the Professional Level Examination of the ICSI.

 

Regular faculty at the ICSI and I address students at various schools and colleges on Career Awareness Programs to pursue the Professional Course of Company Secretaryship.

 

Have held post as a Convenor for the Chennai South Study Circle of the SIRC of ICSI.

 

Have been part of Oral Coaching Committee of the SIRC and presently a member of the PCS Committee of ICSI at SIRC.

 

7.    Future Plans on Career..

 

​ Pradeep: Take it as it comes. My instinct is academics, any day. 

 

Vasumathy: Have qualified as an Insolvency Professional and have been registered with the Insolvency and Bankruptcy Board of India (IBBI). Look forward to handling more genuine cases and representing at NCLT.

 

Teaching Professional Level students at the SIRC on a regular basis, which I have been trying to fit into my schedule.

 

Have been representing at various chambers of commerce and industry on compliance difficulties faced by professionals.

 

Building a robust team of CS professionals, which would contribute to a healthy profession in turn.

 

8.    Do you think your next generation (son) may be interested in doing CS course?

 

​ Pradeep: Perhaps..

 

Vasumathy: May be. He has plans to do CS with Law ...Looking forward to his decision on the same!!

 

Interview by: Mr A. Mohankumar, Practising Company Secretary & Immediate Past Chairman ICSI SIRC