Regulatory updates for the Month of January 2023

COMPANY LAW

1. Release plan of 45 company e-Forms in MCA 21 Version 3.0-reg.

• MCA has introduced certain e-Forms in MCA Version 3.0 and e-Forms are not available in MCA21 Version-2 from 07.01.2023 to 22.01.2023.
• Competent Authority allowed additional time of 15 days without levying additional fees in case due dates of filing of these 45 e-Forms fall during the period between 07.01.2023 to 22.01.2023.

Read: MCA extends time limit for filing 46 forms without additional fees

General extension of due date for 45 e-forms under transition from V2 to V3 Portal

2. Filing of e-Forms GNL-2 and MGT -14 due to migration from V2 Version to V3 Version in MCA 21 Portal

• MCA has given clarification for filing of Form GNL-2 and MGT-14,for the purpose of filing prospectus related documents /resolution relating to prospectus related documents during 7^th January, 2023 to 22^nd January,2023 when migration to V3 Version in MCA-21 Portal will be done and such forms will not be available for filing in V2 Version.
• MCA has provided such forms may be filed in physical mode duly signed by persons concerned with the ROC and take a acknowledgement (as per annexure to circular).However such filing shall be done along with undertaking by company that once the filing of such forms is enabled on the portal, the company shall file the relevant Form in electronic form on MCA-21 portal along with fees.

Read: Filing of Forms GNL-2 & MGT-14 In Physical Mode

3. MCA amends Form AOC-5 (Notice of address at which books of account are to be maintained) effective from 23^rd January 2023.

• MCA amended Form AOC -5 to include the geographic coordinates, i.e., latitude and longitude of the address at which books of accounts are to be maintained.
• Also, there are 3 new mandatory attachments to the form as follows :

a. Proof of address along with standard NOC in case of leases or rented property

b. Copies of utility bill

c. Photograph of the registered office showing external building and second one being inside the office showing at least Director/KMP who has affixed his/her digital signature to the form.

• Click here for the Notification

4. Companies (Prospectus and Allotment of Securities) Amendment Rules, 2023

• MCA has amended Companies (Prospectus and allotment of Securities) Rules,2014, these rules to be called as Companies (Prospectus and allotment of Securities) Rules,2023 effective from 23^rd January 2023
• In Companies (Prospectus and allotment of Securities) Rules,2014 sub rule (6) of rule 12 is omitted and changes has been made in Form PAS-2, Form PAS-3 & Form PAS-6.

5. MCA modified Form MR-1 and MR 2 seeks detailed information w.r.t to NR managerial persons and pleas pending before tribunals

• MCA has amended the Companies (Appointment and Managerial Remuneration) Rules, 2014 additional disclosure relating to whether the appointee is a Non-resident and SRN of MR-2 for obtaining Central Government’s approval (as applicable) is to be mentioned in Form MR-1 & MR-2.
• In Form MR-2 additional disclosure relating to details of application pending before NCLT/NCLAT is required.

6. MCA has amended Companies (Share Capital and Debentures) Rules, 2014

• Companies that are buying back securities need to file declaration with ROC in Form SH-11, signed by 2 directors of the company including the managing director (if any), certifying that buy-back of securities has been made in compliance with Companies Act,2013.
• Requirement of attaching Form SH 15 along with Form SH 11 has been removed. MCA has substituted Forms SH-7, SH-8 and SH-9.
• Click here for the Notification

7. MCA has substituted Form URC-1

• MCA has notified the Companies (Authorized to Register) Amendments Rules,2023 to amend Companies (Authorized to Register) Rules 2014 to be effective from 23^rd January 2023.
• The notification has provided manner in which a company is required to attach and provide documents and information to the ROC along with Form No.URC-1.
• Also, NOC from secured creditor along with charge holder, if applicable is substituted with earlier requirement.
• Click here for the Notification

8. MCA has amended Nidhi Rules,2014

• MCA has introduced new rules called Nidhi (Amendment) Rules,2023 i.e., 23^rd January 2023.
• In Nidhi Rules 2014 the Form NDH-1, Form NDH-2, Form NDH-3, Form NDH-4 has been substituted.
• Click here for the Notification

9. MCA has introduced Companies (Registration Offices and Fees) Amendment Rules, 2023 i.e., 23^rd January 2023

• Rule 8A has been inserted which provides for Signing of forms-e-forms whichever applicable shall be signed by IRP or RP or liquidator of companies under insolvency or as the case may be, and filed with the ROC.
• Form GNL-2, Form GNL-3 and Form GNL-4 are also substituted.

