COMPANIES REGN OFFICES FEES RULES
ln exercise of the powers
conferred by sections 396,398,399,403 and 404 read with sub-sections (1) and
(2) of section 469 of the companies Act, 2013 (18 of 2013), the central
government hereby makes the following rules further to amend the companies
(Registration Offices and Fees) Rules,2014, namely:-
1 (1) These rules may be
called the companies (Registration offices and Fees) Amendment Rules, 2019
(2) They shall come into
force with effect from 25th February, 2019
2. In the companies
(Registration offices and Fees) Rules, 2014, in the Annexure, after item Vll
relating to Fees for filing e- Form DR-3 KYC under rule 12A of the companies
(Appointment and Qualification of Directors) Rules, 2014, the following item
shall inserted namely:- Vlll.
FEE FOR FILING e- Form
ACTIVE under rule 25A of the companies (incorporation) Rules, 2014.
(i) Fee payable till
25.04.2019 on e- Form ACTIVE - Nil
[ii) Fee payable (in
delayed case) - Rs. 10000
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
COMPANIES (INCORPORATION) AMENDMENT RULES, 2019
In exercise of the powers
conferred by sub-section (9) of section 12 and subsections (1) and (2) of
section 469 of the Companies Act, 2013 (18 of 2013), the Central Government
hereby makes the following rules further to amend the Companies (Incorporation)
Rules, 2014, namely: –
1. (1) These rules may be
called the Companies (Incorporation) Amendment Rules, 2019
(2) They shall come into
force with effect from 25th February, 2019
2. In the Companies
(Incorporation) Rules, 2014 (hereinafter referred to as the said rules), after
rule 25, the following shall be inserted, namely:-
_25A. Active Company
Tagging Identities and Verification (ACTIVE)_
(1) Every company
incorporated on or before the 31st December, 2017 shall file the particulars of
the company and its registered office, in e-Form ACTIVE (Active Company Tagging
Identities and Verification) on or before 25.04.2019
Provided that any company
which has not filed its due financial statements under section 137 or due
annual returns under section 92 or both with the Registrar shall be restricted
from filing e-Form-ACTIVE unless such company is under management dispute and
the Registrar has recorded the same on the register:
Provided further that
companies which have been struck off or are under process of striking off or
under liquidation or amalgamated or dissolved, as recorded in the register,
shall not be required to file e-Form ACTIVE
Provided also that in case
a company does not intimate the said particulars the Company shall be marked as
ACTIVE-non-compliant on or after 26th April, 2019 and shall he liable for
action under sub-section (9) of section 12 of the Act:
Provided also that no
request for recording the following event based information or changes shall be
accepted by the Registrar from such companies marked as ACTIVE-non-compliant
unless e-Form ACTIVE is filed –
(i) SH-07 (Change in
Authorized Capital);
(ii) PAS-03 (Change in
Paid-up Capital);
(iii) DIR-12 (Changes in
Director except cessation);
(iv) INC-22(Change in
Registered Office);
(v) INC-28 (Amalgamation,
de-merger)
(2) Where a company files
e-Form ACTIVE on or after 26th April, 2019, the company shall be marked as
ACTIVE Compliant on payment of fee of ten thousand rupees.
3. in the said Rules,
after Form INC-22, the e-form ACTIVE (INC-22A) shall be inserted
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
AN ORDINANCE FURTHER TO AMEND THE COMPANIES ACT, 2013
1.SHORT TITTLE AND COMMENCEMENT
(1) This Ordinance may be
called the Companies (Amendment) Second Ordinance, 2019.
(2) It shall be deemed to
have come into force on the 2nd day of November, 2018.
2. AMENDMENT OF SECTION
In section 2 of the
Companies Act, 2013 (hereinafter section 2. referred to as the principal Act),
in clause (41),—
(a) for the first proviso,
the following provisos shall be substituted namely:—
·
_Provided that where a
company or body corporate, which is a holding company or a subsidiary or
associate company of a company incorporated outside India and is required to
follow a different financial year for consolidation of its accounts outside
India, the Central Government may, on an application made by that company or
body corporate in such form and manner as may be prescribed, allow any period
as its financial year, whether or not that period is a year:_
·
Provided further that any
application pending before the Tribunal as on the date of commencement of the
Companies (Amendment) Second Ordinance, 2019, shall be disposed of by the
Tribunal in accordance with the provisions applicable to it before such
commencement.;
(b) in the second proviso,
for the words Provided further that, the words Provided also that shall be
substituted.
3. INSERTION OF NEW SECTION 10A
After section 10 of the
principal Act, the following section shall be inserted, namely:—
Commencement of business
10A.(1) A company
incorporated after the commencement of the Companies (Amendment) Second
Ordinance, 2019 and having a share capital shall not commence any business or
exercise any borrowing powers unless—
(a) a declaration is filed
by a director within a period of one hundred and eighty days of the date of
incorporation of the company in such form and verified in such manner as may be
prescribed, with the Registrar that every subscriber to the memorandum has paid
the value of the shares agreed to be taken by him on the date of making of such
declaration; and
(b) the company has filed
with the Registrar a verification of its registered office as provided in
sub-section (2) of section 12.
(2) If any default is made
in complying with the requirements of this section, the company shall be liable
to a penalty of fifty thousand rupees and every officer who is in default shall
be liable to a penalty of one thousand rupees for each day during which such
default continues but not exceeding an amount of one lakh rupees.
(3) Where no declaration
has been filed with the Registrar under clause (a) of sub-section (1) within a
period of one hundred and eighty days of the date of incorporation of the
company and the Registrar has reasonable cause to believe that the company is
not carrying on any business or operations, he may, without prejudice to the
provisions of sub-section (2), initiate action for the removal of the name of
the company from the register of companies under Chapter XVIII.
4. AMENDMENT OF SECTION 12
In section 12 of the
principal Act, after sub-section (8), Amendment of the following sub-section
shall be inserted namely:—
(9) If the Registrar has
reasonable cause to believe that the company is not carrying on any business or
operations, he may cause a physical verification of the registered office of
the company in such manner as may be prescribed and if any default is found to
be made in complying with the requirements of sub-section (1), he may without
prejudice to the provisions of sub-section (8), initiate action for the removal
of the name of the company from the register of companies under Chapter XVIII..
5. AMENDMENT OF SECTION 14
In section 14 of the
principal Act,—
(i) in sub-section (1),
for the second proviso, the following provisos shall be substituted, namely:—
·
Provided further that any
alteration having the effect of conversion of a public company into a private
company shall not be valid unless it is approved by an order of the Central
Government on an application made in such form and manner as may be prescribed:
·
Provided also that any
application pending before the Tribunal, as on the date of commencement of the
Companies (Amendment) Second Ordinance, 2019, shall be disposed of by the
Tribunal in accordance with the provisions applicable to it before such
commencement.;
(ii) in sub-section (2),
for the word Tribunal, the words Central Government shall be substituted.
6. AMENDMENT OF SECTION 53
In section 53 of the
principal Act, for sub-section (3), the following sub-section shall be
substituted, namely:—
(3) Where any company
fails to comply with the provisions of this section, such company and every
officer who is in default shall be liable to a penalty which may extend to an
amount equal to the amount raised through the issue of shares at a discount or
five lakh rupees, whichever is less, and the company shall also be liable to
refund all monies received with interest at the rate of twelve per cent. per
annum from the date of issue of such shares to the persons to whom such shares
have been issued.
7. AMENDMENT OF SECTION 64
In section 64 of the
principal Act, for sub-section (2), the following sub-section shall be
substituted namely:—
(2) Where any company
fails to comply with the provisions of sub-section (1), such company and every
officer who is in default shall be liable to a penalty of one thousand rupees
for each day during which such default continues, or five lakh rupees whichever
is less.
