Notification & Circular from Ministry of corporate affairs

1. Notification 1

Vide S.O. 582(E) dated 28.02.2014, it has been declared that the provisions of Section 135 and Schedule VII of the Companies Act, 2013 would come into force with effect from 01.04.2014. Section 135 mandates the adoption of Corporate Social Responsibility Policy by certain companies crossing certain thresholds (net worth of rupees five hundred crore, or turnover of rupees one thousand crore or a net profit of rupees five crore), while Schedule VII gives an indicative list of activities which may be considered by companies in finalizing their Corporate Social Responsibility Policies.

2. Notification 2

The Central Government has notified the Companies (Corporate Social Responsibility Policy) Rules, 2014 vide G.S.R. 129(E) dated 28.02.2014. These rules mandate, inter alia, that companies crossing the aforesaid thresholds will undertake activities in accordance with its stated CSR Policy covering the activities mentioned in Schedule VII.However activities undertaken in pursuance of its normal course of business will not count as CSR activities. The method of determining the net profit for the purpose of CSR have also been laid down. A format for the Annual Report on CSR activities to be included in the Board’s Report has been prescribed, and foreign companies are required to furnish a report of CSR activities undertaken by them along with their Balance Sheets. Such companies are also required to disclose contents of such policy in the Board’s report and the same shall be displayed on the company’s website

3. Circular 1

Registrar of Companies and Registrar of Limited Liability Partnerships have been directed by Circular No. 2/2014 dated 11.02.2014 (F.No.2/2/2014-CL-V) of the Ministry, not to Register Companies/ Limited Liability Partnerships with the word “National” appearing in their names, unless it is a government company and the Central / State government(s) has a stake in it. Similarly, the words “Bank” or “Stock Exchange”/“Exchange” should not be allowed in the names of an entity unless “No Objection Certificate” is produced from the RBI or SEBI, as the case may be.

4. Circular 2

The Ministry has clarified by Circular No. 3/2014 dated 14.02.2014 (F.No.1/12/2013-CL-V) that the restrictions on loans made, guarantees given or security provided or any investment mode by a holding company to its wholly owned subsidiary as laid down in Section 372A of the Companies Act, 1956 (which has not been repealed yet) shall continue to operate subject to the exemptions given in clause (d) of sub-section (8) thereof, if such loan etc. are exclusively used by the subsidiary company for its principal business purposes. Under Section 372A(8)(d), guarantee given or any security provided by a holding company in respect of loan made to its wholly- owned subsidiary are exempted from the said restrictions. The restrictions imposed in Section 186 of the Companies Act, 2013 (which has not been enforced yet) shall apply upon the notification of its commencement