Introduction: The legal landscape witnessed significant changes in January 2024, covering diverse areas such as Company Law, Securities, FEMA, Insolvency, and notable Case Laws. This comprehensive overview delves into key updates, ensuring you stay abreast of the latest regulatory shifts.
COMPANY LAW
1. MCA has notified rules for Listing of Equity Shares in IFSC by Public Companies.
- These rules shall apply to unlisted public Cos. or listed public Cos. which issue their securities for listing on permitted stock exchanges in permissible jurisdictions (i.e. IFSC).
- Unlisted company to file prospectus in e-Form LEAP-1 within 7 days after filing with permitted stock exchange.
- Certain Cos. which shall not be eligible under these rules like Nidhi Co., Cos.- limited by Guarantee, has outstanding deposits and negative net worth etc.
- Companies (Listing of equity shares in permissible jurisdictions) Rules, 2024
SECURITIES LAW
1. SEBI releases framework for “Offer for Sale” (OFS) of shares to Employees through Stock Exchange Mechanism.
- Allotment to employees of equity shares up to INR 2,00,000.
- Under retail category, new employee category added
- Upfront payment is to be made
- SEBI Circular: New Framework for Employee Share Sale via Stock Exchange
2. SEBI extends deadlines for listed entities to verify market rumors.
- The new effective date for implementation for top 100 listed entities has been extended to June 1,2024 and for the top 250 listed entities, the deadline is now December 1, 2024.
- SEBI extends timeline for verification of market rumours by listed entities
FEMA
1. Government has announced new regulations for the direct listing of Indian companies’ shares in foreign stock exchanges.
Amendments in Foreign Exchange Management (Non-debt Instruments)
A. Criteria for listing on international exchanges
a) All shares to be dematerialised form and rank pari passu with equity shares listed on a recognised stock exchange in India
b) Sectoral caps to be adhered to and prohibited activities to be not allowed
c) Promoters, promoter group, directors, or selling shareholders are not barred from participating in the capital market.
B. Citizen of a country or company formed in countries which shares land border with India or an entity whose beneficial owner is from such a country, shall hold equity shares of such public Indian company only with the approval of the Central Government
C. Price to be determined by book building process and not be less than fair market value in case of initial listing
INSOLVENCY LAW
1. Reduction of cooling off period between two consecutive attempts.
- To improve effectiveness of the exams, IBBI has decided to reduce the time period between two consecutive attempts from 2 months to 21 days for Insolvency Exam and Valuation Exam.
- IBBI Announces Reduced Cooling-off Period for Insolvency & Valuation Exams
CASE LAWS
Company Law
1. The Supreme court has dismissed plea challenging the Rule 8A of Companies Act 2013
- In the Case of Suman Kumar Vs. Union of India & Ors. Supreme Court held that :
- The paid-up capital threshold increase from 5 Crores to 10 Crores is made to nullify the effect of inflation and not arbitrary.
- Click here for Judgement
2. Registered Society cannot seek Rectification of Register of Members under section 59 of Companies Act.
- In this matter NCLT held that a company petition field by a society registered under Andra Pradesh Societies Registration Act, 2001 for rectification of share register of members of a company under section 59 of Companies Act, 2013, is not maintainable.
- The appeal was rejected by the NCLT and stated that the society was not a ‘person’ under the Companies Act since it had no nexus with the affairs of the company.
- Complicated cases of law cannot be decided by NCLT under Companies Act and can be decided by court only.
- Click here for Judgement
OTHER UPDATES
1. Government invites suggestions from public on draft Indian Stamp Bill, 2023.
- Highlights of the Bill
- Introduction of Electronic stamps
- enhance the penalty amount to Rs 25,000 from the existing Rs 5,000.
- Indian Stamp Bill, 2023: Ministry of Finance Seeks Public Input
Due Dates under various laws
| 14th February 2024 | • Financial Results along with Limited review report/Auditor’s report under Regulation 33 |
| • Statement of deviation(s) or variation(s) Regulation 32 |
Conclusion: January 2024 proved to be a dynamic period in the legal realm, with far-reaching changes in Company Law, Securities, FEMA, Insolvency, and Case Laws. Staying informed and adapting to these developments is crucial for businesses and professionals navigating the intricate landscape of Indian corporate and financial regulations. Ensure compliance and strategic decision-making with a nuanced understanding of the evolving legal framework.
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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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