Tag Archives: ease of doing business

OPC company relaxations

MCA has vide their circular dated 1st February, 2021 given some relaxations with respect of One Person Companies (OPCs) in India. These are as follows:

  1. OPC can be incorporated by a natural person who is an Indian citizen and resident in India or otherwise. Which means even non resident Indians can incorporate an OPC.
  2. The term “resident in India” means any person who has stayed in India for 182 days or more is replaced with 120 days or more. But frankly this explanation of the term resident in India should have been knocked off once the government has decided to allow resident or non resident Indians to incorporate OPC. Poor drafting.
  3. Hitherto, OPCs cannot voluntarily convert itself into other forms of company i.e. normal private limited unless 2 years has passed since its incorporation or before this period of two years, it has crossed either of the two thresholds i.e. paid up share capital of Rs.50 lakhs and average annual turnover of Rs.2 crores. Now this has been knocked off, which means that OPC can convert itself voluntarily into a normal private company at any time without considering the time factor (2 years from incorporation) or the threshold factor as above.
  4. Hitherto, OPCs was required to mandatorily convert itself into a private limited company/ public limited company only if it exceeded certain thresholds such as paid up share capital of Rs.50 lakhs and turnover of Rs. crores. Now all that mandatory clause has been knocked off. So OPCs can voluntarily convert itself whenever it wants. Which means that OPCs can exist with whatever share capital or turnover it may have. The procedures have also been simplified. Form INC-6 is required to be filed with few documents required.
  5. Similarly, hitherto private company could be converted into an OPC only if its paid up share capital was less than Rs.50 lakhs and average annual turnover is less than Rs.2 crores during the relevant period. Now these limits have been removed which means that private companies can be converted into OPCs at any level.
  6. In some places, it is “or” and some places it is “and” – which suggests poor drafting;
  7. Ease of doing business for OPCs. But OPCs did not enjoy the recent CFSS scheme, which was extended to other corporates.

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export of goods & services – facilitation

RBI circular dated 4th December, 2020 wherein they have introduced certain measures in order facilitate exports of goods & services and for ease of doing business. Read on…

Please refer to the Statement on Development and Regulatory Polices announced as part of Bi-monthly Monetary Policy Statement dated December 4, 2020. With a view to further enhance the ease of doing business and quicken the approval process, it has been decided to delegate more powers to the Authorised Dealer Category – I banks (AD banks) in the following areas:

1. Direct Dispatch of Shipping Documents

1.1 In terms of Paragraph 2 of A. P. (DIR Series) Circular No. 6 dated August 13, 2008, AD banks have been allowed to regularise cases of dispatch of shipping documents by the exporter direct to the consignee or his agent resident in the country of the final destination of goods, up to USD 1 million or its equivalent per export shipment.

1.2 With a view to simplify the procedure, it has been decided to do away with the limit of USD 1 million per export shipment.

1.3 Accordingly, AD banks may regularize such direct dispatch of shipping documents irrespective of the value of export shipment, subject to following conditions:

  1. The export proceeds have been realized in full except for the amount written off, if any, in accordance with the extant provisions for write off.
  2. The exporter is a regular customer of AD bank for a period of at least six months.
  3. The exporter’s account with the AD bank is fully compliant with Reserve Bank’s extant KYC / AML guidelines.
  4. The AD bank is satisfied about the bonafides of the transaction.

2. “Write-off” of unrealized Export bills

2.1 Attention is invited to A.P. (DIR. Series) Circular No. 88 dated March 12, 2013 on “write-off” of unrealized export bills. To provide greater flexibility to the AD banks and to reduce the time taken for according such approvals, the extant procedure is revised as under:

2.2 The above limits of self-write-off and write-off by the AD bank shall be reckoned cumulatively and shall be available subject to the following conditions:

a) The relevant amount has remained outstanding for more than one year;

b) Satisfactory documentary evidence is furnished indicating that the exporter had made all efforts to realise the export proceeds;

c) The exporter is a regular customer of the bank for a period of at least 6 months, is fully compliant with KYC/AML guidelines and AD Bank is satisfied with the bonafides of the transaction.

d) The case falls under any of the undernoted categories:

  1. The overseas buyer has been declared insolvent and a certificate from the official liquidator, indicating that there is no possibility of recovery of export proceeds, has been produced.
  2. The unrealized amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization;
  3. The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country;
  4. The overseas buyer is not traceable over a reasonably long period of time.
  5. The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding that turned out to be unrealizable despite all efforts made by the exporter;
  6. The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control;
  7. Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amounts have remained unrealized consequent to dishonor of the bills by the overseas buyer with no prospects of realization.

