OPC (One Person Company) Annual Return Filing Due dates

In this Article, we are focusing on the Due dates and deadlines / timelines for Filing Annual filing Forms /  Annual Returns for One Person Company (OPC).

 

Introduction:

 

An OPC (One Person Company) will have lesser compliance obligations than other types of Companies, such as a Private Limited Company or even a Limited Liability Partnership. However, when it comes to Annual Return filing for One Person Companies, the due dates will be much earlier compare to other Companies.

 

Let us understand the due dates for OPCs for Annual Return.

 

Forms to be filed:

 

1.      AOC-4 – Filing of Financials

2.      MGT-7A – Annual Return

 

Due dates:

 

1.     AOC-4 – 27^th September every year

 

2.     MGT-7A – 28^th November every year

 

Form AOC 4 shall be filed within 180 days from the end of Financial Year, i.e., 180 days from 31^st March of Every Year. This means that the deadline for submitting E-Form AOC 4 for a One Person Company is 27^th September every year.

 

What is Form MGT-7A?

 

On March 5, 2021, MCA issued Form MGT 7A for OPC and Small Businesses.  Every year, OPC shall file Form MGT 7A. For OPC, the due date for filing Form MGT 7A 60 days from 30^th September as per the e form help kit, i.e. 28^th November every year.

 

Consequences of Late filing:

 

For Form AOC-4:

The additional fees will be Rs. 100 per day from 27^th September and it will go on adding till the filing is done.

 

For Form MGT-7A:

The additional fees will be Rs. 100 per day from 28^th November and it will go on adding till the filing is done.

 

Apart from the above additional Fees, ROC may leavy adjudication penalties for late filing.

 

For more assistance, contact us on:

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8971408308

BUY BACK OF SECURITIES UNDER COMPANIES ACT 2013

BUY-BACK OF SECURITIES

 

I.                        Applicable provisions:

 

Ø     Companies Act, 2013

 

-                      Section 68

-                      Section 69

-                      Section 70

-                      Rule 17 of The Companies (Share Capital and Debentures) Rules, 2014

 

Ø     SEBI

 

-                      Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018.

 

II.                        What is Buy-Back?

 

There is no definition given under Companies Act, 2013 or in SEBI Regulations.

 

In general, Buy-Back of securities means “purchasing own shares or other specified securities of the company from its existing shareholders to extinguish/reduce the outstanding shares or securities”. It is one of the modes of capital restructuring with no intervention of Tribunal.

 

III.                        Reasons for Buy-back        :

 

-                      To increase the shareholder’s wealth

-                      It is a tax effective mode of rewarding shareholders

-                      To increase the value of the company

-                      To provide an additional exit route shareholder when shares are under valued

-                      To enhance consolidation of stake in the company

-                      To prevent unwelcome takeover bids

-                      To achieve optimum capital structure

-                      To support share price during the periods of sluggish market

 

IV.                        Sources of buy-back:

 

As per the Section 68 (1) of the Companies Act, 2014 buy-back can be made only out of:

 

-                      Free reserves

-                      Security premium account

-                      The proceeds out of fresh issue of shares or other specified securities

-                      Buy-back of any kind of shares or other specified securities cannot be made out of the proceeds of the earlier issue of same kind of shares or same kind of other specified securities.

 

V.                        Conditions for Buy-Back:

 

Ø     Authorisation for Buy-back: Articles of Association of the Company shall authorise the Buy-back.

 

Ø     Approval for Buy-back:

 

-                      Approval of Board of Directors: If the total amount of Buy-back is up to 10% of the Paid up capital and free reserve.

-                      Approval of Shareholders: If the total amount of buy-back is more than 10% as mentioned above and up to 25% of Paid up Capital and free reserve

 

Ø     Filing of letter of offer:

 

Before the buy-back of shares company needs to file letter of offer with Registrar in form SH-8. Within 20 days from filing of letter of offer with ROC the letter of offer shall be dispatched to shareholders of the Company.

 

Ø     Declaration of solvency:

 

The Company shall file with the ROC, declaration of solvency along with offer letter in form SH-9.