8. AMENDMENT OF SECTION 77
In section 77 of the
principal Act, in sub-section (1), for the first and second provisos, the
following provisos shall be substituted namely:—
·
Provided that the
Registrar may, on an application by the company, allow such registration to be
made—
(a) in case of charges
created before the commencement of the Companies (Amendment) Second Ordinance,
2019, within a period of three hundred days of such creation; or
(b) in case of charges
created on or after the commencement of the Companies (Amendment) Second Ordinance,
2019, within a period of sixty days of such creation, on payment of such
additional fees as may be prescribed:
·
Provided further that if
the registration is not made within the period specified—
(a) in clause (a) to the
first proviso, the registration of the charge shall be made within six months
from the date of commencement of the Companies (Amendment) Second Ordinance,
2019, on payment of such additional fees as may be prescribed and different
fees may be prescribed for different classes of companies;
(b) in clause (b) to the
first proviso, the Registrar may, on an application, allow such registration to
be made within a further period of sixty days after payment of such advalorem
fees as may be prescribed..
9. AMENDMENT OF SECTION 86
Section 86 of the
principal Act shall be numbered as Amendment of section 86. sub-section (1)
thereof and after sub-section (1) as so numbered, the following sub-section
shall be inserted namely:—
(2) If any person wilfully
furnishes any false or incorrect information or knowingly suppresses any
material information, required to be registered in accordance with the
provisions of section 77, he shall be liable for action under section 447..
10. SUBSTITUTION OF NEW SECTION FOR SECTION 87
For section 87 of the
principal Act, the following section shall be substituted, namely:—
·
Rectification by Central
Government in Register of charges
87. The Central Government
on being satisfied that —
(a) the omission to give
intimation to the Registrar of the payment or satisfaction of a charge, within
the time required under this Chapter; or
(b) the omission or
misstatement of any particulars, in any filing previously made to the Registrar
with respect to any charge or modification thereof or with respect to any
memorandum of satisfaction or other entry made in pursuance of section 82 or
section 83, was accidental or due to inadvertence or some other sufficient
cause or it is not of a nature to prejudice the position of creditors or
shareholders of the company, it may, on the application of the company or any
person interested and on such terms and conditions as it deems just and
expedient, direct that the time for the giving of intimation of payment or
satisfaction shall be extended or, as the case may require, that the omission or
misstatement shall be rectified.
11. AMENDMENT OF SECTION 90
In section 90 of the
principal Act,—
(i) for sub-section (9),
the following sub-section shall be substituted namely:—
(9) The company or the
person aggrieved by the order of the Tribunal may make an application to the
Tribunal for relaxation or lifting of the restrictions placed under sub-section
(8), within a period of one year from the date of such order:
·
Provided that if no such
application has been filed within a period of one year from the date of the
order under sub-section (8), such shares shall be transferred, without any
restrictions, to the authority constituted under sub-section (5) of section
125, in such manner as may be prescribed;
(ii) in sub-section (10),—
(a) after the word punishable,
the words with imprisonment for a term which may extend to one year or shall be
inserted;
(b) after the words ten
lakh rupees, the words or with both shall be inserted;
12. AMENDMENT OF SECTION 92
In section 92 of the
principal Act, for sub-section (5), the following sub-section shall be
substituted namely:—
(5) If any company fails
to file its annual return under sub-section (4), before the expiry of the
period specified therein, such company and its every officer who is in default
shall be liable to a penalty of fifty thousand rupees and in case of continuing
failure, with a further penalty of one hundred rupees for each day during which
such failure continues, subject to a maximum of five lakh rupees..
13. AMENDMENT OF SECTION 102
In section 102 of the
principal Act, for sub-section (5), the following sub-section shall be
substituted namely:—
(5) Without prejudice to
the provisions of sub-section (4), if any default is made in complying with the
provisions of this section, every promoter, director, manager or other key
managerial personnel of the company who is in default shall be liable to a
penalty of fifty thousand rupees or five times the amount of benefit accruing
to the promoter, director, manager or other key managerial personnel or any of
his relatives, whichever is higher..
14. AMENDMENT OF SECTION 105
In section 105 of the
principal Act, in sub-section (3), for Amendment of for the words punishable
with fine which may extend to five thousand rupees, the words liable to a
penalty of five thousand rupees shall be substituted
15. AMENDMENT OF SECTION 117
In section 117 of the
principal Act, for sub-section (2), the following sub-section shall be
substituted, namely:—
(2) If any company fails
to file the resolution or the agreement under sub-section (1) before the expiry
of the period specified therein, such company shall be liable to a penalty of
one lakh rupees and in case of continuing failure, with a further penalty of
five hundred rupees for each day after the first during which such failure
continues, subject to a maximum of twenty-five lakh rupees and every officer of
the company who is in default including liquidator of the company, if any,
shall be liable to a penalty of fifty thousand rupees and in case of continuing
failure, with a further penalty of five hundred rupees for each day after the
first during which such failure continues, subject to a maximum of five lakh
rupees..
16. AMENDMENT OF SECTION 121
In section 121 of the
principal Act, for sub-section (3), the following sub-section shall be
substituted namely:—
(3) If the company fails
to file the report under sub-section (2) before the expiry of the period
specified therein, such company shall be liable to a penalty of one lakh rupees
and in case of continuing failure, with a further penalty of five hundred
rupees for each day after the first during which such failure continues,
subject to a maximum of five lakh rupees and every officer of the company who
is in default shall be liable to a penalty which shall not be less than twenty-five
thousand rupees and in case of continuing failure, with a further penalty of
five hundred rupees for each day after the first during which such failure
continues, subject to a maximum of one lakh rupees..
17. AMENDMENT OF SECTION 137
In section 137 of the
principal Act, in sub-section (3),—
(a) for the words
punishable with fine, the words liable to a penalty shall be substituted;
(b) for the portion
beginning with punishable with imprisonment, and ending with five lakh rupees
or with both, the words shall be liable to a penalty of one lakh rupees and in
case of continuing failure, with a further penalty of one hundred rupees for
each day after the first during which such failure continues, subject to a
maximum of five lakh rupees shall be substituted.
18. AMENDMENT OF SECTION 140
In section 140 of the
principal Act, for sub-section (3), the following sub-section shall be
substituted, namely:—
(3) If the auditor does
not comply with the provisions of sub-section (2), he or it shall be liable to a
penalty of fifty thousand rupees or an amount equal to the remuneration of the
auditor, whichever is less, and in case of continuing failure, with a further
penalty of five hundred rupees for each day after the first during which such
failure continues, subject to a maximum of five lakh rupees.
19. AMENDMENT OF SECTION 157
In section 157 of the
principal Act, for sub-section (2), the following sub-section shall be
substituted namely:—
(2) If any company fails
to furnish the Director Identification Number under sub-section (1), such
company shall be liable to a penalty of twenty-five thousand rupees and in case
of continuing failure, with a further penalty of one hundred rupees for each
day after the first during which such failure continues, subject to a maximum
of one lakh rupees, and every officer of the company who is in default shall be
liable to a penalty of not less than twenty-five thousand rupees and in case of
continuing failure, with a further penalty of one hundred rupees for each day
after the first during which such failure continues, subject to a maximum of
one lakh rupees.
20. SUBSTITUTION OF NEW SECTION FOR SECTION 159
For section 159 of the
principal Act, the following Substitution of section shall be substituted
namely:
·
Penalty for default of
certain provisions.
159. If any individual or
director of a company makes any default in complying with any of the provisions
of section 152, section 155 and section 156, such individual or director of the
company shall be liable to a penalty which may extend to fifty thousand rupees
and where the default is a continuing one, with a further penalty which may
extend to five hundred rupees for each day after the first during which such
default continues..
21. AMENDMENT OF
SECTION 164
In section 164 of the
principal Act, in sub-section (1), section 164. after clause (h), the following
clause shall be inserted namely:—
(i) he has not complied
with the provisions of sub-section (1) of section 165..
22. AMENDMENT OF SECTION 165
In section 165 of the
principal Act, in sub-section (6), for the portion beginning with punishable
with fine and ending with contravention continues, the words liable to a
penalty of five thousand rupees for each day after the first during which such
contravention continues shall be substituted.
23. AMENDMENT OF SECTION 191
In section 191 of the
principal Act, for sub-section (5), the following sub-section shall be
substituted namely:—
(5) If a director of the
company makes any default in complying with the provisions of this section,
such director shall be liable to a penalty of one lakh rupees..
24. AMENDMENT OF SECTION 197
In section 197 of the
principal Act,—
(a) sub-section (7) shall
be omitted;
(b) for sub-section (15),
the following sub-section shall be substituted, namely:—
(15) If any person makes
any default in complying with the provisions of this section, he shall be
liable to a penalty of one lakh rupees and where any default has been made by a
company, the company shall be liable to a penalty of five lakh rupees..
25. AMENDMENT OF SECTION 203
In section 203 of the
principal Act, for sub-section (5), the following sub-section shall be
substituted namely:—
(5) If any company makes
any default in complying with the provisions of this section, such company
shall be liable to a penalty of five lakh rupees and every director and key
managerial personnel of the company who is in default shall be liable to a
penalty of fifty thousand rupees and where the default is a continuing one,
with a further penalty of one thousand rupees for each day after the first
during which such default continues but not exceeding five lakh rupees..
26. AMENDMENT OF SECTION 238
In section 238 of the
principal Act, in sub-section (3), for the words punishable with fine which
shall not be less than twenty-five thousand rupees but which may extend to five
lakh rupees, the words liable to a penalty of one lakh rupees shall be
substituted.
Amendment of section 238.
27. AMENDMENT OF SECTION 248
In section 248 of the
principal Act, in sub-section Amendment of (1),—
(a) in clause (c), for the
word and figures section 455,, the words and figures section 455; or shall be
substituted;
(b) after clause (c) and
before the long line, the following clauses shall be inserted, namely:—
(d) the subscribers to the
memorandum have not paid the subscription which they had undertaken to pay at
the time of incorporation of a company and a declaration to this effect has not
been filed within one hundred and eighty days of its incorporation under
sub-section (1) of section 10A; or
(e) the company is not
carrying on any business or operations, as revealed after the physical
verification carried out under sub-section (9) of section 12..
28. AMENDMENT OF SECTION 441
In section 441 of the
principal Act,—
(a) in sub-section (1), in
clause (b), for the words does not exceed five lakh rupees, the words does not
exceed twenty-five lakh rupees shall be substituted;
(b) for sub-section (6),
the following sub-section shall be substituted, namely:—
(6) Notwithstanding
anything contained in the Code of Criminal Procedure, 1973, any offence which
is punishable under this Act with imprisonment only or with imprisonment and
also with fine shall not be compoundable..
29. AMENDMENT OF SECTION 446B
In section 446B of the
principal Act, for the portion beginning with punishable with fine and ending
with specified in such sections, the words liable to a penalty which shall not
be more than one half of the penalty specified in such sections shall be
substituted.
30. AMENDMENT OF SECTION 447
In section 447 of the
principal Act, in the second proviso, for the words twenty lakh rupees, the
words fifty lakh rupees shall be substituted.
31. AMENDMENT OF SECTION 454
In section 454 of the
principal Act, —
(i) for sub-section (3),
the following sub-section shall be substituted, namely: —
(3) The adjudicating
officer may, by an order
(a) impose the penalty on
the company, the officer who is in default, or any other person, as the case
may be, stating therein any non-compliance or default under the relevant provisions
of this Act; and
(b) direct such company,
or officer who is in default, or any other person, as the case may be, to
rectify the default, wherever he considers fit.;
(ii) in sub-section (4),
for the words such company and the officer who is in default, the words such
company, the officer who is in default or any other person shall be
substituted;
(iii) in sub-section (8),—
(a) in clause (i), for the
words does not pay the penalty imposed by the adjudicating officer or the
Regional Director, the words, brackets and figures fails to comply with the
order made under sub-section (3) or sub-section (7), as the case may be, shall
be substituted;
(b) in clause (ii)—
(i) for the words Where an
officer of a company, the words Where an officer of a company or any other
person shall be substituted;
(ii) for the words does
not pay the penalty, the words, brackets and figures fails to comply with the
order made under sub-section (3) or sub-section (7), as the case may be, shall
be substituted.
32. INSERTION OF NEW SECTION 454A
After section 454 of the
principal Act, the following section shall be inserted namely:
·
Penalty for repeated default.
454A. Where a company or
an officer of a company or any other person having already been subjected to
penalty for default under any provisions of this Act, again commits such
default within a period of three years from the date of order imposing such
penalty passed by the adjudicating officer or the Regional Director, as the
case may be, it or he shall be liable for the second or subsequent defaults for
an amount equal to twice the amount of penalty provided for such default under
the relevant provisions of this Act..
33. REPEAL AND SAVINGS
(1) The Companies
(Amendment) Ordinance, 2019 is hereby repealed.
(2) Notwithstanding such
repeal, anything done or any action taken under the said Ordinance shall be
deemed to have been done or taken under the corresponding provisions of this
Ordinance.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Extension for last date of filing initial return in MSME Form
I
Pending the deployment of
MSME Form I on MCA 21 portal and in order to avoid inconvenience to
stakeholders on account of various factors it is stated the period of thirty
days for filing initial return in MSME Form 1 as specified in Specified
Companies (Furnishing of information about payment to micro and small
enterprise suppliers) Order, 2019 dated 22.01.2019 shall be reckoned from the
date the said e-form is deployed on MCA 21 portal
CIRCULAR AVAILABLE ON
BELOW LINK
http://www.mca.gov.in/Ministry/pdf/InitialReturnInMSMEForm_21022019.pdf
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
President promulgates four Ordinances
The President of India on
the 21st February, 2019 has promulgated the following four Ordinances,
namely:––
1. The Muslim Women
(Protection of Rights on Marriage) Second Ordinance, 2019 (Ord. 4 of 2019).
2. The Indian Medical Council
(Amendment) Second Ordinance, 2019 (Ord. 5 of 2019).
3. The Companies
(Amendment) Second Ordinance, 2019 (Ord. 6 of 2019).
4. The Banning of
Unregulated Deposit Schemes Ordinance, 2019 (Ord. 7 of 2019).
The Muslim Women
(Protection of Rights on Marriage) Second Ordinance, 2019 has been promulgated
to give continued effect to the provisions brought in by the Muslim Women
(Protection of Rights on Marriage) Ordinance, 2019. This Ordinance, inter alia,
declares the practice of triple talaq to be void and illegal and also to make
it an offence punishable with imprisonment up to three years and fine. The
Ordinance will protect the rights of married Muslim women and deter the
practice of divorce by triple talaq (i.e., talaq –e –biddat). It also provide
for payment of subsistence allowance and custody of minor children.
The Indian Medical Council
(Amendment) Second Ordinance, 2019 has been promulgated to give continued
effect to the work already done by the Board of Governors (BOG) as per the
provisions of earlier Ordinance. This Ordinance, inter alia, enables the Board
of Governors appointed in supersession of the Medical Council of India (MCI) to
continue to exercise the powers of MCI for a period of two years or till the
Council is reconstituted, whichever is earlier so as to ensure transparency,
accountability and quality in the governance of medical education in the
country.
In pursuance of the
Government’s objective of providing Ease of Doing Business to Law abiding
corporate while simultaneously strengthening the corporate governance and
compliance framework enshrined in the Companies Act, 2013, the Companies
(Amendment) Second Ordinance, 2019 has been promulgated with a view, to empower
the Central Government to allow certain companies to have a different financial
year instead of as determined by the Tribunal This Ordinance, inter alia,
addresses the need to impose civil liability for technical and procedural
defaults of a minor nature and to plug the corporate governance and enforcement
frame work through the following:
(i) re-categorisation of
16 minor offences as civil defaults which will de-clog special courts;
(ii) transfer of certain
routine functions such as permitting conversion of a public company into a
private company from NCLT to the Central Government;
(iii) making
non-maintenance of registered office and non-reporting of commencement of
business as grounds for striking of from register of companies; and
(iv) breach of ceiling on
Directorships being made a ground for disqualification;
(vi) Enhancing the
pecuniary jurisdiction of Regional Director’s for compounding offences under
the Companies Act with a view to unburdening the NCLT of routine functions etc.
The Banning of Unregulated
Deposit Schemes Ordinance, 2019 has been promulgated to have a central
legislation to tackle the menace of illicit deposits taking activities in the
country. Presently, non-banking entities are allowed to raise deposits from the
public under the provisions of various statutes enacted by the Central Government
and State Governments. However, the regulatory frame work for deposit taking
activity in the country is not seamless. Despite such diverse regulatory frame
work, schemes and arrangements leading to unauthorised collection of money and
deposits fraudulently by inducing public to invest in uncertain schemes
promising high returns or other benefits are still operating in the society.
This Ordinance, therefore, ensures a comprehensive ban on unregulated deposit
taking activity and for its effective enforcement. It aims to prevent such
unregulated deposit schemes or arrangements at their inception and at the same
time makes soliciting, inviting or accepting deposits pursuant to an
unregulated deposited scheme as a punishable offence. The said Ordinance also seeks
to put in place a mechanism by which the depositors can be repaid without delay
by attaching the assets of the defaulting establishments.
THE COMPANIES (AMENDMENT)
SECOND ORDINANCE, 2019
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Central Board of Trustees, EPF recommended crediting of 8.65%
rate of interest on Accumulations in the EPF Member’s Account for the year
2018-19
The 224th meeting of the
Central Board of Trustees, EPF was held here under the chairmanship of Union
Minister of State for Labour and Employment (I/C) Shri Santosh Kumar Gangwar.
The Central Board recommended crediting of 8.65 % rate of interest on the EPF
accumulations in the EPF member’s account for the year 2018-19. The Central
Board ratified the amendment in EPF Scheme 1952, as approved in the 141st
meeting of Financial Investment and Audit Committee (FIAC) held on February 12,
2019, to enable accounting of Investment in Exchange Traded Funds (ETFs)
(Equity & Related Investment). The Central Board ratified the approval of
Chairman, CBT, EPF for continuation of C-DAC as a consultant to carry out the
second phase of Computerisation Project. The Board gave extension to M/s
Standard Chartered Bank as custodian of the EPFO securities on the existing
terms and conditions of agreement for the period upto March 31, 2019. The
Central Board approved revised estimate for the year 2018-19 and budget
estimates for the year 2019-20 and recommended it to the Central Government for
approval. The Board gave consent to have performance review of the Portfolio
Managers from a separate agency in addition to review by M/s CRISIL Limited.
The Central Board took note of the proposal for recommendation for grant of
exemption to six establishments under Section 17(2) of the EPF&MP Act, 1952
read with Para 27A of the EPF Scheme, 1952 by the Appropriate Government . The
Board took note of the proposal for recommendation for grant of exemption under
Section 17(2) of the EPF & MP Act 1952 read with Para 27A of the EPF
Scheme,1952 to M/s Software Technology Parks of India with effect from June 05,
1994 by the Appropriate Government.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Amendments to the Indian Stamp Act, 1899 for Rationalization
of Stamp Duty & Design of Zero Evasion Collection Mechanism in Respect of
Securities market instruments
The President of India,
today, gave his assent to the Amendments to the Indian Stamp Act, 1899 which
were introduced as part of the Finance Act 2019. The was in fulfillment of the
commitment made in the last Union Budget 2018-19 to take reform measures with
respect to Stamp Duty regime on financial securities transactions in
consultation with the States and make necessary amendments to the Indian Stamp
Act, 1899. The Finance Bill 2019 was passed by both the Houses of Parliament,
Lok Sabha and Rajya Sabha, on 12th and 13th February 2019 respectively.
Objective
The amendments propose to
create the legal and institutional mechanism to enable states to collect stamp
duty on securities market instruments at one place by one agency (through the
Stock Exchanges or Clearing Corporations authorised by the stock exchange or by
the Depositories) on one Instrument. A mechanism for appropriately sharing the
stamp duty with relevant State Governments based on state of domicile of the
buying client is also proposed. The present system of collection of stamp duty
on securities market transactions has led to multiple rates for the same
instrument, resulting in jurisdictional disputes and multiple incidences of
duty, thereby raising the transaction costs in the securities market and
hurting capital formation. This has also given scope for rate shopping and
evasion of duty. In order to facilitate ease of doing business and to bring in
uniformity and affordability of the stamp duty on securities across States and
thereby build a pan-India securities market, the Central Government, after due
deliberations, in exercise of powers under Entry 91 of the List I and Entry 44
of List III of the 7th Schedule of Indian Constitution, has decided to amend
the Indian Stamp Act, 1899 to create the legal and institutional mechanism to
enable states to collect stamp duty on securities market instruments at one
place by one agency (through Stock Exchanges or Clearing Corporations
authorized by it or by the Depositories) on one Instrument and develop a
mechanism for appropriately sharing the stamp duty with relevant State
Governments.
Salient Features
To achieve the
rationalisation of stamp duty structures, the amendments, inter-alia, provide
for the following structural reforms; —
·
Each security is charged
with a duty as specified in Schedule I of the Act. Securities are defined to
include all those instruments specified in clause (h) of section 2 of the
Securities Contracts (Regulation) Act, 1956; a “derivative” as defined in
clause (a) of Section 45U of the Reserve Bank of India Act, 1934; a Certificate
of Deposit, Commercial Usance Bill, commercial paper and such other debt
instrument of original or initial maturity up to one year as the Reserve Bank
of India may specify from time to time; repo on Corporate Bonds; and any other
instrument declared by the Central Government, by notification in the Official
Gazette, to be securities for the purposes of this Act.
·
All rates are applicable
only on one side (either by the buyer or by the seller but not by both), while
presently States charge stamp duty on both sides.
·
While fixing the rates,
the rates charged by Maharashtra is taken as the benchmark as Maharashtra
accounts for around 70% of the total stamp duty collection in the country.
However, the rates are chosen in such a manner that it provides a revenue
neutral position to the state governments while reducing overall tax burden for
investors.
·
While duty is applicable
normally on the transaction value, in case of swaps the first leg of the cash
flow; in case of options its premium; and in case of repo on corporate bonds
the interest paid by the borrower are considered for levy of duty.
·
For all exchange based
secondary market transactions in securities, stock exchanges (SEs) shall
collect the duty; and for off-market transactions (which are made for a
consideration as disclosed by trading parties) and initial issue of securities
happening in demat form, depositories shall collect the duty. In the future
event of inter-operability of clearing corporations (CCPs), which provides for
linking of multiple CCPs while allowing participants to consolidate their
clearing and settlement functions at a single CCP, irrespective of the stock
exchange on which the trade is executed, stock exchanges can authorize CCPs to
collect stamp duty on behalf of state governments. This is because when
inter-operability of CCPs is enabled, investors will be able to buy and sell
securities at any stock exchange and clear through any CCP of their choice. If
so, the categorization of a transaction as delivery vs. non-delivery based
trades so as to fix appropriate levies, can only be done by CCPs. The CCPs are
substantially owned by stock exchanges (at least 51% shareholding rests with
SEs).
·
State of domicile of the
buying client or that of the broking house /depository Participant of the
buying client (in case the buyer is outside India, as in the case of Foreign
Portfolio Investors (FPIs)) would be taken as the basis for remitting duty to
the respective States.
·
Issue of securities is
also proposed to be brought into the same tax framework as that of trading of
securities, that is, authorising depositories to collect duty from companies
and redistributing to States based on the domicile State of subscribers /buyers
of security.
·
The depositories
/repositories and trading platforms under the jurisdiction of the Reserve Bank
of India are also brought into this framework. However, Government Securities
(G-secs) and instruments based on G-secs (such as repos/reverse repos on
G-Secs) have been excluded from the purview of stamp duty. Platforms, which
facilitate liquidity adjustments like call money market have also been
excluded.
·
In order to prevent
multiple incidence of taxation, it is proposed that no stamp duty shall be
collected by the State on any secondary record of transaction associated with a
transaction on which the depository / stock exchange has been authorised by the
State Government to collect the stamp duty.
·
Tax arbitrage is avoided
by providing the same rate of stamp duty for issue or re-issue or sale or
transfer of securities happening outside stock exchanges and depositories.
·
Further, rule-making
powers are granted to the Central Government for implementing the new
collection mechanism. Penalty provisions have also been incorporated.
