Companies (Removal of Difficulties) Order, 2016 notified by MCA

MCA Notifies Companies (Removal of Difficulties) Order, 2016

The Minsitry of Corporate Affairs (MCA) has notified Companies (Removal of Difficulties) Order, 2016 vide Orders dt 29th March 2013, as a remedy for the difficulties that have arisen regarding compliance with the provisions of a) sub-section (11) of section 143 of the Companies Act, 2013 and b) section 133 in so far as they relate to consultation with National Financial Reporting Authority till the period it is duly constituted under section 132 of the said Act.

1. MCA Order dt. 29th March [Companies (Removal of Difficulties) Order, 2016]

Whereas the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said Act) received the assent of the President on 29th August, 2013 and section 1 thereof came into force on the same date;

And, whereas, the provisions contained in section 143 of the said Act which provides for powers and duties of auditors and auditing standards has come into force on the 1st April, 2014;

And, whereas, sub-section (11) of section 143 of the said Act provides that the Central Government may, in consultation with the National Financial Reporting Authority, by general or special order, direct, in respect of such class or description of companies, as may be specified in the order, that the auditor’s report shall also include a statement on such matters as may be specified therein;

And, whereas, section 132 of the said Act, which provides for constitution, functions etc., of the National Financial Reporting Authority and the National Financial Reporting Appellate Authority, has not been brought into force and it may take some time to bring said section into force;

And, whereas, the National Advisory Committee on Accounting Standards, constituted under section 210A of theCompanies Act, 1956 (1 of 1956) provides for advising the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies or class of companies;

And, whereas, sub-section (4A) of section 227 of the Companies Act, 1956 (1 of 1956), which corresponds to sub-section (11) of section 143 of the Companies Act, 2013, (18 of 2013) provides that the Central Government may consult the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949 (38 of 1949), while issuing order directing that in case of specified class or description of companies the auditor’s report shall include a statement on additional matters as specified in the order;

And, whereas, the Central Government constituted a Committee chaired by the Joint Secretary or Regional Director, Ministry of Corporate Affairs and representatives from the Institute of Chartered Accountants of India and Industry Chambers and National Advisory Committee on Accounting Standards, Chairman and representative from the Office of the Comptroller and Auditor-General, as special invitees to hold consultation required under sub-section (11) of section 143 of the Companies Act, 2013;

And, whereas, the Central Government, on the basis of recommendations of the said Committee, has issued the Companies (Auditor’s Report) Order, 2015 on 10th April, 2015 for financial year 2015-16 vide notification number S.O.990 (E) dated the 10th April, 2015 published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii) and proposes to issue similar Order to be applicable from the financial year 2015-16 onwards;

And, whereas, difficulties have arisen regarding compliance with the provisions of sub-section (11) of section 143, in so far as they relate to consultation with National Financial Reporting Authority till the period it is duly constituted under section 132 of the Companies Act, 2013;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order to remove the above said difficulties, namely:-

1. Short title and commencement.-

(1) This Order may be called the Companies (Removal of Difficulties) Order, 2016.

(2) It shall be deemed to have come into force from the 10th April, 2015.

2. In the Companies Act, 2013, in section 143, in sub-section (ii), the following proviso shall be inserted, namely:-

“Provided that until the National Financial Reporting Authority is constituted under section 132, the Central Government may hold consultation required under this sub-section with the Committee chaired by an officer of the rank of Joint Secretary or equivalent in the Ministry of Corporate Affairs and the Committee shall have the representatives from the Institute of Chartered Accountants of India and Industry Chambers and also special invitees from the National Advisory Committee on Accounting Standards and the office of the Comptroller and Auditor-General”.

MCA Order dt. 29th March [Companies (Removal of Difficulties) Order, 2016]

2. MCA Order dt. 29th March [Companies (Removal of Difficulties) Second Order, 2016]

Whereas, the Companies Act, 2013 (18 of 2013) (hereinafter referred to as the said Act) received the assent of the President on 29th August, 2013 and section 1 thereof came into force on the same date;

And, whereas, section 133 provides that the Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations made by the National Financial Reporting Authority;

And, whereas, section 133 of the said Act, has come into force with effect from 12th September, 2013;

And, whereas, section 132 of the said Act, which provides for constitution, functions etc. of the National Financial Reporting Authority and National Financial Reporting Appellate Authority, has not been brought into force and it may take some time to bring said section into force;

And, whereas, the National Advisory Committee on Accounting Standards, constituted under section 210A of the Companies Act, 1956 provides for advising the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies or class of companies;

And, whereas, sub-section (3C) of section 211 of the Companies Act, 1956 (1 of 1956) which corresponds to section 133 of the Companies Act, 2013 (18 of 2013) provides that the expression “accounting standards” means the standards of accounting recommended by the Institute of Chartered Accountants of India constituted under the Chartered Accountants Act, 1949 (38 of 1949), as may be prescribed by the Central Government in consultation with the National Advisory Committee on Accounting Standards established under sub-section (1) of section 210A;

And, whereas, difficulties have arisen regarding compliance with the provisions of section 133 in so far as they relate to consultation with National Financial Reporting Authority till the period it is duly constituted under section 132 of the said Act;

And, whereas, on the basis of the recommendations of the National Advisory Committee on Accounting Standards, the Central Government issued the Companies (Indian Accounting Standards) Rules, 2015 with effect from 1st April, 2015 vide notification number G.S.R. 111(E) dated the 16th February, 2015 published in the Gazette in India, Extraordinary, Part-II, Section 3, Sub-section (i) dated the 19th February, 2015;

Now, therefore, in exercise of the powers conferred by sub-section (1) of section 470 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order to remove the above said difficulties, namely:-

1. Short title and commencement.-

(1) This Order may be called the Companies (Removal of Difficulties) Second Order, 2016.

(2) It shall be deemed to have come into force from the 1st April, 2015.

2. In section 133 of the Companies Act, 2013 (herein after referred to as the said Act), the following proviso shall be  inserted, namely:-

“Provided that until the National Financial Reporting Authority is constituted under section 132 of the Companies Act, 2013 (18 of 2013), the Central Government may prescribe the standards of accounting or any addendum thereto, as recommended by the Institute of Chartered Accountants of India, constituted under section 3 of the Chartered Accountants Act, 1949 (38 of 1949), in consultation with and after examination of the recommendations made by National Advisory Committee on Accounting Standards constituted under section 210 A of the Companies Act, 1956”.

MCA Order dt. 29th March [Companies (Removal of Difficulties) Second Order, 2016]

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