Corporate Updates – 25-10-2017


CBDT has issued Clarification related to guidelines for establishing ‘Place of Effective Management’ (PoEM) in India. The concept of ‘Place of Effective Management’ (PoEM) is being used for deciding residency status of a company, other than an Indian Company. It has been clarified that so long as the Regional Headquarter operates for subsidiaries/ group companies in a region within the general and objective principles of global policy of the group laid down by the parent entity in the field of Pay roll functions, Accounting, HR functions, IT infrastructure and network platforms, Supply chain functions, Routine banking operational procedures, and not being specific to any entity or group of entities per se; it would, in itself, not constitute a case of BoD of companies standing aside and such activities of Regional Headquarter in India alone will not be a basis for establishment of PoEM for such subsidiaries/ group companies.


MCA has finally notified that the powers and functions vested in it under section 247 of the said Act shall now be delegated to the Insolvency and Bankruptcy Board of India, subject to the condition that the central Government may revoke such delegation of powers or it may exercise the powers under the said section if in its opinion such a course of action is necessary in the public interest. The Section 247 deals with the Valuation by Registered Valuers. This notification shall come into force with effect from the date of its publication in the Official Gazette.

Corporate Updates – 24-10-2017


CBDT has invited Comments and Suggestions Invited for Amendment of Income-tax Rules wrt Registration of Charitable or Religious Trusts. Through the Finance Act, 2017, a new clause (ab) was inserted in sub-section (1) of Section 12A of the Income-tax Act, 1961 w.e.f 01.04.2018 to the effect that where a trust or an institution, which has been granted registration under sections 12A or 12AA of the Act has subsequently adopted or undertaken modification of the objects and such modification does not conform to the conditions of such registration, then such trust or institution shall be required to obtain registration again by making an application within a period of thirty days from the date of such adoption or modification of the objects. The rules for making an application for registration of charitable or religious trusts under section 12A of the Act are laid down under Rule 17A of the Income-tax Rules, 1962. As per the Rules, the application, for registration of charitable or religious trusts under section 12A of the Act, is to be made in Form 10A. Accordingly, subsequent to the aforesaid amendment to the Act, Rule 17A and Form 10A are proposed to be amended. In this regard, draft notification providing for the amendment of Rule 17A and Form 10A has been framed and available for comments from stakeholders and general public. The comments and suggestions on the draft Rules may be sent by 27th October, 2017 electronically.


CBEC has issued Clarification on issues wherein the goods are moved within the State or from the State of registration to another State for supply on approval basis. It is clarified that the goods which are taken for supply on approval basis can be moved from the place of business of the registered supplier to another place within the same State or to a place outside the State on a delivery challan along with the e-way bill wherever applicable and the invoice may be issued at the time of delivery of goods. For this purpose, the person carrying the goods for such supply can carry the invoice book with him so that he can issue the invoice once the supply is fructified. It is further clarified that all such supplies, where the supplier carries goods from one State to another and supplies them in a different State, will be inter-state supplies and attract integrated tax in terms of Section 5 of the Integrated Goods and Services Tax Act, 2017. It is also clarified that this clarification would be applicable to all goods supplied under similar situations.

Corporate Updates – 23-10-2017


MCA has notified the Companies (Registered Valuers and Valuation) Rules, 2017 which shall come into force on the date of their publication in the Official Gazette i.e 18th October, 2017. A person shall be eligible to be a registered valuer if he is a valuer member of a registered valuers organisation, possesses the prescribed qualifications and experience and his candidature is recommended by the registered valuers organisation of which he is a valuer member for registration as a valuer. The Insolvency and Bankruptcy Board of India (IBBI) is the authority responsible for these regulations. These rules are basically about who could become valuers and the process of registration and deregistration of these valuers with the IBBI. The Chartered Accountants can conduct a financial audit, while subject experts will have to be hired for other specific audits such as for machinery and real estate. Essentially, there will be separate financial valuers and technical valuers. These rules will also be applicable to companies going in for liquidation under the Insolvency Code. Further, companies are now allowed to function as registered valuers, provided three or all of their directors are registered valuers. Because of this, merchant bankers also qualify to become valuers. Unregistered valuers can continue to work till March 31, 2018.


RBI clarifies that linking of Aadhaar to Bank Accounts is mandatory. It is clarified that some fake news items have appeared in a section of the media quoting a reply to a Right to Information Act application that Aadhaar number linkage with bank accounts is not mandatory. The Reserve Bank clarifies that, in applicable cases, linkage of Aadhaar number to Bank Account is mandatory under the Prevention of Money-laundering (Maintenance of Records) Second Amendment Rules, 2017 published in the Official Gazette on June 1, 2017. These Rules have statutory force and, as such, banks have to implement them without awaiting further instructions.

