Quick Answer
On July 31, 2018, the Ministry of Corporate Affairs issued the Companies (Accounts) Amendment Rules, 2018, introducing Rule 8A. This regulation allows One Person Companies and small companies to submit an abridged Directors' Report based on standalone financial statements, significantly reducing compliance burdens by eliminating the requirement for MGT-9.
The Ministry of corporate affairs vide CIRCULAR DATE 31ST JULY 2018, has introduced RoC Filing changes in disclosures latest amendments for Small companies and One person companies in their Boards Report the complete changes are discussed below in detail
RoC filing is the process of submitting the financials and other records to the Registrar in the prescribed form to know more about RoC Filing clink on this link RoC Filings
MCA has amended the Companies (Accounts) Rules, 2014. These rules are now referred as the Companies (Accounts) Amendment Rules, 2018.
COMPANIES (ACCOUNTS) AMENDMENT RULES, 2018
New Rule 8A of the COMPANIES (ACCOUNTS) AMENDMENT RULES, 2018 prescribed abridged form of Directors Report for One Person Company and Small Company this has been issued under Section 134 of Companies Act, 2013
OPC refers to one person company, where the company has only 1 share holder and turnover less than 2 Crores, to more about One Person Company click on this link OPC
What is the definition of small Company under the Companies Act 2013?
Section 2(85) of the Companies Act, 2013 defines “Small Company” in the following manner:
What are the major relief under the newly inserted Rule 8A?
INFORMATION TO BE CONTAINED IN THE DIRECTORS REPORT OF OPC AND SMALL COMPANY. (RoC Filings Changes in Disclosures)
RULE 8A. Matters to be included in Board’s Report for One Person Company and Small Company.- (1) The Board’s Report of One Person Company and Small Company shall be prepared based on the standalone financial statement of the company, which shall be in abridged form and contain the following:-
(a) the webaddress, if any, where annual return referred to in sub-sect ion (3) of section 92 has been placed;
(b) number of meetings of the Board;
(c) Directors’ Responsibility Statement as referred to in sub-section (5) of section 134;
(d) details in respect of frauds reported by auditors under sub-section (12) of section 143 other than those which are reportable to the Central Government;
(e) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report;
(f) the state of the company,s affairs;
(g) the financial summary or highlights;
(h) material changes from the date of closure of the financial year in the nature of business and their effect on the financial position of the company;
(i) th e details of directors who were appointed or have resigned during the year;
(j) the details or significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future.
(2) The Report of the Board shall contain the particulars of contracts or arrangements with related parties referred to in sub-section (1) of section 188 in the Form AOC-2.”.
Conclusion:
This is a very welcome move by the Ministry of Corporate affairs to reduce the compliance burden of small companies and one person companies, the reduced to a very good in term of ease of doing business
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The Ministry of Corporate Affairs introduced Rule 8A under the Companies (Accounts) Amendment Rules, 2018. This rule allows One Person Companies and small companies to prepare their Directors' Report in an abridged form based on their standalone financial statements, rather than following previous, more extensive reporting requirements.
No, according to the major relief provided under the newly inserted Rule 8A of the Companies (Accounts) Amendment Rules, 2018, there is no requirement for One Person Companies and small companies to file the MGT-9 form.
Under Section 2(85), a small company is one that is not a public company, having a paid-up share capital not exceeding fifty lakh rupees (or up to five crore) and a turnover not exceeding two crore rupees (or up to twenty crore) as per its last profit and loss account.
The report must include the annual return web address, number of Board meetings, Directors’ Responsibility Statement, auditor-reported frauds, Board comments on auditor qualifications, financial summary, material changes in business, appointment or resignation of directors, significant court orders, and particulars of related party contracts in Form AOC-2.
No. According to the definition provided in Section 2(85) of the Companies Act, 2013, the classification of a small company does not apply to a holding company, a subsidiary company, a company registered under section 8, or a company governed by any special Act.