·
For facilitating the
collection, stock exchanges/clearing corporations/depositories shall be
eligible for some commission which will be decided in consultation with State
Governments
Implementation Strategy /
Inter-state Council mechanism
·
Subsequent to the
enactment of the Act, it is proposed to create a Coordination Council under
Article 263 of the Indian Constitution by a separate order/notification of the
President of India. This Council comprising of representatives from Union and
States may be tasked with the responsibility of making recommendations
regarding review / revision of stamp duty rates. The Government will also
notify the required rules.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
ERA INFRA BANKRUPTCY: LENDERS MAY CONSIDER ‘STALKING HORSE’
BIDDING
Lenders to Era Infra
Engineering are hoping to put a floor price while inviting bids for the
company, its joint ventures and special purpose vehicles. A senior banker
explained the consortium might consider a ‘stalking horse’ bid while auctioning
the entities. The terms of such an auction are yet to be fully agreed on
between the members of the consortia of Era, the JVs and SPVs. Sources said the
process could be time-consuming since a large number of financial creditors are
involved. Union Bank’s plan calls for mutual consent among members of the
consortium to sell Era together with the SPVs and JVs and not as a stand-alone
entity since that would ensure a better value for all stakeholders. The plan
entails appointing a common resolution professional (RP) and a single bidding
process for the consolidated entity. The process can begin once the NCLT
(National Company law Tribunal) approves the method. The proposal drawn up by
Union Bank of India suggests having a common CIRP process for Era Infra and its
master SPV Era Infrastructure India and at least six others. Of these, four are
being referred to the NCLT by ICICI Bank and one other bank.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RCOM LOOKS TO REAL ESTATE ASSETS, JIO DEAL TO PAY ERICSSON
DUES
Business tycoon Anil
Ambani is planning to use a payment from his brother's company and the sale of
real estate assets to pay what he owes to Sweden's Ericsson following a court
ruling this week, a source familiar with the matter said. India's Supreme Court
on Wednesday ordered Ambani's Reliance Communications Ltd and two of its
directors to pay Ericsson Rs 450 crore ($63.30 million) within four weeks or
face a three-month jail term for contempt of court RCom owes a total Rs 571
crore to the Swedish telecoms equipment maker, including a one-time settlement
of Rs 550 crore and interest payments of Rs 21 crore. The company said in a
statement on Thursday it has already deposited Rs 118 crore with the Supreme
Court and has sought approval from its lenders to release tax refunds of a
further Rs 260 crore to Ericsson. Since the company is in bankruptcy court for
debt resolution, it needs lenders' approval for any such transaction. RCom is
confident of raising the balance well within the time of four weeks allowed by
the honourable Supreme Court, the company said in the statement. A source, who
spoke on the condition of anonymity, said RCom is looking to sell its real
estate assets in Chennai and Kolkata to raise the remaining funds. We have
received only Rs 780 crore (7.8 billion) from Jio. We can ask Jio to pay up
sooner, the source said. The court order comes at a time when Anil Ambani's
Reliance Group, a diversified business empire, is facing falling valuations of
group companies and a loss of goodwill, sparking heavy selling of pledged
shares.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CHALLENGE TO THE CONSTITUTIONAL VALIDITY OF THE INSOLVENCY AND
BANKRUPTCY CODE, 2016
The Supreme Court in Swiss
Ribbons Pvt. Ltd. v. Union of India and Ors. rejected the multi-pronged
challenge to the constitutional validity of the Insolvency and Bankruptcy Code,
2016, while consciously harmonizing the legislative intent with the expanse of
judicial restraint.
Members of the NCLT and
NCLAT appointed in conformity with SC Judgments
The Supreme Court, in
Madras Bar Association v. Union of India, had considered various issues in
relation to the constitution of the National Company Law Tribunal (NCLT),
qualification of the technical members, and constitution of the Selection
Committee. Upon noticing glaring defects, it laid down several remedial
measures for compliance by the Union of India. In this background, it was
argued in Swiss Ribbons that Section 412(2) of the Companies Act, 2013
continued to linger in the statute and therefore there was a likelihood of the
two Judicial Members of the Selection Committee to be outweighed by the three
bureaucrats. However, the Supreme Court, while observing that Section 412 had
already been amended on 03.01.2018 by the Companies Amendment Act, 2017 to
remedy this issue, appeared to be swayed by the affidavit filed by the Ministry
of Corporate Affairs, which clarified in no uncertain terms that the Selection
Committee was constituted to make appointments to the NCLT in the year 2015
itself, in compliance with the judgments of the Supreme Court.
Circuit Benches of the
NCLAT within 6 months
It was avere Delhi that as
the National Company Law Appellate Tribunal (NCLAT) only had a seat at New, it
would be unreasonable and obstructive to expect litigants to travel in order to
exercise their right of appeal. A similar view had been taken by the Supreme
Court in the context of the National Tax Tribunal Act 2005, wherein directions
were issued to set up circuit benches so as to neutralise the hardship to
litigants. The Union of India was in agreement with the petitioners and
undertook to establish circuit benches. The Supreme Court noted the said
undertaking and proceeded to issued directions for establishment of Circuit
NCLAT Benches within a period of 6 months.
Law Ministry and not
Corporate Affairs Ministry to extend administrative support
In Madras Bar Association,
the Court had categorically held that the administrative support for all
Tribunals should be from the Ministry of Law and Justice and that the Tribunals
and members should not be provided with facilities from the parent ministries
or departments concerned. Despite the same, it was brought to the notice of the
Supreme Court that the NCLT and NCLAT were accessing support from the Ministry
of Corporate Affairs. The Supreme Court, on noticing that the Union of India
had not acted in terms of the said directions since 2010, urged it to act
swiftly and comply with the same in letter and spirit.
Differential treatment of
two classes of creditors justified
The petitioners contended
that there is no intelligible differentia between financial creditors and
operational creditors insofar as the object of the Code is concerned. Despite
that, the Code treated both classes of creditors differently. While an
operational debtor is given a notice of default and can dispute the genuineness
of the claim, a financial debtor is neither entitled to a notice nor to dispute
the claim of the financial creditor. Operational creditors have no place in the
committee of creditors unless they amount to 10% of the aggregate amount of
debt owed. Nevertheless, in terms of Section 21 and 24 of the Code, the
operational creditors are not entitled to vote in the committee of creditors.
Hence, in terms of Shayara Bano v. Union of India, such classification is
discriminatory and manifestly arbitrary. However, the Supreme Court upheld the
distinction between the two classes of creditors after analyzing the nature of
their respective debts, financial competence, and extent of evidence needed to
trigger the insolvency resolution proceedings under the Code. The Supreme Court
held that the difference between the two classes of creditors is not only
justified, but also beneficial and considered owing to the fact that:
(1) the operational debts
are typically unsecured and smaller, while financial debts are secured and
larger;
(2) the nature of loan
agreements with financial creditors are different from contracts with
operational creditors for supplying goods and services;
(3) the possibility of
disputed operational debts are relatively higher than financial debts;
(4) an event of default is
far easier to establish and verify for financial creditors as electronic
records of the financial creditors are usually filed in the Information
Utilities; and
(5) financial creditors
are better equipped to engage in restructuring of loans as well as
reorganization of the corporate debtor‘s business considering the fact that
they are involved in assessing the viability of the corporate debtors from the
start.
Since the financial
creditors are usually banks and financial institutions, they are best equipped
to assess viability and feasibility of the business of the corporate debtor. On
the other hand, operational creditors are primarily interested in recovery and
are neither concerned with nor equipped to assess viability and feasibility of
a business. The Supreme Court also clarified that the notice to a financial
debtor is unnecessary considering the debtors are usually aware of the loan
structure and the defaults made. On the other hand, the notice of default in
case of an operational debt will not only prevent premature initiations, but
will also facilitate negotiations and settlements between the parties.
Transition frominability
to pay debts to determining of default
The Supreme Court
recognised the significant change in the trigger mechanism for a financial
creditor‘s application under the Code. Financial creditors are now only
required to establish that the debtor had a financial obligation to pay the
debt and failed to do so, as against having to prove that the debtor is unable
to pay its debts in terms of the repealed Section 433 (e) of the Companies Act.