10. MCA circular on 7^th of February 2023 for extension of time for filing of E forms without additional fee.

• Additional time of 15 days has been allowed for filing of 45 revamped E forms without any additional fees.
• Form PAS-3 was not available for filing in Version 2.0 on 20.01.2023 since it is launched on Version 3.0 on 23.01.2023. Clarification has been given by MCA that whose due dates are between 20.01.2023 and 06.02.2023, can also file Form PAS-03 without payment of any additional fees for the period of 15 days.
• Click here for the Circular

SECURITIES LAW

1. SEBI has given limited relaxation to dispatch of physical copies of financial statements etc. under Regulation 58 of SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015

• SEBI has relaxed the requirement under Regulation 58 of the Listing Regulation which prescribes that any entity with listed Non-Convertible securities shall send a hard copy of statement containing the salient features of all documents prescribed under Section 136 of Companies Act,2013 to those holders of non-convertible securities who have not registered their email address(es) either with the listed entity or with any depository.
• SEBI has relaxed the requirement of Regulation 58(1)(b) of LODR up to 30^th September 2023.

2. Participation of AIFs in Credit Default Swaps

• SEBI has amended AIF Regulation to allow AIFs to participate in Credit Default Swaps (‘CDS’) as protection buyers and sellers.
• Regulations 16,17 ,18 and 20 of AIF Regulations enable AIFs to participate in Credit Default Swaps(CDS).SEBI has prescribed terms and conditions to AIFs buying/selling/transacting in CDS.
• Click here for the Notification

3. SEBI has amended certain Regulations under LODR which includes new definition of ‘Senior Management’

• InvITs and RE ITs registered in accordance with the respective SEBI Regulation 2014 shall comply with governance norms specified under their respective regulation applicable w.e.f April 1,2023.
• SEBI has amended Regulation 16 to include the functional heads under the definition of Senior Management.
• For reappointment of director or manager approval of shareholder is required to be taken at the next general meeting or within 3 months form the date of appointment (whichever is earlier) i.e. reappointment is also covered under Regulation 17.
• In case of appointment and reappointment of director or manager in public sector Company , shareholder approval is required to obtain on the next general meeting.
• “Details of material subsidiaries of the listed entity, including the date an place of incorporation and the name and date of appointment of the statutory auditors of such subsidiaries” as disclosure that has been added as new disclosure to the annual report’s section on corporate governance (applicable for Annual Reports filed for the Financial Year 2022-2023 and thereafter)
• Click here for the Notification

4. BSE has issued Standard Operating Process (SOP) under SEBI (PIT) Regulations,2015 for ensuring compliance with Structured Digital Database (SDD).

• It has been provided that Listed entities to whom the provisions of Regulation 24A of SEBI(LODR),2015 are applicable, the Secretarial Auditor of those entities shall also specifically confirm compliance with the requirement of SDD by the listed entities in its Annual Secretarial Audit Report.
• In Addition to the earlier Circular No 20221104-37 dated 4^th November 2022 specifying consequence in case of non-compliance, clarification has been made that the name of Compliance Officer will also be displayed on the “Get Quote” page of the Exchange website.

Read: SOP under SEBI (PIT) Regulations, 2015 for ensuring compliance with Structured Digital Databa

5. Filing of announcements in XBRL format on BSE listing Centre

• BSE has issued circular to provide facility for filing of disclosure for certain announcements to be made under SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015 in XBRL format with effect from January 28,2023-

a. Disclosure under Regulation 29 of SEBI LODR-Prior intimation of the Board Meeting.

b. Disclosure under Regulation 30 of SEBI LODR-

i) Change in directors, KMP(MD,CFO,CEO,CS etc.),Auditor ,Compliance Officer and Share Transfer Agent.

ii) Outcome of Board Meeting for Dividend, Buyback, Bonus Issue and decision on voluntary delisting by the listed entity.

iii) Acquisitions(including agreement to acquire),Scheme of Arrangement (amalgamation/merger/demerger/restructuring),or sale or disposal of any units, division or subsidiary of the listed entity or any other restructuring.

