c.v.o. ca's news & views brief update on sebi and .... legal updates.pdf · guidelines for...

C.V.O. CA'S NEWS & VIEWS

BRIEF UPDATE ON SEBI AND CORPORATE LAW

by CA IP Neha Rajen Gada and CA IP Rajen Hemchand Gada

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SEBI

A. NOTIFICATIONS

1. Securities and Exchange Board of India (Listing Obligations and Disclosure Require-ments) (Fifth Amendment) Regulations, 2019

[Issued by the Securities and Exchange Board of India vide Notification Circular No. SEBI/LAD-NRO/GN/2019/45 dated December 26, 2019]

Top 500 listed entities by market capitalisation are required to provide business responsibility report describing the initiatives taken by them from an environmental, social and governance perspective, in the format as specified by the Board from time to time. This limited has now been increased to top 1000 companies. However, SMEs and other listed entities may provide this information on voluntary basis.

Record dates in case of rights issue are now required to be intimated atleast three (3) days in advance excluding the date if intimation and record date.

2. Securities and Exchange Board of India (Listing Obligations and Disclosure Require-ments) (Amendment) Regulations, 2020

[Issued by the Securities and Exchange Board of India vide Notification Circular No. SEBI/LAD-NRO/GN/2020/02 dated January 10, 2020]

The top 500 companies had to differentiate the role of Chairman such that he / she shall be a non- executive director and shall not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013. This provision was earlier effective from April 01, 2020. This provision is now being made effective from April 01, 2022.

B. CIRCULARS

1. Guidelines for filing of placement memoran-dum - InvITs proposed to be listed

[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/DDHS/DDHS/ CIR/P/2019/161 dated December 24, 2019]

SEBI has laid down the procedure for listing of privately placed InvITs. Broadly the steps are:

1. Filling of draft placement memorandum ('PM') with SEBI and Stock Exchange through a merchant banker ('MB') not less than 30 days prior to opening of the issue;

2. MB to submit a due diligence certificate in prescribed format alongwith the PM (PM shall contain disclosures as prescribed);

3. SEBI to provide its observations within 15 days of the latest prescribed events; and

4. MB should ensure all observations are suitably commented upon in the PM and a due diligence certificate has to be filed by the MB in prescribed format.

2. Format on Statement of Deviation or Variation for proceeds of public issue, rights issue, preferential issue, Qualified Institutions Placement (QIP) etc.

[Issued by the Securities and Exchange Board of India vide Circular No. CIR/CFD/CMD1/162/2019 dated December 24, 2019]

SEBI has prescribed a common format for reporting of deviations or variations in utilization of proceeds from public issue, rights issue, preferential issue, Qualified Institutions Placement (QIP) etc. The reporting has to be done alongwith declaration of financial results.

VOL. 23 - NO. 7 - FEBRUARY 2020


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3. Stewardship Code for all Mutual Funds and all categories of AIFs, in relation to their investment in listed equities

[Issued by the Securities and Exchange Board of India vide Circular No. CIR/CFD/CMD1/ 168 /2019 dated December 24, 2019]

Institutional Investors in capital markets such as Mutual Funds, AIFs, etc. are expected to shoulder greater responsibility towards their clients / beneficiaries by enhancing monitoring and engagement with their investee companies. Such activities are commonly referred to as 'Stewardship Responsibilities' of the institutional investors and are intended to protect their clients' wealth. SEBI has directed All Mutual Funds and all categories of AIFs shall mandatorily follow the Stewardship Code in relation to their investment in listed equities with effect from April 01, 2020.

4. Circular on Investment in units of Mutual Funds in the name of minor through guardian and ease of process for transmission of units

[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/DF3 /CIR/P/2019/166 dated December 24, 2019]

SEBI has mandated that all investments in Mutual Funds in the name of the minor will now have to be undertaken through the bank account of a minor or minor jointly with guardian. The bank account for the purposes of redemption will also have to be in the name of such minor or minor turned major's account.

