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Government Reduces Rate of Employees’ State Insurance Contribution from 6.5% to 4%
New form for filing application for Nidhi Companies
Ministry of Corporate Affairs issues circular regarding filing of e-Form DIR-3 KYC (Director’s KYC).
Incorporation of Section 8 Companies (Not for profit entity) through SPICe

Government Reduces Rate of Employees’ State Insurance Contribution from 6.5% to 4%

The Government of India has taken a historic decision to reduce the rate of contribution under the ESI Act from 6.5% to 4%(employers’ contribution being reduced from 4.75% to 3.25% and employees’ contribution being reduced from 1.75% to 0.75%). Reduced rates will be effective from 01.07.2019. This would benefit 3.6 crore employees and 12.85 lakh employers.
 

The reduced rate of contribution will bring about a substantial relief to workers and it will facilitate further enrollment of workers under the ESI scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. This shall also lead to enhanced Ease of Doing Business. It is also expected that reduction in rate of ESI contribution shall lead to improved compliance of law.
 

The Employees’ State Insurance Act 1948 (the ESI Act) provides for medical, cash, maternity, disability and dependent benefits to the Insured Persons under the Act. The ESI Act is administered by Employees’ State Insurance Corporation (ESIC). Benefits provided under the ESI Act are funded by the contributions made by the employers and the employees.
 

Under the ESI Act, employers and employees both contribute their shares respectively. The Government of India through Ministry of Labour and Employment decides the rate of contribution under the ESI Act. Presently, the rate of contribution is fixed at. This rate is in vogue since 01.01.1997.
 

The Government of India in its pursuit of expanding the Social Security Coverage to more and more people started a programme of special registration of employers and employees from December, 2016 to June, 2017 and also decided to extend the coverage of the scheme to all the districts in the country in a phased manner. The wage ceiling of coverage was also enhanced from Rs. 15,000/- per month to Rs. 21,000/- from 01.01.2017.
 

These efforts resulted in substantial increase in the number of registered employeesstrong> i.e. Insured Persons and employers and also a quantum jump in the revenue income of the ESIC. The figures are as under: –

Year No. of Employers No. of Insured Persons (in crores) Total contribution received (in Rs. crores)
2015-16 7,83,786 2.1 11,455
2016-17 8,98,138 3.1 13,662
2017-18 10,33,730 3.4 20,077
2018-19 12,85,392 3.6 22,279

 

The Government of India is committed to the cause of welfare of employees as well as employers.
 

It is also committed to improve the quality of medical services & other benefits being provided under the ESI scheme.
 

RELEVANT NOTIFICATION IS AS FOLLOWS:-
 

MINISTRY OF LABOUR AND EMPLOYMENT
NOTIFICATION
New Delhi, the 13th June, 2019
 

G.S.R. 423(E).—Whereas a draft containing certain rules further to amend the Employees’ State Insurance (Central) Rules, 1950 were published in the Gazette of India, Extraordinary, Part-II, Section-3, Sub-section (i), vide number G.S.R. 12 1(E), dated the 15th February, 2019, as required by sub-section (1) of the section 95 of the Employees’ State Insurance Act, 1948 (34 of 1948), inviting objections or suggestions from all persons likely to be affected thereby before the expiry of a period of thirty days from the date on which the copies of the Official Gazette containing the said notification was published were made available to the public;
 

And whereas, the copies of the said Official Gazette were made available to the public on the 15th February, 2019;
 

And whereas, objections or suggestions received from the public in respect of the said draft rules within the period specified above have been considered by the Central Government;
 

Now, therefore, in exercise of the powers conferred by section 95 of the said Act, the Central Government, after consultation with the Employees’ State Insurance Corporation, hereby makes the following rules further to amend the Employees’ State Insurance (Central) Rules, 1950, namely:-
 

1. (1) These rules may be called the Employee’s State Insurance (Central) Amendment Rules, 2019;
 
(2) They shall come into force on the 1st day of July, 2019.
 
2. In the Employees’ State Insurance (Central) Rules, 1950, in rule 51, –
 
(a) in clause (a), for the words “equal to four and three-fourth per cent of the wages”, the words “equal to three and one-fourth per cent. of the wages” shall be substituted;
 
(b) in clause (b), for the words “equal to one and three-fourth per cent of the wages”, the words “equal to three-fourth per cent. of the wages” shall be

New form for filing application for Nidhi Companies

Ministry of corporate affairs notifies Nidhi (Amendment) Rules, 2019 and notified new FORM NDH-4 i.e Form for filing application for declaration as Nidhi Company and for updation of status by Nidhis.
 

MINISTRY OF LABOUR AND EMPLOYMENT
NOTIFICATION
New Delhi, the 13th June, 2019
 

G.S.R.467(E).— In exercise of the powers conferred by sub-section (1) of section 406 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013, the Central Government hereby makes the following rules, to amend the Nidhi Rules, 2014, namely:-
 

1. (1) These rules may be called the Nidhi (Amendment) Rules, 2019.
 

(2) They shall come into force with effect from 15 August, 2019.
 

2. In the Nidhi rules, 2014 (hereinafter referred to as “said rules”), in rule 2, after clause (c), the following clause shall be inserted, namely:
 

“(d) every company declared as Nidhi or Mutual Benefit Society under sub-section (1) of section 406 of the Act”.
 

