Regulatory updates for the Month of August 2022

Companies Act, 2013

Due Dates

1. Companies (Removal of Names of Companies from Register of Companies) Second Amendment Rules, 2022

• MCA has made addition in the Form STK 1, Form STK 5 & Form STK 5A with following:
• The Company is not carrying on any business or operations, revealed after the physical verification carried out under sub-section (9) of section 12.

2. Companies (Accounts) Fourth Amendment Rules, 2022

• Central Government has made amendment as follows :
• The books of accounts and other relevant papers maintained in electronic mode shall remain “accessible in India, at all times”
• Backup of books of accounts and papers maintained in electronic mode including places outside India shall be kept in servers physically located in India on daily basis

3. Physical Verification of the Registered Office of the Company by ROC.

• The Registrar, based upon the information or documents made available on MCA 21 shall visit the office of the said company for the purpose of section 12(9).
• ROC has to prepare physical verification report of the Registered Office of the company in the given format.
• Physical Verification of the Registered Office of the Company by ROC

4. Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2020

• MCA has introduced web based e-forms for existing e-form DIR-3-KYC and web-form DIR-3-KYC-WEB

5. Companies (Registration of Charges) Second Amendment Rules, 2022

• The Rule provides that the Form No.CHG-1, CHG-4, CHG-8 and CHG-9 shall be signed by Insolvency resolution professional or resolution professional or liquidator for companies under resolution or liquidation, as the case may be and filed with the Registrar

6. Companies (Acceptance of Deposits) Amendment Rules, 2022

• The amended rules require companies to provide detailed disclosures with respect to exempted deposits in the revised forms.
• The following additional details are required now: opening balance, additional loan during the year, repayments during the year, any other adjustment, closing balance and ageing of the loan outstanding for less than a year or 1 to 3 years or more than 3 years.

SECURITIES LAW

1. Framework for restricting trading by Designated Person(DPs) by freezing PAN at security level.

• SEBI has directed that from now a notional trading window shall be used as an instrument of monitoring trading by designated person and their immediate relatives.
• This circular shall come into force with effect from the quarter ending September 30,2022.

FEMA

1. Foreign Exchange Management (Overseas Investment) Regulations, 2022

• Ministry of Finance notified new rules and made some significant changes to the framework
• For allowing investment outside India by Indian entities as well as resident individuals, Investment in less than 10% equity of an unlisted Foreign Company has been permitted under the portfolio route
• For Resident Individuals gift of foreign security from non-resident has been permitted subject to compliance with FCRA
• Transfer or liquidation of the overseas company is permitted only post one year of holding by the Indian entity

INSOLVENCY LAW

1. Entries In Book Of Accounts/Balance Sheet can be treated as Acknowledgment of Liability of Debt: Supreme Court

• In the matter of Asset Reconstruction Company (India) Limited & Debtor, Tulip Star Hotels Limited. the Supreme Court observed:
• “the entries in Books of Account/Balance sheet of a company can be treated as acknowledgement of liability in respect of debt payable to a financial creditor” and order of the NCLAT was set aside.
• Asset Reconstruction Company Vs Tulip Star Hotels Limited & Ors. (Supreme Court)

2. NCLAT held that Moratorium is no bar for initiation of proceedings under section 66 of the code

• In the matter of Rakesh Kumar Jain (RP) & Jagdish Singh Nain (RP), NCLAT held that provisions of Moratorium and Fraudulent trading or wrongful trading are independent provisions incorporated for different purposes and therefore, these provisions have to be read independently to achieve the objective of the Code.
• NCLAT upheld the order passed by NCLT that provision of Moratorium prohibits institution and prosecution of proceedings against the Corporate Debtor but does not prohibit proceedings against any fraudulent transactions under Section 66 of the code. 

Due Dates under various laws

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.