Updates on Companies Act, 2013
- Relaxation on levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 NON-XBRL and MGT-7/MGT-7A for the Financial Year ended 31st March, 2021
The Ministry of Corporate Affairs released a General Circular dated 29th October, 2021 with respect to relaxation on levy of additional fees in filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL and MGT-7/ MGT-7A for the financial year ended on 31st March 2021. Upon various requests received from the stakeholders regarding relaxation on levy of additional fees for Annual Financial Statement filings required to be done for the financial year ended on 31st March 2021, the Ministry decided that no additional fees shall be levied up to 31st December 2021 for the filing of e-forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL and MGT-7 and MGT-7A in respect of the financial year ended on 31st March 2021. Further, it is decided by the Ministry that, during the said period only, normal fees shall be applicable for filing of above-mentioned forms.
The Ministry has released this vide General Circular No. 17/2021 on 29th October 2021, can be accessed by clicking the link mentioned below:
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2. Extension of last date of filing of Cost Audit Report to the Board of Directors
In continuation to MCA General Circular No. 15/2021 issued dated 27th September, 2021 with respect to extension of Filing Cost Audit Report to the Board of Director, the Ministry upon receiving multiple representations from various stakeholders has decided that that the last date of filing of Cost Audit Report to the Board of Directors to be further extended to 30th November, 2021 from 31st October, 2021. Furthermore it is declared by the Ministry that the other requirements as mentioned in said General Circular shall remain unchanged.
The Ministry has released this vide General Circular No. 18/2021 on 29th October 2021, can be accessed by clicking the link mentioned below:
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RBI Updates
- Reserve Bank of India(RBI) issues clarification on eligibility Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas under Basel III Capital Regulations
The RBI on October 04, 2021 has issued a notification to clarify the eligibility Limit for Instruments Denominated in Foreign Currency/Rupee Denominated Bonds Overseas under Basel III Capital Regulations.
RBI clarified that the “eligible amount” for purpose of issue of PDIs in foreign currency as per para 1.16 (ii) of Annex 4 to the Master Circular dated July 1, 2015:-
- Not more than 49% of the eligible amount can be issued in foreign currency and/or in rupee denominated bonds overseas.
“Eligible amount” in this context shall mean the higher of:
- 1.5% of RWA; and
- Total Additional Tier 1 capital;
as on March 31 of the previous financial year.
All the other terms of the Master Circular on Basel III Capital Regulations dated July 1, 2015, referred to above, as amended from time to time, shall remain unchanged.
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2. RBI extended the facility of Priority Sector Lending on Banks to NBFCs
The RBI on October 08, 2021 announced Extension of facility of Priority Sector Lending- Banks lending to NBFCs for on-lending wherein the facility of bank lending to NBFCs (other than MFIs) for on-lending was allowed to be classified as PSL up to September 30, 2021.
As announced in the Statement on Developmental and Regulatory Policies dated October 8, 2021, the facility has been extended till March 31, 2022 keeping in view the increased traction observed in delivering credit to the underserved/unserved segments of the economy. Loans disbursed under the on-lending model will continue to be classified under Priority Sector till the date of repayment/maturity whichever is earlier.
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3. RBI issues Notification on the need of discipline on Opening of Current Accounts by Banks:
Earlier, no banks were allowed to open current accounts for borrowers who have availed credit facilities in the form of cash credit (CC)/ overdraft (OD) from the banking system and all transactions are only be allowed to route through the CC/OD account.
However, vide RBI circular dated October 29, 2021, it was informed that the banks may open current accounts for borrowers who have availed CC / OD facilities from the banking system as per the following provisions:
(i) For borrowers, where the exposure of the banking system is less than ₹5 crore, there is no restriction on opening of current accounts or on provision of CC/OD facility by banks, subject to obtaining an undertaking from such borrowers that they shall inform the bank(s), as and when the credit facilities availed by them from the banking system reaches ₹5 crores or more.
(ii) In respect of borrowers where exposure of the banking system is ₹5 crore or more, such borrower can maintain current accounts with any one of the banks with which it has CC/OD facility, provided that the bank has at least 10 per cent of the exposure of the banking system to that borrower.
Further, other lending banks may open only collection accounts subject to the condition that funds deposited in such collection accounts will be remitted within two working days of receiving such funds, to the CC/OD account maintained with the above-mentioned bank maintaining current accounts for the borrower. In case none of the lenders has at least 10% exposure of the banking system to the borrower, the bank having the highest exposure may open current accounts. Non-lending banks are not permitted to open current accounts.
The Banks are asked to implement these changes within a month.
