Updates on Companies Act, 2013
- Effective date deferred for use of accounting software capturing audit trail:
MCA vide its notification dated 24th March 2021 has mandated the use of accounting software that captures audit trail of each and every transaction. The effective date of this amendment has been deferred to 01st April 2022 instead of 01st April 2021. For further details, the notification can be accessed from the enclosed link.
- Effective date deferred for list of matters to be included in Auditor’s Report:
MCA vide its notification dated 24th March 2021 has inserted a list of matters on which auditor shall include his/her views and comments in the Auditors report. The effective date of this amendment has been deferred to 01st April 2022 instead of 01st April 2021. For further details, the notification can be accessed from the enclosed link
- Spending for Temporary COVID care facilities is an eligible CSR activity:
MCA vide General circular NO. 05/2021 dated 22nd April 2021 has clarified that Spending of CSR funds for “Setting up Makeshift Hospitals and Temporary COVID care facilities” will be considered as an eligible CSR activity under Schedule VII of Companies Act 2013, relating to promotion of health care, including preventive health care and disaster management.
- Priority Sector Lending (PSL) – Lending by banks to NBFCs for On-Lending:
Vide notification dated March 23, 2020, RBI has advised that the bank loans to registered NBFCs (other than MFIs)for on-lending will be eligible for classification as priority sector under Agriculture and Micro & Small Enterprises up to March 31, 2021. Now the RBI has been decided to extend the PSL classification for lending by banks to NBFCs for on-lending by six months i.e. up to September 30, 2021.
- External Commercial Borrowings (ECB) Policy – Relaxation in the period of parking of unutilised ECB proceeds in term deposits:
ECB borrowers are allowed to place ECB proceeds in term deposits with AD Category-I banks in India for a maximum period of 12 months. In view of the difficulty faced by borrowers in utilizing already drawn down ECBs due to COVID-19 pandemic induced lockdown and restrictions, it has been decided to relax the above stipulation as a one-time measure, with a view to provide relief.
Accordingly, unutilised ECB proceeds drawn down on or before March 1, 2020 can be parked in term deposits with AD Category-I banks in India prospectively for an additional period up to March 01, 2022.
- Enhancement of limit of maximum balance per customer at end of the day from ₹1 lakh to ₹2 lakh – Payments Banks (PBs):
PBs were restricted to hold a maximum balance of ₹1 lakh per individual customer at the end of the day. Now it has been decided to enhance the limit of maximum balance at the end of the day from ₹1 lakh to ₹2 lakh per individual customer of PBs with immediate effect.
- Setting Up Of Limited Purpose Clearing Corporation (LPCC) By Asset Management Companies (AMCs) Of Mutual Funds:
SEBI Circular No.SEBI/HO/IMD/DF2/CIR/P/2021/17 dated February 2, 2021 prescribed the modalities for contribution of AMCs towards share capital of LPCC. In this regard, it was prescribed, inter alia, that the contribution from AMCs shall be in proportion to the Average AUM of open ended debt oriented mutual fund schemes managed by them for the Financial Year (FY) 2019-20
In consideration of the representation received from AMFI, SEBI vide this circular has modified to the effect that the contribution of AMCs shall be based on Average AUM of debt oriented schemes, as detailed above, for the Financial Year (FY) 2020-21.
- Circular on Regulatory Reporting by AIFs:
In terms of AIF Regulations and paragraph 3.2 of Circular No. CIR/IMD/DF/10/2013 dated July 29, 2013, AIFs are required to submit periodical reports to SEBI relating to their activity. In order to provide ease of compliance, it has been decided to review the existing Reporting Requirement. Based on consultation with various stakeholders and recommendation of Alternative Investment Policy Advisory Committee, it has been decided that all AIFs shall submit report on their activity as an AIF to SEBI on quarterly basis within 10 calendar days from the end of each quarter in the revised formats as specified in Annexure I of the said circular. The detailed circular can be accessed through the link mentioned below:
- Circular on Reporting Formats for Mutual Funds:
Based on the consultation with industry the formats for the following reports i.e. reports to be submitted by AMCs to Trustees, by AMCs to SEBI and by Trustees to SEBI have been reviewed and revised.
- Circular on Guidelines for warehousing norms for Agricultural and Agri-processed goods and non-agricultural goods (only base and industrial metals) underlying a commodity derivatives contract having the feature of physical delivery:
Warehousing or Storage infrastructure and its ancillary services play a critical role in the delivery mechanism of the Commodity Derivatives Market. With this objective, Regulation 43A of Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018 (“SECC Regulations”)provides, inter-alia, that every recognized Clearing Corporation(hereinafter referred to as “CCs”)providing clearing and settlement services for commodity derivatives shall ensure guarantee for settlement of trades including good delivery.
It is, therefore, incumbent upon the Clearing Corporations to put in place a comprehensive framework of norms for ensuring good delivery as mandated under the SECC Regulations.
On the basis of various observations, Inputs and feedback received, the SEBI vide this circular advised the Clearing Corporations to frame guidelines in accordance with the revised norms as specified in the Annexure of the said circular in order to bring uniformity in requirements for agricultural and agri-processed commodities and base/industrial metals, ease of doing business, rationalised regulatory compliance costs etc. The norms laid down in this circular shall come into effect from June 01, 2021.
