The Ministry of Corporate Affairs (MCA) had through a notification made on 3rd January 2020 notified Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 as well as amended the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
The few amended rules of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 includes;
1. The attached rules shall be applicable for Financial Year starting on or after 1st April 2020
2. Section 203 and Rule 8, 8A- Appointment of Key Managerial Personnel– Every Private Company which has a paid-up share capital of 10 crore rupees or above would have a whole-time company secretary.
Presently every Listed Company and Public Company who has Paid up share capital of 10 crore rupees or above would have a whole-time company secretary, and all the Private Limited Company who has Paid up share capital of 5 crore rupees or above would have a whole-time company secretary.
Therefore, Financial Year starting on or after 1st April 2020, each Company that is, Public or Private Companies who have Paid up share capital of 10 crore rupees or above would have a whole-time Company Secretary.
3.Section 204 and Rule 9- Secretarial Audit for bigger Companies- Applicability: following Clause c was inserted
“(c) every corporation having outstanding loans or borrowings from banks or public financial institutions of 100 crore rupees or more.”.
Presently (before considering the effect of the MCA notification) following class of Companies are needed to annex with its Boards Report Secretarial Audit Report as stated in Section 204:
(a) Every public company who has a paid-up share capital of 50 crore rupees or above; or
(b) Every public company who has a turnover of 250 crore rupees or above.
Therefore, Financial Year starting on or after 1st April 2020, even Private Companies fulfilling the Criteria stated above that is, having outstanding loans or borrowings from banks or public financial institutions of 100 crore rupees or above would be required to annex Secretarial Audit Report with the Board Report.
Hence, the amendments had widened the scope of Section 204.
Also, an explanation was incorporated herewith, removing the ambiguity existing within.
Explanation: - Relating to this sub-rule, it has been clarified that the paid-up share capital, turnover, or outstanding loans or borrowings as the case might be, existing on the last date of latest audited financial statement would be taken into account.
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