3. In the said rules, in rule 3, after clause (d), the following clause shall be inserted, namely:-
 

‘(da) “Nidhi” means a company which has been incorporated as a Nidhi with the object of cultivating the habit of thrift and savings amongst its members, receiving deposits from, and lending to, its members only, for their mutual benefit, and which complies with the rules made by the Central Government for regulation of such class of companies.’.
 

4. In the said rules, after rule 3, the following rule shall be inserted, namely:
 

3A. Declaration of Nidhis .—“ The Central Government, on receipt of application (in Form NDH-4 along with fee thereon) of a public company for declaring it as Nidhi and on being satisfied that the company meets the requirements under these rules, shall notify the company as a Nidhi in the Official Gazette:
 

Provided that a Nidhi incorporated under the Act on or after the commencement of the Nidhi (Amendment) Rules, 2019 shall file Form NDH-4 within sixty days from the date of expiry of:
 

(a) one year from the date of its incorporation; or
 

(b) the period up to which extension of time has been granted by the Regional Director under sub-rule (3) of rule 5:
 

Provided further that nothing in the first proviso shall prevent a Nidhi from filing Form NDH-4 before the period referred therein:
 

Provided also that that in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment).”.
 

5. In the said rules, in rule 4, -(i) in sub-rule (1), the words, “to be incorporated under the Act” shall be omitted;
 

(ii) in sub-rule (5), the words “Company incorporated as a” shall be omitted.
 

6. In the said rules, in rule 5,
 

(i) in sub-rule (1), for the words “from the commencement of these rules”, the words “from the date of its incorporation” shall be substituted;
 
(ii) in sub-rule (3), before the Explanation, the following proviso shall be inserted, namely:-
 

“Provided that the Regional Director may extend the period upto one year from the date of receipt of application.”.
 

(iii) in sub-rule (4), after the words, brackets and figure “contained in sub-rule (1)”, the words, brackets and figures “and gets itself declared under sub-section (1) of section 406” shall be inserted.
 

7. In the said rules, in rule 7, in sub-rule (1), after the words “shall issue” the words “fully paid up” shall be inserted.
 

8. In the said rules, in rule 12,—
 

(i) in sub-rule (1) after clause (b), the following clause shall be inserted namely:- “(ba) The date of declaration or notification as Nidhi”;”;
 

(ii) in sub-rule (2), in clause (a), for the words “Registrar of Companies”, the words “Bench of the National Company Law Tribunal” shall be substituted.
 

9. In the said rules, in rule 23, in sub-rule (2),
 
(i) for the words “concerned Regional Director”, the words, “Central Government” shall be substituted;
 

(ii) for the words “such Regional Director”, the words, “Central Government” shall be substituted;
 

(iii) in the proviso, for the words “Regional Director”, the words, “Central Government” shall be substituted.
 

23A. Compliance with rule 3A by certain Nidhis:– Every company referred to in clause (b) of rule 2 and every Nidhi incorporated under the Act, before the commencement of Nidhi (Amendment) Rules, 2019, shall also get itself declared as such in accordance with rule 3A within a period of one year from the date of its incorporation or within a period of six months from the date of commencement of Nidhi (Amendment) Rules, 2019, whichever is later:
 

Provided that in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment).
 

23B. Companies declared as Nidhis under previous company law to file Form NDH-4:– Every company referred in clause (a) of rule 2 shall file Form NDH-4 alongwith fees as per the Companies (Registration Offices and Fees) Rules, 2014 for updating its status:
 

Provided that no fees shall be charged under this rule for filing Form NDH-4, in case it is filed within six month of the commencement of Nidhi (Amendment) Rules, 2019:
 

Provided further that, in case a company does not comply with the requirements of this rule, it shall not be allowed to file Form No. SH-7 (Notice to Registrar of any alteration of share capital) and Form PAS-3 (Return of Allotment).
 

11. In the said rules, after the Form NDH-3, the following form shall be inserted, namely:-
 

FORM NDH-4
 

[Pursuant to section 406 of the Companies Act, 2013 and rule 3A, rule 23A and rule 23B of the Nidhi Rules, 2014]

Form for filing application for declaration as Nidhi Company and for updation of status by Nidhis.

https://taxguru.in/wp-content/uploads/2019/07/Nidhi-Amendment-Rules-2019.pdf

Ministry of Corporate Affairs issues circular regarding filing of e-Form DIR-3 KYC (Director’s KYC)

MCA vide General Circular No. 07/2019 dated 27.06.2019 proposes to implement a web-based verification service with pre-filled data based on the records in registry to enable ease of verification in filing KYC.
 

The e-Form DIR-3 KYC will be required to be filed in case of updation of mobile no. or e-mail address. Further, in case of updation in any other personal detail, e-Form DIR-6 may be filed for updation of the same before completion of KYC through the web-based service.
 

The amendment in the relevant rules including the amendment related to extension of time (allowing for adequate time) for completion of KYC through e-form DIR-3 KYC or the web-based service, as the case may be, will be notified shortly.

Incorporation of Section 8 Companies (Not for profit entity) through SPICe

MCA by Companies (Incorporation) 6th Amendment Rules, 2019 dated 7th June, 2019 has amended the incorporation rules for incorporation of Section 8 Companies. The rules will be effective from 15th August, 2019.
 

As per the amended rules, application for incorporation of Section 8 Company along with application for license for such Company will now be submitted in Form INC-32 (SPICe). However, application for Section 8 license for an existing Section 8 Company will continue to be in Form INC-12.
 

Currently, the power to grant license to Section 8 Company is with Registrar of Companies (ROC). Post this amendment, this power will go into the hands of Central Registration Center (CRC).
 

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