2.3 Notwithstanding anything contained in para 2.1 and 2.2 above, the AD bank may, on request of the exporter, write-off unrealised export bills without any limit in respect of cases falling under any of the categories specified at 2.2 (d) (i), (ii) and (iii) above provided AD bank is satisfied with the documentary evidence produced.

2.4 AD banks may also permit write-off of outstanding amount of export bills up to the specified ceilings indicated in para 2.1 above, where the documents have been directly dispatched by the exporter to the consignee or his agent resident in the country of final destination of goods if the case falls under any of the categories specified at 2.2 (d) (i), (ii) and (iii) above.

2.5 The AD bank shall ensure that the exporter seeking write-off has submitted documentary evidence towards surrendering of proportionate export incentives, if any, availed of in respect of the relative export bill.

2.6 In case of self-write off, the AD bank shall obtain from the exporter, a certificate from Chartered Accountant indicating the export realization in the preceding calendar year and details of the amount of write-off, if any, already availed of during the current calendar year along with the requisite details of the EDF/Export Bill under the write-off request. The certificate shall also indicate that the export incentives, if any, availed by the exporter have been surrendered.

2.7 The following cases, however, would not qualify for the “write-off” facility:

  1. Exports made to countries with externalization problem i.e. where the overseas buyer has deposited the value of export in local currency but the amount has not been allowed to be repatriated by the Central Bank authorities of the country concerned.
  2. EDF/Softex which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil / criminal suit.

2.8 AD banks shall report write-off of export bills in Export Data Processing and Monitoring System (EDPMS).

2.9 AD banks shall put in place a system to carry out random check / percentage check of the export bills so written-off by their internal Inspectors/Auditors (including external Auditors).

2.10 Requests of write-off not covered under the above instructions may be referred to the Regional Office concerned of the Reserve Bank.

3. Set-off of Export receivables against Import payables

3.1 Presently, AD banks are allowing exporters/importers to set-off their outstanding export receivables against outstanding import payables from/to the same overseas buyer/supplier. The Bank has been receiving requests from AD banks, on behalf of their Importer/Exporter constituents, for allowing such set-off with their overseas group/associate companies either on net basis or gross basis, through an in-house or outsourced centralised settlement arrangement.

3.2 Accordingly, it has been decided to delegate powers to AD banks to also consider such requests of set-off, and the revised guidelines, in supersession of the instructions contained in circular A.P. (DIR Series) Circular No 47 dated November 17, 2011, are issued as under:

The AD bank may allow set-off of outstanding export receivables against outstanding import payables, subject to the following conditions:

  1. The arrangement shall be operationalized/supervised through/by one AD bank only
  2. AD bank is satisfied with the bonafides of the transactions and ensures that there are no KYC/AML/CFT concerns;
  3. The invoices under the transaction are not under investigation by Directorate of Enforcement/Central Bureau of Investigation or any other investigative agency;
  4. Import/export of goods/services has been undertaken as per the extant Foreign Trade policy
  5. The export / import transactions with ACU countries are kept outside the arrangement;
  6. Set-off of export receivables against goods shall not be allowed against import payables for services and vice versa.
  7. AD bank shall ensure that import payables/export receivables are outstanding at the time of allowing set-off. Further, set-off shall be allowed between the export and import legs taking place during the same calendar year.
  8. In case of bilateral settlement, the set-off shall be in respect of same overseas buyer/supplier subject to it being supported by verifiable agreement/mutual consent.
  9. In case of settlement within the group/associates companies, the arrangement shall be backed by a written, legally enforceable agreement/contract. AD bank shall ensure that the terms of agreement are strictly adhered to;
  10. Set-off shall not result in tax evasion/avoidance by any of the entities involved in such arrangement.
  11. Third party guidelines shall be adhered to by the concerned entities, wherever applicable;
  12. AD bank shall ensure compliance with all the regulatory requirement relating to the transactions;
  13. AD bank may seek Auditors/CA certificate wherever felt necessary.
  14. Each of the export and import transaction shall be reported separately (gross basis) in FETERS/EDPMS/IDPMS, as applicable
  15. AD bank to settle the transaction in E/IDPMS by utilizing the ‘set-off indicator’ and mentioning the details of shipping bills/bill of entry/invoice details being settled in the remark column (including details of entities involved)

