Archives for June 2017

Corporate Updates – 16-06-2017

MCA

MCA has notified various exemptions to the Section 8 Companies vide notification dated 5th June, 2015. MCA has come out with further exemptions and notified the amendments to the principal notification dated 5th June, 2015. Now onward a Section 8 Company can appoint more than 15 Directors without passing Special Resolution. Further, a company in which twenty-six per cent or more of the paid-up share capital is held by the Central Government or one or more State Governments or both, can give loan for funding Industrial Research and Development projects at a rate of interest lower than the prevailing yield of one year, three year, five year or ten year Government Security closest to the tenor of the loan under Section 186(7) of the Companies Act, 2013.

SEBI

SEBI has issued a Circular regardingimposition of fines on the Listed Companies for non-compliance with certain provisions of ICDR Regulations 2009. Therefore, a fine of Rupees 20,000 per day of non-compliance till the date of compliance and If non-compliance continues for more than 15 days, additional fine of 0.01 % of paid up capital of the entity or Rupees 1 crore, whichever is less shall be imposed on listed entities in case such as delay in completion of bonus issue pursuant to Regulation 95 (1), Companies not allotting the shares on conversion of convertible securities within 18 months issue pursuant to Regulation 75 and Issuer not approaching the exchange for listing of equity shares within 20 days from date of allotment pursuant to Regulation 108 (2). The amount of fine realized as per the above structure shall be credited to the "Investor Protection Fund" of the concerned recognized stock exchange. The fine shall be paid within 15 days of notice for the same.

News from NIRC of ICSI

NIRC is organising one day Seminar on LABOUR LAWS on Saturday, the 17th June, 2017. Registration: 9.00 AM onwards at Hotel Le-Meridien, M.G. Road, Sector -26, Delhi-Gurugram Border, Gurugram – 122002, Haryana (NEAR GURU DRONACHARYA METRO STATION); Fee: Rs.1,750/- per delegate inclusive of service tax (Rs.1000/- for students); FREE for Corporate Members of NIRC(2017-18); PCH – 6.

Corporate Updates – 15-06-2017

MCA:

MCA has notified various exemptions to the Private Limited Companies vide notification dated 5th June, 2015. MCA has come out with further exemptions and notified the amendments to the principal notification dated 5th June, 2015. All one person company, small company, dormant Company, private company (if such private company is registered as a start-up) not to include the cash flow statement with its financial statement. Further, the private Company can now accepts deposits from its members, not exceeding one hundred per cent. of aggregate of the paid up share capital, free reserves and securities premium account and all start-up companies can accept deposits, for five years from the date of its incorporation or other companies which fulfills certain conditions. Partial relief under section 92(1)(g) for small companies have been given as they have to only show aggregate amount of remuneration drawn by their directors only, earlier KMP were also included. Exemptions are also provided from the provisions of Section 143(3)(i) w.r.t comment in the Auditors Report on Adequate Internal Financial Controls system, to One Person Company or Small Company and to Private Company, if its turnover is less than Rs. 50 Crores or borrowings are less than Rs. 25 Crores.

MCA

MCA has notified various exemptions to the Government Companies vide notification dated 5th June, 2015. MCA has come out with further exemptions and notified the amendments to the principal notification dated 5th June, 2015. One of the much needed exemption now provided through this amendment is relating to the place of Annual General Meeting with in the city, town or village in which the registered office of the company is situate or such other place as the Central Government may approve in this behalf. All powers of Tribunals as provided under the provisions of the Section 203-232 shall be exercised by the Central Government. Further, all Government Companies and its subsidiaries are now exempted from the provisions of Section 152(6) & (7) w.r.t retirement of directors by rotation.

Corporate Updates – 14-06-2017

RBI:

RBI has decided that banks may also use the ratings of the INFOMERICS Valuation and Rating Pvt Ltd. (INFOMERICS) for the purpose of risk weighting their claims for capital adequacy purposes in addition to the existing six domestic credit rating agencies. The rating-risk weight mapping for the long term and short term ratings assigned by INFOMERICS will be the same as in case of other rating agencies. Earlier six domestic credit rating agencies viz. CARE, CRISIL, FITCH India, ICRA, Brickwork Ratings and SMERA have been accredited for the purpose of risk weighting the banks’ claims for capital adequacy purposes. The long term and short term ratings issued by these domestic credit rating agencies have been mapped to the appropriate risk weights applicable as per the Standardised Approach under the Basel II Framework.

CBDT:

Central Board of Direct Taxes vide its press release has clarified about the recent SUPREME COURT JUDGEMENT ON AADHAR-PAN LINKAGE. Hon’ble Supreme Court in its landmark judgement has upheld Section 139AA of the Income Tax Act as constitutionally valid which required quoting of the Aadhaar number in applying for PAN as well as for filing of income tax returns. Further, only a partial relief by the Court has been given to those who do not have Aadhaar and who do not wish to obtain Aadhaar for the time being, that their PAN will not be cancelled so that other consequences under the Income Tax Act for failing to quote PAN may not arise.

Corporate Updates – 13-06-2017

DGFT

The Foreign Trade (Development & Regulation) Act, 1992 provides that no person shall make any import or export except under an Importer Exporter Code (IEC) number, granted by the Director General of Foreign Trade or the officer authorized by the Director General in this behalf. As a measure of ease of doing business, it has been decided to keep the identity of an entity uniform across the Ministries/Departments. Henceforth (with the implementation of GST), PAN of an entity will be used for the purpose of IEC, i.e., IEC will be issued by DGFT with the difference that it will be alpha numeric (instead of 10 digit numeric at present) and will be same as PAN of an entity. For new applicants, w.e.f. the notified date, application for IEC will be made to DGFT and applicant’s PAN will be authorized as IEC. For residuary categories under Para 2.07 of HBP 2015­20, the IEC will be either UIN issued by GSTN and authorized by DGFT or any common number to be notified by DGFT. Further, for the existing IEC holders, necessary changes in the system are being carried out by DGFT so that their PAN becomes their IEC. DGFT system will undertake this migration and the existing IEC holders are not required to undertake any additional exercise in this regard. IEC holders are required to quote their PAN (in place of existing IEC) in all their future documentation, w.e.f. the notified date. The legacy data which is based on IEC would be converted into PAN based in due course of time.

CBDT

Ministry of Finance (Department of Revenue) has issued a Circular, clarifying the Settled View on whether trade advances are covered under section 2(22) (e) (i.e.definition of Dividend) of the Income Tax Act. Pursuant to the pronouncements of various courts CBDT has clarified that trade advances, which are in the nature of commercial transactions would not fall within the ambit of the word ‘advance’ in section 2(22)( e) of the Act. Accordingly, henceforth, appeals may not be filed on this ground by Officers of the Department and those already filed, in Courts tribunals may be withdrawn/not pressed upon.

Corporate Updates – 12-06-2017

PCSHelpline- Conversion of Companies into LLP

NIRC of ICSI has decided to start fortnightly "PCS HELPLINE" to provide guidance / counseling in respect of problems and difficulties being faced by our members. In this series, NIRC is organizing "PCS HELPLINE” program today, the 29th May, 2017, to resolve the queries over telephone regarding Technical / Procedural / Interpretation issues relating to the topic “Conversion of Companies into LLP” by CS Kiran Sharma, PCS, will be available to answer the queries telephonically, Today, 12th June, 2017 from 3.30 PM to 5.00 PM at 011-49343001.

MasterClassesonGST

Registration open for Master Classes on “GST – Goods & Service Tax” to be held from Monday, 12th June, 2017 to 16th June, 2017 daily from 5:30 PM onwards at Auditorium, ICSI-NIRC Building, 4, Prasad Nagar Institutional Area, New Delhi. Fee : Rs. 750/- for all participants including Corporate Members of NIRC; Online Payment / Registration Facility Available; Program Credit Hours: 02 per day.

CBDT

The CBDT has notified Transfer Pricing Tolerance Limit for Assessment Years 2017-18 and 2018-19. The Central Government notifies that where the variation between the arm’s length price determined under section 92C of the Act and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed one per cent. of the latter in respect of wholesale trading and three per cent. of the latter in all other cases, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price for assessment year 2017-18 and assessment year 2018-19. For the purposes of this notification, “wholesale trading” means an international transaction or specified domestic transaction of trading in goods, which fulfils the following conditions, purchase cost of finished goods is 80% or more of the total cost pertaining to such trading activities and average monthly closing inventory of such goods is 10% or less of sales pertaining to such trading activities.

SEBI

The SEBI has amended the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and notified the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) (Second Amendment) Regulations, 2017 which shall come into force on the date of their publication in the Official Gazette. A new definition of “Systemically Important Non-Banking Financial Company” which means a non-banking financial company registered with the Reserve Bank of India and having a net-worth of more than five hundred crore rupees as per the last audited financial statements has been inserted. Further, the monitoring agency shall now submit its report to the issuer in the format specified in Schedule IX on a quarterly basis instead of a half yearly basis, till at least ninety five percent of the proceeds of the issue excluding the proceeds under offer for sale and amount raised for general corporate purposes, have been utilized. The Board of Directors and the management of the company shall provide their comments on the findings of the monitoring agency as specified in Schedule IX.

Corporate Updates – 09-06-2017

Master Classes on GST

Registration open for Master Classes on “GST – Goods & Service Tax” to be held from Monday, 12th June, 2017 to 16th June, 2017 daily from 5:30 PM onwards at Auditorium, ICSI-NIRC Building, 4, Prasad Nagar Institutional Area, New Delhi. Fee : Rs. 750/- for all participants including Corporate Members of NIRC; Online Payment / Registration Facility Available; Program Credit Hours: 02 per day.

RBI

RBI has issued a Master Direction on Information Technology Framework for the NBFC Sector. The focus of the proposed IT framework is on IT Governance, IT Law/Policy, Information & Cyber Security, IT Operations, IS Audit, Business Continuity Planning and IT Services Outsourcing. The directions are categorized into two parts, those which are applicable to all NBFCs with asset size above Rs. 500 crore (Considered Systemically Important) are provided in Section-A. Directions for NBFCs with asset size below Rs. 500 crore are provided in Section-B. NBFCs may place these directions before their Board, together with a gap-analysis vis-a-vis the Master Direction and the proposed action by September 30, 2017. NBFCs- Systemically Important shall comply with the Master Directions by June 30, 2018 and other NBFCs (asset size below Rs. 500 crore) shall comply by September 30, 2018.

RBI

RBI has announced Reduction in Statutory Liquidity Ratio (SLR) pursuantto Section 24 and Section 56 of the Banking Regulation Act, 1949. The Reserve Bank of India today has decided to reduce the Statutory Liquidity Ratio (SLR) of commercial banks, primary (urban) co-operative banks (UCBs), state co-operative banks and central co-operative banks from 20.5 per cent of their Net Demand and Time Liabilities (NDTL) to 20.00 per cent from the fortnight commencing June 24, 2017.

Corporate Updates – 07-06-2017

CBDT

The Ministry of Finance, Department of Revenue notifies the list of transactions not chargeable to securities transaction tax (STT). Following transactions of acquisition of equity shares entered into on or after the 1st day of October, 2004 are not chargeable to securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004, such as, acquisition of existing listed equity share in a company through a preferential issue whose equity shares are not frequently traded in a recognised stock exchange of India, transaction for acquisition of existing listed equity share in a company which is not entered through a recognised stock exchange of India and acquisition of equity share of a company during the period beginning from the date on which the company is delisted from a recognised stock exchange and ending on the date immediately preceding the date on which the company is again listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 read with Securities and Exchange Board of India Act,1992 and the rules made thereunder. However, there are certain transactions to which this Circular shall not apply. This notification shall come into force with effect from the 1st day of April, 2018 and shall accordingly apply to assessment year 2018-19 and subsequent assessment years.

CBDT

In exercise of the powers conferred by clause (v) of the Explanation to section 48 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby specifies the Cost Inflation Index for the Financial Years taking the base year as 2001-02. This notification shall come into force with effect from 1st day of April, 2018 and shall accordingly apply to the assessment year 2018-19 and subsequent years .

Corporate Updates – 06-06-2017

MCA

MCA has issued clarification w.r.t the issue of duplicate shares to the IEPF Authority. It has been stated that since transfer of shares to IEPF under Section 124(6) of the Companies Act, 2013, takes place on account of operation of law hence the procedure followed during transmission of shares may be followed in such cases and duplicate shares need not to be issued in such cases. The MCA has clarified that the procedure similar to what is followed in case of transmission of shares may be followed by companies while transferring shares to IEPF Authority pursuant to Section 124(6) of the Companies Act, 2013 read with applicable rules.

CBDT

CBDT has notified the Income-tax (10th Amendment) Rules, 2017 which shall come into force from the date of their publication in the Official Gazette. In the Income-tax Rules, 1962, in Rule 31(3), the deadline to furnish Form 16 to employees extended till June 15 from 31st day of May every year. The Rule 31(3) provides for due date of furnishing of Form 16 (relating to TDS) to the employees; specifying that the employer is required to furnish Form 16 to the employees by June 15, 2017 following the financial year (FY) in which salary was paid and tax was deducted.

Corporate Updates – 05-06-2017

SEBI

SEBI has set up a Committee on Corporate Governance under the Chairmanship of Shri Uday Kotak, Executive Vice Chairman and Managing Director of Kotak Mahindra Bank. The other members of the committee are the representatives of Corporate India, stock exchanges, professional bodies, Investor groups, Chambers of commerce, law firms, academicians and research professionals and SEBI. The Committee shall make recommendations to SEBI with the aim of improving standards of corporate governance of listed companies in India on the issues such as Independent Directors, disclosures pertaining to Related Party Transactions, accounting and auditing practices followed by listed companies, voting and participation in general meetings, Board Evaluation practices and any other matter, as the Committee deems fit pertaining to corporate governance in India.

GST

The GST Council headed by the Hon’ble Finance Minister, Mr. Arun Jaitley met for the fifteenth time on June 3, 2017, with an agenda to fix the rates for almost all the remaining items, such as precious metals (gold and silver), diamonds, biscuits, textiles, and footwear. Ahead of this meeting, sprint begins for GST rollout from July 1, 2017 as envisaged. The GST Council has broadly approved the GST rates for most of remaining categories of goods. The GST Council has further approved the Draft Rules for Final Return – Rules and GSTP Formats, Mismatch Formats, Return Formats and Final Transitional Rules. Further, the GST Council has made amendments/additions in the GST Rate Schedule for certain Goods for providing more clarification. For e.g. as per the earlier GST Rate Schedule for Goods, Solar Panel was falling under the tax slab of 18% as well as 5%, now it has been clarified vide amendment that Solar Panel will be taxable at 5%.

Corporate Updates – 02-06-2017

RBI

RBI has issued Notification to introduce Legal Entity Identifier for OTC derivatives markets. The LEI is a 20-character unique identity code assigned to entities who are parties to a financial transaction. It has been decided to implement the LEI system for all participants in the Over-the-Counter (OTC) markets for Rupee Interest Rate derivatives, foreign currency derivatives and credit derivatives in India, in a phased manner. Accordingly, all current and future participants would be required to obtain the unique LEI code as per time lines indicated in the schedule attached to this Notification. Entities without an LEI code would not be eligible to participate in the OTC derivative markets, after the date specified in the schedule. Entities can obtain LEI from any of the Local Operating Units (LOUs) accredited by the Global Legal Entity Identifier Foundation (GLEIF) – the entity tasked to support the implementation and use of the LEI.

SEBI

SEBI vide its Circular introduced the Online Registration Mechanism for Mutual Funds. It has now been decided to operationalize SEBI Intermediary Portal for the entities to submit the mutual funds registration applications online. For registration of mutual funds the SEBI Intermediary Portal shall include online application for registration, processing of application, grant of in-principle approval, grant of final registration etc. SEBI Intermediary Portal for application of registration of Mutual Funds shall be made operational from June 01, 2017. The applicants will be separately required to submit relevant documents viz. declarations / undertakings required as a part of application form prescribed in relevant regulations, in physical form only for records, without impacting the online processing of applications for registration.