News

MCA Issues Companies Registered Valuers And Valuation Amendment Rules 2022

The Ministry of Corporate Affairs has issued the Companies Registered Valuers and Valuation Amendment Rules 2022, an amendment to the Companies (Registered Valuers and Valuation) Rules, 2017.

The amendment requires partnership entities to be members of a registered valuer’s organization, though not more than one at a time, to be eligible as registered valuers. Entities have six months to comply with the requirement.

In addition, new rules, i.e., 7A and 14A, have been inserted that require registered valuers to intimate the Insolvency & Bankruptcy Board of India (IBBI) regarding changes in the governing board or its committee or appellate panel or in personal details, including any alteration in the composition of directors or partners or any amendment in any provision of the partnership agreement or Memorandum of Association (MoA), which may impact registered valuer registration, after the payment of the specified fee.

The amendment has also clarified that the requirement of a temporary surrender of membership in the event of taking employment shall not be applicable to members serving as full-time directors in a company registered as a valuer.

News

SEBI Issues Circular on Standardisation of Rating Scales by CRAs

The Securities and Exchange Board of India (SEBI) has prescribed fresh guidelines advising Credit Rating Agencies (CRAs) to align their rating scales with the rating scales prescribed under the guidelines of respective financial sector regulator or authority in terms of Regulation 9(f) of SEBI (Credit Rating Agencies) Regulations, 1999.

Standardised symbols and their definitions have been devised for Issuer Rating/Corporate Credit Rating that indicates the degree of safety of the issuer or the rated entity with regard to timely servicing of all its debt obligations.

In addition, standardised descriptors have been specified for “Rating Watch” and “Rating Outlook”.  A ‘rating outlook’ indicates CRA’s view on the expected direction of the rating movement in the near to medium term, whereas a ‘rating watch’ indicates a CRA’s view on the expected direction of the rating movement in the short term. 

The circular is effective from January 1, 2023, and CRAs shall report on their compliance with the same to SEBI within one quarter. Monitoring shall be done in terms of the half-yearly internal audit for CRAs.

 

News

SEBI Amends Guidelines for Preferential Issue and Institutional Placement of Units by listed REIT/InvIT

On 28 September 2022, the Securities and Exchange Board of India (SEBI) issued guidelines for modifying the provisions pertaining to preferential issue and institutional placement of units by listed InvITs/ REITs which were previously notified vide Circular dated 27 November, 2019.

Key Takeaways:

The amendment to Clause 2.2 provides that units of the same class, proposed to be allotted shall now be required to be listed for a period of 6 months.

As per the amended Clause 4.2, the unsubscribed portion of the units can be made to the sponsor in the institutional placement subject to the following conditions:

  1. Atleast 90% of the issue size has been subscribed.
  2. The object of the issue should be acquisition of assets from that sponsor.
  3. The allotted units should be locked in for a period of three years from the date of trading approval granted for the units. (As per Clause 3 Annexure I of Circulars dated 27-11-2019).
  4. Approval of unitholders should be taken before the allotting the unsubscribed portion of the units to sponsors.

News

Two Crypto Companies Restrained from Using TATA Trademark

The Delhi High Court restrained two US and UK-based crypto companies from using the well-known mark “TATA”. The Court held that in the public consciousness, TATA could only be associated with the TATA group of companies owing to the eminence they have gained in India and abroad over the years.

The two companies, Hakunamatata TATA founders and Tata Bonus, have been using the TATA trademark to sell crypto coins without making any changes to claim distinctiveness. It appeared “unscrupulous”  to the Court. On further inquiry, it was found that the UK-based company was using a Pakistan-based designer, who could not claim ignorance of the TATA brand, given its popularity, especially in the South Asian region.

The Court ordered TATA Bonus to take down the website from their domain, putting it on hold until the pendency of the application, whereas for Hakunamatata, the Court did not order any prohibitions.

Without dismissing the suit, the Court held that it could not pass an order of injunction due to territorial restrictions under the Trademarks Law and the Civil Procedure Code (CPC).

On appeal filed by TATA Group, the Division bench held that once the suit was admitted and entertained on Indian soil, the Court was well within reasonable jurisdiction to adjudicate on the application of ad-interim injunction and reject the same conclusively.

The Court held that while the territoriality of the dispute is determined, an interim injunction can be granted. The Division bench set aside the Single Judge’s order and instructed the two companies against using the TATA trademark.

In this case, the Division bench overruled the single judge’s order as the crypto companies’ continued use of the TATA trademark could sully the name of the TATA group. While the Single Judge Bench was right in not overstepping its territorial jurisdiction, injuncting the two companies from using the trademark was within its powers as the aggrieved company was Indian.

The courts were obliged to protect Tata Group’s well-known registered mark, especially when the infringing companies’ operations directly affect global and domestic goodwill.

News

MCA Revises Corporate Social Responsibility Rules

On 20th September 2022, the Ministry of Corporate Affairs notified amendments to the Corporate Social Responsibility Rules with an objective to keep the impact assessment of companies falling under the ambit of CSR at the forefront. 

Key Takeaways: 

  • Only companies falling under Section 135 (1) of the Companies Act 2013,  are now mandated to constitute a CSR Committee. This implies that the applicability of the Section has to be re-examined by every company each year for the continuation of the CSR committee. 
  • As per the newly amended Rule 8,  the expenditure for impact assessment, which can be included in the CSR spending, shall not exceed 2% of total CSR expenditure for the relevant financial year or ₹50 lakh whichever is higher.  
  • The newly amended Rules now mandate that for the purpose of annual reporting the companies shall provide the executive summary along with the weblinks of impact assessment of CSR projects carried out.
  • Further, the Rules also provide for the Companies to carry out their independent impact analysis of their CSR activities. Such impact assessment is mandatory for businesses with Rs 10 crore or more CSR budget and for all projects with an outlay of 1 crore or more.

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.