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SEBI Updates
- Relaxations relating to procedural matters –Issues and Listing
SEBI vide its various circular granted relaxations from strict enforcement of certain regulations of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, pertaining to Rights Issue opening upto September 30, 2021 and on the representations received from the Market participants and to ease and facilitate investors, the relaxation mentioned earlier in 2020 has further extended and shall be applicable for Rights Issues opening upto March 31, 2022. The detailed circular can be accessed by clicking the link mentioned below:
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2. Circular on Mutual Funds
SEBI, vide circulars dated October 04, 2013 and October 19, 2016, allowed Mutual Fund Distributors (‘MFDs’) and SEBI registered Investment Advisers (‘IAs’) to use the infrastructure of recognized stock exchanges to purchase and redeem Mutual Fund (‘MF’) units on behalf of their clients.
Based on the discussions with Mutual Fund Advisory Committee, SEBI vide its circular dated October 4, 2021 has prescribed the certain norms with respect to transactions in the units of Mutual Funds undertaken through service providers/platforms other than stock exchanges. The detailed circular can be accessed by clicking the link mentioned below:
Click here to access the Circular
3. Discontinuation of usage of pool accounts for transactions in units of Mutual Funds on the Stock Exchange Platforms
SEBI, vide its circulars issued in the year 2009 & 2010 permitting units of mutual fund schemes to be transacted through registered stock brokers and clearing members respectively, by using stock exchange infrastructure. Presently, funds and / or units of the mutual fund schemes move through stock brokers’ / clearing members’ pool accounts in an aggregate manner to client account or Clearing Corporation/AMC account, as the case may be. In addition to above, they were allowed to use the infrastructure of the stock exchanges to purchase and redeem mutual fund units on behalf of their clients.
Based on discussions with stakeholders and recommendations of the Mutual Fund Advisory Committee, Pooling of funds and/or units by stock brokers / clearing members in any form or manner shall be discontinued for mutual fund transactions also various norms has been prescribed w.r.t. transactions covered under above mentioned circulars The detailed circular dated October 4, 2021 can be accessed by clicking the link mentioned below:
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4. Disclosure of Complaints against the Stock Exchange(s) and the Clearing Corporation(s)
In order to bring about transparency in the Investor Grievance Redressal Mechanism, SEBI vide its circular dated October 4, 2021, prescribed that all the Stock Exchanges and the Clearing Corporations shall disclose on their websites, the data on complaints received against them and redressal thereof, latest by 7thof succeeding month, as per the format enclosed at Annexure-‘A’ to this circular. These disclosure requirements are in addition to those already mandated by SEBI. The provisions of this circular shall come into effect from January 01, 2022. The Annexure-‘A’ and the detailed circular can be accessed by clicking the link mentioned below:
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5. Revised Formats for filing financial information for issuers of non-convertible securities
SEBI vide circular dated October 5, 2021prescribed the revised formats for Standalone financial results on a quarterly basis and Standalone and consolidated financial results on an annual basis for the entity which has listed its non-convertible securities.
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6. Amendments to manner and mechanism of providing exit option to dissenting unit holders pursuant to Regulation 22(6A) and Regulation 22(8) of SEBI (Real Estate Investment Trusts) Regulations, 2014 (“SEBI (REIT) Regulations”)
SEBI vide circular dated July 17, 2020 provided the manner and mechanism of providing exit option to dissenting unit holders pursuant to Regulation 22(6A) and Regulation 22(8) of SEBI (Real Estate Investment Trusts) Regulations, 2014.
The said circular stands modified vide SEBI Circular dated October 5, 2021 and the same can be accessed by clicking the link mentioned below:
Click here to access the Circular
7. Amendments to manner and mechanism of providing exit option to dissenting unit holders pursuant to Regulation 22(5C) and Regulation 22(7) of SEBI Infrastructure Investment Trusts Regulations, 2014 (“SEBI (InvIT) Regulations”)
SEBI vide circular dated July 17, 2020 provided the manner and mechanism of providing exit option to dissenting unit holders pursuant to Regulation 22(5C) and Regulation 22(7) of SEBI (Infrastructure Investment Trusts) Regulations, 2014. The said circular stands modified and can be accessed by clicking the link mentioned below:
Click here to access the Circular
8. Circular on Minimum percentage of trades carried out by mutual funds through RFQ platform
SEBI, vide circular dated July 22, 2020 mandated mutual funds to undertake at least 10% of their total secondary market trades in Corporate Bonds through RFQ platform of stock exchanges. Based on the recommendations of Mutual Fund Advisory Committee (MFAC), in order to further increase the liquidity on exchange platforms, the circular has been modified. The modified circular dated October 6, 2021can be accessed by clicking the link mentioned below:
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9. Revised Formats for Limited Review/ Audit Report for issuers of non-convertible securities
SEBI vide notification dated September 07, 2021, Regulation 52 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 (‘Listing Regulations’) were amended, mandating entities that have listed non-convertible securities to disclose financial results on a quarterly basis, including assets & liabilities and cash flows as well as requiring certain changes in the line items in the financial results.
Accordingly, this circular dated October 14, 2021 provides the revised formats for limited review report / audit report.
