Updates on Companies Act, 2013
- Relaxation of gap between two consecutive Board Meetings
In view of the difficulties arising to resurgence of COVID-19, MCA vide circular dated 3rd May, 2021, has extended the interval between two consecutive Board Meetings from 120 days to 180 days in respect of first two quarters of the Financial year 2021-22.
- Clarification on CSR spending for COVID care.
MCA vide General circular dated 05th May 2021 has clarified that spending of CSR funds for “Creating health infrastructure for COVID care, Establishment of medical oxygen generation and storage plants, manufacturing and supply of oxygen concentrators, ventilators, cylinders and other medical equipment for countering COVID-19 or similar such activities ” are eligible CSR activities under Schedule VII of Companies Act 2013, relating to promotion of health care, including preventive health care and disaster management.
- Clarification on offsetting the excess CSR spent for FY for 19-20
MCA vide General circular dated 20th May 2021, has clarified that incase a company has contributed any amount to “PM CARES Fund” on 31.03.2020, which is over and above the minimum amount as prescribed under section 135(5) of the Companies Act, 2013 (“Act”) for FY 2019-20, and such excess amount or part may be offset against the requirement to spend under section 135(5) for FY 2020-21 subject to certain conditions.
- Relaxation on levy of Additional Fees in filing of certain forms.
Considering the on-going pandemic situation, MCA vide General circular dated 03rd May 2021 has granted additional time for filing certain specified forms, that are due for filing between 1st April 2021 to 31st May, 2021, up to 31st July, 2021 without any payment of additional fees.
- Relaxation of time for filing charge related forms.
On account of the resurgence of COVID-19 Pandemic, MCA vide General Circular dated 03rd May 2021 has provided relaxation of time in filing forms related to Creation or Modification of Charges (Form CHG-1 or Form CHG-9) and the period beginning from 1st April, 2021 and ending on 31st May, 2021 shall not be reckoned for the purpose of counting the number of days under Section 77 and 78 of the Act.
- Relaxation in timelines for compliance with regulatory requirements by Debenture Trustees due to the COVID-19 pandemic
As per SEBI (Debenture Trustees) Regulations, 1993 as amended from time to time and circulars issued there under, debenture trustees are required to perform periodical monitoring and disclose various reports/documents/certificates on Stock Exchanges and on their websites within prescribed timelines.
Representations have been received from debenture trustees with regard to relaxation in timelines for complying with certain regulatory provisions of SEBI Circular No. SEBI/ HO/ MIRSD/ CRADT/ CIR/ P/ 2020/230 dated November 12, 2020 (“Circular”).
After taking into consideration the representations received from debenture trustees and the challenges arising out of CoVID-19 pandemic, it has been decided to extend the timelines for the few regulatory requirements of the said SEBI circular for the quarter/half year/ year ending March 31, 2021.
The detailed circular can be accessed through the link mentioned below:
- Business responsibility and sustainability reporting by listed entities
SEBI vide Circular no. CIR/CFD/CMD/10/2015 dated November 04, 2015 has prescribed the format for the Business Responsibility Report (BRR) in respect of reporting on ESG (Environment, Social and Governance) parameters by listed entities.
In terms of amendment to regulation 34 (2) (f) of LODR Regulations vide Gazette notification no. SEBI/LAD-NRO/GN/2021/22dated May 05,2021 it has now been decided to introduce new reporting requirements on ESG parameters called the Business Responsibility and Sustainability Report (BRSR).
The format of the BRSR and the guidance note can be accessed through below link:
- Procedure for seeking prior approval for change in control of SEBI registered Portfolio Managers
Regulation 11 of the SEBI (Portfolio Managers) Regulations, 2020 prescribes the conditions of registration as a Portfolio Manager. Vide SEBI (Portfolio Managers) (Second Amendment) Regulations, 2021 notified on April 26, 2021, a Sub – regulation (aa) has been inserted in the aforesaid Regulation 11 which provides that a Portfolio Manager shall obtain prior approval of SEBI in case of change in control in such manner as may be specified by SEBI. The said amendment and procedure can be accessed through the link mentioned below:
- Relaxation from compliance to REITs and InvITs due to the CoVID-19 virus pandemic
SEBI is in receipt of representations from InvITs and REITs requesting extension of timelines for various regulatory filings and compliances for InvITs and REITs for the period ending March 31, 2021, inter-alia-,due to ongoing second wave of the COVID -19 pandemic and restrictions imposed by various state governments.
