Updates on Companies Act, 2013
- Extension of filing cost audit report to the Board of Directors:
Pursuant to Section Rule 6(5) and 6(6) of Companies (Cost Records and Audit) Rules, 2014, the cost auditor shall forward the duly signed report to the Board of Directors within a period of 180 days from the closure of the financial year and such report shall be furnished to the Ministry in form CRA-4 within 30 days of receipt of copy of the report.
Based on representations received from stakeholders, owing to pandemic, the Ministry of Corporate Affairs released a circular dated 27th September, 2021 to extend the last date for filing of the Cost Audit Report. It stated that if the report by cost auditor is submitted to the Board of Directors by 31st October, 2021, the same shall not be a violation by the Company and the form CRA-4 shall be filed within 30 days of receipt of copy of the report. Further, if any company has got extension in holding AGM, then such Companies may file the form within 30 days from the date AGM.
The Ministry has released this vide General Circular No. 15/2021 on 27th September 2021, can be accessed by clicking the link mentioned below:
2. Extension of time for holding Annual General Meeting for the financial year ended on 31.03.3021:
The Ministry on 23rd September, 2021 ordered to all Registrar of Companies to grant an extension of time for convening the Annual General Meeting for the financial year ended on 31st March 2021 in view of the Covid-19 Pandemic. The extension granted is for a period of 2 (two) months from the due date by which the AGM ought to have been held otherwise.
The said extension is applicable to all companies who had pending applications in form GNL-1 for extension of AGM, applications which were rejected by the Ministry and for approved applications, whose extension granted was for a period less than 2 (two) months. The circular can be accessed by clicking the link mentioned below:
- Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021
The Reserve Bank of India on September 08, 2021 has published the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021 to further amend the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015.
The amendment of regulation 15 was made to recognize other applicable benchmarks for fixing the maximum rate of interest that may be paid by an exporter on the advance payment received by them.
2. Use of any Alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions
The Reserve Bank of India on September 28, 2021 published a notification through which it allowed use of any Alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions. In view of the impending cessation of LIBOR as a benchmark rate, it has been decided to permit AD banks to use any other widely accepted/Alternative reference rate in the currency concerned for such transactions.
- Revised guidelines for Liquidity Enhancement Scheme in the Equity Cash and Equity Derivatives Segments
SEBI vide circular dated April 23, 2014 permitted stock exchanges to introduce liquidity enhancement schemes in the equity cash and equity derivatives segments to enhance liquidity in illiquid securities.
SEBI vide circular dated September 1, 2021 stated that based on the experience of stock exchange they have decided to modify clause 3.1 and 4.1 of circular dated April 23, 2014. The modified clause can be accessed by clicking the link mentioned below:
2. Alignment of interest of Asset Management Companies (‘AMCs’) with the Unit holders of the Mutual Fund Schemes
The Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2021(‘MF Amendment Regulations’) was notified on August 05th, 2021 & the provisions of the said regulations shall come into force on the 270thday from the date of notification.
As per the amended regulations AMCs are required to invest such amount in such scheme(s) of the mutual fund, based on the risk associated with the scheme, as may be specified by the Board from time to time. Accordingly, it is decided that based on the risk value assigned to the scheme(s) that AMCs shall invest minimum amount as a percentage of assets under management (‘AUM’) in their scheme(s) as provided in the Annexure as specified in the SEBI Circular dated September 2, 2021.
3. Amendment to SEBI Circular SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017 on Amendment pursuant to comprehensive review of Investor Grievance Redressal Mechanism
SEBI issued a Circular SEBI/HO/DMS/CIR/P/2017/15 dated February 23, 2017 on Amendment pursuant to comprehensive review of Investor Grievance Redressal Mechanism.