 

Ø     Offer period

 

The buy-back shall be open for 15 -30 days from the date of dispatch of offer letter. (It can be less   than 15 days if all the members approved)

 

Ø     Fully paid up shares

 

Only fully paid up shares can be bought back.

 

Ø     Time limit:

 

Buy-back should be completed within 1 year from the passing of Special resolution or Board Resolution.

 

Ø     Acceptance of Offer:

 

In case the number of shares offered by the shareholders is more than the total number of shares to be bought back by the company, the acceptance per shareholder shall be on proportionate basis out of the total shares offered for being bought back.

 

Ø     Verification

 

Company should complete the verification of offers received within 15 days from the completion of offer and within 21 days from the date offer company shall intimate the rejection of offer received if any.

(If the company is not intimate the rejection within 21 days it is deemed to be accepted)

 

Ø     Separate Bank Account

 

After the closure of the buy-back offer, the company shall immediately open a separate bank account and deposit therein, such sum, as would make up the entire sum due and payable as consideration for the shares tendered for buy-back.

 

Ø     Payment

 

Within 7 days from the date of verification of offers:

 

·                     Make the payment to those shareholders whose shares are accepted

·                     Return the share certificate to those shareholders whose shares are not accepted

 

Ø     Extinguishment of Shares:

 

Within 7 days from the date of completion of buyback the Company should extinguish and physically destroy the shares bought back.

 

Ø     Return of Buy-back

 

Within 30 days from the completion of buyback Company needs to file return of buyback in form SH-11.

 

VI.                        Prohibition of Buy-Back in certain cases:

 

According to section 70 of the Companies Act, 2013, A Company should not buy-back its securities or other specified securities, directly or indirectly

 

a)                  Through its subsidiary Company, including its own subsidiary Company

b)                  Through any investment Company or group of investment Companies

c)                  If the company is defaulted in repayment of deposits, interest payment thereon, redemption of debenture or preference shares, payment of dividend to any shareholder and repayment of any term loan or interest thereon

Note: if the default is remedied and period of 3 years has been lapsed after such default ceased to subsist.

d)                  If the Company has not complied with the provisions of Section 92 (Annual Return), Section 123 (Declaration of Dividend), Section 127 (Punishment for failure to distribute dividends) and Section 129 (Financial Statements).

 

VII.                        Quantum of Buy-back

 

VIII.                        Steps involved in buy-back

 

A.                  Convening of Board Meeting:

 

-                      Pass the resolution for buy-back of shares

-                      Approve the notice of Extra Ordinary General Meeting

 

B.                   Convening of Extra Ordinary General Meeting

 

-                      Pass the Resolution for buy-back of shares

-                      Filing of form MGT-14 with ROC (in case of passing of special resolution)

-                      Filing of letter of offer and declaration of solvency with ROC

-                      Circulation of letter of offer to shareholders

 

C.                   Opening of buy-back process

 

-                      Buy-back shall be open for 15-30 days from the dispatch of offer letter

-                      Verification of offer – Should be completed within 15 days from the completion of offer

-                      Rejection of offer – within 21 days from the date offer company shall intimate the rejection of offer received if any.

 

D.                  Opening of Bank account

 

-                      After completion of buy-back Company shall open a separate Bank account and deposit the total amount of consideration payable for buy-back.

 

E.                   Payment

 

-                      Within 7 days from the date of verification shall make the payment to those shareholders whose shares are accepted

-                      Within 7 days from the date of completion of buyback the Company should extinguish and physically destroy the shares bought back.

 

F.                   Return of buy-back

 

-                        Within 30 days from the completion of buyback Company needs to file return of buyback in form SH-11.

 

 

IX.          POINTS TO BE KEPT IN MIND

 

-                      the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves.

-                      Where a company completes a buy-back of its shares or other specified securities under this section, it shall not make a further issue of the same kind of shares or other securities including allotment of new shares under clause (a) of sub-section (1) of section 62 or other specified securities within a period of six months except by way of a bonus issue or in the discharge of subsisting obligations such as conversion of warrants, stock option schemes, sweat equity or conversion of preference shares or debentures into equity shares.

