In this edition we have tried to bring you notice the latest amendment that followed in the month of November, 2021 issued by MCA, RBI, SEBI, DIPP and others.
Amendments issued by MCA
MCA has removed all the Disqualification of Director Identification Number (DINs)
As per the Companies Act, directors for five years are disqualified, if they are part of a company that defaulted on filing financial statements or annual returns for three years or has failed to repay the deposits accepted by it or pay interest on it. The disqualification also covers directors of companies that defaulted on redeeming any debentures on the due date or pay the interest due on it or pay any dividend declared. These directors cannot be re-appointed as a director of that company or in any other company for five years from the date of the default. Earlier this month, MCA has issued a public notice to notify that the Director Identification Numbers (DINs) of Directors found to be disqualified have been de-flagged since the restriction was for five years. MCA had flagged the DINs of Directors found to be disqualified under sub-section 2(a) of section 164 of the Companies Act, 2013 w.e.f. 1st November 2016 for a period of five years. All these Directors are now free to take up fresh assignments.
To read more: https://www.mca.gov.in/mcafoportal/showEnquireDIN.do
MCA notifies IEPF Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2021
to amend the existing Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016. Through this notification, the base limit of ₹2 lakhs is increased to ₹5 lakhs for various document submission related purposes. Now, in case of loss of securities held in physical mode, the shareholder can submit a self-attested copy of FIR/ Police Compliant instead of a notarized copy. In the existing provisions, it was required to submit Surety Affidavit of value equal to market value that of shares as on date of execution but with the advent of this amendment, the Surety Affidavit needs not to be of the afore-mentioned value. Earlier, it was required to give an advertisement in at least one English language national daily newspaper having nationwide circulation and in one regional language daily newspaper published in the place of the registered office of the company, if the market value of the shares was greater than ₹10,000, which is now increased to ₹5 lakhs. This amendment is for the benefit of small shareholders. To ease out the entire process of claim, many issues are resolved and altered to provide clarity and ease to the stakeholders which include a Documentary requirement for securities held in physical mode and the word, “nominee” is now replaced with the word, “claimant”. Further, a copy of the death certificate of the security holder attested by the claimant would now be a sufficient document.
To read more: https://egazette.nic.in/WriteReadData/2021/230981.pdf
Amendments issued by SEBI
SEBI has issued clarification regarding Disclosure obligations of listed entities in relation to Related Party Transactions
SEBI has earlier mandated all listed entities that have listed specified securities to submit to the stock exchanges disclosure of Related Party Transactions (RPTs) in the format specified by the Board from time to time. Further, SEBI has been decided to prescribe the information to be placed before the audit committee and the shareholders for consideration of RPTs. Accordingly, the following provisions shall apply to entities that have listed specified securities on a Recognized Stock Exchange shall provide the detailed information, for review of the audit committee for approval of a proposed RPT which includes Type, material terms and particulars of the proposed transaction; Name of the related party and its relationship with the listed entity or its subsidiary, including nature of its concern or interest (financial or otherwise); Tenure of the proposed transaction(particular tenure shall be specified); Value of the proposed transaction; The percentage of the listed entity’s annual consolidated turnover, for the immediately preceding financial year, that is represented by the value of the proposed transaction (and for a RPT involving a subsidiary, such percentage calculated on the basis of the subsidiary’s annual turnover on a standalone basis shall be additionally provided); If the transaction relates to any loans, inter-corporate deposits, advances or investments made or given by the listed entity or its subsidiary. Justification as to why the RPT is in the interest of the listed entity; Copy of the valuation or other external party report, if any such report has been relied upon; Percentage of the counter-party’s annual consolidated turnover that is represented by the value of the proposed RPT on a voluntary basis. This Circular shall come into force with effect from April 1, 2022.
To read more: https: https://www.sebi.gov.in/legal/circulars/nov-2021/disclosure-obligations-of-listed-entities-in-relation-to-related-party-transactions_54113.html
SEBI has revised guidelines for processing of the draft Scheme of Arrangement by Listed Entities filed with the stock exchanges.
These amendments are aimed at ensuring that the recognised stock exchanges refer draft schemes to SEBI only upon being fully convinced that the listed entity is in compliance with SEBI Act, Rules, Regulations and circulars. As per the revised guidelines, this report needs to be accompanied by an undertaking from the listed entity, stating that no material event impacting the valuation has occurred during the intervening period of filing the scheme documents with exchange and period under consideration for valuation. Besides, the entities now also need to submit a declaration on any past defaults of listed debt obligations of the entities forming part of the scheme. In addition, a no-objection certificate from the lending scheduled commercial banks/ financial institutions are also required to be submitted. Further, the fractional entitlements, if any, shall be aggregated and held by the trust, nominated by the Board on that behalf, who shall sell such shares in the market at such price, within a period of 90 days from the date of allotment of shares. The listed company has to submit a report from its audit committee and the independent directors certifying that the listed entity has compensated the eligible shareholders. SEBI has also asked the exchange to ensure compliance with the guidelines and the non-compliance, if any, has to be submitted to the regulator on a quarterly basis. Any misstatement or furnishing of false information will make the listed entity liable for punitive action. The guidelines will be applicable for all the schemes filed with the stock exchanges from the date of the circular.
