Monthly Archives: February 2021

Last of the Breed

Louis L’Amour is my favorite author and this one does not disappoint. Brilliant story of a US air force pilot and a red Indian shot down and captured by Russians for information. Major Joe Mack is a Red Indian, a Sioux and knowing all the survival skills of his forefathers. He escapes prison by pole vaulting above the prison walls and then, in freezing temperatures, sprints across the cold, frozen Russian land and has to use all the skills of his ancestors to survive and be on the run for days, months and years. He meets a family of hunters and trappers, stays with them for a while, hunting meat for them and falling silently in love with the daughter Natalya. He is faced with with the guile of an Yakut, a Russian who has similar intelligence as him to trace him out of his hidings, Alekhin. He fears only Alekhin and has to constantly place secret snares and traps for his followers to fall to death. The deadly game of cat and mouse goes on for a couple of seasons with the KGB after his blood. Brilliant narrative as usual from Louis L’Amour – a pulsating, throbbing novel bought to life by the master. Goodreads 5/5

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producer companies

MCA has vide its notification dated 11th February, 2021 notified section 52 of the Companies (Amendment) Act, 2020.

Section 52 of the Companies Amendment Act, 2020, brings to life a new Chapter XXIA which pertains to producer companies. Earlier these provisions were regulated under the old Companies Act, 1956, but now they have been brought into the Companies Act, 2013 proper.

Sections 378A to 378ZU governs the incorporation & administration of producer companies in India, which are a form of farmer co-operatives in the agriculture sector. They are formed by farmers/ producers of agricultural crops and there are strict guidelines regarding their formation, administration, governance, etc.

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definition of listed companies

MCA has vide its notification amended the Companies (Specification of Definition Details), Rules, 2014 by introducing a new rule 2A which defines the companies which need not be considered as listed companies. The rule says

“2A. Companies not to be considered as listed companies.- For the purposes of the proviso to clause (52) of section 2 of the Act, the following classes of companies shall not be considered as listed companies, namely:-
(a) Public companies which have not listed their equity shares on a recognized stock exchange but have listed their –
(i) non-convertible debt securities issued on private placement basis in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008; or
(ii) non-convertible redeemable preference shares issued on private placement basis in terms of SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013; or
(iii) both categories of (i) and (ii) above.
(b) Private companies which have listed their non-convertible debt securities on private placement basis on a recognized stock exchange in terms of SEBI (Issue and Listing of Debt Securities) Regulations, 2008;
(c) Public companies which have not listed their equity shares on a recognized stock exchange but whose equity shares are listed on a stock exchange in a jurisdiction as specified in sub-section (3) of section 23 of the Act.”.

Section 23(3) of the Act pertains to listing in foreign jurisdictions. So basically all the public companies who have listed only their debt securities without listing their equity securities will not be considered as listed entities. Similarly private companies which listed only their debt securities also will be considered as listed entities anymore.

That takes from these entities, the onerous responsibility of complying with the listing regulations stipulated by SEBI.

Government calls it as an ease of doing business, but ideally, this should have been thought about early on itself i.e. such companies should not have been considered as listed entities ab initio itself.

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monetary penalty on BOM

RBI has vide its order dated 25th February, 2021 levied a monetary penalty of Rs.20 million on a nationalised bank i.e. Bank of Maharashtra. That penalty is due to massive non compliances relating to contravention of / non-compliance with certain provisions of the directions contained in Reserve Bank of India (Frauds classification and reporting by commercial banks and select FIs) directions 2016 and the circulars on Concurrent Audit System in Commercial Banks – Revision of RBI’s Guidelines, Disclosure of customer complaints and unreconciled balances on account of ATM transactions, and Micro, Small and Medium Enterprises (MSME) Sector – Restructuring of Advances.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.