-                      The company shall maintain a register of shares or other securities which have been bought-back in Form No. SH.10.

 

 

For more details you can contact us

 

email: dcsadvisors@gmail.com

Mobile: 9019421726

 

 

Author:

 

TEAM DCS ADVISORS LLP

 

Disclaimer:

The Views expressed are solely of the Author and the contents of this article is to share the Knowledge on subject matter. Expert advice should be sought for your specific circumstances.

 

                 

 

 

ALL YOU NEED TO KNOW ABOUT PRIVATE PLACEMENT AND FAQS ON PRIVATE PLACEMENT

PRIVATE PLACEMENT (PP) UNDER COMPANIES ACT, 2013

 

Introduction:

 

We all know Companies Act, 2013 provides various options to issue Securities (Shares, Debentures or any other type of Securities). One of these options is Private Placement. The definition of Private Placement explains when the Companies have to follow the provisions. Let’s look into the Definition and the Provisions.

 

List of Sections:

 

Before go to the Provisions of Private Placement, it is apt to make the list of Sections and Rules which are applicable while issuing securities under Private Placement. Below is the list:

 

·       Section 42 of the Companies Act, 2013

·       Rule 14 of the Companies (Prospectus and Allotment of Securities) Rules, 2014

 

Definition:

 

Explanation -I to Section 42(3) defines the Private Placement;

 

"Private Placement" means any offer or invitation to subscribe or issue of securities to a select group of persons by a company (other than by way of public offer) through private placement offer-cum-application, which satisfies the conditions specified in this section.

 

Let us split the definition and make it easy to understand

 

Private Placement is:

 

-      any offer or invitation by a company

-      to subscribe or issue of securities

-      to a select group of persons,

-      other than by way of public offer,

-      which satisfies the conditions specified in Sec 42

 

Provisions:

 

Now we understood what is the definition, but what are the provisions to be followed while issuing securities under Private placement (PP)?

 

The list is made in Q&A format for better understanding:

 

i.            To whom securities can be issued under PP??

 

The securities under PP can be issued /offered only to a select group of persons who have been identified by the Board.  

 

ii.          Private Placement offer can be given to how may persons? 

 

The offer of securities or invitation to subscribe securities, shall be made to not more than 50 persons in a single offer or not more than 200 persons in the aggregate in a financial year (excluding qualified institutional buyers and employees of the company being offered securities under ESOP). This restriction would be read for all the securities combined together in a Financial Year.

 

iii.       What kind of Approval/Resolution to be passed for offer under Private Placement?

 

Each Private Placement offer should be previously approved by the shareholders of the company, by a Special Resolution.

 

In case of offer or invitation for non-convertible debentures, it shall be sufficient if the company passes the Board Resolution each time if such issue is within the borrowing limit specified under Section 180(1)(c) of the Companies Act. However, borrowing limits are to be approved by the shareholders of the issuer company first.

 

For Private Companies issuing NCDs no need of Shareholder Resolution as there is an exemption granted for Section 180. 

 

iv.        Is there any prescribed format for Offer Letter?

 

The PP offer letter shall be in form of PAS-4 serially numbered and addressed specifically to the person to whom the offer is made and shall be sent to him, either in writing or in electronic mode, within thirty days of recording the name of such person.

 

A company shall issue private placement offer cum application letter only after the relevant special resolution or Board resolution has been filed in form MGT-14 to the ROC. 

 

v.          Is there any minimum Offer size per person?

 

Earlier there was a requirement of minimum offer size of Rs. 20,000 face value of the Security. However the same was dispensed off by Companies (Prospectus and Allotment of Securities) Second Amendment Rules, 2018 with effect from 7th August, 2018. So there is no minimum offer size for Private Placement.

 

vi.        Whether Separate Bank Account in scheduled Bank to be opened for each offer?

 

There is always confusion regarding this question from the beginning of Commencement of Section 42.

 

The provision reads as “the monies received on application under this section shall be kept in a separate bank account in a scheduled bank”.