Based on the representations received by the Stock Exchange few paragraphs of the said circular stands modified/replaced. The detailed circular can be accessed by clicking the link mentioned below:
4. Position Limits for Currency Derivatives Contracts
SEBI vide circular dated June 20, 2014 prescribed the position limits in permitted currency pairs. Based on feedback received from Stock Exchanges/ Clearing Corporations and upon a review of the same, it has been decided to revise the client level position limits, per stock exchange. The revised limits can be accessed by clicking the link mentioned below:
5. Introduction of T+1 rolling settlement on an optional basis
SEBI vide circular dated February 06, 2003, shortened the settlement cycle from T+3 rolling settlement to T+2 w.e.f. April 01, 2003. SEBI has been receiving request from various stakeholders to further shorten the settlement cycle. Based on discussions with Market Infrastructure Institutions (Stock Exchanges, Clearing Corporations and Depositories), it has been decided to provide flexibility to Stock Exchanges to offer eitherT+1 or T+2 settlement cycle. A Stock Exchange may choose to offer T+1 settlement cycle on any of the scrips, after giving an advance notice of at least one month, regarding change in the settlement cycle, to all stakeholders, including the public at large, and also disseminating the same on its website.
The detailed circular can be accessed by clicking the link below:
6. Clarifications with respect to Circular dated April 28, 2021 on ‘Alignment of interest of Key Employees (‘Designated Employees’) of Asset Management Companies (AMCs) with the Unit holders of the Mutual Fund Schemes’
SEBI, vide circular dated April 28, 2021has provided that a part of the compensation of Key Employees of the AMCs shall be paid in the form of units of the scheme(s) in which they have a role or oversight. Based on the representations received from the Mutual Fund Industry and recommendations of Mutual Funds Advisory Committee (‘MFAC’), it has been decided to provide clarity on certain provisions and on the applicability of the aforementioned circular. The detailed circular can be accessed by clicking the link given below:
7. Risk Management Framework (RMF) for Mutual Funds
In order to ensure that mutual funds render, at all times, high standards of service, exercise due diligence, ensure proper care in their operations and to protect the interests of investors, SEBI vide Circular No.MFD/CIR/15/19133/2002, dated September 30, 2002 prescribed certain systems, procedures and practices that must be followed by all mutual funds with regard to risk management in various areas like fund management, operations, customer service, marketing and distribution, disaster recovery and business contingency, etc.
Since the date of issuance of the aforesaid circular, there have been significant developments in the mutual fund industry and in the financial markets as a whole. Accordingly, it has been decided to review the extant Risk Management Framework for Mutual Funds.
The recommendations of Mutual Funds Advisory Committee (MFAC) have been suitably incorporated in the Risk Management Framework for mutual funds and the detailed framework can be accessed through below link:
8. Circular on Swing pricing framework for mutual fund schemes
SEBI floated a consultation paper on introduction of swing pricing framework for mutual fund schemes. Pursuant to the feedback received on the said consultation paper and subsequent deliberations in the Mutual Fund Advisory Committee (MFAC), it has been decided to introduce swing pricing framework for open ended debt mutual fund schemes (except overnight funds, Gilt funds and Gilt with 10-year maturity funds). The detailed SEBI circular dated September 29, 2021 can be accessed by clicking the link mentioned below:
9. Guidelines for Investment Advisers – Extension of timelines
“Guidelines for Investment Advisers” issued vide Circular No. SEBI/HO/IMD/DF1/CIR/P/2020/182 dated September 23, 2020 (hereinafter referred as “Circular”) inter alia prescribed time line of six months from the end of each financial year for Investment Advisers (IA) to conduct annual audit in respect of compliance of SEBI (Investment Advisers) Regulations, 2013 (“IA Regulations”) and circulars issued there under. Further, a timeline of one month from the date of the audit report but not later than October 31st of each year was prescribed for submitting adverse findings of such audit , if any, for the previous financial year starting with the financial year ending March 31, 2021.
The Circular further specified a timeline of 6 months from the end of the financial year for the IAs to obtain an annual certificate from an auditor confirming compliance with the client level segregation requirements as specified in Regulation 22 of the IA Regulations.
SEBI is in receipt of representations from IAs requesting for extension of abovementioned timelines prescribed for annual compliance audit and annual certificate confirming client level segregation due to pandemic.
After due consideration, for financial year ending March 31, 2021, it has been decided to extend the timeline for compliance with the aforesaid requirements by three months.