4. Refund of Export Proceeds

4.1 Attention is invited to A. P. (DIR Series) Circular No.37 dated April 05, 2007, in terms of which AD banks, through whom the export proceeds were originally realised, were allowed to consider requests for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality.

4.2 There have been instances when re-importing of goods has not been possible as the exported goods had reportedly been auctioned or destroyed in the importing country.

4.3 The instructions have been reviewed and henceforth AD banks, while permitting refund of export proceeds of goods exported from India, shall:

  1. Exercise due diligence on the track record of the exporter;
  2. Verify the bona-fides of the transaction/s;
  3. Obtain from the exporter a certificate issued by DGFT / Custom authorities that no export incentive has been availed of by the exporter against the relevant export or the proportionate export incentives availed, if any, have been surrendered;
  4. Not insist on the requirement of re-import of goods, where exported goods have been auctioned or destroyed by the Port / Customs / Health authorities/ any other accredited agency in the importing country subject to submission of satisfactory documentary evidence.

4.4 In all other cases AD banks shall ensure that procedures as applicable to normal imports are adhered to and that an undertaking from the exporter, to re-import the goods within three months from the date of refund of export proceeds, shall be obtained.

5. AD banks may bring the contents of this Circular to the notice of their constituents concerned. The Master Direction No 16/2015 dated January 01, 2016 is being updated to reflect the above changes.

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auto-populated form GSTR3B

Update on the GST portal dated 11th November, 2020

  1. GSTN has earlier introduced Form GSTR-2B, a static statement with details of ITC available for a tax period, for the benefit of taxpayers. GSTR-2B is an auto-drafted Input Tax Credit (ITC) statement generated for every recipient, on the basis of the information furnished by their suppliers, in their respective Form GSTR-1 & 5 and Form GSTR-6 filed by ISD. Click here for details https://www.gst.gov.in/newsandupdates/read/396 .
  2. GSTN has also introduced a facility to download pdf statement to taxpayers, who are filing monthly GSTR-1 statement, with system computed values of Table 3 of Form GSTR-3B. This PDF will be prepared on the basis of the values reported by them, in their GSTR-1 statement, for the said tax period. Click here for details https://www.gst.gov.in/newsandupdates/read/398 .
  3. In continuation of the return linkage project, GSTN has now introduced auto-populated Form GSTR-3B in PDF format, for benefit of the taxpayers. The auto-populated PDF of Form GSTR-3B will consist of:-
    • Liabilities in Table 3.1(a, b, c and e) and Table 3.2 from Form GSTR-1
    • Liability in Table 3.1(d) and Input Tax Credit (ITC) in Table 4 from auto-drafted ITC Statement from Form GSTR-2B.
  4. This facility is made available in Form GSTR 3B dashboard from October 2020 tax period onwards.
  5. This facility will become available for taxpayers who are registered as Normal taxpayer, SEZ Developer, SEZ unit and casual taxpayer.
  6. The system generated PDF will be made available on GSTR-3B dashboard. Taxpayers will be able to access their Form GSTR-3B (PDF) through: Login to GST Portal > Returns Dashboard > Select Return period > GSTR-3B> System Generated 3B.