The statutory inspection of the bank with reference to its financial position as on March 31, 2018 and March 31, 2019 and the Risk Assessment Reports (RARs) pertaining thereto revealed, inter alia, non-compliance with the aforesaid directions issued by RBI. In furtherance to the same, notices were issued to the bank advising it to show cause as to why penalty should not be imposed for failure to comply with the directions issued by RBI. After considering the bank’s replies to the notices, oral submissions made in the personal hearing and examination of additional submissions made by it, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

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relaxations in ESIC

Employees state insurance corporation press release dated 23rd February, 2021. Salient features.

  1. Relaxation in contributory conditions to avail Sickness Benefit to the Insured Women availing Maternity Benefit

After the enhancement in duration of maternity benefit from earlier 12 weeks to 26 weeks, in some cases Insured Women were not eligible to avail sickness benefit in the corresponding benefit period after availing maternity benefit as the mandatory contributory conditions of minimum 78 days were not met being the Insured Women under receipt of maternity benefit and leave.

In such cases, it has been now decided that an Insured Women will be qualified to claim sickness benefit in the corresponding benefit period if the contribution in her respect were paid or payable for not less than half the number of days available for working in such shorter contribution period.

The relaxation will be effective from 20.01.2017 i.e. the date from which the enhanced duration of Maternity Benefit is effective.

  1. Relaxation in contributory conditions to avail Sickness & Maternity Benefits for the benefit period of January to June’2021

The country was placed into lockdown to curb the spread of Covid-19 pandemic, which resulted in the closure of factories/establishments for several months. It resulted in non-entitlement to avail sickness & maternity benefits for many Insured Persons/Women as the mandatory days of contribution couldn’t be met. Considering the hardship being faced by Insured Persons, ESIC has now decided to extend the relief to the IPs by relaxing the contributory conditions for availing the Sickness & Maternity Benefits for the benefit period of 01.01.2021 to 30.06.2021.

Now, an Insured Woman will be entitled to avail Maternity Benefit, if the contributions in respect of her were payable not less than 35 days in immediately preceding two consecutive contribution periods.

In case of IPs/IWs appointed before the contribution period April-September, 2020 , the eligibility condition to avail sickness benefit will be decided on the basis of their contribution in previous contribution period i.e. September ’19 to March ‘2020,whereas, the IPs/IWs appointed during the contribution period April-September, 2020 will be eligible for sickness benefit in the benefit period January-June ‘2021 if contribution in respect of them were payable for not less than half the number of days available for working to them during the contribution period April-September ‘2020.

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remittance to IFSC under LRS

RBI has vide its circular dated 16th February, 2021 allowed resident individuals to invest in securities issued in the International Financial Services Centre (IFSC) through the Liberalised Remittance Scheme route. There are some conditions to be fulfilled, which are :

  1. The remittance shall be made only for making investments in IFSCs in securities, other than those issued by entities/companies resident (outside IFSC) in India.
  2. Resident Individuals may also open a non interest bearing Foreign Currency Account (FCA) in IFSCs, for making the above permissible investments under LRS. Any funds lying idle in the account for a period upto 15 days from the date of its receipt into the account shall be immediately repatriated to domestic INR account of the investor in India.
  3. Resident Individuals shall not settle any domestic transactions with other residents through these FCAs held in IFSC.

Further there are some compliances to be done by the authorised dealers in such transactions which are :

AD Category – I banks, while allowing such remittances, shall ensure compliance with all other terms and conditions, including reporting requirements prescribed under the Scheme. It may be noted that any person resident in India (outside IFSC) entering into any transaction with a person/entity in IFSC shall only be governed by regulations/directions and rules issued/notified by the Reserve Bank of India and the Government of India respectively under Foreign Exchange Management Act (FEMA), 1999. Further, compounding of any contravention of FEMA provision by such person resident in India shall be dealt by the Reserve Bank of India in accordance with the extant instructions/provisions on compounding of contraventions under FEMA.

