Introduction: In October 2023, several significant regulatory updates have been introduced, impacting various aspects of corporate and financial laws in India. In this article, we will delve into the key changes in Company Law, Securities Law, Insolvency Law, and explore recent case law decisions.
Page Contents
Company Law
1. New Promoters of Bankrupt Firms can easily shift Registered Offices, MCA tweaks rules.
- Provision made for shifting of a registered office from one state or union territory to another in matters pertaining to the acquisition of a company by a new management, so long as:
-such acquisition was undertaken under a resolution plan approved under IBC.
-no appeal against the aforesaid resolution plan is pending in any court or tribunal, and no inquiry, inspection or investigation is pending or initiated after the approval of said resolution plan.
2. MCA mandates new designated person for beneficial interests in shares
- Company to designate immediately person who shall be responsible for furnishing information & extending cooperation in providing information to the Registrar or any other authorised officer regarding beneficial interest in shares of the
- Until a designated person is appointed, existing officers like Company Secretaries or Directors deemed for this role.
- Change in designated person to be notified in GNL 2
- Designated person name to be mentioned in MGT 7
- Click here for Notification
3. MCA mandates dematerialisation for private companies.
- As per the amended norms, every private company except small co. must issue the securities only in dematerialised form September 2024
- MCA has also specifically said that no private company can issue securities or buyback its securities after prescribed period until the entire holding of securities of its promoters, directors, and key managerial personnel has been
- These provisions shall not apply to Government
- Click here for Notification
4. Limited Liability Partnership (Third Amendment) Rules, 2023
- Every LLP is required to maintain a register of partners which must contain details of their beneficial interests and both tangible and intangible contributions.
- A person whose name is entered in the register of partners of an LLP but does not hold any beneficial interest fully or partly in contribution must file a declaration to that effect with the LLP within 30 days from the date on which his/her name is entered in the register.
- Every LLP must specify a designated partner who will be responsible for furnishing information to the ROC with respect to beneficial interests in contributions in LLP.
- Register of Partners to be maintained containing name & contribution, to me made within 30 days or 7 days of change
- Click here for Notification
5. Government Allows Indian Companies to List Overseas with Conditions
- MCA has formally notified the relevant section under the company’s law to enable for Indian companies to list on foreign exchanges, with specific
- Detailed information awaited on the process
- Click here for Notification
Securities Law
1. SEBI extends timeline for verification of market rumours by listed entities
- SEBI has provided extension of timeline for verification of market rumors by listed
- The watchdog said now market rumours have to be verified and confirmed, denied, or clarified by the:
i. Top 100 listed entities by market capitalization, to February 1, 2024 and
ii. For top 250 listed entities by market capitalization, to August 1, 2014.
- In order to bring more transparency and to ensure timely disclosure of material events or information by listed entities, SEBI had introduced new regulations earlier this year
- Click here for Circular
2. Relaxation provided to listed entities from certain provisions of SEBI LODR – SEBI
- These relaxations, as provided by SEBI until 30 September 2024, are summarised hereinunder:
- As per regulations, listed entities must dispatch a hard copy of the statement containing the salient features of all the documents as prescribed to shareholders or holders who have not registered their email
- However, the listed entities must send a hard copy of their full annual reports to shareholders who have requested the
- Moreover, the listed entities need not send proxy forms as required under regulation regarding general meetings held electronically
- Click here for Circular
Insolvency Law
1. Govt excludes aircraft, aircraft engine and helicopter-related transactions from moratorium
- MCA issued a notification stating that the provisions of Moratorium of the Insolvency and Bankruptcy Code, 2016 (IBC), would not be applicable to transactions, arrangements or agreements, under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.