- Relaxations relating to procedural matters –Issues and Listing:
To ease and facilitate investors, the relaxation mentioned for Rights Issues opening is further extended and shall be applicable up to September 30, 2021, provided that the issuer along with the Lead Manager(s) shall continue to comply with point (v) of the SEBI Circular No. SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 06, 2020.
In respect to mechanism and compliance requirements at point (iv) and (v) of the SEBI Circular No. SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated May 6, 2020, the issuer along with Lead Manager(s), Registrar, and other recognized intermediaries (as incorporated in the mechanism) shall also ensure the following:
- Refund for un-allotted / partial allotted application shall be completed on or before T+1 day (T: Basis of allotment day).
- Registrar to the issue shall ensure that all data with respect to refund instructions is error free to avoid any technical rejections. Further, in case of any technical rejection of refund instruction, same shall be addressed promptly.
- Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments:
SEBI, vide circular numbered SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 dated November 1, 2016, had advised Credit Rating Agencies to frame detailed policy on provisional ratings. Subsequent to consultation with various stakeholders, including credit rating agencies, steps have been taken for standardizing and strengthening the policies on provisional rating. The detailed circular can be accessed through the link mentioned below:
- Alignment of interest of Key Employees of Asset Management Companies (AMCs) with the Unit holders of the Mutual Fund Schemes:
SEBI has taken steps to standardize the scheme categories and characteristics of each category, the management of risk return profile of the schemes rests with the AMCs and the Key Employees.
In order to align the interest of the Key Employees of the AMCs with the unitholders of the mutual fund schemes, it has been decided that a part of compensation of the Key Employees of the AMCs shall be paid in the form of units of the scheme(s) as prescribed in the said Circular. 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:
Based on the recommendation of Mutual Fund Advisory Committee (MFAC) and to enhance the quality of disclosure w.r.t. risk and performance and portfolio of the schemes, without creating information overload on the investor, it has been decided that the disclosures as specified in the circular shall be made to the investor only for the schemes in which the unit holders are invested as on the date on which the disclosures are stipulated.
- Relaxation from compliance with certain provisions of the SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015 due to the COVID-19 pandemic
SEBI is in receipt of representations from listed entities, professional bodies, industry associations, market participants’ etc. requesting extension of timelines for various filings and relaxation from certain compliance obligations under the LODR Regulations 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 grant relaxations from compliance with certain provisions of the LODR Regulations. The detailed circular can be accessed through the link mentioned below:
- Relaxation from compliance with certain provisions of the SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015 / other applicable circulars due to the CoVID-19 pandemic:
SEBI is in receipt of representations from listed entities, professional bodies, industry associations, market participants etc. requesting extension of timelines for various filings and relaxation from certain compliance obligations under the LODR Regulations 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 grant relaxations from compliance with certain provisions of the LODR Regulations for the entities that have listed their debt securities, Non-convertible Redeemable Preference Shares, bonds and commercial papers. The detailed circular can be accessed through the link mentioned below:
- Addendum to SEBI Circular on “Relaxation in adherence to prescribed timelines issued by SEBI due to Covid 19” dated April 13, 2020:
Relaxations in adherence to prescribed timelines for carrying out various shareholder requests and for other regulatory filings were granted to RTAs in view of the COVID-19 pandemic.
It has been now decided to add, ‘Processing of the demat requests’, to this list and accordingly the list of 13 items that are eligible for relief. The said Relaxation has been extended upto July 31, 2021.
Further, the timeline for submission of Internal Audit Report for the half year ended 31st March, 2021 by RTA has been extended to July 31, 2021 in view of the Covid-19situation.
The list of 13 items can be known by accessing the circular link mentioned below:
- Relaxation in timelines for compliance with regulatory requirements
In view of the situation arising due to COVID-19 pandemic, lockdown imposed by the Government and representations received from Stock Exchanges, SEBI had earlier provided relaxations in timelines for compliance with various regulatory requirements by the trading members / clearing members / depository participants.
In view of the prevailing situation due to Covid-19 pandemic and representation received from the Association of National Exchanges Members of India (ANMI), Stock Exchanges and Depositories, it has been decided to extend the timelines for compliance with the regulatory requirements as prescribed under the circular by by the Trading Members / Clearing Members / Depository Participants / KYC Registration Agencies. The circular can be accessed through the link mentioned below
- Timelines for updation of Scheme Information Document (SID) and Key Information Memorandum (KIM)
Based on the feedback received on SEBI vide circular no. SEBI/HO/IMD/DF2/CIR/P/2021/024 dated March 04, 2021 with respect to the procedure for updating of SID and KIM of Mutual Fund schemes, it has been decided to modify paragraph 11 of the of the aforesaid circular. The detailed circular can be accessed through the link mentioned below.
Further taking into account the difficulties expressed by the industry in light of continuing COVID 19 scenario, it has been decided that the updation of SID and KIM for the half-year ended March, 2021 shall be completed by May 31, 2021. Click here to access the link