 

However in a recent Adjudication Order, ROC, Bangalore has imposed adjudication penalty for not opening a Separate Bank Account. Hence it is prudent to open a Separate Bank Account.

 

vii.      When to make the payment for subscription?

 

Every identified person willing to subscribe to the private placement issue shall apply in the private placement and application issued to such person along with subscription money.

 

viii.    Whether the person to whom the offer has been made can renounce the offer to other person?

 

The proviso to sub-section 3 of Section 42 explicitly provides that the private placement offer and application shall not carry any right of renunciation.

 

The person to whom the offer is made can either accept or reject the offer. There is no right for renunciation. 

 

ix.        What are the acceptable payment modes?

 

The subscription money shall be paid either by cheque or demand draft or other banking channel or not by cash.

 

x.          Whether application money can be utilized by the Company before allotting the securities??

 

No. the Application money received shall not be utilised for any purpose other than:

 

(a) for adjustment against allotment of securities; or

(b) for the repayment of monies where the company is unable to allot securities.

 

xi.        Within how many days the Allotment of Securities to be completed?

 

Issuer Company shall allot its securities within 60 days from the date of receipt of the application money; and

 

if the Company is not able to allot the securities within that period, it shall repay the application money to the subscribers within 15 days from the date of completion of 60 days; and

 

if the company fails to repay the application money within the aforesaid period, it shall be liable to repay that money with interest at the rate of 12% per annum from the expiry of the sixtieth day.

 

xii.      Is there any record of Private Placement to be maintained?

 

The Company shall maintain a complete record of private placement offers in Form PAS-5.

 

xiii.    When to file Return of Allotment for Private Placement of Shares / Securities?

 

A return of allotment of securities shall be filed with the Registrar within 15 days of allotment in Form PAS-3 along with a complete list of all the allottees.

 

The amount should not be utilised before filing Form PAS-3 (Return of Allotment)

 

xiv.     Whether the Company can make fresh offer under PP when one PP offer is pending?

 

No fresh offer or invitation under this section shall be made unless the allotments with respect to any offer or invitation made earlier have been completed or that offer or invitation has been withdrawn or abandoned by the company

 

xv.       What are the consequenses of non-compliane?

 

Any private placement issue not made in compliance of the provisions of section 42 shall be deemed to be a public offer and all the provisions of this Act and the Securities Contracts (Regulation) Act, 1956 and the Securities and Exchange Board of India Act and Regulations will apply.

 

Contravention of Section 42 attracts penalty which may extend to the amount involved in the offer or invitation or Rs. 2 Crore whichever is lower, and the company shall also refund all monies to subscribers within a period of 30 days of the order imposing the penalty.

 

If a company defaults in filing the return of allotment within15 days, the company, its promoters and directors shall be liable to a penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty-five lakh rupees

 

 

STEP BY STEP PROCEDURE FOR PRIVATE PLACEMENT

 

 

1.     Hold Board Meeting	2.     Hold General Meeting	3.     File form MGT-14
•        To approve the list of identified persons •         To approve the draft offer letter •         To call GM	•        To pass special resolution approving PP and approving offer letter	•        File the Special Resolution in Form MGT-14 within 30 days from the date of EGM
4.     Circulate the Offer Letter (PAS-4)	5.     Receive the Application money	6.     Allotment
•        PAS-4 to be circulated to the identified persons. •        It can be circulated only after filing MGT-14	•        The Application money to be received and kept in a Separate Bank Account	•        Allotment to be done within 60 days from the date of receipt of Application Money
7.     File Return of Allotment	8.     Utilization of amount	9.     Other incidental matters
•        The Return of Allotment in Form PAS-3 to be filed within 15 days from the date of allotment	•        The amount can be utilised only after filing PAS-3	•        Issue of Share Certificates within 2 months fromt he date of allotment •        Updating the Register of Members

 

 

 

For more details you can contact us

 

email: dcsadvisors@gmail.com

Mobile: 9019421726

 

 

Author:

 

TEAM DCS ADVISORS LLP

 

Disclaimer:

The Views expressed are solely of the Author and the contents of this article is to share the Knowledge on subject matter. Expert advice should be sought for your specific circumstances.