Copy of the circular can be found here

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production linked incentive for I.T. sector

After the success of Production Linked Incentive Scheme in bringing investments in mobile phone (handsets and components) manufacturing, the Union Cabinet chaired by the Prime Minister, Shri Narendra Modi has approved the Production Linked Incentive (PLI) Scheme forIT hardware products.The target IT hardware segments under the proposed Scheme include Laptops, Tablets, All-in-One Personal Computers (PCs) and Servers.

The scheme proposes production linked incentive to boost domestic manufacturing and attract large investments in the value chain of these IT Hardware products.

PLI scheme for Mobile Phones and Specified Electronic Components was launched las year during the middle of pandemic to establish India as a hub of electronic manufacturing. It has been a huge success in terms of interest received from Global as well as Domestic Mobile Manufacturing companies. 16 companies were approved under the first round of the PLI Scheme for Large Scale Manufacturing of Mobile Phones and Specified Electronic Components.

The scheme was announced in April, 2020; last date for application was 31st July, 2020 and the scheme commenced on 01.08.2020. All this happened during the most challenging times of COVID19, when the economy and manufacturing was under severe stress. In the last 5 months of scheme operation and despite challenging times, the applicant companies, including top global mobile phone companies, have produced goods worth ~INR 35,000 crore and invested ~INR 1,300 crore under the Scheme. Additional employment generation during this period stands at around 22,000 jobs. Another scheme for promoting manufacturing of electronics components called SPECS has also received 22 applications involving investment of about INR 13,500 crore in the areas of active, passive and electromechanical components; displays and mechanics for mobile phones.

Based on initial success of the PLI Scheme for Mobile Phones and Specified Electronic Components, 10 target sectors along with specific product lines having high growth potential were identified by NITI Aayog for implementation of PLI Schemes. PLI Scheme for IT Hardware is a further step in that direction. It comes in close wake of Production Linked Incentive (PLI) Scheme for Telecom and Networking Products that was approved by Union Cabinet last week.

The total cost of the PLI Scheme for IT Hardware is approximately INR 7,350 crore (Rupees Seven Thousand Three Hundred Fifty Crore Only) over 4 years.

The Scheme shall extend incentives between4% to1%on net incremental sales (over base year i.e. 2019-20) of goods manufactured in India and covered under the target segment, to eligible companies, for a period of four (4) years.

The proposed scheme is likely to benefit major global as well as domestic manufacturers of IT hardware products namely Laptops, Tablets, All-in-One PCs, and Servers. This is an important segment to promote manufacturing as there is huge import reliance for these items at present.

PLI Scheme is conceived in a manner that incentives are payable by government only after investment has been done, employment has been generated, production and sales targets have been met.


The scheme will enhance the development of electronics ecosystem in the country. India will be well positioned as a global hub for Electronics System Design and Manufacturing (ESDM) on account of integration with global value chains, thereby becoming a destination for IT hardware exports.

  • Over the next 4 years, the Scheme is expected to lead to total production of upto INR 3,26,000 crore (INR 3.26 lakh crore) by these 5 Global Champions and 10 National Champions.
  • It is equally heartening to note that the scheme is also expected to boost exports significantly. Out of the total production in the next 4 years, more than 75% are expected to be exports of the order of INR 2,45,000 crore.
  • The Scheme will bring an additional investment in electronics manufacturing to the tune of INR 2,700 crore.
  • The direct and indirect revenues generated from production under this scheme are expected to be INR 15,760 crore over next 4 years.
  • Domestic value addition for IT Hardware is expected to rise to 20% – 25% by 2025 from the current 5% – 10% due to the impetus provided by the Scheme. Increase in both domestic manufacturing and domestic value addition will help significantly reduce the large foreign exchange outgo that India will have to otherwise bear.
  • It is expected that the scheme would lead to large scale electronics manufacturing in the country and open tremendous employment opportunities. The scheme has a potential to generate over 1,80,000 jobs (direct and indirect) over 4 years.
  • The scheme will promote large scale electronics manufacturing of IT Hardware products and contribute significantly to achieving a USD 1 Trillion digital economy and a USD 5 Trillion GDP by 2025.


The vision of National Policy on Electronics 2019 notified on 25.02.2019 is to position India as a global hub for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities in the country for developing core components, including chipsets, and creating an enabling environment for the industry to compete globally.

Currently, the laptop and tablet demand in India is largely met through imports valued at ₹ 29,470 crore (USD 4.21 billion) and at ₹ 2,870 crore (USD 0.41 billion) respectively. The market for IT Hardware is dominated by 6-7 companies globally which account for about 70% of the world’s market share. These companies are able to exploit large economies of scale to compete in global markets. It is imperative that these companies expand their operations in India and make it a major destination for manufacturing of IT Hardware.

Given the current global scenario, the world of manufacturing is undergoing a paradigm shift. Manufacturing companies across the globe are looking to diversify their manufacturing locations to mitigate the risk involved in depending on a single market.

PLI Schemes will help in making India a globally competitive destination for electronics manufacturing and create domestic champions to further our mission of achieving an AtmaNirbhar Bharat.

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production linked incentive for pharma sector

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved Production Linked Incentive (PLI) Scheme for Pharmaceuticals over a period of Financial Year 2020-21 to 2028-29.

The Scheme will benefit domestic manufacturers, help in creating employment and is expected to contribute to the availability of wider range of affordable medicines for consumers.

The scheme is expected to promote the production of high value products in the country and increase the value addition in exports.  Total incremental sales of Rs.2,94,000 crore and total incremental exports of Rs.1,96,000 crore are estimated during six years from 2022-23 to 2027-28.

The scheme is expected to generate employment for both skilled and un-skilled personnel, estimated at 20,000 direct and 80,000 indirect jobs as a result of growth in the sector.

It is expected to promote innovation for development of complex and high-tech products including products of emerging therapies and in-vitro Diagnostic Devices as also self-reliance in important drugs.  It is also expected to improve accessibility and affordability of medical products including orphan drugs to the Indian population.  The Scheme is also expected to bring in investment of Rs.15,000 crore in the pharmaceutical sector.

The scheme will be part of the umbrella scheme for the Development of Pharmaceutical Industry. The objective of the scheme is to enhance India’s manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods in the pharmaceutical sector. One of the further objectives of the scheme is to create global champions out of India who have the potential to grow in size and scale using cutting edge technology and thereby penetrate the global value chains.

The salient features of the Scheme are as follows:-

Target Groups:

The manufacturers of pharmaceutical goods registered in India will be grouped based on their Global Manufacturing Revenue (GMR) to ensure wider applicability of the scheme across the pharmaceutical industry and at the same time meetthe objectives of the scheme. The qualifying criteria for the three groups of applicants will be as follows-

(a) Group A: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods more than or equal to Rs 5,000 crore.

(b) Group B: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods between Rs 500 (inclusive) crore and Rs 5,000 crore.

(c) Group C: Applicants having Global Manufacturing Revenue (FY 2019-20) of pharmaceutical goods less than Rs 500 crore. A sub-group for MSME industry will be made within this group, given their specific challenges and circumstances.

Quantum of Incentive:

The total quantum of incentive (inclusive of administrative expenditure) under the scheme is about Rs 15,000 crore. The incentive allocation among the Target Groups is as follows:

(a)          Group A: Rs 11,000 crore.

(b)          Group B: Rs 2,250 crore.

(c)           Group C: Rs 1,750 crore.

The incentive allocation for Group A and Group C applicants shall not be moved to any-other category. However, incentive allocated to Group B applicants, if left underutilized can be moved to Group A applicants.

Financial Year 2019-20 shall be treated as the base year for computation of incremental sales of manufactured goods.

Category of Goods:

The scheme shall cover pharmaceutical goods under three  categories as mentioned below:

  1. Category 1

Biopharmaceuticals; Complex generic drugs; Patented drugs or drugs nearing patent expiry; Cell based or gene therapy drugs; Orphan drugs; Special emptycapsules like HPMC, Pullulan, enteric etc.; Complex excipients; Phyto-pharmaceuticals: Otherdrugs as approved.

(b)Category 2

Active Pharmaceutical Ingredients / Key Starting Materials / Drug Intermediates.

(c)Category 3 (Drugs not covered under Category 1 and Category 2)

Repurposed drugs; Auto immune drugs, anti-cancer drugs, anti-diabetic drugs, anti-infective drugs, cardiovascular drugs, psychotropic drugs and anti-retroviral drugs; In vitro diagnostic devices; Other drugs as approved; Other drugs not manufactured in India.

Rate of incentive will be 10% (of incremental sales value) for Category 1 and Category 2 products for first four years, 8% for the fifth year and 6% for the sixth year of production under the scheme.

Rate of incentive will be 5% (of incremental sales value) for Category 3 products for first four years, 4% for the fifth year and 3% for the sixth year of production under the scheme.

The duration of the scheme will be from FY 2020-21 to FY 2028-29. This will include the period for processing of applications (FY 2020-21), optional gestation period of one year (FY 2021-22), incentive for 6 years and FY 2028-29 for disbursal of incentive for sales of FY 2027-28.


Indian pharmaceutical industry is 3rd largest in the world by volume and is worth USD 40 billion in terms of value. The country contributes 3.5% of total drugs and medicines exported globally. India exports pharmaceuticals to more than 200 countries and territories including highly regulated markets such as USA, UK, European Union, Canada etc. India has a complete ecosystem for the development and manufacturing of pharmaceuticals with companies having state of the art facilities and highly skilled/technical manpower. The country also has a number of renowned pharmaceutical educational and research institutes and a robust support of allied industries.

At present, low value generic drugs account for the major component of Indian exports, while a large proportion of the domestic demand for patented drugs is met through imports. This is because the Indian Pharmaceutical sector lacks in high value production along with the necessary pharma R&D. In order to incentivize the global and domestic players to enhance investment and production in diversified product categories, a well-designed and suitably targeted intervention is required to incentivise specific high value goods such as bio-pharmaceuticals, complex generic drugs, patented drugs or drugs nearing patent expiry and cell based or gene therapy products etc.

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Dogs of War

Brilliant book by Frederick Forsyth “Dogs of War” set in the murky world of mercenaries being used to topple governments where mineral stakes are high, very high.

Zangaro, a fictional African country is in the middle of it, some platinum reserves having been discovered there, with a corrupt president at the helm, ethnic clashes, broken down army, no economy to speak of. In comes Sir James Mansion a wealthy mining businessman smelling riches aplenty and his two handpicked assistants, Endean and Thorpe to do the dirty job for him. Endean tasked with finding mercenaries who will carry arms to the country, do an ambush and kill the president and ransack the place to tithers.

Forsyth does a detailed narrative of the reconnaissance part of the operation from recruiting friends to the mission, to procuring the necessary arms, equipment, boats, arranging everything legally, well almost all of them. Most of the narrative is dwelt on the preparation part of the operation.

And when you expect the operation will run to plan, Forsyth springs a surprise at the end. Cat Shannon, the English mercenary is in the thick of the things, does a meticulous job of planning the operation down to the last hour, minute with precision. This one is cult classic for the ages.

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rights issue

MCA has issued a notification dated 11th February, 2021 wherein they have amended the Companies (Share Capital and Debenture) rules, 2014 by adding a new clause 12A after clause 12.

Basically what the new clause 12A says is that it stipulates that the rights issue offer has to be made for acceptance by the shareholders within 7 days from the date of offer.

Earlier this stipulation was never there in the act or rules. The exact wording of the rule 12A is as follows

12A. Period for notice under sub-clause (i) of clause (a) of sub-section (1) of section 62.- For the purposes of sub-clause (i) of clause (a) of sub-section (1) of section 62, the time period within which the offer shall be made for acceptance shall be not less than seven days from the date of offer.”.

Copy of this notification can be found at the MCA site .i.e.

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issuance of digital insurance policies

IRDAI circular dated 9th February, 2021 on the subject, which is self explanatory

All Insurers excluding GIC Re, FRBs and Lloyd’s (India)

Re: Issuance of digital insurance policies by insurance companies via Digilocker

Digilocker is an initiative under the Digital India program by the Government of India where citizens can get authentic documents/ certificate in digital format from original issuers of these certificates. It aims at eliminating or minimising the use of physical documents and will enhance effectiveness of service delivery, making these hassle free and friendly for the citizens.

2. In the insurance sector, Digilocker will drivereduction in costs, elimination of customer complaints relating to non-delivery of policy copy, improved turnaround time of insurance services, faster claims processing and settlement, reduction in disputes, reduction in fraud and improvement in customer contactability. On the whole it is expected that it will lead to better customer experience. 

3. In order to promote the adoption of Digilocker in the insurance sector, the Authority advises all insurers to enable their IT systems to interact with Digilocker facility to enable policyholders to use digilocker for preserving all their policy documents.

4. The insurers should inform their retail policyholders about Digilocker and how to use it. Insurers are also advised to enable the process by which the policyholders can place their policies in the digilocker.

5. Digilocker team in NeGD (National e-Governance Division) under Ministry of Electronics and Information Technology shall provide necessary technical guidance and logistic support to facilitate adoption of Digilocker. A brief for on-boarding documents and contact details of resource persons in NeGD is annexed.

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loans to directors of co-op banks banned

Extensive circular issued by RBI banning loans by primary urban co-operative banks to directors, their relatives, the companies/firms/ concerns in which they or their relatives are interested in. Directors/ relatives cannot also stand as surety/ guarantor in respect of loans granted or any financial accommodation sanctioned by the UCBs. Detailed circular follows:

2. The Banking Regulation Act, 1949 (“the Act”) has been amended by the Banking Regulation (Amendment) Act, 2020 notified for the Primary (Urban) Co-operative Banks (UCBs) on September 29, 2020 and deemed to have been effective from June 29, 2020. Consequently, section 20 of the principal Act has become applicable to UCBs. Keeping in view the above, the extant directions on the subject issued to UCBs have been reviewed and the revised directions are issued as under.

3. UCBs shall not make, provide or renew any loans and advances or extend any other financial accommodation to or on behalf of their directors or their relatives, or to the firms / companies / concerns in which the directors or their relatives are interested (collectively called as “director-related loans”). Further, the directors or their relatives or the firms / companies / concerns in which the directors or their relatives are interested shall also not stand as surety/guarantor to the loans and advances or any other financial accommodation sanctioned by UCBs. ‘Advances’ for the purpose shall include all types of funded / working capital limits such as cash credits, overdrafts, credit cards, etc.

4. The following categories of director-related loans shall, however, be excluded from “loans and advances” for the purpose of these directions:

  1. Regular employee-related loans to staff directors, if any, on the Boards of UCBs;
  2. Normal loans, as applicable to members, to the directors on the Boards of Salary Earners’ UCBs;
  3. Normal employee-related loans to Managing Directors / Chief Executive Officers of UCBs;
  4. Loans to directors or their relatives against Government Securities, Fixed Deposits and Life Insurance Policies standing in their own name.

Explanation: For the purpose of these directions –

i. The term ‘any other financial accommodation’ shall include funded and non-funded credit limits and underwritings and similar commitments, as under:

  1. The funded limits shall include loans and advances by way of bill/cheque purchase/ discounting, pre-shipment and post-shipment credit facilities and deferred payment guarantee limits extended for any purpose including purchase of capital equipment and acceptance limits in connection therewith sanctioned to borrowers, and guarantees by issue of which a bank undertakes financial obligation to enable its constituents to acquire capital assets. It shall also include investments which are in the nature of / in lieu of credit.
  2. The non-funded limits shall include letters of credit, guarantees other than those referred to in paragraph (a) above, underwritings and similar commitments. It shall also include off-balance sheet exposure in the form of derivatives.

ii. The word “relative” shall have the meaning as under:

A person shall be deemed to be a relative of another, if and only if:-

a) They are members of a Hindu Undivided Family; or

b) They are husband and wife; or

c) The one is related to the other (or vice-versa) in the manner indicated below:

  1. Father (including step-father)
  2. Mother (including step-mother)
  3. Son (including step-son)
  4. Son’s wife
  5. Daughter (including step-daughter)
  6. Daughter’s husband
  7. Brother (including step-brother)
  8. Brother’s wife
  9. Sister (including step-sister)
  10. Sister’s husband

iii. The word “interested” shall mean the director of the UCB or his relative, as the case may be, being a director, managing agent, manager, employee, proprietor, partner, coparcener or guarantor, as the case may be, of the firm / company / concern (including HUF):

Provided that a director of a UCB or his relative shall also be deemed to be interested in a company, being the subsidiary or holding company, if he/she is a director, managing agent, manager, employee or guarantor of the respective holding or subsidiary company:

Provided further that a director of a UCB shall also be deemed to be interested in a company/firm if he/she holds substantial interest in or is in control of the company/firm or in a company, being the subsidiary or holding company, if he/she holds substantial interest in or is in control of the respective holding or subsidiary company:

Provided further that a relative of a director of a UCB shall also be deemed to be interested in a company/firm if he/she is a major shareholder or is in control of the company/firm or in a company, being the subsidiary or holding company, if he/she is a major shareholder or is in control of the respective holding or subsidiary company:

iv. The term “substantial interest” shall have the same meaning as assigned to it in section 5(ne) of the Banking Regulation Act, 1949.

v. The term “control” shall include the right to appoint majority of the directors or to control the management or policy decisions exercisable by a person or persons acting individually or in concert, directly or indirectly, including by virtue of their shareholding or management rights or shareholders agreements or voting agreements or in another manner.

vi. The term “major shareholder” shall mean a person holding 10% or more of the paid up share capital.

5. UCBs shall submit information pertaining to their director-related loans as at the end of each quarter (i.e. 31 March, 30 June, 30 September and 31 December), in the format given in the Annex to these directions, to the concerned Regional Office of Department of Supervision of Reserve Bank of India within fifteen days from the end of the respective quarter. In the case of UCBs functioning under Administrator(s) / Person(s)-in-Charge / Special Officers, the UCBs concerned should submit the information in respect of loans and advances availed by the Administrator(s) / Person(s)-in-Charge / Special Officers, including their relatives.

6. These directions supersede the earlier directives / instructions issued on the subject and shall come into force immediately. The existing director-related loans sanctioned/granted by UCBs in terms of the earlier directives / instructions prior to the issue of this circular, if any, may continue till their respective maturity and shall not be renewed further.

7. A copy of this circular should be placed before the Board of Directors of your bank in its ensuing meeting and a confirmation thereof should be sent to the concerned Regional Office of the Department of Supervision of Reserve Bank of India.

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major port authorities bill

Parliament today passed the Major Port Authorities Bill, 2020. Shri Mansukh Mandaviya, Minister of State (I/C) for Ports, Shipping &Waterways moved the bill in Rajya Sabha today and it was passed. Now the Bill will go  to the President of India for his assent.

With a view to promote the expansion of port infrastructure and facilitate trade and commerce, the Major Port Authorities Bill 2020 bill aims at decentralizing decision making and to infuse professionalism in governance of major ports. It imparts faster and transparent decision making benefiting the stakeholders and better project execution capability. The Bill is aimed at reorienting the governance model in central ports to landlord port model in line with the successful global practice. This will also help in bringing transparency in operations of Major Ports.This will empower the Major Ports to perform with greater efficiency on account of full autonomy in decision making and by modernizing the institutional framework of Major Ports.

The salient features of the Major Port Authorities Bill 2020 are as under: –

  1. The Bill is more compact in comparison to the Major Port Trusts Act, 1963 as the number of sections has been reduced to 76 from 134 by eliminating overlapping and obsolete Sections.
  2. The new Bill has proposed a simplified composition of the Board of Port Authority which will comprise of 11 to 13 Members from the present 17 to 19 Members representing various interests. A compact Board with professional independent Members will strengthen decision making and strategic planning. Provision has been made for inclusion of representatives of State Government in which the Major Port is situated, Ministry of Railways, Ministry of Defence and Customs, Department of Revenue as Members in the Board apart from a Government Nominee Member and a Member representing the employees of the Major Port Authority.
  3. The role of Tariff Authority for Major Ports (TAMP) has been redefined. Port Authority has now been given powers to fix tariff which will act as a reference tariff for purposes of bidding for PPP projects. PPP operators will be free to fix tariff- based on market conditions. The Board of Port Authority has been delegated the power to fix the scale of rates for other port services and assets including land.
  4. An Adjudicatory Board has been proposed to be created to carry out the residual function of the erstwhile TAMP for Major Ports, to look into disputes between ports and PPP concessionaires, to review stressed PPP projects and suggest measures to review stressed PPP projects and suggest measures to revive such projects and to look into complaints regarding services rendered by the ports/ private operators operating within the ports.
  5. The Boards of Port Authority have been delegated full powers to enter into contracts, planning and development, fixing of tariff except in national interest, security and emergency arising out of inaction and default. In the present MPT Act, 1963 prior approval of the Central Government was required in 22 instances.
  6. The Board of each Major Port shall be entitled to create specific master plan in respect of any development or infrastructure.
  7. Provisions of CSR & development of infrastructure by Port Authority have been introduced.
  8. Provision has been made for safeguarding the pay & allowances and service conditions including pensionary benefits of the employees of major ports

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merger/ amalgamation of small companies

MCA has vide its amendment to the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016 provided for easy merger/ amalgamation between two or more start-up companies or one or more start up company with one or more small company.

This comes under section 233 of the companies act, 2013 which provides for an easy procedure for merger/ amalgamation of small companies without going through the cumbersome process of court/ tribunal etc. The process under clause 25 of the above regulations is by no means easy as it still involves considerable paper work, documentation and procedures but compared to the court/ tribunals, it is relatively easier.

So MCA has introduced a new sub clause 1A under clause 25 of the aforesaid Rules to provide for the said easy merger/ amalgamation.

So this is one more avenue for the company secretaries – to guide small companies/ start-up companies in the merger/ amalgamation under section 233 of the companies act, 2013 and the aforesaid regulations.

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small company

MCA has vide its notification dated 1st February, 2021 changed the definition of small company in the Companies Act, 2013.

Now small company will be a company which has a paid up share capital and turnover of not more than Rs.20 million and Rs.200 million respectively. Hitherto the limits were Rs.5 million and and Rs.2 million respectively.

Note that both the conditions should be satisfied for a company to be a small company ie.. the paid up share capital should not cross Rs.20 million AND the turnover should not cross Rs.200 million. If a company’s paid up share capital is more than Rs.20 million but the turnover is less than Rs.200 million, then it will still remain a small company.

There are a few benefits of a company being a small company under the companies act, 2013 such as

  • No need to prepare Cash flow statement as part of financial statement.
  • Where other companies require providing details of remuneration to directors and key managerial personnel, small companies are required to provide details of the only aggregate amount of remuneration drawn by directors in its Annual Return.
  • Mandatory rotation of auditor not required.
  • An Auditor of small companies is not required to report on the adequacy of the internal financial controls and its operating effectiveness in the auditor’s report.
  • Hold only two board meetings in a year.
  • Annual Return of the company can be signed by the Company Secretary, or where there is no company secretary, by a single director of the company.
  • Lesser penalties for Small Companies.
  • Lesser filing fees for Small Companies.

The lesser filing fees for small companies has not been operationalised yet, but it is expected that MCA will bring that soon.

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