In this context, the Supreme Court accounted for the difference between claim,
debt and default, and relied on this difference to justify the reasons that a
financial creditor has to prove default as opposed to an operational creditor
who merely claims a right to payment of a liability or obligation in respect of
a debt which may be due. The four reasons for the change in approach are
(1) predictability and
certainty;
(2) admission into the
insolvency resolution process aims to protect and not prejudice the interests
of the corporate debtor;
(3) protecting the
economic interests of the corporate debtor is more important than the cause of
default; and
(4) liquidation is
resorted to only in case of failure of the resolution process.
Stringent mechanism for
withdrawal of applications is necessary
Section 12A of the Code,
pertaining to the withdrawal mechanism of an admitted application, was one of
the primary grounds of challenge. It was contended that unbridled and
uncanalized power is given to the committee of creditors to reject legitimate
settlements and there is a requirement of an approval of at least ninety
percent of the voting members of the committee of creditors. In addition,
though withdrawal may be permitted prior to admission, there is no provision to
permit withdrawal after admission of the application. The Supreme Court
considered these grounds of challenge in the context of the objective of the
Code, which endorses the participation of all key stakeholders in the
negotiation process. It was held that once the resolution process commences the
proceedings are no longer between the applicant creditor and debtor but it is
one which involves all creditors. This is solely to prevent settlements to the
exclusion of the other creditors. Hence, the high threshold of ninety percent
approval However, it was also clarified that withdrawals would be permissible,
in exercise of the inherent powers of the NCLT, at any stage where the
committee of creditors is not yet constituted. Nevertheless, the committee of
creditors do not have unbridled powers owing to the appeal provision under the
Code.
Evidence of Private
Information Utilities is merely prima facie evidence of default
The petitioners also
challenged the role of the information utilities under the Code and equated the
certificate of the information utility, insofar as it relates to the occurrence
of a default to a preliminary decree, which is issued without any hearing or
adjudication. The Supreme Court analysed the Information Utilities Regulations,
Regulations 20 and 21 to hold that the evidence is merely prima facie evidence
of default, which can be rebutted by the corporate debtor.
Resolution Professional
has only Administrative and no Quasi-Judicial Powers
The Supreme Court
negatived the challenge to the powers of the resolution professional, which the
petitioners deemed were quasi-judicial in nature and not merely administrative
It was held, upon relying on the CIRP Regulations, that the resolution
professional is only a facilitator of the resolution process, whose
administrative functions are subject to the supervision of the committee of
creditors and by the Adjudicating Authority. Even when he is required to make a
determination, he is only to apply to the Adjudicating Authority for
appropriate relief on the basis of the determination. To the contrary, the
liquidator has quasi-judicial powers under the Code, as he has to consolidate,
verify and adjudicate claims.
Section 29A is not
retrospective and is also Constitutionally valid
The petitioners also
launched a four-fold challenge on the recently incorporated Section 29-A of the
Code, which lays down the categories of persons who are ineligible from
submitting a resolution plan. Firstly, it was averred that the retrospective
application of the provision would impair the vested rights of erstwhile
promoters and would lead to multiple litigation and delay of the resolution
process. Secondly, a blanket ban on all promoters of the corporate debtors,
without incorporating certain exceptions to protect the efficient promoters
would be manifestly arbitrary. Thirdly, it was averred that an account may be
classified as a NPA, despite him not being a wilful defaulter and that the
period of one year had no basis or rationality. Lastly, relatives of erstwhile promoters
are also ineligible under Section 29 A (j), even though they have no business
connection with the erstwhile promoters. The Supreme Court relied upon
ArcelorMittal to hold that the resolution applicant does not possess a vested
right for consideration or approval of its resolution plan, and therefore Section
29A isn’t really retrospective as it does not take away any vested right The
Court also held that it is wholly justified to prevent a person who is unable
to service his own debt to participate in the resolution process. Further, the
one-year period was also judicious, considering the fact that the RBI Master
Circulars classify a loan as an NPA only after sufficient grace period is given
to the defaulter. Also, during such grace period, the said defaulter is
permitted to bid with the other resolution applicants to manage the corporate debtor.
In so far as the argument that relatives of erstwhile promoters are also
ineligible to participate under Section 29A(j), the Supreme Court held that
such a restriction would apply only if the said resolution applicant was
connected to the business activity of the resolution applicant. The exemption
of MSME under Section 29A was also not found fault with, as the Supreme Court
perceived the business of an MSME to attract interest from a promoter of an
MSME and may not be of interest to other resolution applicants. Therefore, if
MSME’s aren’t exempted then other resolution applicants may not come forward
and it would lead to a liquidation of the MSME instead of resolution.
Section 53 is not
Arbitrary
The petitioners contended
that Section 53 is discriminatory and manifestly arbitrary and violative of
Article 14 of the Constitution, as operational creditors rank below all other
creditors, including other unsecured creditors who happen to be financial
creditors and are not likely to receive any part of the proceeds of the sale of
liquidation assets. The Supreme Court negatived this challenge on the basis of
the relative importance of the two types of debts i.e. financial debts which
are secured and operational debts which are unsecured. Recovery of financial
debts infuse additional capital into the economy as banks and financial
institutions are able to use that money to lend to other entrepreneurs and
business entities. This creates sufficient intelligible differentia in order to
justify differential treatment in the distribution of assets. Hence, Article 14
is not attracted.
The continual failures of
the Sick Industrial Companies (Special Provisions) Act, 1985, The Recovery of
Debts due to Banks and Financial Institutions Act, 1993 and the Securitisation
and Reconstruction of Financial Assets and Enforcement of Securities Interest
Act, 2002, coupled with the underlying principle that the judiciary ought to
maintain sufficient restraint in matters relating to economic regulation, form
the backdrop to this decision of the Supreme Court in upholding the
constitutional validity of the Code. The Supreme Court was sensitive to the
fact that the legislature and the government ought to be permitted to
experiment in order to foster change in the economy. A denial of the same by
adoption of rigid methodologies by the courts, would not only prevent growth,
but will also result in adverse and grave consequences to the nation. Economic
problems being relatively complex the Legislature cannot be expected to enact a
water tight legislation that contemplates all possible problems and abuses.
Therefore, merely because there may be a possibility of certain inequities, the
Supreme Court rightly held that legislation cannot be struck down as unconstitutional.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RELIANCE CAPITAL TO SELL MF STAKE TO NIPPON FOR RS 8,000 CR
Anil Ambani plans to quit
the mutual fund space by selling of his 42 per cent stake to joint venture
partner Nippon Life to reduce debt. The deal is expected to be about Rs
7,000-Rs 8,000 crore and reduce Rs 18,000 crore debt on Reliance Capital books.
The deal may lead to open offer for retail investors. Reliance Capital, which
owns Reliance Mutual Fund, will off-load the stake to Nippon Life at much
higher price to the current market due to the control premium being given to
the joint venture partner. Both partners currently hold 42.88 per cent each,
and about 14 per cent is the public float. With over $700 billion in assets,
Nippon Life, a Fortune 100 company, is the largest asset manager in Japan, and
one of the largest in the world, it added. Total assets managed by Nippon Life
globally is more than two times the size of the India MF industry.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
ANIL AMBANI COMPANY AMONG FIRMS WITH OVER 95% PLEDGED PROMOTER
SHAREHOLDING: REPORT
Even as firms with pledged
shareholding continue to remain in focus after the recent crash in Essel
Group-promoted stocks, a few companies including Anil Ambani-led Reliance Naval
and Engineering, IL&FS Transportation Networks and Sterlite Technologies
have pledged shareholding of more than 95% according to a report. In its latest
report, Kotak Institutional Equities found that in CG Power and Industrial,
Kwality, Reliance Naval and Engineering, IL&FS Transportation Networks and
Sterlite Technologies, the promoters have pledged more than 95% of their
shareholdings Notably, promoters of 116 companies pledged their holdings among
BSE-500 Index stocks compared to 114 companies in September 2018 quarter. Six
companies had more than 90% of their promoter holdings pledged, said the
report. We clarify that pledging of shares does not necessarily imply that a
company or a promoter is under financial stress; banks (lenders) could have
sought additional security in the form of promoter shares, analysts at Kotak
Institutional Equities added. Interestingly, a few firms in which pledged
promoter holdings declined include Fortis Healthcare, Suzlon Energy, Advanced
Enzyme Technologies, Adani Transmission and Indiabulls Housing Finance.