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discontinuation of FEMA returns

RBI circular dated 13th November, 2020 whereby they have discontinued 17 returns under FEMA. The list of discontinued reports is as under:

Annexure

List of Discontinued Reports

Sl No.Name of ReportReporting EntityFrequency
1Category-wise transaction where the amount exceeds USD 5000 per transactionAD Category-IIMonthly
2Category-wise, transaction-wise statement where the amount exceeds USD 25,000 per transactionAD Category- IIMonthly
3Statement of Purchase transactions of USD 10,000 and above (including transactions of their franchisees)FFMCs and AD Category- IIMonthly
4Extension of Liaison Offices (LOs)AD Category-I banksAs and when extension is granted
5Extension of Project Offices (POs)AD Category-I banksAs and when extension is granted
6FII/FPI daily: Daily inflow/outflow of foreign fund on account of investment by FPIsAD banksDaily
7FII/FPI Return (Monthly): Data relating to actual inflow /outflow of remittances on account of investments by Foreign Institutional Investors (FIIs) in the Indian Capital marketAD Category-I banksMonthly
8FVCI reporting: Inflows/outflows of remittances on account of investments by Foreign Venture Capital Investor (FVCIs) and Market value of Investments made by FVCIsAD Category-I banks/Custodian banksMonthly
9Reporting of Inflow/Outflow details in respect of Mutual Fund by Asset Management CompaniesAsset Management CompaniesQuarterly
10Market value of FII Investment in India on fortnightly basisAD Category-I banksFortnightly
11Market value of FII Investment in India on Monthly basisAD Category-I banksMonthly
12FII holdings as percentage of floating stockAD Category-I banksMonthly
13Form DRR for Issue/transfer of sponsored/unsponsored Depository Receipts (DRs)-Hardcopy@CustodianAt the time of issue/transfer of depository receipts
14ADR/GDR Movement Report- two way fungibilityAD Category-I banksMonthly
15Repatriation of Sales proceeds of underlying shares represented by FCCBs/GDRs/ ADRsCustodianMonthly
16GDR/ADR underlying shares issued, re deposited and released monthly reportingCustodianMonthly
17Monitoring of disinvestments by Overseas Corporate BodiesAD banksMonthly

@ Please note that it is only the hardcopy filing of form DRR that has been discontinued. The domestic custodian may continue to report the form DRR on FIRMS application in terms of Regulation 4 (5) of FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019.

This is with a view to promoting ease of doing business and reducing cost of compliance to the stakeholders.

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Mineral Laws

PIB press release dated 12th March, 2020

Parliament passed The Mineral Laws (Amendment) Bill, 2020 for amendments in Mines & Mineral (Development and Regulation) Act 1957 and The Coal Mines (Special Provisions) Act, 2015. Rajya Sabha passed the bill today while Lok Sabha already passed this bill on 6th March, 2020. The Mineral Laws (Amendment) Bill, 2020, will open a new era in Indian coal & mining sector specially to promote Ease of Doing Business. Union Coal & Mines Minister Sh. Pralhad Joshi said that this Bill will transform the mining sector in the country boosting coal production and reducing dependence on imports.

The amended provisions clearly provide that companies which do not possess any prior coal mining experience in India and/or have mining experience in other minerals or in other countries can participate in auction of coal/lignite blocks. This will not only increase participation in coal/lignite block auctions, but also facilitate the implementation of FDI policy in the coal sector.

Now, the companies which are not ‘engaged in specified end-use’ can also participate in auctions of Schedule II and III coal mines. The removal of the end use restriction would allow wider participation in auction of coal mines for a variety of purposes such as own consumption, sale or for any other purpose, as may be specified by the Central Government.

The Bill also allows prospecting licence-cum-mining lease (PL-cum-ML) for coal/lignite which increases the availability of coal & lignite blocks, and coal blocks of varying grades in a wide geographical distribution will be available for allocation.

The successful bidders/allottees have now been entitled to utilize mined coal in any of its plants or plants of its subsidiary or holding company. Amendments also provide for allocation of the coal mine to the next successful bidder or allottee, subsequent to termination of its allocation along with the matters incidental to it. A provision has also been made for appointment of designated custodian for management of the mines, apart from Schedule II mines, which have come under production and whose vesting/ allotment order has been cancelled.