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10. Streamlining of issuance of SCORES Authentication
SEBI vide circular dated October 14, 2021 issued a circular stating that now it has been decided to introduce an online mechanism for obtaining SCORES credentials for all “companies intending to list their securities on SEBI recognized stock exchanges”. The online form can be accessed on the SCORES website www.scores.gov.in. This has been done as part of SEBI’s green initiative and to streamline the Redressal of investor grievances against companies before listing.
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11. Transmission of Securities to Joint Holder(s)
SEBI vide circular dated October 18, 2021stated the norms pertaining to transmission of securities to joint holders(s) that were provided in clause 23 of Table F in schedule 1 read with section 56(2) & 56(4)(c) of the Companies Act 2013. It has been observed in some cases that due to counterclaim / dispute from the legal representative of one of the deceased holder, the RTAs have not effected transmission to the surviving joint holder(s). In this regard, RTAs are hereby advised to comply with the aforesaid provisions of the Companies Act 2013 and transmit securities in favour of surviving Joint holder(s), in the event of demise of one or more joint holder(s), provided that there is nothing contrary to the same in the Article of Association of the company.
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12. Modalities for filing of placement memorandum through a Merchant Banker under SEBI (Alternative Investment Funds) Regulations, 2012
SEBI vide circular dated October 21, 2021 mentioned the Modalities for filing of placement memorandum through a Merchant Banker. AIFs shall launch scheme(s) subject to filing of placement memorandum with SEBI through a SEBI registered Merchant Banker. In this regard, the SEBI (Alternative Investment Funds) Regulations, 2012, (“AIF Regulations”), have been amended and notified on August 13, 2021. The detailed circular can be accessed by clicking the link mentioned below:
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13. Amendment to SEBI Circular pertaining to Investor Protection Fund (IPF)/Investor Service Fund (ISF) and its related matters
SEBI vide circular dated October 22, 2021 drew attention to SEBI circular datedJune13, 2017 on Comprehensive guidelines for Investor Protection Fund (IPF), Investor Service Fund (ISF)and its related matters. With the objective to align with the practices in securities market, based on the internal deliberations/discussions, and the feedback received from the Stock Exchanges, it has been decided to modify the few clause of the aforesaid circular. The detailed circular can be accessed by clicking the link mentioned below:
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14. Amendment to SEBI Circulars pertaining to Investor Grievance Redressal System and Arbitration Mechanism
SEBI vide circular dated October 22, 2021 drew attention to earlier SEBI circulars dated July 11, 2017 and March 14, 2018 on Investor Grievance Redressal System and Arbitration Mechanism.
To further enhance the effectiveness of Investor Grievance Redressal System and Arbitration Mechanism at the Stock Exchanges, based on the internal deliberations/discussions, and the feedback received from the Stock Exchanges, it has been decided to add/modify certain provisions of the aforesaid circulars. The modifications to the said circulars can be accessed by clicking the link mentioned below:
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15. Guiding Principles for bringing uniformity in Benchmarks of Mutual Fund Schemes
SEBI vide circular dated October 27, 2021 decided to standardize and bring uniformity in the Benchmarks of Mutual Fund Schemes and taking into account the recommendations of Mutual Fund Advisory Committee (MFAC). It has been further decided that there would be two-tiered structure for benchmarking of schemes for certain categories of schemes. The first tier benchmark shall be reflective of the category of the scheme, and the second tier benchmark should be demonstrative of the investment style / strategy of the Fund Manager within the category. All the benchmarks followed should necessarily be Total Return Indices. The guiding principle can be accessed by clicking the link mentioned below:
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16. Maintenance of current accounts in multiple banks by Stock Brokers
SEBI vide its circular issued in 1993 on “Regulation of Transactions between Clients and Brokers” mandated that all the brokers shall keep the money of the clients in a separate account and their own money in a separate account. Further in 2017 “Clarification to Enhanced Supervision Circular” provided guidelines on uniform nomenclature to be followed by Stock Brokers for naming and tagging of bank accounts. RBI had issued a circular permitting banks to open specific accounts which are stipulated under various statutes and instruction of other regulators/regulatory departments, without any restrictions.
Based on representations received and in order to facilitate seamless settlement of funds and for the convenience of investors, it has clarified that Stock Brokers should maintain current accounts in appropriate number of banks (subject to the maximum limit prescribed by Stock Exchanges/SEBI from time to time) for all the said purposes.
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17. Investment/ trading in securities by employees and Board members of AMC(s) and Trustees of Mutual Funds
SEBI vide circular dated November 17, 2016, has specified the norms for investment/ trading in securities by employees of AMC(s) and Trustees of Mutual Funds and consolidated the provisions of all the previous circulars as Annexure A to the said circular. Subsequently, SEBI vide circular dated March 04, 2021, partially modified Annexure A of the circular dated November 17, 2016.
Based on the representations received from the industry participants& AMFI and recommendations of Mutual Fund Advisory Committee, it is decided to review the circular and partially modify the provisions of the circular dated November 17, 2016. The modified circular can be accessed by clicking the link mentioned below:
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