Notably, the total percentage of shares pledged by promoters dropped to 7.8% in
the December quarter over the last quarter’s 8.3%. This is the lowest in the
last nine quarters. According to the latest figures, outstanding promoters
pledged shares were Rs 1.96 lakh crore, which is about 1.47% of the total
BSE-500 Index’s market capitalization in December 2018, found the study. In
case of a few firms – Texmaco Rail, Uflex and Wockhardt, there has been fresh
promoter pledges Nifty firms with more than 5% of pledged promoter holdings
were Zee Entertainment (59.4%), Adani Ports & SEZ (45.5%), JSW Steel
(43.6%), IndusInd Bank (26.4%) and Indiabulls Housing Finance (12.7%), said the
report. Indiabulls Real Estate, Coffee Day Enterprises, Jain Irrigation
Systems, Infibeam Avenues and Jindal Steel & Power saw highest increase in
pledged promoter holdings.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
DOT COMMISSION SEEKS REVENUE ASSURANCE FROM BSNL, MTNL FOR
REVIVAL SUPPORT
The Digital Communications
Commission (DCC) on Thursday asked loss-making telecom PSUs BSNL and MTNL to
explain their turnaround strategy and give an assurance to achieve higher
revenue for getting financial support, an official said. Public sector firms
BSNL and MTNL have sought financial support 4G spectrum and approvals for asset
sales as part of their revival plans. DCC members wanted to know what is the
revival plan, when will these (BSNL and MTNL) companies come back to health,
how will they ensure that if they are given all the support, how exactly the
commission can foresee that they will achieve higher revenue, an official
source said after the meeting. MTNL has sought a refund of interest that it
paid for broadband wireless access spectrum which it was given by the
government and asked to pay the price that was determined in auctions held in
2010. Both state-run telecom firms have asked for permissions to monetise their
land assets as well as the voluntary retirement scheme for employees on the
Gujarat model. Under the Gujarat model, an amount equivalent to 35 days of salary
for each completed year of service, and 25 days of salary for each year of
service left till retirement is offered. The VRS scheme for BSNL and MTNL will
have a revenue impact of Rs 6,365 crore and Rs 2,120 crore respectively. Both
the companies have also sought spectrum for 4G services through equity infusion
from the government. The DoT has recommended that VRS of both PSU should be
funded through 10-year bond issue and the bond should be paid back by lease
revenue that they will get from land asset monetisation. Besides, this the DCC
has asked Universal Service Obligation Fund to work out on leasing of optical
fibre network laid down under BharatNet project for 20 year period to telecom
operators through auction to push its uptake and also evaluate sale option.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
MPC MINUTES SHOW RBI MULLED BIGGER RATE CUT AT FEB REVIEW
According to the minutes
of the MPC meeting released on Thursday, Ravindra Dholakia, part of the
six-member MPC, said there was space for about 60 basis points repo rate cut as
the central bank’s headline inflation forecast for the year ahead turned out to
be less than the target of 4 per cent for the first time. I think space has
opened up for a substantial rate cut of about 50 to 60 bps going forward, he
said. Four members of the MPC voted for a rate cut, while two members,
including Deputy Governor Viral V Acharya and member Chetan Ghate, voted for
status quo. The minutes showed that Acharya suggested that the MPC should wait
till the next policy for a rate cut He recalled that he had voted for a rate
cut in August 2017, when all components of inflation had experienced downward
trends, upside risks to inflation had reduced, and growth was weaker. That
constellation of parameters gave me greater comfort to cut the policy rate than
at the present juncture. Should a similar situation evolve in the next two
months, I would have greater clarity for future policy action, he said. He,
however, voted for a change in the policy stance to neutral. Combining my
inflation and growth assessments, and given the Monetary Policy Committee
(MPC)’s mandate to target headline inflation at 4 per cent on a durable basis
while paying attention to growth, I prefer to ‘take off the helmet’ but ‘stay
within the crease’. That is, I vote for a change in the stance from ‘calibrated
tightening’ to ‘neutral’ to retain policy flexibility at future dates based on
incoming data, but to hold the policy rate at 6.5%, said Acharya. Ghate, who
also voted for neutral stance, said the elevated level of inflation ex-food and
fuel continued to be challenging, despite the fall from 5.8 per cent in
November to 5.6 per cent in December. Inflation has thus softened but not in a
broadbased way, he said. He said growth in a number of economies slowed in 2019
due to trade tensions and the associated uncertainty. This clouds India’s
export outlook and should be carefully watched. I also worry that India is not
consolidating fiscally although the extra budgetary spending on social welfare
and stimulative programs may not materialise (unless states match it with their
own initiatives). The quality of fiscal expenditures after the election may
also improve. Maintaining status quo on the rates would be consistent with
sustainable growth in the economy and achieving the inflation target over the
medium-term, said Ghate. On the other hand, RBI Governor Shaktikanta Das,
Michael Debabrata Patra, Ravindra H Dholakia and Pami Dua voted in favour of a
rate cut.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
EXPECT RS 3,000 CRORE RECOVERY FROM BHUSHAN POWER IN Q4: PNB
MD
Punjab Nation Bank (PNB)
is expecting an overall recovery of Rs 10,000 crore from two big NCLT accounts
in Q4FY19. Of this, the lender expects to get 3,000 crore from the Bhushan
Power and Steel, said Sunil Mehta. The lender also expects to recover over
2,000 crore from Essar Steel in the quarter ending March 2019, said Mehta. The
lender’s current exposure to NCLT accounts stands at 36,367 crore of which, it
has made a provision for 75%, said the company in a statement. In Q3FY19, the
lender had reported a 5.7% sequential decrease in the stressed assets at 84,732
crore. Fresh slippages also fell by 25.7% quarter-on-quarter (q-o-q) to 3,324
crore during the quarter. On the 14,356.84-crore fraud at PNB’s Brady House
Branch in Mumbai, Mehta said, bank has realised that the lapse has happened due
to a few people at one particular branch. Therefore, we have rolled out
centralised loan processing centres to mitigate such one-off incidents. Mehta
said, We have decided to disinvest 4% stake in PNB MetLife; however, this is
just for a price discovery and we will continue to hold 26% controlling stake
in the company. The state-run lender is also looking forward to sell it’s stake
in PNB Housing Finance. We have received the bids and negotiations are in
process, a decision will be taken on the stake sale by the end of this quarter,
Mehta told.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FEB RATE REVIEW MINUTES REFLECT RBI WORRY OVER GROWTH SLOWDOWN
The Reserve Bank of India
Governor Shaktikanta Das has said that the neutral stance of the central bank
will provide flexibility and the room to address challenges to sustained growth
of the Indian economy over the coming months, as long as the inflation outlook
remains benign. The RBI on Thursday released the minutes of the Monetary Policy
Committee’s meeting on February 6-7. The assessment by the central bank in the
minutes showed that the economic activity has slowed down in some of the major
emerging market economies (EMEs) with China growth decelerated in Q42018. In a
major policy shift, the six-member MPC headed by Governor Shaktikanta Das on
February 7 had lowered the repo rate by 25 basis points to 6.25 per cent in a
4-2 vote. RBI cut the rate for the first time in 17 months. The MPC also
changed the policy stance to ‘neutral’ from ‘calibrated tightening’. Viral V
Acharya, said that the RBI’s quarterly inflation projections over the next
12-month horizon have been further revised downward and imply headline
inflation steadily rising but remaining below the target rate of 4 per cent.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
VIJAYA BANK MERGER: ACTION COMMITTEE TO HOLD ELECTED
REPRESENTATIVES MEET
Save Vijaya Bank Action
Committee will hold a meeting for people’s representatives in Dakshina Kannada
and Udupi districts to declare their stand on the merger of Vijaya Bank with
Bank of Baroda. The meeting will be held at Town Hall here on February 23 at
11am. Committee convener Dinesh Hegde Ulepady said a meeting of people’s
representatives has been organized to convey the unanimous opinion of coastal
district with regard to the bank’s merger to the central government. The
central government, which has decided to merge Vijaya Bank with Bank of Baroda
from April 1 also has the power to cancel the same decision. People’s
representatives from all political parties will be given opportunity to declare
their stand on the issue. Leaders of Congress, BJP, JD(S) and CPI(M) have been
informed and requested them to send their representatives for the meeting,
Ulepady said. A memorandum with the signatures of representatives from all
parties will be prepared during the meet and the same will be submitted to the
central government, he said. If Vijaya Bank is merged with the Bank of Baroda,
then there are possibilities that 50% of the rural branches may be closed.
People, especially villagers, will have to face difficulties in their bank
transactions.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RBI SEEKS INFO FROM NBFCS ON MORATORIUM GIVEN TO BORROWERS
Amid a controversy on
loans against shares, the Reserve Bank of India has asked non-banking finance
companies (NBFCs) to disclose the moratorium or grace period given to
borrowers. Besides mutual funds (MFs), NBFCs are large lenders against shares —
often funding promoters to diversify and raise stake through creeping
acquisition. There are more than 11,000 NBFCs of which 218 are systemically
important, having total assets of Rs 25 lakh crore. MFs are not within RBI’s
jurisdiction, but the standstill deal between funds and the promoter concerned
has not gone down well with the regulator. If borrowers pledging shares to
raise money fail to bring in additional collateral when stocks fall, lenders
should sell the stock to protect their exposure. And, if the shares can’t be
sold, credit rating agencies should downgrade the instruments issued by the
borrower to raise funds. If none of these happens, the very product ‘loan
against shares’ comes under question, a person familiar with the subject told.
RBI is understood to be closely monitoring developments relating to share
pledged by promoters. The Securities and Exchange Board of India (Sebi) is silent
on the understanding between MFs and the promoter who has been given a
breathing space of six months by the funds.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
BANKS, NBFCS IGNORED RBI CAUTION ON LOANS AGAINST PLEDGED
SHARES
Both banks and non-banking
financial companies (NBFCs) ignored the Reserve Bank of India’s (RBI) words of
caution on lending against pledged shares and continued the practice, shows
data. RBI had twice cautioned against the risk of lending against shares. In
its financial stability reports of December 2013 and December 2014, RBI said
such practices could affect the health of the financial system and pose a risk
to retail investors While banks accounted for 3.11% of all pledged shares by
value and NBFCs 12.79% at the end of December 2014, the percentages shot up to
14.47% and 39.59%, respectively, by the end of December 2018, shows data of NSE
500 companies sourced from Prime Database. Experts said the regulator’s concern
stems from the fact that the financial system is interconnected and any
instability in one part rapidly spreads to other segments, as was witnessed in
the recent liquidity crisis. In the normal course of action, promoters would
have raised money from the market, reducing their stake in the process, said
Ashvin Parekh, adding that in case of a default and an ensuing conversion of
debt into equity, lenders might be left with a stake in a company that they do
not want to be part of. In 2013, RBI had cited a Securities and Exchange Board
of India (Sebi) analysis of 4,274 listed companies to show that promoters had
pledged some or all of their shares in those companies. Of these, promoters of
286 firms had pledged more than 50% of their shareholding. In a December 2014
report, RBI had said that in some instances, the shares pledged by unscrupulous
promoters could lose value and they might not mind losing control of the
company as there was a possibility of diversion of funds before share prices
collapsed.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SEBI REVISES MINIMUM HAIRCUT FOR GOVERNMENT SECURITIES USED AS
COLLATERAL
Sebi on Thursday revised
the minimum haircut for government securities (G-sec) that are used as
collateral in the market. Generally, haircut refers to the difference between
the market value of the particular securities and the value at which the same
has been kept as collateral. Now, there would be three minimum haircut slabs
depending on the type and tenure of the government securities, according to a
circular. The haircut would be at least 2 per cent for treasury bills and
liquid government securities having maturity period of less than three years.
The slab would be a minimum 5 per cent for those securities having maturity
period of more than three years. As per the circular, the haircut slab for all
other semi-liquid and illiquid government securities would be at least 10 per
cent. Currently, the minimum haircut level for all types of G-sec is 10 per
cent. In the securities market, clearing corporations extend credit to trading
members for investments in stock exchanges on the basis of central government
securities as collateral. The revision in the minimum haircut is in accordance
with recommendations of Sebi's Risk Management Review Committee.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SEBI FINES 2 FIRMS FOR FRAUDULENT TRADE IN BSE STOCK OPTIONS
Markets regulator Sebi
Thursday slapped a total penalty of Rs 13 lakh on two entities for non-genuine
trades in illiquid stock options on the BSE. The two entities are Bhiragacha
Finance Company and Blue Bird Mercantiles Pvt Ltd, according to Sebi's two separate
but similarly worded orders. The Securities and Exchange Board of India (Sebi)
conducted an investigation into the trading activity in illiquid stock options
on the BSE from April 2014 to September 2015 after observing large-scale
reversal of trades in the bourse's stock options segment. The regulator
observed that the entities deliberately adopted strategy to enter into reversal
trades with same counterparties and that too at price incurring losses to them.
Facts shows that these trades were executed with precision to match with the
same counterparty to create artificial volume in these contracts, and create
misleading appearance of trading, Securities and Exchange Board of India (Sebi)
said.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SLUGGISH START TO M&A DEAL ACTIVITY IN 2019
In the absence of
big-ticket deals in January, the overall Merger & Acquisition (M&A)
values fell 85 per cent in the month, recording $2.3 billion across 36
transactions. This is 23 per cent lower than deal volumes recorded in January
2018, according to a study by Grant Thornton. Inactivity in domestic M&A
transactions mostly impacted the M&A report card for January. Consolidation
for creating leadership position, the sale of non-performing business and
expansion to new geographies were the underlying themes for key transactions
last month, said Pankaj Chopda. Though the Union Budget has attempted to create
a favourable deal environment, the deal activity is expected to be tepid for
the part of the year considering the domestic political uncertainty and global
economic conditions, he added. January 2018 recorded four transactions in the
billion-dollar category, aggregating to $13.9 billion as compared with only one
such deal in January 2019, which was valued at $1.3 billion. The report further
states that such a drastic fall in the number of large transactions resulted in
domestic transactions declining from $12.63 billion in January 2018, to $0.39
billion in January 2019. Consequently, the average deal size in January 2019
reduced significantly to $64 million from $322 million in January 2018 and $234
million recorded in December 2018. Pharma, healthcare and biotech sectors led
the deal activity accounting for more than half of the total deal value driven
by Radiant — Max Healthcare deal amounting to $1.3 billion. On the other hand,
IT sector led the deal pack with eight deals valuing at $42 million, spread
across IT solutions, mobile VAS, BPO, and hardware segments. Education,
agriculture and manufacturing sectors have been active this month recording
big-ticket transactions valued over $100 million.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SOME SHAREHOLDERS QUESTION JET REVIVAL PLAN, CRITICISE LACK OF
TRANSPARENCY
Some shareholders of Jet
Airways questioned the airline’s resolution plan and criticised the management
for lack of transparency and giving a raw deal to minority shareholders Last
week, the airline’s board approved a draft resolution plan which seeks to raise
Rs 8,500 crore through various options, including issue of fresh shares, sale
of aircraft, among others. Lenders would receive 114 million shares upon
conversion of debt for Rs 1 and secure 50 per cent stake in the company as part
of the resolution plan. The enabling proposal for the same was put to vote at
the extraordinary general meeting (EGM) on Thursday. The airline’s Founder
Chairman Naresh Goyal did not attend the meeting, which was chaired by
Executive Director Gaurang Shetty. Approvals from various lenders are expected,
beginning the first week of March. Banks will be issued cumulative redeemable
preference shares upon debt conversion and will also infuse fresh equity into
the airline along with Goyal and Etihad Airways. The airline has a debt of
around Rs 7,600 crore, which includes Rs 1,700 crore of aircraft loan. Domestic
banks have an exposure of over Rs 3,500 crore. The airline’s Deputy Chief
Executive Officer Amit Agarwal denied that minority shareholder interests are
being suppressed and said the management was working to make the airline
efficient and sustainable He said announcements can only be made upon receipt
of various approvals.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
No comments:
Post a Comment