CORPORATE AND LEGAL ALERT- JUNE 2022
In this edition we have tried to bring you notice the latest amendment that followed in the month of June, 2022 issued by MCA, RBI, SEBI, DIPP and others.
Amendments issued by MCA
Through this amendment, MCA has added a new sub-rule 4 in Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, to provide that in case of a compromise or an arrangement or merger or demerger between an Indian company and a company or body corporate which has been incorporated in a country which shares a land border with India, a declaration in Form No. CAA-16 shall be required at the stage of submission of an application under Section 230 of the Act.
To Read More ..
https://egazette.nic.in/WriteReadData/2022/236112.pdf
MCA has been observed that various Section 8 companies are altering their object clause for carrying out micro-finance activities by way of passing Special Resolution, changing Activity code and subsequently filing of e-form MGT-14 with the concerned ROCs, even though at initial incorporation, the ROC (CRC) is not allowing Section 8 companies to get incorporated with the objects of microfinance activities in view of Ministry’s direction letter no. No. 05/33/2017-CL.V dated 10.02.2020 and letter dated 31.8.2020.
To Read More
https://www.mca.gov.in/bin/dms/getdocument?mds=pjROvSy%252FgkUSNcnWQyTUxQ%253D%253D&type=open
MCA has tightened the norms for the appointment of any person, as director in an Indian Company, who is a national of a country that shares a land border with India. Accordingly, in case the person seeking appointment is a national of a country that shares a land border with India, necessary security clearance from the Ministry of Home Affairs, the Government of India shall also be attached along with the consent.
To Read More https://www.mca.gov.in/bin/dms/getdocument?mds=wYSGjqnF6yGnx2KJbnw8aA%253D%253D&type=open
The amendment is brought under Rule 6 which deals with compliances required by a person eligible and willing to restore his name in the independent director databank.
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https://www.mca.gov.in/bin/dms/getdocument?mds=U4Pl6Cz4l3T9YHrD1ZOq2g%253D%253D&type=open
The amendment brought the revisions to the procedure for striking off a company. Accordingly, where the Registrar, on examining the application made in Form STK-2, finds that it is necessary to call for further information or finds such application or any document annexed therewith is defective or incomplete in any respect, he shall inform the applicant to remove the defects and re-submit the complete Form within fifteen days from the date of such information, failing which the Registrar shall treat the Form as invalid in the electronic record, and shall inform the applicant.
To Read More
https://www.mca.gov.in/bin/dms/getdocument?mds=TffuoSoybbV3DKUqzsmMaQ%253D%253D&type=open
According to the National Financial Reporting Authority (NFRA) amendment rules 2022, Rule 13 is amended to provide the revised penalty provision for non-compliance or contravention with any of the provisions.
To Read More
https://www.mca.gov.in/bin/dms/getdocument?mds=ALYJ%252BRnuB%252BCYMY4Llv02JA%253D%253D&type=open
Amendments issued by SEBI
All Demat accounts maintained by stock brokers should be appropriately tagged. All Demat accounts of stock brokers which are untagged need to be appropriately tagged by June 30, 2022, under the categories which include Proprietary Account to Hold Own Securities; Pool account for Settlement Purposes; Client Unpaid Securities Account to Hold Unpaid Securities of Clients; Client Securities Margin Pledge Account for Margin obligations to be given by way of Pledge/ Re-pledge, and Client Securities under Margin Funding Account to Hold funded securities in respect of margin funding.
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The Board has approved an amendment to simplify the process for transmission of securities to ensure that uniform processes are followed by the Registrars to an Issue and Share Transfer Agents (RTAs) / listed companies which would further ease the transmission process for investors. The threshold limit for simplified documentation for transmission of securities has been revised from Rs. 2 lakhs to Rs. 5 lakhs for securities held in physical mode per listed issuer and from Rs. 5 lakhs to Rs. 15 lakhs for securities held in the dematerialized mode for beneficiary account.
To Read More
https://mail.google.com/mail/u/0/?pli=1#inbox/FMfcgzGpGnLZzQTSPSTHmDnZrhjtNNfk
As per Clause 9 of SEBI KYC (Know Your Client) Registration Agency (KRA) Regulations, 2011. The KYC records of all existing clients (who have used Aadhaar as an officially valid document (OVD) shall be validated within a period of 180 days from August 01, 2022. and for those clients who have completed KYC using non-Aadhaar OVD, their records will be validated only after they have given their Aadhaar number.
To Read More
https://egazette.nic.in/WriteReadData/2022/236790.pdf
The new framework will come into force with effect from 1st June 2022. The Arbitration Mechanism shall be initiated post exhausting all actions for resolution of complaints including those received through the SCORES Portal. The Arbitration reference shall be filed with the Stock Exchange where the initial complaint has been addressed. In case of arbitration matters involving a claim of up to Rs. 25 lakhs, a sole arbitrator shall be appointed and, if the value of the claim is more than Rs. 25 lakhs, a panel of three arbitrators shall be appointed. The arbitration and appellate arbitration shall be conducted at the regional center of the stock exchange nearest to the shareholder(s) /investor(s).
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Based on the representations received from REITs/InvITs, SEBI has decided to further extend the facility to conduct annual meetings through VC/OAVM. Besides, the Ministry of Corporate Affairs (MCA), last month, extended the facility of holding AGMs and EGMs through VC/OAVM till December 31, 2022.
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For any dispute between the member and the client relating to or arising out of the transactions in the Stock Exchange, which is of civil nature, the complainant/ member shall first refer the complaint to the IGRC and/ or to Arbitration Mechanism provided by the Stock Exchange before resorting to other remedies available under any other law. A complainant/member, who is not satisfied with the recommendation of the IGRC shall avail the arbitration mechanism of the Stock Exchange for settlement of complaints within three months from the date of IGRC recommendation.
To Read More
https://www.sebi.gov.in/legal/circulars/jun-2022/investor-redressal-grievance-mechanism_59521.html
Amendments issued by RBI
The directions shall apply to the Non-centrally cleared foreign exchange derivative contracts undertaken in terms of the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 and non-centrally cleared interest rate derivative contracts undertaken in terms of the Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019 and any other non-centrally cleared derivative (NCCD) contract as may be specified by the Reserve Bank.
To Read More
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12328&Mode=0
Amendments issued by IBBI
IBBI has notified which shall come into force on the date of their publication in the Official Gazette i.e 14-06-2022. The Amendment has provided the revised mechanism for carrying out inspections and investigations on insolvency professional agencies, insolvency professionals, and information utilities and passing orders by Disciplinary Committee. The mechanism of complaint/ grievance redressal and subsequent enforcement action has been amended to have expeditious redressal and also to avoid placing an undue burden on the service providers.
To Read More
https://ibbi.gov.in/uploads/legalframwork/c317bc75a22562eb4a439072ecda405f.pdf
The amendment provides the operational creditors to furnish extracts of Form GSTR-1, Form GSTR-3B and e-way bills, wherever applicable along with the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016. These additional sets of documents can be used as evidence of transactions with the corporate debtor, debt, and default easing the process of admission. These documents will also to be submitted as part of the claims submitted to the resolution professional to help collation of claims.
To Read More
https://ibbi.gov.in/uploads/legalframwork/c317bc75a22562eb4a439072ecda405f.pdf
Amendments issued by CBIC
CBIC has requested the Insolvency and Bankruptcy Board of India establish the role of the GST and Customs authorities in certain crucial matters under the Insolvency and Bankruptcy Code, 2016. The GST and Customs Authorities have been classed as operational creditors. The authorities must file claims against corporate debtors when the corporate bankruptcy and resolution process are commenced and a public statement inviting claims is published by the insolvency professional.
To Read More
https://ibbi.gov.in/uploads/whatsnew/d43197e20e9644e00e26c5e036e0a269.pdf
The Goods and Services Tax (Compensation to States) Act, 2017 provides for compensation to states for any loss in revenue due to the implementation of GST. The Act allows the central government to levy a GST Compensation Cess on the supply of certain goods and services. The receipts from the cess are deposited to a GST Compensation Fund. The amount deposited in the Fund is used to compensate states for any loss in revenue following the implementation of GST. Earlier the government fixed the last date for levy of GST compensation cess till July 01, 2022, however, it has now been extended till March 31, 2026.
To Read More
https://egazette.nic.in/WriteReadData/2022/236790.pdf
The GST on the supply of printing, writing or drawing ink, knives, power-driven pumps, LED Lamps, lights and fixtures are recommended to be increased from 12% to 18%. The GST rate on the solar water heaters and finished leather is recommended to be increased from 5% to 12%.
To Read More
https://pib.gov.in/PressReleseDetail.aspx?PRID=1838020
Amendments issued by FSSAI
Submission of returns physically or through email will not be
considered. As per regulation 2.1.13 of Food Safety and Standards (Licensing
and Registration of Food Businesses) Regulations, 2011, every licensee shall on
or before 31st May of each year, submit a return, in ‘Form D-1’ to the
Licensing Authority in respect of each class of food products handled by him
during the previous financial year.
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As per sub-regulation 9 of FSS (labeling and display) regulations 2020, the food service establishments having central license or outlets at 10 or more locations shall mention the calorific value against the food items displayed on the menu cards or boards or booklets and shall also provide information such as nutritional information, allergen information, ingredient information, etc.
To Read More
https://www.fssai.gov.in/upload/advisories/2022/06/62a86bfa4849eOrder_FBO_ECommerce_14_06_2022.pdf
Amendments issued by CBDT
The Budget brought in a new section, 194R in the I-T Act which requires deduction of tax at source at the rate of 10%, by any person, providing any benefit or perquisite, exceeding Rs 20,000 in a year to a resident, arising from the business or profession of such resident. In line with CBDT’s commitment to reduce taxpayer grievances, revised Instruction for the constitution & functioning of Local Committees to deal with taxpayer grievances arising out of high-pitched assessments was issued.
To Read More
https://www.fssai.gov.in/upload/advisories/2022/06/62a86bfa4849eOrder_FBO_ECommerce_14_06_2022.pdf
MISCALLANEOUS
Through this amendment, Rule 6 deals with an intimation of receiving foreign funds from relatives, which is amended to provide that the time period to notify the government regarding the overseas transaction has been extended from 30 days to three months. Accordingly, any person receiving a foreign contribution in excess of 10 lakhs or equivalent thereto in a financial year from any of his relatives shall inform the Central government (details of funds) within three months from the receipt of such contribution.
To Read More
https://egazette.nic.in/WriteReadData/2022/236981.pdf
Angel Funds bridge the gap between start-ups and angel investors, who are instrumental in providing mentoring, and resources to the start-ups. In recognition of the same, IFSCA has now issued a framework for Angel funds under the IFSCA (Fund Management) Regulations, 2022. The salient features of the said framework include a Fund Management Entity (FME) in IFSC will be able to launch Angel Fund by filing a placement memorandum with the Authority under a Green Channel, i.e. the schemes can open for subscription by investors immediately upon filing the placement memorandum with the Authority. Angel Funds shall accept investments from accredited investors or investors who are willing to commit at least USD 40,000 over 5 years.
To Read More
https://ifsca.gov.in/Viewer/Index/318