Regulatory Updates: September 2023 | Company, SEBI, RBI & Insolvency Law

Keeping abreast of regulatory updates is crucial for businesses and professionals to ensure compliance with the law and adapt to evolving requirements. In this article, we provide a comprehensive overview of the key regulatory updates in September 2023 across various domains, including Company Law, SEBI, RBI, and Insolvency Law. These updates are essential for businesses, investors, and legal practitioners to navigate the ever-changing regulatory landscape.

Company Law Updates: September 2023

1. MCA notifies LLP (Second Amendment) Rules replacing Form 3 and Form 4

• In new Form 3 a new table has been updated by the MCA regarding the details of each partner to contribute money or property or other benefit or to perform services and their profit sharing ratio.
• It is required to mention the Jurisdiction of Police Station right after the address of partner in the new Form 4.
• New requirement to mention Number of amendments made in LLP agreement till date and SRN of Form 4 or Form 5 of last one year from the date of filing this form

2. MCA extends Timeline of Annual General Meeting and EGM through VC or OAVM

• The MCA has also allowed companies to hold their extraordinary general meetings and AGMs via video conference till end September 2024.

SEBI Updates: September 2023

1. SEBI issues revised quarterly reporting format for AIFs

• Timelines for submission in revised format:

i .Trial Run – June 23 Quarter to be completed by October 15, 2023

ii. Sept 23 Quarter to be completed by November 15, 2023

iii. Dec 2023 Quarter onwards Within 15 calendar days from the end of each quarter

• More elaborate format of reporting covering detailed information on investments made.

2. Investors’ complaint   redressal platform SCORES   linked to online dispute resolution

• Investors’ complaints will be handled through auto-escalation and auto-routing process.
• Action taken report within 21 days from date of receipt of complaint.
• Effective from Dec 4th, 2023

Insolvency Law Updates: September 2023

1. IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2023

• While filing an application the creditors shall also submit along with evidence, chronology of the debt and default including the dates when the debt became due, default, part payments made & the last acknowledgment of debt and the limitation applicable.
• Insertion of Regulation 3A: RP to take custody & control of assets & records with the assistance and co-operation by the personnel of Corporate Debtor.
• Extension of timeline for claim submission to either 90 days from the insolvency commencement date or the date of issue of the latest RFRP, whichever is later.
• CoC member(s) can submit a proposal for audit giving its scope, objective, estimate of costs, proposed auditor. The same is to be approved by CoC.
• Responsibilities prescribed and revised fees to be paid to the authorized representative of the creditors per meeting of the committee attended by him and their fees to be part of CIRP cost.

2. IBBI Notifies Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendments) Regulations, 2023

• The Agency may refuse to accept the surrender of membership by any professional member if there is grievance or disciplinary proceeding pending against it before the Agency or the Board or it does not comply with requirements.
• Grounds for expulsion of the member have been amended for the agency to additionally consider factors provided in the Schedule.
• The application for enrolment as a professional member shall be communicated to the applicant, along with a certificate of membership within sixty days of receipt of the application.

POSH Updates: September 2023

1. HC Judge suggests amending POSH Act and considering marginalised women’s woes.

• Telangana High Court Judge said that since the pandemic many workplaces shifted to the online mode, there is a need to incorporate the IT Act & Cyber security with POSH Act 2013 because of emerging scenario.
• It was also observed that “while the POSH Act is very comprehensive, we still have sexual harassment cases.”
• Housemaid should be bought under ambit of POSH
• Sex education should be introduced in schools and colleges.

Important Case Laws- September 2023

1. NCLT Kolkata held that Preference Share Owners aren’t Financial Creditors

• In the matter of EPC Constructions India Limited vs Matix Fertilisers and Chemicals Limited
• The Financial Creditor was holding Cumulatively Redeemable Preference Shares (CRPS) of the CD, claimed that the default amount of 310 Crore is due and payable by CD.
• The issues that was cropped up for determination of whether a Preference Shareholder is a Creditor of a Company and eligible to make an application as financial creditor.
• In the given case NCLT held that a Preference Shareholder is not a Financial Creditor unless the Preference Shares become due for redemption.

2. ROC Penalises SustVest for Raising Funds on Tyke Platform

• ROC Delhi & Haryana penalised Mumbai based crowdfunding platform Tyke Technologies and a Gurgaon-based company, SustVest and three of its promoter-directors after the company used the platform to raise money from the general public.
• Solargridx Ventures Pvt Ltd is also required to provide refunds to all the 565 subscribers along with interest.
• The RoC’s order states that such fund mobilisation is a violation of private placement rules under the Companies Act.
• As per rules private placement of any kind of securities, a company raising funds must restrict the offer to a maximum of 200 investors.
• Click here for Order

Other Updated

1. I-T notifies ‘Angel Tax’ rules for valuing investments in startups

• Five new valuation methods introduced allowing valuation of CCPS too
• Valuation report from Merchant Banker valid for 90 days prior to issue of shares.
• The rules, effective from September 25, also allow for minor valuation discrepancies upto 10%, aiming to minimize inconvenience for investors.
• Earlier, only investments made by a resident investor used to attract angel tax, however it was extended to non-resident investors also in the current budget

2. CA Guilty of Professional Misconduct For writing “To Whomsoever it may concern” on a Certificate.

• In the matter of Shri G. Nagaraju Vs. CA. Lingaraj M. Pujari:
• CA was appointed by the Company for issuing a Certificate showing expenditures which were not supported by any bills, vouchers, documents, etc.
• The Certificate issued by him was not addressed to the company but addressed to “To Whomsoever It May Concern” and the purpose for which the same had been issued was not specified therein.
• As the CA had been appointed by the company and the Certificate should be addressed to the company and not to unidentified users.

Due Dates under various laws

14th October 2023	Notice to registrar for the Appointment of Statutory Auditor (ADT-1) if AGM date is of 30th September
21st October 2023	Shareholding Pattern, Corporate Governance Report, Statement of Investor complaints.
29th October 2023	Filing of Annual Accounts (Form – AOC-4 or AOC 4 XBRL) if the AGM date is of 30th September, Filing Report on AGM (For listed company)(MGT15).
30th October 2023	Statement of Account & Solvency LLP (Form 8).
31st October 2023	Half Yearly forms for outstanding payment to MSME (MSME FORM 1).

Conclusion: Staying informed about regulatory updates is vital for businesses and professionals to navigate the legal landscape effectively. The September 2023 regulatory updates in Company Law, SEBI, RBI, and Insolvency Law encompass a wide range of changes that can impact compliance, reporting, and business operations. It is essential for stakeholders to understand and adapt to these changes to ensure continued adherence to the law and best practices in their respective fields.

******

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.