Regulatory updates for the Month of July 2022

Company Law:

1. MCA Introduces V3 for certain Company E-Forms.

• To be launched on 31st Aug 2022 at 12:00 AM
• Forms for Charge, Deposits & Directors KYC Forms will be rolled out in phase 1.

2. Order of ROC for violation u / s 161 of companies Act 2013

3. Spending of CSR Funds for “Har Ghar Tiranga”

• Board of directors cannot appoint a person as MD or WTD directly under sec 196 & 203 unless such person is also appointed as an additional director first and subsequent ratification of members has been obtained at AGM.
• In the present case the private limited company was fined INR 3 lakhs with officers INR 1 lakhs each for non-compliance of sec 161.
• Rs.10 lakh penalty imposed for failure to co-opt MD as Additional Director

3. Spending of CSR Funds for “Har Ghar Tiranga”

• Any amount spend with respect to “Har Ghar Tiranga” campaign under Azadi ka Amrit Mahotsav will be eligible as CSR activity as per Companies Act, 2013.
• Clarification on spending of CSR funds for “Har Ghar Tiranga” campaign

Securities Law:

1. Extension for filing the information under Regulation 46 & 62 of SEBI (LODR) Regulations, 2015 in NEAPS.

• Extension in filing of information till August 31, 2022 in new module which was made in NEAPS for URLs of the information required under website disclosures
• Extension of time for filing information under Regulation 46 & 62 of LODR Regulations

2. Release of new digital portal for filing of information with NSE.

• NSE has made it mandatory for the listed entities to file the following in XBRL Format with the stock exchange w.e.f 11th July.
• Covers Financial results, related party transaction (RPT) and business responsibility and sustainability report (BRSR) under SEBI (LODR) 2015

NSE notifies Filing on new portal with effect from July 11, 2022

3. Levy of goods and service tax (GST) on the fees payable to SEBI 4. SEBI lays structure for listing social entities on exchanges

• The GST council has recommended to withdraw the exemption granted to services by SEBI.
• Therefore, all the fees & other charges to be payable to SEBI shall be subject to GST @ 18%

Levy of Goods & Services Tax (GST) on the fees payable to SEBI

4. SEBI lays structure for listing social entities on exchanges

• Social impact funds have been included as part of category-I AIF’s Replacing the existing social ventures fund.
• Social stock exchanges will help not for profit enterprises in raising funds via zero coupon zero principal instruments
• For profit social enterprises can raise funds debt or equity shares on main, SME or Innovators Growth platform.

SEBI (Alternative Investment Funds) (Third Amendment) Regulations, 2022

5. NSE has issued Guidance note on disclosures pertaining to analysts / institutional investors

• Listed Entity has to provide disclosures prior, during and post Analyst / Institutional Investors meet / call to stock exchange and on company’s Website.

Guidance note on disclosures pertaining to analysts/institutional investors meet

Insolvency Law:

1. IBBI tightens the scrutiny over RP’s related party transaction

• Social impact funds have been included as part of category-I AIF’s Replacing the existing social ventures fund
• Mandated all RPs to disclose his relationship and relationship of professionals appointed by him with various stakeholders such as the corporate debtors, financial creditors and potential buyers involved in a resolution process within 3 days
• Relationship defined wherein the resolution professional derives more than 5% revenue a year from the related party and other instances

IBBI (Insolvency Professionals) (Amendment) Regulations, 2022

2. Supreme court allows some discretion in corporate insolvency proceedings

• In a recent ruling in Vidarbha Industries Power Limited v. Axis Bank Limited SC has held that the NCLT while examining the existence of debt and default by a corporate debtor in an application for initiation of CIRP has the discretion to admit or not admit such application.
• overall financial health and viability of the Corporate Debtor needs to be considered

SC on Adjudicating Authority have Discretionary power to admit application of Financial Creditor for initiation of CIRP: SC

3. Report of the IRP / RP / Liquidator should be filed as separate interlocutory application (IA)

• NCLT has directed that report of the IRP / RP / liquidator should be filed as a separate interlocutory application and numbered for listing

Click here for notification

4. Registration of IP suspended after the IP removed some members from COC on the basis that they have not contributed to the CIRP cost.

• In the matter of Mr. Yogesh Kumar Gupta Disciplinary Committee of IBBI decided that IP had violated the provisions of the Code by removing the CoC members from the list of CoC and revise their voting share on the basis that some CoC members have not contributed to the CIRP cost.

IBBI suspends registration of IP for removing CoC members from list

5. NCLT Chandigarh Order on filing of documents within timelines.

Office Order No.NCLT/CHD/2022/154 Dated: 27.07.2022

• NCLT has directed all the practicing professionals to submit the documents (Such as reply, rejoinder etc.) at least 2 days prior to the date of hearing
• Any documents submitted within 2 days before the date of hearing shall not be accepted.

6. Limit of 1 Crore to initiate CIRP can be meet by making joint application by one or more financial creditors of corporate debtor: Rajasthan HC

Vishnu Oil Mill Private Ltd Vs. Union Of India (Rajasthan High Court at Jodhpur), D.B. Civil Writ Petition No. 2507/2022, Dated: 25/07/2022

• High court of Rajasthan in the matter of Vishnu oil mill private limited held that as per Section 7 of the IBC a group of financial creditors can converge and join hands to touch the financial limit of Rs.1 crore stipulated to initiate a CIRP under the IBC.

Due Dates under various laws