• Currently disclosures are made in PDF mode as per provisions of Regulation 30 of SEBI(LODR)Regulations and further in XBRL mode within 24 hours of submission of said PDF. At a later stage , date to be announced exchange will shift only to XBRL submission.
• Click here for the Notice

INSOLVENCY LAW

1. MCA has issued consultation paper to outline proposed changes in Insolvency and Bankruptcy Code 2016

• MCA has issued consultation paper on proposed amendments to strength the efficiency of IBC 2016 and public comments are invited by 7^th of February 2023.
• Changes to the code are being considered in relation to the admission of CIRP application.
• Proposed amendments also provides for streamlining the insolvency resolution process, recasting the liquidation process, and the role of service providers under the Code.

2. NCLAT upheld the decision of NCLT to keep Bank Guarantees outside the scope of Moratorium under Section 14 of the IBC.

• Application has been filed before NCLAT for stay on encashment of Bank Guarantee by Bank (Guarantor).
• In the referred case bank disputed on the ground that there exist a fraud. NCLAT observed that the Bank Guarantees constitutes a independent contract between the bank and applicant and therefore bank is under obligation to honour the request made by applicant unless transaction is hit by moratorium.
• Further court held that CIRP cannot be a ground to deny encashment of the bank guarantees. Also in case there exist no fraud, the bank cannot raise objection for encashment of bank guarantee because banks are under obligation to encash the bank guarantee.
• In the case of IDBI Bank Ltd vs. Indian Oil Corporation Limited, the NCLAT upheld that under amended Section 14(3)(b) of the IBC, irrevocable and unconditional Bank Guarantees are beyond the moratorium and can be invoked even during the moratorium period and under the relevant case invocation and encashment of the Bank Guarantee held valid and legal.

Source- IDBI Bank Ltd. Vs. Indian Oil Corporation Ltd. (NCLAT Delhi), Company Appeal (AT) (Ins) No. 543 of 2021, Date-10.01.2023

CASE LAWS

1. Delhi High Court has passed order that for sexual harassment complaints, enquiry proceedings cannot be quashed merely because ICC failed to complete enquiry within 90 days

• In the case of CA Nitesh Parashar v. Institute of Chartered Accountants of India ICAI & Ors ,the court held that enquiry proceedings cannot be quashed on ground that ICC failed to complete enquiry within 90 days as provided under act.
• The Delhi HC rejected the contention of petitioner that sexual harassment complaint need to be quashed as Internal Complaints Committee (ICC) has failed to complete enquiry proceeding within 90 days.

OTHER UPDATES

NCLT has issued order to prescribe Dress Code for respective parties under NCLT Rules

• NCLT has prescribed dress code under the NCLT rules for the following related parties-

a. For president and member-Dress code shall be long trouser (white/Black, Black striped or Grey),white shirt and for females dress shall be sober colored saree, national dress and collar band with a black coat.

b. For legal practitioner-The dress code for legal practitioner shall be as provided under Bar Council of India Rules.

c. For Authorized Representative-Every Authorized Officer such as CS/CA/CMA shall appear in professional dress code as prescribed.

d. For IRP/RP/Liquidator-In case of male member ,the dress shall be sober colored dress with coat and tie. For females dress shall be sober colored saree or formal national dress and suit or coat shall be optional.

f. For parties in person-Parties appearing in person before NCLT shall be properly dressed in any national dress and in sober color.

• Click here for the Order

2. Key highlights of Budget 2023

• Total 120 clauses amended
• For Companies- there is no change in tax rate
• Only MSME payments made will be allowed as deduction
• PAN to be used as common business ID
• No ITC on CSR expenditures- input tax credit shall not be available in respect of goods or services or both received by a taxable person which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.
• Extension of the date of incorporation for income tax benefits to startups from March 31, 2023, to March 31, 2024 and to provide the benefit of carry forward of losses on change of shareholding of startups from seven years of incorporation to ten years.

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.