After consideration, it has been decided to extend the due date for regulatory filings and compliances for InvITs and REITs for the period ending March 31, 2021 by one month over and above the timelines, prescribed under various SEBI Regulations applicable to them. The detailed circular can be accessed through the link mentioned below:
- Enhancement of overall limit for overseas investment by Alternative Investment Funds (AIFs)/Venture Capital Funds (VCFs):
SEBI registered AIFs and VCFs are permitted to invest overseas, subject to an overall limit of USD 750 million. However, the said limit has been enhanced USD 1,500 million vide SEBI circular dated May 21, 2021.
- Format of compliance report on Corporate Governance by Listed Entities
As per the provisions of Regulation 27(2) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), a listed entity is required to submit a quarterly compliance report on corporate governance in the format specified by the Board from time to time to recognised Stock Exchange(s).
In order to bring about transparency and to strengthen the disclosures around loans/ guarantees/comfort letters/ security provided by the listed entity, directly or indirectly to promoter/ promoter group entities or any other entity controlled by them, it has been decided to mandate such disclosures on a half yearly basis, in the Compliance Report on Corporate Governance.
The format of disclosure in this regard is specified by SEBI vide its circular dated May 31, 2021. The detailed circular can be accessed through the link mentioned below:
- Disclosure of the following only w.r.t schemes which are subscribed by the investor : a. risk-o-meter of the scheme and the benchmark along with the performance disclosure of the scheme vis-à-vis benchmark and b. Details of the portfolio
SEBI, vide circular no. SEBI/HO/IMD/IMD-II DOF3/P/CIR/2021/555 dated April 29, 2021, specified disclosures with regard to disclosure of (a) risk-o-meter of the scheme and the benchmark along with the performance disclosure of the scheme vis-à-vis benchmark and (b) details of portfolio, which were applicable from June 01, 2021.
Based on the representation received from AMFI, it has been decided to extend the implementation date of the provisions of the aforesaid circular to September 1, 2021.
- Relaxation in compliance with requirements pertaining to AIFs and VCFs
SEBI in receipt of representation from AIF Industry, requesting extension of timelines for various regulatory filings and compliances for AIFs and VCFs, due to ongoing second wave of the COVID-19 pandemic and restrictions imposed by various state governments.
After consideration, it has been decided to extend the due dates for regulatory filings by AIFs and VCFs, during the period ending March 2021 to July, 2021 as prescribed under SEBI (Alternative Investment Funds) Regulations, 2012 and circulars issued there under.
- Notification under the Bilateral Netting of Qualified Financial Contract Act, 2020
The Securities and Exchange Board of India (SEBI) vide this notification hereby specifies the following entities as qualified financial market participants, which subject to the provisions as may be specified by SEBI , may enter into qualified financial contracts notified by any regulatory authority as specified in the First Schedule: –
1.Mutual Fund registered with Securities and Exchange Board of India; and
2.Alternative Investment Fund registered with Securities and Exchange Board of India
- Securities and Exchange Board of India (Listing Obligations And Disclosure Requirements) (Second Amendment) Regulations, 2021
SEBI vide Gazette notification dated May 05, 2021 hereby made the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)(Second Amendment) Regulations, 2021 to further amend the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015
The said amended Regulation can be accessed through below link
- Priority Sector Lending (PSL) – On-lending by Small Finance Banks (SFBs) to NBFC-Micro-Finance Institutions (MFIs):
In view of the fresh challenges brought on by the COVID-19 pandemic and to address the emergent liquidity position of smaller MFIs, it has been decided to allow PSL classification to the fresh credit extended by SFBs to registered NBFC-MFIs and other MFIs (Societies, Trusts etc.) and which have a ‘gross loan portfolio’ of up to ₹500 crores as on March 31, 2021, for the purpose of on-lending to individuals. Bank credit as above will be permitted up to 10% of the bank’s total priority sector portfolio as on 31 March, 2021. The above dispensation shall be valid up to March 31, 2022.
- Credit to MSME Entrepreneurs:
With a view to incentivize credit flow to the Micro, Small, And Medium Enterprise (MSME) borrowers, in February 2021 Scheduled Commercial Banks were allowed to deduct credit disbursed to new MSME borrowers from their net demand and time liabilities (NDTL) for calculation of the cash reserve ratio (CRR).
In order to further incentivize inclusion of unbanked MSMEs into the banking system, this exemption currently available for exposures up to Rs 25 lakhs and for credit disbursed up to the fortnight ending October 1, 2021 is being extended till December 31, 2021.