To read more: https://www.sebi.gov.in/legal/circulars/nov-2021/scheme-of-arrangement-by-listed-entities_53967.html
SEBI has notified the SEBI a (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2021 which shall come into force with effect from April 1, 2022
The amendment is brought under regulation 23 which deals with related party transactions in which the existing Explanation has been amended to provide that a transaction with a related party shall be considered material, if the transaction(s) to be entered into individually or taken together with previous transactions during a financial year, exceeds rupees one thousand crores or ten percent of the annual consolidated turnover of the listed entity as per the last audited financial statements of the listed entity, whichever is lower. The listed entity shall formulate a policy on materiality of related party transactions and on dealing with related party transactions including clear threshold limits duly approved by the Board of Directors and such policy to be reviewed once every three years and updated accordingly. Further as per Regulation 23(2), all related party transactions and subsequent material modifications shall require prior approval of the audit committee of the listed entity. Furthermore, the audit committee of a listed entity shall define “material modifications” and disclose it as part of the policy on materiality of related party transactions and on dealing with related party transactions. The listed entity shall submit to the stock exchanges disclosures of related party transactions in the format as specified by the Board from time to time, and publish the same on its website: Provided that a ‘high-value debt listed entity’ shall submit such disclosures along with its standalone financial results for the half-year.
Amendments issued by RBI
RBI has directed all Deposit-taking NBFCs (NBFCs-D) with 10 or more branches and Non-Deposit-taking NBFCs (NBFCs-ND) with asset size of Rs. 5,000 crore and above having public customer interface to appoint Internal Ombudsman (IO) within a period of six months from the date of issue of the direction.
However, Stand-alone Primary Dealer; Non-Banking Financial Company – Infrastructure Finance Company (NBFC-IFC); Core Investment Company (CIC); Infrastructure Debt Fund – Non-Banking Financial Company (IDF-NBFC); Non-Banking Financial Company – Account Aggregator (NBFC-AA); NBFC under Corporate Insolvency Resolution Process; NBFC in liquidation and NBFC having only captive customers are excluded from the applicability of this direction. The NBFC may appoint more than one IO depending on the number of complaints received/branch network. In such a case, the NBFC shall define the jurisdiction of each IO. The tenure of the IO shall be for a fixed term of not less than three years, but not exceeding five years and the same shall be indicated in the appointment letter. The IO shall not be eligible for reappointment or for extension of tenure in the same NBFC. The IO shall deal only with the complaints that have already been examined by the NBFC but have been partly or wholly rejected by the NBFC. In other words, the IO shall not handle complaints received directly from the customers or members of the public. Further, the NBFC shall put in place a system of periodic reporting of information to Reserve Bank as prescribed in this circular.
To read more: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12195&Mode=0
RBI has issued a Master Direction on Interest Rate on Deposits dealing with the Foreign Currency (Non-resident) Accounts (Banks) Scheme [FCNR(B)].
RBI in view of the impending discontinuance of LIBOR as a benchmark rate has decided to permit banks to offer interest rates on Foreign Currency (Non-resident) Accounts (Banks) Scheme (FCNR) deposits using widely accepted ‘Overnight Alternative Reference Rate (ARR) for the respective currency’ with upward revision in the interest rates ceiling by 50 bps. RBI has amended Section 19(d) to provide that the Interest on floating rate deposits shall be paid within the ceiling of swap rates for the respective currency/ maturity and in case of fixed-rate deposits, interest shall be paid within the ceiling of Overnight Alternative Reference Rate for the respective currency/ maturity. The Overnight Alternative Reference Rate for the respective currency /SWAP rates as on the last working day of the preceding month shall form the base for fixing ceiling rates for the interest rates offered effectively in the following month.
To read more: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12191&Mode=0
Miscellaneous Amendments
The Employees State Insurance Corporation has relaxed the time limit for filing and depositing ESI contributions due to system breakdown in the IT system.
The ESI contribution for the month of October, 2021 can be remitted up to November 30, 2021 instead of November 15, 2021 and Return of Contribution for the period April 2021 to September-2021 may be filed up to December 15, 2021 instead of November 11, 2021. Keeping in view the problems being faced by stakeholders regarding performing online tasks through various Panchdeep modules due to system breakdown in IT system. ESIC has decided to extend the timeline up to 30th November for filing ESI contribution and 15th December 2021 for filing return of contribution.
To read more: https://www.esic.nic.in/attachments/circularfile/b3f541ded1e9eac2478859428b16117d.pdf