Corporate Updates – 18-10-2017


The SEBI has issued circular to notify the amendments to Securities and Exchange Board of India (International Financial Services Centres) Guidelines, 2015. In order to further streamline the operations at IFSC, based on the internal discussions and consultations held with the stakeholders, it has been decided to further streamline the process and to protect the interests of investors in securities and to promote the development of and to regulate the securities market. It is now decided to allow any entity based in India or in a foreign jurisdiction may form a company in IFSC to act as a trading member of a stock exchange and/or a clearing member of a clearing corporation in IFSC.


The Directorate General of Foreign Trade has notified the Amendments in Foreign Trade Policy 2015-2020. Various provisions of Foreign Trade Policy 2015-20 is amended to enable certain additional duties / taxes / cess exemptions for Advance authorisations, EPCG Authorisations and units under EOU / EHTP / STP/ BTP Scheme. Accordingly, Import under EPCG Scheme shall be subject to an export obligation equivalent to 6 times of duties, taxes and cess saved on capital goods, to be fulfilled in 6 years reckoned from date of issue of Authorisation.

Corporate Updates – 17-10-2017


MCA has issued a circular w.r.t transfer of shares to Investor Education and Protection Fund Authority as per the amended rules notified recently, wherein the seven years period provided under sub-section (5) of section 124 is completed for unpaid/unclaimed dividends during September 7, 2016 to October 31, 2017. the due date for transfer of such shares by companies is October 31st, 2017. The IEPF Authority has opened demat accounts with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) through Punjab National Bank and SBICAP Securities Limited respectively, as Depository Participants. All companies which are required to transfer shares to IEPF Authority under the aforesaid Rules, shall transfer such shares, whether held in dematerialised form or physical to the demat accounts of IEPF Authority by way of corporate action. The Information related to the shareholders , whose shares are being transferred to IEPF’s demat accounts with PNB or SBICAP shall be provided by the companies to NSDL or CDSL respectively as per the prescribed format by the concerned depository. Any cash benefit accruing on account of shares transferred to IEPF such as dividend, proceeds realised on account of delisting of equity shares of the company, shall be transferred by companies to bank account opened by the Authority with Punjab National Bank which has been linked to demat accounts.


The Securities and Exchange Board of India in order to effectively discharge their hedging function, commodity derivative contracts must be anchored to their respective underlying physical markets,has issued circular on Criteria for Settlement Mode of Commodity Derivative Contracts. The Board has prescribed the guidelines for deciding appropriate settlement mode for commodity derivatives contracts. The first preference of settlement type shall always be by the way of physical delivery and cash settlement of commodity derivatives contract may be considered only in specified scenarios with a proper justification. Further, there is availability of reliable benchmark price of the commodity which can be used as reference for settlement price. Exchanges shall satisfy themselves that the reference spot price is robust fair indicator of prevailing prices and not susceptible to any distortion/manipulation. The provisions of the circular shall come into effect from the date of the circular.

Corporate Updates – 16-10-2017


MCA has notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2017 which shall come into force from 13th October, 2017. Through this amendment detailed process and procedure w.r.t Transfer of Shares to the specified account of the IEPF Authority has been laid. Accordingly, where the period of Seven Years under sub section (5) of Section 124 has been completed during the period from 7th September 2016 to 31st October, 2017, the due date of Transfer shall be deemed to be 31st October, 2017. Further, Transfer of Shares by the Company to the Fund Shall be deemed to be Transmission of Shares. And the procedure followed for Transmission of Shares shall be followed while transferring the shares. Furthermore, Every Company which has deposited amount to the Fund shall nominate Nodal Officer for the purpose of coordination with IEPF Authority and shall communicate the details of Nodal Officer within 15 days from the date of publication of this rules. Company shall display the name of Nodal Officer and his email ID on its website.


CBEC has notified the Central Goods and Services Tax (Ninth Amendment) Rules, 2017 which shall come into force on the date of their publication in the Official Gazette. The exemption contained in the notification No. 8/2017-Central Tax (Rate) dated the 28th June, 2017 as amended by this notification shall apply to all registered persons till the 31st day of March, 2018. The above mentioned notification will be effective from October 13th, 2017. Accordingly, the CBEC has notified suspension of Reverse Charge Mechanism (RCM) till 31 March 2018 under Section 9(4) of the CGST Act, 2017/ Section 7(4) of the UTGST Act, 2017/ Section 5(4) of the IGST Act, 2017. There is nothing in the Notification on the effective date of RCM suspension. However GSTN has tweeted on 12 Oct. 2017 that the RCM Suspension will be applicable w.e.f. the date of Notification (i.e. 13 Oct. 2017). This will benefit small businesses and substantially reduce compliance costs. The exemption contained in this notification shall apply to all registered persons till the 31st day of March, 2018.

