In this edition we have tried to bring you notice the latest amendment that followed in the month of December, 2021 issued by MCA, RBI, SEBI, DIPP and others.
Amendments issued by MCA
The Ministry of Corporate Affairs has issued the clarification on holding of Annual General Meeting (AGM) through Video Conference (VC) or Other Audio-Visual Means (OAVM).
MCA has decided to allow the companies whose AGMs are due in the Year 2021, to conduct their AGMs on or before June 30, 2022 in accordance with the requirements laid down in Para 3 and Para 4 of the General Circular No. 20/2020 dated 05.05.2020. It is further clarified that this Circular shall not be construed as conferring any extension of time for holding of AGMs by the companies under the Companies Act, 2013 (the Act) and the companies which have not adhered to the relevant timelines shall be liable to legal action under the appropriate provisions of the Act.
To read more: https://www.mca.gov.in/bin/dms/getdocument?mds=LzJdfoYrL7zlnxT8HWRv5Q%253D%253D&type=open
The Ministry of Corporate Affairs has issued the clarification on passing general and special resolutions through Video Conference (VC) or Other Audio-Visual Means (OAVM) or to transact items through postal ballot.
The Ministry has come up with the relaxations for the provisions under the Companies Act 2013 to allow respective companies to pass ordinary and special resolutions regarding the urgent matters in lieu of the difficulties faced by the stakeholders due to amid COVID-19 outbreak. It has been decided to allow companies to conduct their EGMs through Video Conference (VC) or Other Audio-Visual Means till (OAVM) or transact items through postal ballot till June 30, 2022. Earlier MCA has allowed the extension up to December 31, 2021.
To read more: https://www.mca.gov.in/bin/dms/getdocument?mds=FNEhC2FrbKO7ANLDeiQ01A%253D%253D&type=open
MCA has issued a new clarification on of holding of the Annual General Meeting (AGM) through Video Conference (VC) or Other Audio-Visual Means (OAVM).
MCA has provided more leeway for companies in terms of holding their Annual General Meetings in virtual mode. The relaxation will be applicable for companies planning to hold their Annual General Meetings (AGMs) next year for the financial year 2021-22. It is clarified that the Companies proposing to hold their AGMs in 2022 for the financial year ended/ending any time before/on March 31, 2022 have been allowed to conduct the same through the virtual mode till June 30, 2022. The companies can conduct their AGMs through video conference (VC) or other audio-visual means (OAVM). MCA has further clarified that the circular should not be construed as conferring any extension of time for holding AGMs by the companies under the Companies Act, 2013.
To read more:
https://www.mca.gov.in/bin/dms/getdocument?mds=%252FsmI3Qxz3XlO4y8gLsakgg%253D%253D&type=open
Amendments issued by SEBI
SEBI has published the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Third Amendment) Regulations, 2021
to further amend the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Through this amendment, Regulation 5A which deals with delisting offers has been substituted. Accordingly, an acquirer may seek the delisting of the target company by making a delisting offer as per the prescribed conditions which include that the acquirer shall have declared his intention to so delist the target company at the time of making such public announcement of an open offer as well as at the time of making the detailed public statement and the declaration of the intent to so delist shall be made initially only in the detailed public statement. The delisting offer obligations shall be fulfilled by the acquirer by making the public announcement, the detailed public statement and the letter of offer shall mention the open offer price determined in accordance with regulation 8 of these regulations and the indicative price for delisting. The open offer price and indicative price shall be notified by the acquirer at the time of making the detailed public statement and in the letter of offer. Further, in cases where a delisting offer is not successful on account of the non–receipt of the prior approval of shareholders in terms of Regulation 11 of the Delisting Regulations; or on account of non-receipt of the prior in-principle approval of the relevant stock exchange in terms of regulation 12 of the Delisting Regulations; or the threshold as specified under Regulation 21 of the Delisting Regulations is not achieved, in such cases, the acquirer shall, within two working days in respect of such failure, make an announcement in all the newspapers in which the detailed public statement was made and comply with all the applicable provisions of these regulations in relation to completing of the open offer.
SEBI has revised Operational Circular for issue and listing of Non-convertible Securities, Securitized Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper
Since the notification of the SEBI ILDS Regulations, 2008 and the SEBI NCRPS Regulations, 2013, SEBI has issued multiple circulars covering procedural and operational aspects thereof. The process of merging these regulations into the SEBI NCS Regulations, 2021 also entails the consolidation of related existing circulars into a single operational circular, with consequent changes. The operational circular provides a chapter-wise framework for the issuance, listing and trading of Non-convertible Securities, Securitized Debt Instruments, Security Receipts, Municipal Debt Securities or Commercial Paper. The framework is revised to direct that during Listing of Commercial Paper, where an issue is made by an issuer who has been in existence for less than three years, a disclosure that the issue is open for subscription only to Qualified Institutional Buyers shall be made.
To read more:
Amendments issued by RBI
RBI has notified the Introduction of Legal Entity Identifier for Cross-border Transactions
In order to further harness the benefits of legal entity identifier (LEI), has been decided that AD Category I banks, with effect from October 1, 2022, shall obtain the LEI number from the resident entities (non-individuals) undertaking capital or current account transactions of ₹50 crores and above (per transaction) under FEMA, 1999. The Legal Entity Identifier (LEI) is a 20-digit number used to uniquely identify parties to financial transactions worldwide to improve the quality and accuracy of financial data systems. LEI has been introduced by the Reserve Bank in a phased manner for participants in the over-the-counter (OTC) derivative, non-derivative markets, large corporate borrowers and large value transactions in centralized payment systems. Further, AD Category I banks may encourage concerned entities to voluntarily furnish LEI while undertaking transactions even before October 1, 2022. Once an entity has obtained an LEI number, it must be reported in all transactions of that entity, irrespective of transaction size. Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the GLEIF, the body tasked to support the implementation and use of LEI. In India, LEI can be obtained from Legal Entity Identifier India Ltd. (LEIL) (https://www.ccilindia-lei.co.in), which is also recognized as an issuer of LEI by the Reserve Bank under the Payment and Settlement Systems Act, 2007.
To read more: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12206&Mode=0
RBI has notified the External Commercial Borrowings, Trade Credits and Structured Obligations, prescribing the benchmark rates and the maximum spread over benchmark for calculating the all-in-cost for foreign currency (FCY) ECBs and TCs.
In order to facilitate smooth transitioning from Libor linked overseas borrowings to market-related benchmarks, the Reserve Bank of India has allowed widely accepted interbank rate or alternative reference rate (ARR) for external commercial borrowings and trade credits. Besides, it has also raised the ceiling for all in cost borrowings. Henceforth, the benchmark rate in case of foreign currency external commercial borrowing (ECB) and trade credit (TC) shall refer to any widely accepted interbank rate or alternative reference rate (ARR) of 6-month tenor, applicable to the currency of borrowing” the Reserve Bank said in a circular issued to commercial banks. Currently, the benchmark rate is the 6-months Libor- London interbank offered rate (Libor) of different currencies or any other 6-month interbank interest rate applicable to the currency of borrowing. The new instruction defining the all-in cost ceiling for ECB and trade credit is going to bring clarity to the market about the probable pricing of these products when linked with ARRs. For existing ECBs/ TCs linked to Libor whose benchmarks are changed to ARRs, the all-in-cost ceiling for such ECBs/ TCs has been revised upwards by 100 bps to 550 bps and 350 bps, respectively, over the ARR. But this dispensation is only on account of the transition from LIBOR to alternative benchmarks.
To read more: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12204&Mode=0
RBI has issued a notification to bring Non-Banking Finance Companies (NBFCs) under the ambit of the prompt corrective action (PCA) framework.
The objective of the PCA Framework is to enable Supervisory intervention at the appropriate times and require the Supervised Entity to initiate and implement remedial measures in a timely manner, so as to restore its financial health. The PCA framework is also intended to act as a tool for effective market discipline. The PCA framework does not preclude the Reserve Bank of India from taking any other action as it deems fit at any time in addition to the corrective actions prescribed in the Framework. NBFCs have been growing in size and have substantial interconnectedness with other segments of the financial system. Accordingly, it has now been decided to put in place a PCA Framework for NBFCs to further strengthen the supervisory tools applicable to NBFCs. The PCA Framework for NBFCs, shall come into effect from October 1, 2022, based on the financial position of NBFCs on or after March 31, 2022. The PCA framework is applicable to All Deposit Taking NBFCs [Excluding Government Companies] (NBFCs-D), All Non-Deposit Taking NBFCs in Middle, Upper and Top Layers (NBFCs-ND) [Including Investment and Credit Companies, Core Investment Companies (CICs), Infrastructure Debt Funds, Infrastructure Finance Companies, Micro Finance Institutions and Factors] but excluding NBFCs not accepting/not intending to accept public funds; Government Companies, Primary Dealers and Housing Finance Companies. Once an NBFC is placed under PCA, taking the NBFC out of PCA Framework and/or withdrawal of restrictions imposed under the PCA Framework will be considered only on fulfillment of certain conditions.
To read more: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12208&Mode=0
Miscellaneous Amendments
IBBI has notified the amendment to the IBBI (Online Delivery of Educational Course and Continuing Professional Education by Insolvency Professional Agencies And Registered Valuers Organisations) Guidelines, 2020
The IBBI has once again extended the validity of the Insolvency and Bankruptcy Board of India (Online Delivery of Educational Course and Continuing Professional Education by Insolvency Professional Agencies and Registered Valuers Organizations) Guidelines, 2020 till March 31, 2022. Earlier IBBI has extended the validity till September 30, 2021 and December 31, 2021. IBBI has allowed all IPA & RVO to continue to conduct the online courses under the applicable provisions.
To read more: https://ibbi.gov.in/uploads/legalframwork/58782cc53126e4e8cfc18103d7d5798d.pdf
The Food Safety and Standards Authority of India has revised the appeal procedure under the Food Safety and Standards (Approval for non-specified food and food ingredients) Regulation, 2017.
As per the revised provision 4(6), the food business operator may file an appeal before the Chief Executive Officer of the food authority against any decision of rejection of the application within 30 days of the receipt of the rejection letter. Such appeal shall be disposed off within 30 days of its receipt and any delay beyond this shall be allowed within reasons recorded thereof. Further as per Regulation 4(7), a food business operator, who is aggrieved by the decision of the Chief Executive Officer of the food authority may file a review petition to be placed for consideration of the Chairperson of the food authority, within 30 days from the date of issue of appellate order. The decision of the Chairperson, Food Authority shall be final in this regard. Such review shall be disposed off within 30 days of its receipt and any delay beyond this shall be allowed with reasons recorded thereof.
To read more: