Stay informed with the latest regulatory updates for May 2023 in India. From changes in the Companies Act, 2013, to amendments in voluntary strike-off rules, compromises, arrangements, and amalgamations, these updates impact corporate governance, financial reporting, and more. Explore modifications in securities laws and learn about the Supreme Court’s directions for effective Prevention of Sexual Harassment (POSH) Act implementations. Stay compliant with SEBI’s IPO norms and understand the implications of BRSR disclosure for the top 1000 listed companies. Additionally, gain insights into recent case laws related to securities and company law. Stay updated to effectively manage your operations in accordance with the latest legal requirements.
The Companies Act, 2013 is a comprehensive legislation that governs the functioning and regulation of companies in India. It provides a legal framework for the incorporation, operation, management, and dissolution of various types of companies, including private companies, public companies, and one person companies. The Act outlines the rights, duties, and responsibilities of company directors, shareholders, and other stakeholders, as well as provisions related to corporate governance, financial reporting, mergers and acquisitions, and more.
In addition to the Companies Act, 2013, there have been several recent updates and amendments in various areas related to corporate and business regulations. These updates cover diverse aspects such as prevention of money laundering, voluntary strike-off of companies, compromises, arrangements, and amalgamations, implementation of the Prevention of Sexual Harassment (POSH) Act, and modifications in securities laws.
In this recent set of updates, the Central Government and regulatory bodies like the Ministry of Corporate Affairs (MCA), Securities and Exchange Board of India (SEBI), and National Company Law Appellate Tribunal (NCLAT) have introduced significant changes to enhance transparency, compliance, and corporate governance practices.
It is important for professionals, stakeholders, and businesses to stay updated with these changes to ensure compliance with the relevant laws and regulations and to effectively manage their operations in accordance with the latest requirements.
Companies Act, 2013
1. CA, CS And CWAs covered under the ambit of PMLA if financial transactions executed on behalf of client.
- CAs, CS, CWAs have become the reporting entities under PMLA if they do financial transactions on behalf of their clients
- Financial transactions covering buying/sale of immovable property, managing money, bank accounts, creation, operation or management of Companies, LLPs or trusts
- Also covers activities such as formation agents of companies/LLPs, acting as Director, secretary, of company, providing registered/business office, acting as Trustee or nominee shareholder
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2. MCA amends voluntary Strike-off of Companies Rules w.e.f 10th May 2023
- Before applying for voluntary strike off of Company, all the pending overdue annual filings (Forms AOC-4 and MGT-7) for all the years up to the financial year in which the company ceases its business, to be filed.
- The mentioned condition also applies when the company files an application where Registrar initiates an action of removal.
- Previously, the MCA had removed the requirement for up-to-date financial results and annual returns, vide the amendment introducing the Centre for Processing Accelerated Corporate Exit.
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3. MCA amends Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 w.e.f 15/06/2023.
- Amendment applicable to small companies, holding & subsidiary, two startup companies and one startup & one small company
- Objection or suggestion from RoC or the Official Liquidator shall be given within 30 days.
- where there is no objection/suggestion from RoC & the Official Liquidator or the objection/ suggestions are not sustainable and the scheme is in the interest of Creditors and Public the CG shall issue the Confirmation order in Form CAA 12 within 15 days after the expiry of the said 30 days.
- Where CG is of the opinion that it is not in the public interest or in the interest of creditors, it may within 60 days of the receipt of the scheme, file an application before the Tribunal in form CAA 13.
- If the CG Does not issue Confirmation order within period of 60 days of the receipt of the scheme, it shall be deemed that it has no objection to the scheme and a confirmation order shall be issued accordingly.
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POSH
1. Supreme Court issues directions for effective POSH implementations
- Central, State government & Union territories to conduct a “timebound exercise” to verify the constitution and composition of ICCs/LCs/ICs.
- Ensure easy access to information about ICCs/LCs/ICs, contact details, complaint filing procedures, and relevant rules and regulations by publishing the same on the respective organization’s website.
- Professional bodies, educational institutions, hospitals, and nursing homes to also conduct similar exercises to ensure compliance with the Act.
- Employers/management/authorities must take “immediate and effective steps” to familiarize members of committee with their duties & shall also conduct orientation & awareness programs, workshops, seminars to educate members of committee, women employees, and women’s groups about the provisions of the Act.
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SECURITIES LAW
1. SEBI has issued modification in IPO norms
- As per notification SEBI has made the underwriting agreement a necessary for IPO filings under SEBI (ICDR) Regulations.
- The issuer making an IPO, desires to have the issue underwritten, it shall, prior to the filing of the prospectus, enter into an underwriting agreement with the merchant bankers or stock brokers.
- It Shall Indicate the maximum number of specified securities they shall subscribe to, at a predetermined price which shall not be less than the issue price.
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2. Informal guidance on BRSR disclosure for top 1000 listed companies.
- SEBI has mandated BRSR applicability to the top 1000 listed entities on the basis of market capitalization for reporting on a voluntary basis for Y 2021 – 22 and mandatory from F.Y 2022 – 23.
- As the subject company was not in top 1000 cos as on 31st March 2022 and 31st March 2023 and Regulation 3(2) which mandates a company to continue filing of BRR or BRSR even if it falls below threshold was effective from 5th May 2021, reporting is not required, SEBI
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Case Laws
Securities law
1. SAT held no time period has been provided for appointment of a director (other than an ID) in case of vacancy.
- In the case of Century Enka Limited vs SEBI, SAT decided that:
- There is no timeline provided under Regulation 17(1) of SEBI LODR to fill the vacancy caused by the reason of death, resignation, of Director.
- Stock exchanges were levying penalty at 5000/- per day beyond 3 months delay in filling up the vacancy etc. If no time line is provided, the question of imposition of fine at the rate of Rs. 5,000/- per day does not arise.
- SAT ruled that so long as the period of filing the vacancy is not framed, no fine could be imposed.
Company law
1. Company fined Rs 1 crore by ROC Mumbai for failure to transfer CSR funds within 6 months of closure of FY
- The company RHI Magnesita India Ltd was expected to transfer its unspent CSR funds to any of the prescribed funds listed by the government, within six months.
- Company had not deposited entire amount prescribed within the due date.
- Penalties of Rs 2 lakh each also imposed on CEO & Managing Director and a few other senior members of the management.
Other Updates
1. NCLAT dispenses with hard copies filing.
- Filing of hard copies of Appeals/ Interlocutory Applications/ Reply/ Rejoinder etc. shall not be mandatory w.e.f 15th May 2023.
Due Dates under various laws
|
29th June 2023 |
Form NDH-1 – Return on Statutory Compliances |
| Disclosures of related party transactions SEBI (LODR) Regulation, 2015 | |
| 30th June 2023 | Return of Deposit in Form DPT-3 |
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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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