Corporate Updates – 13-10-2017


The Director General of Foreign Trade has made amendments in Para 5.25 (Re-Export / Repair / Replacement of Capital Goods Imported under EPCG Scheme) of the Handbook of Procedures (HBP) of FTP 2015-20, with immediate effect. As per the amendments, Capital Goods imported under EPCG Scheme, may be re-exported for repairs abroad within three years from the date of clearance by Customs of such goods, with permission of RAl Customs Authority. The duty component on the expenditure incurred on the repairs as well as the insurance and the freight, both ways shall be taken into account for re-fixation of the EO. All other contents of Para 5.25 remain unchanged.


Department of Industrial Policy and Promotion has launched a Scheme of budgetary support under Goods and Service Tax Regime to the units located in States of Jammu & Kashmir, Uttarakhand, Himachal Pradesh and North East including Sikkim for a residual period for which each of the units is eligible, a new scheme is being introduced. The new scheme is offered, as a measure of goodwill, only to the units which were eligible for drawing benefits under the earlier excise duty exemption/refund schemes but has otherwise no relation to the erstwhile schemes. The said Scheme shall come into operation w.e.f. 01.07.2017 for an eligible unit and shall remain in operation for residual period. The overall scheme shall be valid upto 30.06.2027. The budgetary support shall be disbursed from budgetary allocation of Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry.

Corporate Updates – 12-10-2017


GST Council has made the recommendations for GST rate structure to reduce the cascading of taxes arising on account of non-inclusion of petrol, diesel, ATF, natural gas and crude oil in GST and to incentivise investments in the E&P (exploration and production) sector and downstream sector. Offshore works contract services and associated services relating to oil and gas exploration and production in the offshore areas beyond 12 nautical miles shall attract GST of 12%. Transportation of natural gas through pipeline will attract GST of 5% without input tax credits (ITC) or 12% with full ITC. Import of rigs and ancillary goods imported under lease will be exempted from IGST, subject to payment of appropriate IGST on the supply/import of such lease service and fulfilment of other specified conditions. Further, GST rate on bunker fuel is being reduced to 5%, both for foreign going vessels and coastal vessels.


IBBI invites public comments on (i) draft Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Individuals and Firms) Rules,2017, and (ii) draft Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Individuals and Firms) Regulations, 2017. The Insolvency and Bankruptcy Board of India had constituted a Working Group to recommend the strategy and approach for implementation of the provisions of the Insolvency and Bankruptcy Code, 2016 dealing with insolvency and bankruptcy in respect of (i) Guarantors to corporate debtors, i.e., personal guarantors, and (ii) Individuals having business, and submit a report along with draft Rules and Regulations. IBBI invites public comments on these draft rules and regulations by 31st October 2017.

Corporate Updates – 11-10-2017


SEBI issued a circular on non compliance with the Minimum Public Shareholding (MPS) requirements as per Regulation 38 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 which mandates a listed entity to comply with the MPS requirements. In order to maintain consistency and uniformity of approach in the enforcement of MPS norms mandated under regulation 38 of the Listing Regulations, procedure has been prescribed through this circular and shall be followed by the recognised stock exchanges/depositories, as applicable, with respect to non-compliant listed entities, their promoters and directors. The stock exchanges shall issue notices to such entities within 15 days from date of observation of non-compliance, intimating all actions taken / being taken and advise the entities to ensure compliance. The recognized stock exchange shall impose an increased fine of ₹10,000/- per day of non-compliance on the listed entity and such fine shall continue to be imposed till the date of compliance by such listed entity. The recognized stock exchange may also consider compulsory delisting of the non-compliant listed entity in accordance with the applicable provisions.


The Ministry of Corporate Affairs has opposed some of the recommendations made by the Securities and Exchange Board of India committee on corporate governance on the grounds that they concern matters already covered by the Companies Act. The committee, which was set up by SEBI to suggest ways in which to enhance corporate governance standards, has called for an increase in the minimum number of directors and the inclusion of at least one independent woman board member — areas under the ambit of the Companies Act and therefore not under the remit of the market regulator. The corporate affairs department also expressed concern that some recommendations seek to extend jurisdiction to unlisted companies, which are regulated by MCA. This relates to the obligations of a listed company’s board with respect to subsidiaries.

Corporate Updates – 09-10-2017


The GST Council, in its 22nd Meeting has recommended various facilitative changes to ease the burden of compliance on small and medium businesses. Some of the welcome changes are Registration and operationalization of TDS/TCS provisions to be postponed till 31st March, 2018; The e-way bill system to be introduced in a staggered manner with effect from 1st January, 2018 and will be rolled out nationwide with effect from 01st April 2018. The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15th November 2017. The last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15th November 2017. Invoice Rules to be modified to provide relief to certain classes of registered person. Suspension of the reverse charge mechanism u/s 9(4) of the CGST Act, 2017 and u/s 5(4) of the IGST Act, 2017 till 31st March 2018. Changes in Composition Schemes to simplify compliance structures for the tax payers. The taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.


IBBI has amended the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)Regulations, 2016 and Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017. According to the amended regulations, a resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor.