News

SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2022 Notified

On 10th May 2022, the Securities Exchange Board of India notified SEBI (Infrastructure Investment Trusts) (Amendment) Regulations, 2022 which are set to come into force on the date of their publication in the Official Gazette.

In the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, the following amendment has been notified:

“In Schedule II, paragraph 4 shall be substituted with the following: “

With respect to privately placed InvIT, the InvIT shall pay non-refundable filing fees of: 

i. 0.1% in case of initial offer.

ii. 0.05% in case of the rights issue, of the total issue size including greenshoe option, if any, at the time of filing of the draft placement memorandum or letter of offer, as applicable, with the Board.”

 

 

News

MCA Amends Companies (Share Capital and Debenture) Rules, 2014

On 4th May 2022, the Ministry of Corporate Affairs notified amendments to the  Companies (Share Capital and Debenture) Rules, 2014. The Rules shall come into force from the date of their publication in the Official Gazette. 

As per the amendment, in the Annexure, Form No.SH-4, before the Enclosures of the Companies (Share Capital and Debentures) Rules, 2014, the following Declaration shall be inserted: 

Declaration: 

1. Transferee is not required to obtain the Government approval under the Foreign Exchange
Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares, or; 

2. Transferee is required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares and the same has been obtained and is
enclosed herewith.”

News

IBBI Amends Liquidation Process Regulations, 2016

On 28th April 2022, the Insolvency and Bankruptcy Board of India amended the Liquidation Process Regulations clarifying the applicability of Sections 2A, 21A, 31A and 44.

The said amendments have been issued to come into force from the date of notification in the Official Gazette. 

The amendment has inserted an explanation after regulations 2A, 21A, 31A and 44 clarifying that the requirements of this regulation shall only apply to liquidation processes commencing on or after the date of the commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019. 

News

MCA Amends Rules Governing Nidhi Companies

On 19th April 2022, the Ministry of Corporate Affairs notified amendments to the Rules governing Nidhi Companies in the Official Gazette. 

The Amendments mandate Public Companies seeking to function as Nidhi, to obtain a prior declaration from the Central Government before accepting deposits.  The same has been enshrined under the newly inserted Rule 3B (1) which states, 

“On and after the commencement of Nidhi (Amendment) Rules, 2022, public company
desirous to be declared as a Nidhi shall apply, in Form NDH-4, within a period of one hundred
twenty days of its incorporation for declaration as Nidhi, if it fulfils the following conditions,
namely:-
(I) it has not less than two hundred members; and
(II) it has Net Owned Funds of twenty lakh rupees or more.”‘

Further, as per Rule 3B (2), the promoters and the directors of the Company also have to attach a declaration with regard to the fulfilment of ‘fit and proper’ person criteria along with Form NDH-4. 

The Rules have identified the following factors to be taken into account for the determination of a ‘fit and proper’ person: 

(a) integrity, honesty, ethical behaviour, reputation, fairness and character of the person. 

(b) the person not incurring any of the following disqualifications, namely:-

  • Criminal complaint or information under section 154 of the Code of Criminal Procedure, 1973 (2 of 1974) has been filed by a person authorised by the Central Government against such person and which is pending.
  • Charge sheet has been filed against such person by any enforcement agency in
    matters concerning economic offences which is pending. 
  • An order of restraint, prohibition or debarment has been passed against such person by any regulatory authority or enforcement agency in any matter concerning company law, securities laws or financial markets which is in force. 
  • An order of conviction has been passed against such person by a court for any
    offence involving moral turpitude. 
  • Such person has been declared insolvent and not been discharged. 
  • Such person has been found to be of unsound mind by a court of competent
    jurisdiction and the finding is in force. 
  • Such person has been categorised as a willful defaulter. 
  • Such person has been declared a fugitive economic offender. 
  • Such person is a director in five or more companies incorporated or declared as Nidhi, or is a promoter of three or more companies incorporated or declared as Nidhi. 

News

ROC Granted Permission to File Complaint Against CA/CS by MCA

The Ministry of Corporate Affairs has directed the Registrar of Companies of National Capital Delhi and Haryana to file complaints against CA/CS who allegedly have been indulging in professional misconduct. 

The MCA in its communication document to ROC stated that “

This is in reference to your letter dated 18.02.2022 stating that as per SOP dated 10.12.2021, Professional Institutes against professionals i.ei Chartered Account s and Company Secretaries are required to be filed providing the names of the following professionals indulged in professional misconduct and have not discharged their duties as per law. In this regard, you are hereby authorised to file complaints against the following professionals before the concerned institutes and submit the ATR at the earliest” 

The authorisation has been granted to take action against seven CAs and six CSs working with ten private limited companies.

With this move, the MCA is prompting the institutes to establish a professional misconduct directive against its members. 

 

News

MCA Notifies Limited Liability Partnership (Second Amendment) Rules, 2022

The Ministry of Corporate Affairs (MCA) vide its Notification dated 04th March, 2022 has published Limited Liability Partnership (Second Amendment) Rules, 2022 to further amend the existing Limited Liability Partnership Rules, 2009. The said amendment shall come into force on the date of its publication in the Official Gazette.

 

The following amendments have been notified:

 

  1. Substitution in Rule 11(1): Second proviso for the word “two”, the word “five” shall be substituted.

 

  1. Insertion in Rule 11(3): After the words and figures “Form 16” the following words shall be inserted: “and shall mention Permanent Account Number and Tax Deduction Account Number issued by the Income Tax Department.”

 

  1. Substitution in Rule 19(4): The person making the application shall attach a copy of the incorporation certificate of the limited liability partnership or the company or the registration certificate of the entity, as the case may be.

 

  1. Substitution in Rule 24(6): Statement of Account and Solvency shall be signed on behalf of the limited liability partnership by its designated partners. Where the Corporate Insolvency Resolution Process has been initiated against the limited liability partnership under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) or the Limited Liability Partnership Act, 2008 (06 of 2009) has come under liquidation under the said Code, 2016 or the said Act, 2008, the said Statement of Account and Solvency may be signed on behalf of the limited liability partnership by interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator.

 

  1. Insertion in Rule 25(2) proviso: Provided that where the Corporate Insolvency Resolution Process has been initiated against the limited liability partnership under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) or the Limited Liability Partnership Act, 2008 (06 of 2009) having turnover upto five crore rupees during the corresponding financial year or contribution upto fifty lakh rupees has come under liquidation under the said Code, 2016 or the said Act, 2008, the said annual return may be signed on behalf of the limited liability partnership by interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator and no certification by a designated partner shall be required.

 

  1. Substitution in Rule 34(3)(ii)(c): For the words and figures “Form 29”, the words and figures “Form 28” shall be substituted.

 

  1. Substitution in Rule 34(8): For the words and figures “Form 29”, the words and figures “Form 28” shall be substituted.

 

  1. Substitution in Rule 37(1A)(II): For the words and figures “enclose along with Form 24”, the words and figures “furnish in Form 24” shall be substituted.

News

SEBI makes the Separation Norm of MD and Chairman Roles Voluntary

Following the recommendations of the Kotak Committee, SEBI had decided to make it mandatory for the listed companies to have their post of Chairman and Managing Director separated from April 1, 2022. However, owing to the “unsatisfactory level of compliance achieved so far” with respect to this governance reform, the compliance has been made voluntary. Additionally, there was continued representation from stakeholders, industry bodies and corporates expressing difficulties and challenges as the reason for non-compliance with the regulatory norm.

On a review of the compliance status by SEBI it was observed that the compliance level stood at 50.4% amongst the top 500 Listed Companies as on September 2019, which progressed by 54% only till December 31, 2021. Thus, barely a 4% incremental improvement in compliance by the top 500 listed companies over the last two years.  Expecting the remaining about 46% of the top 500 listed companies to comply with these norms by the target date was perceived as an unrealistic shot. 

Additionally, the following amendments were introduced by the Board in the meeting:

  1. Amendment to SEBI (Alternative Investment Funds) Regulations, 2012:

The Board approved amendment to SEBI (Alternative Investment Funds) Regulations, 2012, providing flexibility to Category III Alternative Investment Funds (AIFs) to calculate the investment concentration norm based either on investable funds or net asset value of the fund while investing in listed equity of investee company, subject to the conditions as may be specified by the Board.

  1. Alignment of regulatory framework for ‘security cover’, disclosure of credit ratings and due diligence certificate

Amendments were made to the SEBI (Debenture Trustee)
Regulations, 1993, SEBI (Issue and Listing of Non-Convertible Securities)
Regulations, 2021 and SEBI (Listing Obligations and Disclosure Requirements),
2015 w.r.t the term ‘security cover’, disclosure  of credit rating and due diligence certificate.

 

News

SEBI Amends LODR Regulations, 2015

The Securities and Exchange Board of India (SEBI) has issued a fresh set of regulations to amend the existing SEBI (LODR) Regulations, 2015  which have come into force on the date of their publication in the Official Gazette, that is, 24th January 2022.

The new set of amendments specify that the appointment or re-appointment of persons earlier rejected by shareholders at the general meeting shall take place only with prior approval of shareholders.

Further, in Regulation 17 (1C), the words “or as a manager” shall be inserted after the words “Board of Directors

The following provisos to Regulation 17(1C) have also been added,

“Provided that the appointment or a re-appointment of a person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting, shall be done only with the prior approval of the shareholders:

Provided further that the statement referred to under sub-section (1) of section 102 of the Companies Act, 2013, annexed to the notice to the shareholders, for considering the appointment or re-appointment of such a person earlier rejected by the shareholders shall contain a detailed explanation and justification by the Nomination and Remuneration Committee and the Board of directors for recommending such a person for appointment or re-appointment.”

In regulation 40(1), the existing proviso shall be substituted with the following,

“Provided that requests for effecting transfer of securities shall not be processed unless the securities are held in the dematerialised form with a depository: Provided further that transmission or transposition of securities held in physical or dematerialised form shall be effected only in dematerialised form.”

Further, in Regulation 40(3), in the first proviso, the words “for securities held in dematerialized mode and physical mode” and the words “and twenty-one days respectively” have been omitted.

Amendments have also been introduced to Regulations 32(7), 39(2) and Schedule VI Clause D (1).