A summary on essential alterations by MCA w.e.f. 1st April 2021

The ministry of corporate affairs (MCA) comes with the amendment of various rules under its law. These amendments in the company❜s law pertain to audits, auditors, and accounts.

Besides, by making alterations to schedule III of the companies Act, 2013, the ministry has increased the disclosure❜s necessity. It will also include details about cryptocurrency dealings.

All these changes came in a notification by the ministry. Further, the changes will get implemented to the company law that shall be effective from 1st April.

Companies to round off the numbers in the financial statements

As per the company law alterations, now the companies have to round off all the numbers that are exhibiting on the financial statements. Before this, the rounding off the figures in the financial statements was optional. Further, the MCA also clears it that the rounding off the number will be applicable on total incomes instead of turnover.

Companies will now disclose the shareholding of the promoters

The note on the share capitals that comes in the financial statement will now include the details about shareholding. The companies will now disclose the shareholding of the promoters along with the alterations. However, if there is any shareholding of the promoters, you need to mention during the financial year under review effective from 1st April 2021.

The latest maturities of the long-term burrowing must get disclosed separately

As per the company❜s law review, you need to disclose the current maturities of all the long-term borrowings during the financial year. Further, all these maturities have to get declared separately below the short-term heading burrowing instead of other current liabilities.

Trade payables aging schedule is compulsory

One more thing that is mandate after the amendment in the companies act is the trade payables aging schedule. Yes! The note on the trade payables due for paying now must include the aging schedule.

This disclosure comes with an impeccable impact, especially on the pending litigation under section 9 of the insolvency and bankruptcy code, 2016. Lately, the Supreme Court of India, in a case between Mobilox innovations private limited vs. Kirusa Software private limited, settled the matter as per the new provisions in the company❜s Act. Further, in the view of the provisions under section 9(5)(ii)(d) of the bankruptcy and the insolvency code, 2016, a request under section 9 for starting the corporate insolvency resolution process, an operational creditor will not get admitted if the debt for which the application gets disputed. That implies; if there is any dispute regarding the quality of the good/any other matter.

This proves this amendment is material for litigation purposes.

Reclassification of security deposits

The amendment in the company❜s Act also states that the security deposits maintained in the company must get reclassified. They must get reclassified as another non-current asset instead of long-term loans/advances.

Disclosure about the utilization of the borrowings

As per the amendments, all the companies must disclose the reasons for fund utilization. The reason is mandatory if they use the fund other than the purpose for which they have burrowed. The purpose of the fund use shall also get disclosed as per the new Act.

Companies to reveal the books of accounts with the monthly or quarterly report filed with the banker

Suppose any company has outstanding borrowings from any banks/financial institution having their current asset as a security, in such cases. In that case, the companies have to disclose whether their quarterly statements or the statement of the recent assets filed to the banks or any other financial institution agree with the book of account. If it is not so, the company has to file a summary of reconciliation and reasons behind such errors.

Companies to reveal the details of the immovable property

As per the company❜s Act amendments, all the companies now have to furnish detail about their immovable property. Other than the property that comes with lease agreements, all other properties with title agreements must get revealed by the companies.

The revelation about the property revaluation plant, equipment

If any company has revalued their property, equipment, or plant, in such cases, the company must disclose it to the MCA.

Revealing about the loan/advances

The company must disclose the loans/advances like the loans granted to the promoters. The company shall also include directors, KMPs, and other related parties in the disclosure.

Revealing about the capital work in progress

The companies also have to reveal the capital work in progress in a disclosure agreement. This disclosure is necessary if the completion of the work exceeds compared of the original plans.

Note on intangible assets

The company has to note the intangible assets with the amount of change that comes due to revaluation.

Revealing about the procedures pending from the company❜s side

As per the new amendment, all the companies have to provide the details about all the procedures that are pending from their side. If the company is acquiring any Benami property under the Benami Transaction Prohibition Act, 1988, the companies need to reveal all such procedures.

Disclosure about willful defaulter

If the company is declared as a defaulter from any bank❜s side, the company has to disclose the same.

These were the amendments; if you have any doubts, you are welcome to share them in the comment section.

Important: Please note that the information on this page / site is provided as general information for better understanding for the user and does not constitute tax, legal, or other professional advice and must not be used as such. Please consult your professional adviser(s) if you have any questions / doubts regarding the above.

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