5. Measures to strengthen the conduct of Investment Advisers (IA).

[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/IMD/DF1/ nCIR/P/2019/169 dated December 27, 2019]

In order to further strengthen the conduct of IAs, while providing investment advice and to protect the interest of investors seeking their advice, the IAs shall comply with the following:

(a) No free trials of any products / services to be provide to prospective clients;

(b) No part payment of fees to be accepted for any product / services;

(c) Risk profiling should be complete based on the information provided by the client;

(d) Client consent to be obtained on the complete risk profile through registered email or physical document;

(e) Fees to be received strictly by account payee crossed cheques / demand draft or by way of direct credit into their bank account through NEFT/ RTGS/IMPS/UPI;

(f) Fees should not accepted by way of cash deposits; and

(g) Complaints status in prescribed format should be disclosed on Investment Adviser's website.

6. Format for Statement indicating Deviation or Variation in the use of proceeds of issue of listed non-convertible debt securities or listed non-convertible redeemable preference shares (NCRPs)

[Issued by the Securities and Exchange Board of India vide Circular No. SEBI/HO/DDHS/08/2020 dated January 17, 2020]

SEBI has prescribed a common format for reporting of deviations or variations in utilization of proceeds from issue of listed non-convertible debt securities or listed non-convertible redeemable preference shares (NCRPs). The reporting has to be within 45 days from the end of half year. 7. Guidelines for rights issue of units by a listed Real Estate Investment Trust (REIT) & Infrastruc-ture Investment Trust (InvIT)

[Issued by the Securities and Exchange Board of India vide Circulars No. SEBI/HO/DDHS/ DDHS/CIR/P /2020/09 & SEBI /HO/DDHS /DDHS/CIR/P/2020/10 dated January 17, 2020]

The guidelines deal with conditions of issue, appointment of merchant bankers and other intermediaries, offer letter (draft and final), application, pricing of units, timelines, manner of issuance, subscription, allotment and listing of units and restriction on further capital issues.



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CORPORATE LAW

A. RULES

1. Companies (appointment and managerial

personnel) Amdt Rules 2020

[Issued by Ministry of Corporate Affairs vide

Notification No. G.S.R. 13(E) dated January 03,

2020]

The minimum paid-up capital limit for appointment

of whole time Company Secretary in a Private

Limited Company has been increased to Rs. 10.00

crores. Further, secretarial audit report will now also

be required for every company having outstanding

loans or borrowings from banks or public financial

institutions of one hundred crore rupees or more.

B. CIRCULARS

1. Relaxation of additional fees and extension of

last date of filing of CRA-4 (cost audit report) for

FY 2018-19 under the Companies Act, 2013 - reg.


General Circular No. 17/2019 dated December 30,

2019]

The last datc for filing of CRA-4 (cost audit report) for

all eligible companies for the financial year 2018-19,

without payment of additional fee, has been further

extended till 29.02.2020.

2. Extension for filing BEN-2


General Circular No. 1/2020 dated January 01,

2020]

The time limit for filing of e-form BEN-2 is extended to 31.03.2020.

CA Manoj Chunilal Shah CA Viral Vinod Satra

Compiled by:FEMAUPDATES


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Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2019

In Regulation 4 after sub regulation (e) following is inserted –

“(ea) re-export of leased aircraft/ helicopter and/or engines/auxiliary power units (APUs) re-possessed by overseas lessor and duly de-registered by the Directorate General of Civil Aviation (DGCA) on the request of Irrevocable Deregistration and Export Request Authorisation (IDERA) holder under 'Cape Town Convention' subject to permission by DGCA/Ministry of Civil Aviation for such export/s.”

A new sub regulation is added to the already existing scenarios of export of goods/software wherein furnishing

of declaration is not required.


Compiled by:

CA Ashwin Bhawanji Shah

RERA UPDATESUPDATE ON REAL ESTATE (REGULATION & DEVELOPMENT ) ACT , 2016

RECENT JUDICIAL PRONOUNCEMENT ON SECTION 7 (3) PRONUOUNCED BY MAHARERA AUTHORITY

a. Shahbaz Dawood Mukadam Vs Hitech Haifizi Town Developers

b. Varghese Chacko & others Vs Nirmal Life Style (Kalyan) Pvt Ltd

c. Tagore Nagar Anjali Buyers Association Vs Aditya Enterprises

Relief Sought by allottees

a. Possession of the flat with interest for delayed possession u/s 18 of the Act.

b. Refund of principal with interest and compensation by choosing exit option for delayed possession u/s 18 of the Act.

The common facts were as under :-

a. There has been delay in handing over the possession since long time.

b. The revised timeline mentioned by promoter on web site of Maharera while registering the project , has expired.

c. Promoter has not filed application u/s 6 or 7 (3) of the Act for granting further extension of the timeline for completion of the project.

Section 6 of the Act provides for extension of the project complet ion t imel ine which are summarised as under :-

a. Authority are empowered to grant extension the project timeline on application of promoter due to force majeure.

b. force majeure means war, flood, drought, fire, cyclone, earthquake or any other calamity caused by nature affecting regular development of the real estate project.

c. The maximum permissible extension of the timeline shall in no case exceed one year from the timeline originally mentioned by the promoter.

d. The prescribed fees applicable for registration of project needs to be paid by the promoter.

However, Authority have been taking lenient view and automatic extension of one year of the timeline have been granted without looking into the force majeure conditions as prescribed by section 6 of the Act.

Promoters were not allowed in any case extension beyond one year even after looking at force majeure conditions or factors beyond the control of the promoter.

The provisions of section 6 restricting the extension up to only one year is challenged as unworkable, unreasonable and unconstitutional in the Writ Petition No.2737/2017 Neelkamal Realtors suburban Pvt Ltd Vs Union of India.

The matter had been elaborately discussed by Hon'ble High Court, Mumbai in the said writ petition and authority had been directed to use section 7(3) route for further grant of extension of timeline based on merits of the facts.

Pronouncement by the Authority in the above matters :-

a. Project as of date on account of non extension has lapsed.

b. Promoter to form association of allottees and share contact details of allottees.


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c. Respondent is directed to approach for further extension of timeline of the project.

d. If the promoter is unable to complete the project then association contemplate action u/s 7 & 8 of the Act.

e. Complainant in one sense are equity holders as they are interested in completion of project which involves financial issues.

f. It is necessary for Maharera to first decide extension/revocation of the project before any compliant could be considered.

g. Complaint stand disposed off and complainant is at liberty to re approach Maharera once the project is revived.

h. Relief sought for refund of principal amount paid with interest/ interest for delayed possession and compensation remains unaddressed.

FOOD FOR THOUGHT :-

1. Whether Authority order is sustainable in law ?

2. Whether Authority can simply ask association to initiate action u/s 7 of the Act and remain passive spectator ?

3. Whether preamble and main objects of introduction of RERA law are being defeated ?

Keep watching for critical analysis on Section 6, 7, 8 of the Act in the next issue

To be continued ………


Compiled by:

CA Haresh Padamshi Kenia

DIRECT TAXES LAW UPDATE

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INCOME-TAX (SIXTEENTH AMENDMENT) RULES, 2019 - INSERTION OF RULE 119AA

NOTIFICATION NO.105/2019 [G.S.R.960(E), (F.NO.370142/35/2019-TPL)], DATED 30-12-2019

In exercise of the powers conferred by section 269SU read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend Income-tax Rules, 1962, namely:—

(1) These rules may be called the Income-tax (16th Amendment) Rules, 2019.

(2) They shall come into force from 1st day of January, 2020.

(3) In the Income-tax Rules, 1962, after rule 119A, the following rule shall be inserted, namely:—

"119AA. Modes of payment for the purpose of section 269SU.—Every person, carrying on business, if his total sales, turnover or gross receipts, as the case may be, in business exceeds fifty crore rupees during the immediately preceding previous year shall provide facility for accepting payment through following electronic modes, in addition to the facility for other electronic modes of payment, if any, being provided by such person, namely:—

(i) Debit Card powered by RuPay;

(ii) Unified Payments Interface (UPI) (BHIM-UPI); and

(iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code).".

SECTION 139AA OF THE INCOME-TAX ACT, 1961 – INTIMATION OF AADHAAR AND LINKAGE WITH PAN - AMENDMENT IN NOTIFICATION NO. S.O. 3539(E), DATED 28-9-2019

NOTIFICATION S.O.4708(E) [NO.107/2019 [F.NO.225/75/2019-ITA.II), DATED 30-12-2019

The date for intimation of Aadhaar Number and linkage of Aadhaar Number with PAN has been extended till 31-03-2020.

SECTION 276C, READ WITH SECTIONS 276B, 276BB, 276CC OF THE INCOME-TAX ACT, 1961 - OFFENCES AND PROSECUTION - WILFUL ATTEMPT TO EVADE TAX, ETC. - COMPOUNDING OF OFFENCES - ONE TIME MEASURE - EXTENSION OF TIME LIMIT

CIRCULAR NO. 1/2020 [ F. NO. 285/08/2014/-IT(INV. V)/639] DATED 3-1-2020

Reference is invited to the Circular No 25/2019 F No 285/08/2014-IT(Inv. V) dated 09.09.2019 whereby, the condition for filing of applications for compounding of offences under the Income-tax Act, 1961 (the Act), to be filed within 12 months from filing of complaint in the court, was relaxed by CBDT till 31.12.2019 as a one-time measure.

The CBDT has received references from the field formation, including requests made by the 1CAI chapters, wherein, it has been brought to the notice of CBDT that the taxpayers could not avail the benefit of the one-time relaxation window due to genuine hardships.


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With a view to give a final opportunity to such taxpayers, and to reduce the pendency of existing prosecution cases before the courts, the CBDT in exercise of powers u/s 119 of the Act, read with explanation below sub-section (3) of section 279 of the Act, issues this Circular, whereby para 4.1 (i) of the above circular stands modified as under:

"Such application .shall be filed before the Competent Authority i.e. the Pr. CCIT/CCIT/Pr. DGIT/DGIT concerned, on or before 31.1.2020"

It is clarified that all other prescriptions/conditions of the Circular No. 25/2019 shall remain unchanged and shall apply to all such applications.

SECTION 119 OF THE INCOME-TAX ACT, 1961 - CENTRAL BOARD OF DIRECT TAXES - INSTRUCTION TO SUBORDINATE AUTHORITIES - CONDONATION OF DELAY IN FILING OF FORM NO. 10B FOR ASSESSMENT YEAR 2018-19 AND SUBSEQUENT YEARS

CIRCULAR NO. 2/2020 [F. NO. 197/55/2018-ITA-I], DATED 3-1-2020

Representations have been received by the Board/field authorities stating that Form No. 10B could not be filed along with the return of income for A.Y. 2016-17 and A.Y. 2017-18. It has been requested that the delay in filing of Form No. 10B may be condoned. Previously, vide instruction in F.No. 267/482/77-IT(part) dated 9-2-1978, the CBDT had authorized the ITO to accept a belated audit report after recording reasons in cases where some delay has occurred for reasons beyond the control of the assessee.

Accordingly, the CBDT issued Circular No. 10/2019 circulated through F.No. 197/55/2018-ITA-I in supersession of earlier circular/Instruction issued in this regard, and with a view to expedite the disposal of applications filed by such trust or institution for condoning the delay in filing Form No. 10B and in the exercise of the powers conferred under section 119(2) of the Act, the Central Board of Direct Taxes vide Circular No. 10/2019 dated 23rd May, 2019 and Circular No. 28/2019 dated 27th September, 2019 both issued vide F.No. 197/55/2018-ITA-I has directed that :—

(i) The delay in filing of Form No. 10B for A.Y. 2016-17 and A.Y. 2017-18, in all such cases where the Audit Report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned.

(ii) In all other cases of belated applications in filing Form No. 10B for years prior to AY. 2018-19, The commissioner of Income-tax are authorized to admit and dispose off by 31-3-2020 such applications for condonation of delay u/s 119(2)(b) of the Act. The Commissioner will while entertaining such belated applications in filing Form No. 10B shall satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.

In addition to the above, it has also been decided by the CBDT that where there is delay of upto 365 days in filing Form No. 10B for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are hereby authorized to admit such belated applications of condonation of delay under section 119(2) of the IT Act and decide on merits.

The Commissioners of Income-tax shall, while entertaining such belated applications in filing Form No. 10B, satisfy themselves that the assessee was prevented by reasonable cause from filing such application within the stipulated time.

SECTION 119 OF THE INCOME-TAX ACT, 1961 - CENTRAL BOARD OF DIRECT TAXES - INSTRUCTION TO SUBORDINATE AUTHORITIES - CONDONATION OF DELAY IN FILING OF FORM NO. 10 AND FORM NO. 9A FOR ASSESSMENT YEAR 2018-19 AND SUBSEQUENT YEARS

CIRCULAR NO. 3/2020 [F. NO. 197/55/2018-ITA-I], DATED 3-1-2020


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Representations have been received by the Board/field authorities stating that Form No. 9A and Form No. 10 could not be filed along with the return of income starting from AY. 2016-17, which was the first year of e-filing of these forms, and for subsequent assessment years also. It has been requested that the delay in filing of Form No. 9A and Form No. 10 may be condoned under section 119(2)(b) of the Act.

Accordingly, in suppression of earlier Circulars/Instructions issued in this regard, with a view to expedite the disposal of application filed by the trust or institution for condoning the delay and in exercise of the powers conferred under section 119(2)(b) of the Act, the Central Board of Direct Taxes has already authorized the Commissioners of Income-tax to admit belated applications in Form No. 9A and Form No. 10 in respect of Assessment Year 2016-17 and Assessment Year 2017-18 where such Form No. 9A and Form No. 10 are filed after the expiry of the time allowed under the relevant provisions of the Act vide Circular No. 7/2018 dated 20-12-2018 and Circular No. 30/2019 dated 17-12-2019 both issued vide F.No. 197/55/2018-ITA-I.

In addition to the above, it has also been decided by the CBDT that where there is delay of up to 365 days in filing Form No. 9A and Form No. 10 for Assessment Year 2018-19 or for any subsequent Assessment Years, the Commissioners of Income-tax are hereby authorized to admit such belated applications of condonation of delay under section 13 9(2) of the IT Act and decide on merits.

The Commissioners of Income-tax shall, while entertaining such belated applications in Form No. 9A and Form No. 10, satisfy themselves that the assessee was prevented by reasonable cause from filing of applications in Form No.9A and Form No. 10 within the stipulated time. Further, in respect of Form No. 10, the Commissioners shall also satisfy themselves that the amount accumulated or set apart has been invested or deposited in any one or more of the forms or modes specified in sub-section (5) of Section 11 of the Act.

SECTION 139 OF THE INCOME-TAX ACT, 1961 - RETURN OF INCOME - CBDT GRANTS RELAXATION IN ELIGIBILITY CONDITIONS FOR FILING OF INCOME-TAX RETURN FORM-1 (SAHAJ) AND FORM-4 (SUGAM) FOR ASSESSMENT YEAR 2020-21

PRESS RELEASE DATED 09-01-2020

In order to ensure that the e-filing utility for filing of return for assessment year (A.Y) 2020-21 is available as on 1st April, 2020, the Income-tax Return (ITR) Forms ITR-1 (Sahaj) and ITR-4 (Sugam) for the A.Y 2020-21 were notified vide notification dated 3rd January, 2020. In the notified returns, the eligibility conditions for filing of ITR-1 & ITR-4 Forms were modified with intent to keep these forms short and simple with bare minimum number of Schedules. Therefore, a person who owns a property in joint ownership was not made eligible to file the ITR-1 or ITR-4 Forms. For the same reason, a person who is otherwise not required to file return but is required to file return due to fulfilment of one or more conditions in the seventh proviso to section 139(1) of the Income-tax Act, 1961 (the Act), was also not made eligible to file ITR-1 Form.

After the aforesaid notification, concerns have been raised that the changes are likely to cause hardship in the case of individual taxpayers. The matter has been examined and it has been decided to allow a person, who jointly owns a single house property, to file his/her return of income in ITR-1 or ITR-4 Form, as may be applicable, if he/she meets the other conditions. It has also been decided to allow a person, who is required to file return due to fulfilment of one or more conditions specified in the seventh proviso to section 139(1) of the

Disclaimer: The views / opinions expressed in the articles are purely of the writers. The readers are requested to take proper professional guidance before abiding the views expressed in the articles. The publisher, the editor and the association disclaim any liability in connection with the use of the information mentioned in the articles.

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