consequences of non apllicabilty of CARO

Sl. No.

Clause

CARO, 2003

CARO (Amend), 2004

Amendments / Remarks

01

Clause (iv)(2) of Para 1

a private limited company with a paid up capital and reserves not more than fifty lakh rupees and has not accepted any public deposit and does not have loan outstanding ten lakh rupees or more from any bank or financial institution and does not have a turnover exceeding five crore rupees.

'a private limited company with a paid up capital and reserves not more than rupees fifty lakh and which does not have loan outstanding exceeding rupees twenty five lakh from any bank or financial institution and does not have a turnover exceeding rupees five crore at any point of time during the financial year.

1. The Pvt. Ltd. Companies cannot legally raise public deposits and hence the clause has been omitted.
2. The loan outstanding limit has been raised from Rs.10 lakhs to Rs. 25 lakhs above.
3. Now a private limited Company, in order to be exempt from the applicability of the Order, must satisfy all the conditions at any point of time during the financial year.

02

Clauses( c) to (i) of Para 2

Definitions of:
(c) "finance company"
(d) "investment company"
(e) "manufacturing company"
(f) "mining company"
(g) "processing company"
(h) "service company"
(i) "trading company"

OMITTED

Certain definitions repeated from MAOCARO, 1988 have been omitted now.

03

Clause (iii) of Para 4

a) has the company either granted or taken any loans, secured or unsecured to/from companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and amount involved in the transactions.
b) whether the rate of interest and other terms and conditions of loans given or taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company;
c) whether payment of the principal amount and interest are also regular;
d) if overdue amount is more than one lakh, whether reasonable steps have been taken by the company for recovery/payment of the principal and interest;

a) has the company granted any loans, secured or unsecured to companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and amount involved in the transactions; and
b) whether the rate of interest and other terms and conditions of loans given by the company, secured or unsecured , are prima facie prejudicial to the interest of the company ; and
c) whether receipt of the principal amount and interest are also regular; and
d) if overdue amount is more than rupees one lakh, whether reasonable steps have been taken by the company for recovery of the principal and interest;
e) has the company taken any loans, secured or unsecured from companies, firms or other parties covered in the register maintained under section 301 of the Act. If so, give the number of parties and the amount involved in the transactions; and
f) whether the rate of interest and other terms and conditions of loans taken by the company, secured or unsecured, are prima facie prejudicial to the interest of the company; and
g) whether payment of the principal amount and interest are also regular.

Previously merged clauses have been de-merged again in line with MAOCARO, 1988 with some changes have already made in CARO,2003.

04

Clause (iv) of Para 4

is there an adequate internal control procedure commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods. Whether there is a continuing failure to correct major weaknesses in internal control;

is there an adequate internal control system commensurate with the size of the company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. Whether there is continuing failure to correct major weakness in internal control system;

1.      Now the more emphasis has been given to internal control system rather than mere internal control procedure.

2.      Now the para covers purchase and sale of services also.