- This would mean that aircraft, engine and helicopter leased and other agreements will not be bound by a
- The government’s notification to exempt such transactions from moratorium coincides with the ongoing insolvency proceedings of Go
- However, the notification does not mention whether it applies to pending
- Click here for Notification
Case Laws
Insolvency Law
1. RPs can’t challenge Tribunal Order: Supreme Court
- In the matter of Regen Powertech Private Limited vs Giriraj Enterprises the Supreme Court has said that
- Resolution professionals (RPs) do not have the power to file appeals against the decisions of bankruptcy courts as they are “neutral” persons appointed to assist the
- Only aggrieved parties like the Committee of Creditors (CoC) and others can file appeals against the decisions of the NCLT or
- Click here for Order
Company Law
1. Penalty of 3 lakh imposed for Non-disclosure of compliance with the Sexual Harassment of Women at Workplace in Directors’ Report.
- During the inquiry it was found that the company’s Board reports did not disclose compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition, Redressal) Act,
- In response, Company claimed exemption from constituting an Internal Complaints Committee due to having less than ten employees in each establishment and No complaints from female workers Non-disclosure in the Board’s report was unintentional.
- It was held that even though the constitution is not applicable it is required to mention about the disclosures as per the prescribed format
- Hence, penalty of three lakh rupees on the company and fifty thousand rupees on each officer in default was imposed for non-
- Click here for the Order
2. MCA imposes penalty on company for violating Loan & Rights issue provisions
- The company had received a loan from its founder-directors for working capital purposes. This loan was subsequently converted into equity shares by adjusting from the loan amount.
- However, the company erroneously recorded this allotment as a rights issue instead of correctly categorizing it as a conversion of a loan into equity. The error was discovered when the company filed Form PAS-3 for the
- The company’s authorized representative emphasized that the default was not intentional but occurred inadvertently and without any malafide intention.
- Hence Penalty were imposed under the Act for violation of the
- Click here for Order
3. CSR Violation: MCA Imposed Heavy Penalty of 66.16 Lakhs.
- ROC Karnataka has taken a decisive step by imposing a substantial penalty on Private Limited Company.
- For two years the Company has failed to transfer the unspent CSR amount in a special account within thirty days from the end of financial year as required under the Act.
- Due to delay in transferring unspent amount within stipulated time, lead to violation of provisions of the of the Act.
- Hence, the penalty of total 66,16,156 lakhs was imposed on Company & its directors.
- Click here for Order
4. Penalty of Rs. 8 lakh arose on Private Limited due to failure in CSR disclosure in Boards’ Report.
- Ceratizit India Private limited (“Company”) had failed to disclose the reasons for not spending the CSR amount in FY 2017-18 & 2018-19 in the Board’s report.
- The company and its officers in default violated the provisions of the Act rending them for penal
- Thus, the Act imposes a penalty of Six lakh rupees on the company and one lakh rupees on each officer in default for non-compliance.
- Click here for Order
Other Updates
1. GST council to clarify on corporate guarantees
- The GST council has clarified that corporate guarantees given by a parent company to its subsidiary will be subject to goods and services tax (GST).
- The GST council has recommended that the taxable value of corporate guarantees be set at 1% of the guarantee amount or the actual consideration, whichever is
- Additionally, the council has stated that no GST is to be paid when a company’s director provides a personal guarantee to a bank or financial institution without receiving any consideration.
Due Dates under various laws
|
14th November 2023 |
1. Regulation 33(3) Financials results along with limited review report/Auditor’s report (For list Companies)
2. Regulation 33 (5): Financial Results (In case of entity which has listed their specified securities on SME Exchange) 3. Regulation 32 (1): Statement of deviation(s) or variation(s) |
| 18th November 2023 | Submit the Structured Digital Database (SDD) Compliance Certificate |
| 29th November 2023 | 1. PAS-6-Reconciliation of share capital audit report-
To be filled by Unlisted public company. 2. MGT 7/7A- Annual Return. 3. MGT 8- Compliance certificate by PCS.(For Listed Company or Companies having PSC ≥ 10 Crores or turnover ≥ 50 crores) |
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Disclaimer: This newsletter is a compilation of updates prepared and circulated from the academic point of view only and are not intended to constitute professional advice on any matter. The views and opinions expressed in this newsletter are those of the author of this document and are based on the internal research done by the Author.
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