Alerts:

Regulatory Alert: MCA “Specified Companies (Furnishing of Information about payment to micro and small enterprise suppliers) Order, 2019”

01 February 2019

The Ministry of Micro, Small and Medium Enterprises vide notification dated 2nd November 2018, had directed all Companies, who get supplies of goods or services from Micro and Small Enterprises and whose payments to such suppliers exceed 45 (Forty-Five) days from the date of acceptance or the date of deemed acceptance of goods or services as per the provisions of the Act*, to submit a Half yearly return to the Ministry of Corporate Affairs stating the following:

  1. The amount of payments due
  2. The reasons for the delay

*The Micro, Small and Medium Enterprises Development Act, 2006.

Now, the Ministry of Corporate Affairs vide its notification dated 22nd January 2019 has issued “Specified Companies (Furnishing of information about payment to Micro and Small enterprise suppliers) Order, 2019” [“Order”] to provide for reporting requirements under the aforesaid notification.

This Alert provides an overview of the provisions of the Order which impacts the provisions under the Act and has binding effect on compliances with Ministry of Corporate Affairs for all the Companies.

Key highlights of the Order:

The Order defines “Specified Companies” as, Companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 and directs Specified Companies to file the following:       

  1. Onetime Return: “MSME Form I”, furnishing the details of all outstanding dues (remaining unpaid for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services) to micro or small enterprises suppliers existing on 22nd January 2019. This reporting needs to be done within 30 days from the date of publication of the notification dated 22nd January 2019 in the Official Gazette. 
  2. Half Yearly Return: “MSME Form I” by 31st October for the period from April to September and by 30th April for the period from October to March, every year.

BDO Comments

  • Every Company would need to ascertain whether it is availing supplies of goods or services from micro and small enterprises. Once the Company has identified that its suppliers include micro and small enterprises, it will have to determine whether the due(s) are outstanding for more than 45 days. This exercise will help the Company to identify whether the Company falls under the category of “Specified Companies”.
  • This Order has come into force on 22nd January 2019. Therefore, MSME Form I (onetime return) should be filed on or before 20th February 2019. Specified Companies would also be required to file MSME Form I, half yearly, every year.
  • Going forward “Specified Companies” will endeavour to clear their outstanding dues towards micro and small enterprises within 45 days to deter implications under The Micro, Small and Medium Enterprises Development Act, 2006.