The Ministry of Corporate Affairs has issued a significant amendment to the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, aimed at enhancing the transparency and accountability of corporate payments to micro and small enterprises (MSEs).
Effective from 15 July 2024 , this amendment mandates that only those specified companies with payments pending for more than 45 days to any micro or small enterprises must furnish the required information in MSME Form-1 and also detailed break-up of outstanding will be required to be given with the reason of delay
Below is Notification
New Delhi, the 15th July, 2024
S.O. 2751(E).—In exercise of the powers conferred by section 405 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following Order to amend the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019:
1. Title and Commencement
- (1) This Order may be called the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024. (2) It shall come into force on the date of its publication in the Official Gazette.
2. Amendments to the Specified Companies Order, 2019
In the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 (hereinafter referred to as the said order):
(i) Paragraph 3 Amendment:
The following proviso shall be inserted in paragraph 3:
“Provided that only those specified companies which are having payments pending to any micro or small enterprises for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services under section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) shall furnish the information in MSME Form-1.”
(ii) Annexure Amendment:
In the Annexure, for MSME Form-1, the following form shall be substituted:
THE GAZETTE OF INDIA: EXTRAORDINARY [PART II—SEC. 3(ii)]
Summary of the Notification:
- Introduction and Context: The Ministry of Corporate Affairs has issued a notification amending the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019. The amendment aims to streamline the reporting requirements for specified companies in relation to their payments to micro and small enterprises (MSEs).
- Key Changes:
- Proviso Addition in Paragraph 3: Only those specified companies with payments pending for more than 45 days to any micro or small enterprises are required to furnish the information in MSME Form-1. This aligns with section 9 of the Micro, Small and Medium Enterprises Development Act, 2006, which stipulates the time frame for payment acceptance.
- Form Substitution: The existing MSME Form-1 in the Annexure of the 2019 Order is replaced with a new form. The updated form is designed to capture the relevant information more effectively.
- Implications for Specified Companies:
- Compliance Requirement: Companies must track their payment timelines closely to determine if they meet the criteria for mandatory reporting in MSME Form-1.
- Timely Reporting: Companies with overdue payments to MSEs exceeding 45 days must ensure timely submission of the updated MSME Form-1 to comply with the amended Order.
- Objective: The amendment seeks to enhance transparency and accountability in corporate payments to MSEs, ensuring that the small enterprises receive their dues promptly, thereby fostering a healthier business environment.
Detailed Explanation:
The Ministry of Corporate Affairs has recognized the need to ensure that micro and small enterprises are paid promptly by larger corporate entities. Delayed payments can significantly impact the cash flow and operations of these smaller enterprises. The amendment to the Specified Companies Order, 2019, introduces a clear stipulation that only companies with payments pending beyond 45 days need to furnish the required information, thereby focusing on critical cases of delayed payments.
Importance of Section 9 of the MSME Development Act, 2006:
Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006, is pivotal as it sets the legal framework for the timely acceptance and payment for goods and services provided by MSEs. By aligning the reporting requirements with this section, the amendment reinforces the legal obligation of timely payments to MSEs.
MSME Form-1:
The updated MSME Form-1 is designed to capture detailed information about pending payments, ensuring that the data submitted is comprehensive and useful for monitoring and regulatory purposes. This form substitution is aimed at improving the ease of reporting and the quality of information collected.
Revised form below:
The Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024, marks a significant step towards ensuring that micro and small enterprises receive their payments on time. By mandating reporting only for payments pending beyond 45 days and updating the reporting form, the Ministry of Corporate Affairs aims to foster a more accountable and transparent business environment. Companies must stay vigilant about their payment schedules and ensure compliance with the new requirements to avoid penalties and contribute to the overall health of the MSME sector.
Visit www.cagurujiclasses.com for practical courses
