The Registrar of Companies would now be able to issue direct licences to not-for-profit organisations making their registration easier. The new rules issued by the Ministry of Corporate Affairs has done away with some mandatory provisions which will make incorporation as a Section 25 company much faster.
"Now, the power to issue licence under Section 25 has been delegated to Registrar of Companies...It will reduce the time taken in incorporation of Section 25 companies (not-for-profit companies). The 30-day mandatory notice period before incorporating such a company has also been done away with," said Avinash Srivastav, joint secretary with the Ministry of Corporate Affairs, on the sidelines of an event. While easing the rules for non-profit organisations, the government, amidst rising concerns of misuse of funds raised by companies through private placement of shares , said that it will come up with new rules to regulate the use of such funds.
"Something is being worked out. By June-end, we will be coming out with formal draft rules or set of guidelines for unlisted companies raising money through private placements of shares," said Srivastav. The decision of the Ministry of Corporate Affairs to come up with new guidelines comes against the backdrop of the controversy surrounding the Sahara group of firms raising funds through similar instrument. The fund raising act of the company was objected to by the Securities and Exchange Board of India.
Disclosure: The above information/content is taken from http://www.economictimes.com The Economic Times have copyright over above information/content. The above information/content is put for general education to spread the information available in public domain. Link for more details http://www.economictimes.com