With the amendments, environment and forest clearances along with other approvals and clearances shall automatically get transferred to the new owners of mineral blocks for a period of two years from the date of grant of new lease. This will allow new owners to continue with hassle free mining operations. During the period, they may apply for the fresh licence beyond the period of two years.

The auction of lease of mines can now be started before expiry of lease period. It will enable the state government to take advance action for auction of mineral blocks so that the new lease holder could be decided before the existing lease gets expired. This will help in seamless production of minerals in the country.

The new provisions will also augment the exploration of the deep seated minerals and minerals of national interest by allowing Non Exclusive Reconnaissance Permit (NERP) holders to apply for composite licence or Mining Lease (PL-cum-ML).Various repetitive and redundant provisions of MMDR Act and CMSP Act have also been omitted for Ease of Doing Business.

The Bill replaces the ordinance for amendment of the MMDR Act 1957 and CMSP Act which was promulgated on 10th January 2020.

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companies 2nd amendment bill 2019

PIB press release dated 4th march, 2019

The Union Cabinet, chaired by the Prime Minister, Shri Narendra Modi has approved the Companies (Second Amendment) Bill, 2019 to amend the Companies Act, 2013.

The Bill would remove criminality under the Act in case of defaults which can be determined objectively and which, otherwise, lack the element of fraud or do not involve larger public interest.  This would also lead to further de-clogging of the criminal justice system in the country.  The Bill would also further ease of living for law abiding corporates.

Earlier, the Companies (Amendment) Act, 2015 amended certain provisions of the Act to remove difficulties faced in implementation of various provisions of the Act.

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SPICe+ webinar

Clarifications from MCA officials in the webinar held today on SPICe+ incorporation forms

Ministry of Corporate Affairs has notified dated 18th February, 2020

Regarding Companies (Incorporation) Amendment Rules, 2020.

Shall come into effect from 23rd February, 2020

MCA has introduce SPICe+ and AGILE-PRO for incorporation of a Company

Before Notification After Notification
Spice, MOA, AOA, Agile  – PDF based form Spice+, MOA, AOA, Agile-pro  – web based form
RUN Spice+ Part A
INC-9 – Draft document INC-9 – Auto populated pdf. from MCA portal
For incorporation – Spice and other linked forms are to be filled For incorporation – Spice+ Part B and other linked forms are to be filled
All respective forms – in download pdf. format Once SPICe+ is filled completely with all relevant details, the same would then have to be converted into pdf format, with just a click of the mouse button, for affixing DSCs
Features:-

–          Incorporation

–          DIN Allotment

–          Mandatory issue of PAN

–          Mandatory issue of TAN

–          Allotment of GSTIN (if so applied for)

Features:-

–          Incorporation

–          DIN Allotment

–          Mandatory issue of PAN

–          Mandatory issue of TAN

–          Mandatory issue of EPFO registration

–          Mandatory issue of ESIC registration

–          Mandatory issue of Profession Tax registration(Maharashtra)

–          Mandatory Opening of Bank Account for the Company and

–          Allotment of GSTIN (if so applied for)

 

 

Rest all procedure remains the same as per earlier only the form version has changed and format.

 

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SPICe+

As part of Government of India’s Ease of Doing Business (EODB) initiatives, the Ministry of Corporate Affairs has notified a new Web Form christened ‘SPICe+’ (pronounced ‘SPICe Plus’) replacing the existing SPICe form. SPICe+ would offer 10 services by 3 Central Govt Ministries & Departments (Ministry of Corporate Affairs, Ministry of Labour & Department of Revenue in the Ministry of Finance) and One State Government (Maharashtra), thereby saving as many procedures, time and cost for Starting a Business in India and would be applicable for all new company incorporations.

Following are the features of the new Spice+ web form:

·         SPICe+ would be an integrated Web Form.

       ·         SPICe+ would have two parts viz.: Part A-for Name reservation for new companies and Part B offering a bouquet of services viz.

(i)                 Incorporation

(ii)               DIN allotment

(iii)             Mandatory issue of PAN

(iv)              Mandatory issue of TAN

(v)                Mandatory issue of EPFO registration

(vi)              Mandatory issue of ESIC registration

(vii)            Mandatory issue of Profession Tax registration(Maharashtra)

(viii)          Mandatory Opening of Bank Account for the Company and

(ix)              Allotment of GSTIN (if so applied for)

 

·           The new web form would facilitate On-screen filing and real time data validation for seamless incorporation of companies. For ensuring ease while filing, SPICe+ has been structured into various sections. Information once entered can be saved and modified.

 

·           Registration for EPFO and ESIC shall be mandatory for all new companies to be incorporated through SPICe+ and no EPFO & ESIC registration nos. shall be separately issued by the respective agencies.

 

·           Registration for Profession Tax shall also be mandatory for all new companies to be incorporated in the State of Maharashtra through SPICe+.

 

·           All new companies incorporated through SPICe+ would also be mandatorily required to apply for opening the company’s Bank account through the AGILE-PRO linked web form.

 

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incorporation

MCA amends the Companies (Incorporation) Rules by bringing in faster incorporation of companies in India. Salient features are as under:

  • Date of notification was on 6th February, 2020.
  • The said notification is issued by MCA with a view to amend the prior rules with respect to incorporation of a company.
  • The new rules shall be called as Companies (Incorporation) Amendment Rules, 2020.
  • And it will come into force with effect from the 15th February, 2020 which means that as of now the prior rules is still in effect i.e. Companies (Incorporation) Rules, 2014.
  • The main reason behind the new amendment rules is to reduce procedures, time and as well as cost for all the new company incorporations with effect from the 15th February, 2020.
  • MCA has taken a new initiative in ease of doing business by introducing new E-Forms for incorporation of all new companies i.e. Form SPICE+ and Form AGILE PRO.
  • Form SPICE+ will offer multiple services which is divided into 2 parts such as Part A for name reservation for new company and Part B as given below:
    • Incorporation
    • DIN allotment
    • Mandatory issue of PAN
    • Mandatory issue of TAN
    • Mandatory issue of EPFO registration
    • Mandatory issue of ESIC registration
    • Mandatory issue of Profession Tax registration (Maharashtra)
    • Mandatory opening of Bank Account for the Company and
    • Allotment of GSTIN (if required)
  • As per the Companies (Incorporation) Amendment Rules the Rule 9 of Companies (Incorporation) Rules, 2014 is also been amended which states that for reservation of name or change of name an application shall be made at the official site of MCA by using web service under SPICE+ and in case of change of name then by using web service under RUN along with the fees as provided in the Companies (Registration Offices and Fees) Rules, 20014.
  • It is to be noted that it shall be the discretion of the Registrar or Central Registration Centre for accepting or rejecting the application made as above. In case any defects arises in the application made as above then the same need to be rectified within 15 days.
  • In rule 10, 12, sub rule (1) of rule 19, sub rules (1), (2), (3), (4), (7), and (9) of rule 38 of prior rules wherever the words, letters, figures and bracket “Form No INC-32 (SPICE)” is appeared the words “Form No. INC-32 (SPICE+) shall be replaced with effect from the 15th February, 2020.
  • Also the rule 38 of prior rules has been amended and states that in the marginal heading, for the words, brackets and letters “Electronically (SPICE)” the words “Electronically Plus (SPICE+)” shall be replaced.
  • There has been a change made in rule 38A of prior rules which is relating to Form AGILE which will be known as AGILE PRO and also after clause (c) the new clause has been added i.e. clause (c) which is for Profession Tax Registration with effect from the 15Th February, 2020 and clause (d) which is for Opening of Bank Account with effect from 15th February, 2020.
  • New E –Forms has been replaced by prior forms i.e. in case of Form RUN, Form INC-32 (SPICE) and Form INC-35 (AGILE) the Form INC-32 (SPICE+) and Form INC-35 (AGILE PRO) has been substituted which will offered multiple services and it will results into cost cutting and time saving as compared to prior E-Forms.
  • E-Form INC-9 is also been replaced by E-Form known as RUN which will be used for the purpose of change of name only as of now.
  • Form No INC-33 is also been amended whereby the letters, words and brackets “MOA language 0 English 0 Hindi SRN for (RUN)” shall be deleted.
  • Also relatedly amendment is also made in Form No INC-34 where the letters, words and brackets “AOA language 0 English 0 Hindi SRN for (RUN)” shall be deleted.
  • Lastly in Form No URC-1 the words and letters “Form language 0 English 0 Hindi SRN of RUN” shall be deleted.

 

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digital licensing

PIB press release dated 10th january 2020 introducing paperless licensing for petroleum road tankers. Good move by the govt.

In line with the vision of Prime Minister, Narendra Modi’s Digital India and Ease of Doing Business, the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, has launched paperless licensing process through Petroleum and Explosives Safety Organisation (PESO) for road tankers for transportation of petroleum under the Petroleum Rules, 2002.

This is a significant move towards paperless and green India that will provide simpler mechanism, ease of living and business to the petroleum road tanker ownersMoving towards digitisation, the process will include filing the applications online. This will also include online payment of fees which will go directly to the concerned officer’s ID without any manual interface. Applicants, at each stage of processing of the application, will be intimated via SMS and email, whether discrepancy or grant of licence or approval. This will be in addition to the same being reflected in the applicant’s profile.

The new process will update the applicant at each stage triggering an e-mail and SMS immediately when the licence is granted by the officer concerned and is dispatched electronically. All this process will be without any need for printing and physical dispatch.

This extraordinary and forward looking initiative is directly going to benefit more than one lakh petroleum road tanker owners who together hold more than half of total licences issued under the Petroleum Rules, 2002. An added advantage of this move is that the authenticity of the licence can be verified through public domain available on PESO’s website. This automation is going to revolutionise the petroleum & gas industry benefitting it immensely.

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inter-bank transactions

RBI circular dated 6th January, 2020 permitting AD category 1 banks to undertake customer and inter bank transactions beyond onshore market hours.

Attention of Authorised Dealers (ADs) is invited to the Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 notified vide Notification No. FEMA.25/RB-2000 dated May 3, 2000) issued under clause (h) of sub-section (2) of Section 47 of FEMA, 1999 (Act 42 of 1999), as amended from time to time and the Master Direction- Risk Management and Inter-bank Dealing dated July 05, 2016, as amended from time to time.

2. As announced in the Statement of Developmental and Regulatory Policies dated October 04, 2019 it has been decided to accept the recommendation of the Task Force on Offshore Rupee Market to permit AD Cat-I banks to offer foreign exchange prices to users at all times, out of their Indian books, either by a domestic sales team or through their overseas branches.

3. Accordingly, the following section is being added in Part C (Inter-Bank Foreign Exchange Dealings) of the Master Direction- Risk Management and Inter-Bank Dealings:

“6. Customer and inter-bank transactions beyond onshore market hours

Authorised dealers may undertake customer (persons resident in India and persons resident outside India) and inter-bank transactions beyond onshore market hours. Transactions with persons resident outside India, through their foreign branches and subsidiaries may also be undertaken beyond onshore market hours.”

4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

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differential voting rights

PIB press release dated 16th August, 2019

The Ministry of Corporate Affairs has amended the provisions relating to issue of shares with Differential Voting Rights (DVRs) provisions under the Companies Act with the objective of enabling promoters of Indian companies to retain control of their companies in their pursuit for growth and creation of long-term value for shareholders, even as they raise equity capital from global investors.

            The key change brought about through the amendments to the Companies (Share Capital & Debentures) Rules brings in an enhancement in the previously existing cap of 26% of the total post issue paid up equity share capital to a revised cap of 74% of total voting power in respect of shares with Differential Voting Rights of a company.

Another key change brought about is the removal of the earlier requirement of distributable profits for 3 years for a company to be eligible to issue shares with Differential Voting Rights.

            The above two initiatives have been taken by the Government in response to requests from innovative tech companies & startups and to strengthen the hands of Indian companies and their promoters who have lately been identified by deep pocketed investors worldwide for acquisition of controlling stake in them to gain access to the cutting edge innovation and technology development being undertaken by them.

The Government had noted that such Indian promoters have had to cede control of companies which have prospects of becoming Unicorns, due to the requirements of raising capital through issue of equity to foreign investors.

Alongside the above two changes, another major step taken is that the time period within which Employee Stock Options (ESOPs) can be issued by Startups recognized by the Department for Promotion of Industry & Internal Trade (DPIIT) to promoters or Directors holding more than 10% of equity shares, has been enhanced from 5 years to 10 years from the date of their incorporation.

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Committee to review offences

PIB press release dated 15th july, 2018 follows:

The Ministry of Corporate Affairs (MCA) has constituted a 10 Member Committee, headed by the Secretary of Ministry of Corporate Affairs, for review of the penal provisions in the Companies Act, 2013 may be setup to examine ‘de-criminalisation’ of certain offences.

The MCA seeks to review offences under the Companies Act, 2013 as some of the offences may be required to be decriminalised and handled in an in-house mechanism, where a penalty could be levied in instances of default. This would also allow the trial courts to pay more attention on offences of serious nature. Consequently, it has been decided that the existing compoundable offences in the Companies Act – 2013 viz. offences punishable with fine only or punishable with fine or imprisonment or both may be examined and a decision may be taken as to whether any of such offences may be considered as ‘civil wrongs’ or ‘defaults’ where a penalty by an adjudicating officer may be imposed in the first place and only consequent to further non-compliance of the order of such authority will it be categorised as an offence triable by a special court.

It is also required to be seen as to whether any non-compoundable offences viz. offence punishable with imprisonment only, or punishable with imprisonment and also with fineunder the Companies Act, 2013 may be made compoundable. The Committee shall submit its report within thirty days to the Central Government for consideration of its recommendations.

The terms of reference of the Committee are as follows:

  1. To examine the nature of all ‘acts’ categorised as compoundable offences viz. offences punishable with fine only or punishable with fine or imprisonment or both under the CA-13 and recommend if any of such ‘acts’ may be re-categorised as ‘acts’ which attract civil liabilities wherein the company and its ‘officers in default’ are liable for penalty;
  2. To review the provisions relating to non-compoundable offences and recommend whether any such provisions need to be re-categorised as compoundable offence;
  3. To examine the existing mechanism of levy of penalty under the CA-13 and suggest any improvements thereon;
  4. To lay down the broad contours of an in-house adjudicatory mechanism where penalty may be levied in a MCA21 system driven manner so that discretion is minimised;
  5. To take necessary steps in formulation of draft changes in the law;
  6. Any other matter which may be relevant in this regard.

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Certificate of commencement of business

Government has vide an amendment to the Companies Act, 2013 completely done away with the requirement of commencement of business certificate being required by a company after it is incorporated. This was a cumbersome procedure which hitherto in the Companies Act, 1956 was required to be obtained only by public limited companies but under the new Companies Act, 2013 was made mandatory even for private limited companies.

Necessary amendments has been carried out to the Act and also to the Rules thereof.

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Common Seal

The Ministry of Corporate Affairs has vide an amendment to the Companies Act, 2013 done away with the mandatory requirement of a common seal for a company. The Government has issued a Companies (Amendment) Bill, 2015 which has been notified on 26th May, 2015.

Section 9 of the Act has been amended to delete the requirement of having a common seal for a company.

However a company may if it desires keep a common seal. If it does have a common seal, then it should have its name engraved in the common seal in legible characters.

Section 22(2) of the Act has been amended to add a proviso that

where the company does not have a common seal, then the authorisation under this sub-section shall be made by two directors or by a director and company secretary, wherever the company has appointed a company secretary.

The authorisation mentioned in section 22(2) where the company does have a company seal, should be in writing and it can authorise any person generally or in respect of any specified matters, as its attorney to execute other deeds on its behalf either in India or outside India.

So if the company does have a common seal, then it has powers to empower any person in writing to execute the documents under the common seal of the company, but if the company does not have a common seal then only two directors of the company or one director and the company secretary where the company has appointed a company secretary can be so authorised.

So it makes sense for a company to have a common seal especially a large company with diverse operations whereas a small company having limited operations and more in the nature of family business can dispense with the requirement of a common seal.

This is an initiative of the government under the “ease of doing business” procedure in order to mitigate the hardships for companies operating in India.

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