- Resolution Framework – 2.0: Resolution of COVID-19 related stress of Individuals and Small Businesses:
Under ‘Resolution Framework – 1.0’ Lending institutions were permitted to offer a limited window to individual borrowers and small businesses to implement resolution plans in respect of their credit exposures while classifying the same as Standard upon implementation of the resolution plan.
The resurgence of COVID-19 pandemic in India in the recent weeks and the consequent containment measures to check the spread of the pandemic may impact the recovery process and create new uncertainties. With the objective of alleviating the potential stress to individual borrowers and small businesses, additional set of measures are being announced under ‘Resolution Framework – 2.0’.
- Resolution Framework 2.0 – Resolution of COVID-19 related stress of Micro, Small and Medium Enterprises (MSMEs):
In view of the uncertainties created by the resurgence of the COVID-19 pandemic, it has been decided to extend the scheme announced during February 2021 for restructuring existing loans without a downgrade in the asset classification subject to the following conditions:
The aggregate exposure, including non-fund based facilities, of all lending institutions to the borrower does not exceed ₹25 crore as on March 31, 2021. The restructuring of the borrower account is invoked by September 30, 2021. The restructuring shall be treated as invoked when the lending institution and the borrower agrees to proceed with the efforts towards finalising a restructuring plan to be implemented in respect of such borrower.
- Periodic Updation of KYC – Restrictions on Account Operations for Non-compliance:
Keeping in view the current COVID-19 related restrictions in various parts of the country, Regulated Entities (REs) are advised that in respect of the customer accounts where periodic updation of KYC is due and pending as on date, no restrictions on operations of such account shall be imposed till December 31, 2021, for this reason alone.
- Amendment to the Master Direction (MD) on KYC:
Master Direction on KYC has been amended to further leverage the Video based Customer Identification Process (V-CIP) and to simplify and rationalise the process of periodic updation of KYC. The Regulated Entities may undertake V-CIP to carry out Customer Due Diligence in case of new customer on-boarding for individual customers, proprietor in case of proprietorship firm, authorized signatories and Beneficial Owners in case of Legal Entity customers. Regulated Entities may also undertake V-CIP for conversion of existing accounts opened in non-face to face mode using Aadhaar OTP based e-KYC authentication, and updation or periodic updation of KYC for eligible customers.
- RBI Clarifies sponsor contribution by Indian party (IP) to AIF located in overseas jurisdiction including IFSC to be treated as Overseas Direct Investment (ODI):
RBI has clarified that any sponsor contribution from a sponsor IP to an Alternative Investment Fund (AIF) set up in an overseas jurisdiction, including International Financial Services Centres (IFSCs) in India, as per the laws of the host jurisdiction, will be treated as Overseas Direct Investment (ODI). Accordingly, IP, as defined in regulation 2(k) of the Notification ibid. can set up AIF in overseas jurisdictions, including IFSCs, under the automatic route provided it complies with Regulation 7 of the Notification FEMA 120/2004-RB.
- Relaxation in timeline for compliance with various payment system requirements:
Based on the representations received from various bank and non-bank entities, it has been decided to extend the timeline of certain compliance Norms with respect to the Various Payment System Requirements. It is to provide relief to all existing non-bank PPI issuers, Authorised Payment System Operators, Existing non-bank entities offering PA services.
- RBI Instructs Companies to Enable PPI Interoperability by March 2022:
It has been announced that:
•It shall be mandatory for PPI issuers to give the holders of full-KYC PPIs (KYC-compliant PPIs) interoperability through authorized card networks (for PPIs in the form of cards) and UPI (for PPIs in the form of electronic wallets); the interoperability shall be enabled by March 31, 2022.
•The limit for full-KYC PPIs shall be increased from Rs.1 lakh to Rs.2 lakh, and
•Cash withdrawal shall be permitted using full-KYC PPIs of non-bank PPI issuers. Maximum limit of Rs.2,000 per transaction with an overall limit of Rs.10,000 per month per PPI.
- Interest rates payable on unclaimed interest bearing deposit reduced to 3:
RBI had specified the rates of interest payable by banks to the depositors on the unclaimed interest bearing deposit amount transferred to the DEA Fund. The rate of interest has since been reviewed and it has been decided that the rate of interest payable by banks to the depositors/claimants on the unclaimed interest bearing deposit amount transferred to the Fund shall be 3 per cent simple interest per annum with effect from the date of this circular.