20 February, 2020
COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) AMENDMENT RULES, 2020
The Ministry of Corporate Affairs issued a notification on January 3, 2020 to amend the Companies ( Appointment and Remuneration of Managerial Personnel) Rules, 2014 which provide that a private company having a paid- up share capital of INR 10 crore or more would be required to appoint a whole- time Company Secretary, instead of the earlier requirement to appoint a whole- time company secretary by private companies having paid- up share capital of INR 5 crore or more. Further, as per the amended Rules,
every company having outstanding loans or borrowings from banks or public financial institutions amounting to INR 100 crore rupees or more would be required to undergo secretarial audit. The amended rule shall be applicable in respect of financial years commencing on or after April 1, 2020.
PROCESSING OF E-MANDATE IN UNIFIED PAYMENTS INTERFACE (UPI) FOR RECURRING TRANSACTIONS
On January 10, 2020, RBI reviewed and extended the circular on “Processing of e-mandate on cards for recurring transactions” to cover UPI transactions as well. All the instructions/ conditions outlined in the circular under reference would apply, mutatis mutandis, while processing e-mandate in UPI. This is also in line with the measures proposed for furthering digital payments announced vide, the RBI Press Release dated November 8, 2019.
STREAMLINING THE PROCESS OF RIGHTS ISSUE
On January 22, 2020, SEBI, simplified the rights issue process to make it more efficient and effective, by amending the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (“SEBI ICDR”) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR”). Accordingly, changes made with respect to the rights issue process are inter alia as follows:
(a) The period for advance notice to stock exchange(s) under Regulation 42(2) of SEBI LODR has been reduced from at least 7 working days to at least 3 working days;
(b) Issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of same to the stock exchanges for dissemination on their websites, as per Regulation 84 (1) of ICDR Regulations, shall be completed by the issuer at least 2 days before the date of opening of the issue;
(c)The concept of dematerialized rights entitlement has been introduced.
This circular shall be applicable for all rights issues and fast track rights issue where Letter of Offer (LoF) is filed with the stock exchanges on or after February 14, 2020.
LAUNCH OF AN INTEGRATED WEB FORM “SPICE+”
The Ministry of Corporate Affairs (“MCA”) on January 23, 2020 introduced a new web form christened ‘SPICe+’ (pronounced ‘SPICe Plus’) as a part of the Government of India’s Ease of Doing Business initiatives, thereby replacing the existing form for incorporation of companies in India. The form SPICe+ would be an integrated web form offering multiple services viz. name reservation, incorporation, DIN allotment, mandatory issue of PAN, TAN, EPFO, ESIC, Profession Tax (Maharashtra) registrations and opening of bank account. The e-form SPICe+ can also be used to obtain GST registration, if opted for by the applicant. The new form will be introduced on February 15, 2020. In this regard, the MCA has also issued the Companies (Incorporation) Amendment, Rules, 2020 on February 6, 2020.
COMPANIES (WINDING UP) RULES, 2020
The Ministry of Corporate Affairs has issued the Companies (Winding Up) Rules, 2020 which deals with the procedure with respect to winding up of companies under the provisions of the Companies Act, 2013 (‘Act’).
The winding up Rules would apply to all kind of winding up petitions/ applications (including voluntary winding up, winding up on application by the Registrar of Companies) except for winding up in cases of insolvency which would be governed by the provisions of the Insolvency and Bankruptcy Code 2016. The winding up Rules also provides for summary procedure for winding up of companies meeting specified thresholds (i.e., companies having total outstanding deposit not exceeding INR 2.5 Million, or having outstanding loan not exceeding INR 5 Million, or having turnover upto INR 500 Million, or having paid up share capital not exceeding INR 10 Million) by the Central Government. The winding up of companies which meet the specified threshold will require the approval of the Central Government instead of the National Company Law Tribunal he said rules shall come into force from April 1, 2020, subject to their notification in the official gazette.
COMMENCEMENT NOTIFICATION WITH RESPECT TO SUB-SECTION 11 AND 12 OF SECTION 230 OF THE COMPANIES ACT, 2013
The Ministry of Corporate Affairs has notified that the provisions of sub-section 11 and 12 of section 230 of the Companies Act, 2013 which shall be effective from February 3, 2020. Sub-section 11 provides that any compromise or arrangement may include takeover offer. Henceforth, any scheme of compromise or arrangement presented before National Company Law Tribunal (“NCLT”) can include a takeover offer. The takeover offer with respect to listed companies shall be governed as per the relevant regulations issued by the Securities and Exchange Board of India. Further, as per sub-section 12 an aggrieved party may make an application to the NCLT in the event of any grievances with respect to the takeover offer of companies other than listed companies.
COMPANIES(COMPROMISES, ARRANGEMENTS AND AMALGAMATIONS) AMENDMENT RULES, 2020
The Ministry of Corporate Affairs issued a notification dated February 3, 2020 to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The amended rules provide that a member can make an application for arrangement, for the purpose of takeover offer, when such member along with any other member holds not less than three-fourths of the shares in the company, and such application has been filed for acquiring any part of the remaining shares of the company. The explanation to the amended rule provides that that the provisions of the rule would not apply to any transfer or transmission of shares through a contract, arrangement or succession, as the case may be, or any transfer made in pursuance of any statutory or regulatory requirement. The amended rules further provides that a separate bank account should be opened by such member(s) for the purpose of depositing one-half of total consideration of takeover offer and the details of such bank account should be provided in the application along with a valuation report by a registered valuer.
NATIONAL COMPANY LAW TRIBUNAL (AMENDMENT) RULES, 2020
The Ministry of Corporate Affairs issued a notification dated February 3, 2020 to amend the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The amended rules provide that a member can make an application for arrangement, for the purpose of takeover offer, when such member along with any other member holds not less than three-fourths of the shares in the company, and such application has been filed for acquiring any part of the remaining shares of the company. The explanation to the amended rule provides that that the provisions of the rule would not apply to any transfer or transmission of shares through a contract, arrangement or succession, as the case may be, or any transfer made in pursuance of any statutory or regulatory requirement. The amended rules further provides that a separate bank account should be opened by such member(s) for the purpose of depositing one-half of total consideration of takeover offer and the details of such bank account should be provided in the application along with a valuation report by a registered valuer.
INTEREST SUBVENTION SCHEME FOR MICRO, SMALL & MEDIUM ENTERPRISES (MSMES)
On February 5, 2020, RBI issued a notification regarding the modifications in the operational guidelines for ‘Interest Subvention Scheme for MSMEs’. In this regard, it is decided by the Government of India to bring, inter alia, the following modifications in the operational guidelines:
(a) Submission of statutory auditor certificate by June 30, 2020 and in the meantime, settle claims based on internal / concurrent auditor certificate.
(b) Acceptance of claims in multiple lots for a given half year by eligible institutions.
(c) Requirement of Udyog Aadhar Number (UAN) may be dispensed with for units eligible for GST. Unit not required to obtain GST, may either submit Income Tax Permanent Account Number (PAN) or their loan account must be categorized as MSME by the concerned bank.
(d) Allow trading activities also without Udyog Aadhar Number (UAN).
Further, with the trading activity also eligible for interest subvention as indicated at (d) above, the ‘Format of Certificate for claiming Subsidy’ has been revised.
For further information, please contact:
Gaurav Wahie, Partner, Clasis Law
gaurav.wahie@clasislaw.com