ECBs - liberalisation

RBI has vide its notification dated 19th September, 2018 liberalised the External Commercial Borrowing policy to the following extent:

(i) ECBs by companies in manufacturing sector: As per the extant norms, ECB up to USD 50 million or its equivalent can be raised by eligible borrowers with minimum average maturity period of 3 years. It has been decided to allow eligible ECB borrowers who are into manufacturing sector to raise ECB up to USD 50 million or its equivalent with minimum average maturity period of 1 year.

(ii) Underwriting and market making by Indian banks for Rupee denominated bonds (RDB) issued overseas: Presently, Indian banks, subject to applicable prudential norms, can act as arranger and underwriter for RDBs issued overseas and in case of underwriting an issue, their holding cannot be more than 5 per cent of the issue size after 6 months of issue. It has now been decided to permit Indian banks to participate as arrangers/underwriters/market makers/traders in RDBs issued overseas subject to applicable prudential norms.

So this is a boost for manufacturing sector in line with the Make in India policy of the government. 

RBI notification can be found at https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11375&Mode=0

strike off companies

Presently when any company has been struck off by the MCA for any reasons, the only option available is to file a petition with the NCLT to revive the company. This is a time consuming process as well as effort involved. Many such companies have been rendered as "strike off" stage due to various reasons beyond the control of the existing Directors. 

Now since July 2018 the additional filing fees for annual forms is on the basis of Rs.100 per day calculation and it is going to hurt companies to remain as non compliant. Filing of petition with NCLT involves time and cost and also clogging of the judicial system with routine applications. NCLT is already over burdened due to the number of cases filed under the Insolvency & Bankruptcy Code, 2016 and other petitions like mergers, amalgamations, oppression cases. In such scenario what is the justification for routine applications involving revival of strike off companies to be filed with NCLT it is not clear and not justified also. 

Many companies have various reasons and these are legacy reasons which are genuine in nature due to which they failed in filing the annual documents. Admitted that they are non compliant and have suffered much due to the Director's DIN becoming de-activated. MCA should now look at an easy process for revival of strike off companies at the ROC/ RD level without involving the judicial bodies in this regard. They can levy a fine or penalty similar to the compounding fines and close the matter. Anyways MCA is gaining due to higher fees from the per day fee structure so the companies are already being penalised in this regard. They should not be further penalised by forcing them to seek redressal from the judicial courts of the country. 

DIR-3-KYC extension

MCA has vide its notification dated 20th September, 2018 given a limited time exemption to file form DIR-3-KYC for all DIN holders albeit with a reduced fee of Rs.500/-. This window is open from 21st October, 2018 to 5th October, 2018 after which the filing fees of Rs.5000/- will become applicable.

I think they should have continued with the fees of Rs.500/- only throughout instead of hiking it to Rs.5000/- from 6th October, 2018 onwards. 

Personal Injuries

Personal Injuries is a legal thriller from Scott Turow. Robbie Feaver is  a personal injury lawyer in Kindle County and he is being used by FBI to go undercover and ferret out other judges to whom regular paybacks take place in order to deliver favourable orders. There is a whole of emotional drama to this story, with his wife dying of ALS, a female agent attached to him, his best friend in his firm whom he wants to protect at any cost. The story appears to be on weak ground at many places, though it started off very well. The narrative of Scott Turow, however is extremely good. Goodreads 3/5 

strike off companies - no business

MCA has been striking off companies for not filing its annual returns and annual financial statements for a period of 3 years consecutively. Also lately it has been issuing show cause notices to companies who have not done any business for the last two years, to strike their names off from the register of companies. While there is a provision in the companies act, 2013 in section 248 for issuing of such show cause notices, the moot question to ask is whether it is just to send show cause notices to companies just because they have no business income for the last 2 years. According to me it is grossly unfair because businesses have upturns and downturns and when there is downturn, it could last lot more years, sometimes half a decade also. When there is general recession, then businesses fail, like in the real estate industry there is a recession for so many years. Shipping industry has its worst over woes for nearly a decade or so. Businesses suffered huge setback due to the ill advised demonetisation and there was disruption in the business due to the GST rollout. Plus industry itself goes through one crises after another, there could be technological changes taking place rapidly, disruption etc. which could all affect the business in one way or another. Industries are starved of bank funds due to which they are unable to do capex or even meet working capital requirements. Therefore in light of the above, what is the justification for issuing strike off show cause notices to companies just because they have no business income for two consecutive years. Especially when the companies have been doing the compliance all properly all along - appointing auditors, filing the statutory annual forms and event based forms etc. 

LLP registration

MCA has vide its notification dated 18th September, 2018 streamlined the process of incorporation of Limited Liability Partnerships (LLP) in India. Hitherto, for more than 10 months, the LLP incorporation had come to a standstill as MCA had stopped issuing stand-alone Director Identification Number (DIN) to individuals.

1) Now name reservation for a LLP can be done by a web service called LLP-RUN. Unfortunate part is that this RUN will be governed by their Central Reservation Centre (CRC) which is a retrograde step, in my view. That section is manned by totally incompetent people who have no idea at all about business incorporation.

2) Form 2 for incorporation of LLP will be replaced by FiLLiP which will carry the DIN allotment process also. So this is good move.

3) Similarly minor amendments have been made to Addendum to Form 2 (which will be known as Addendum to Form FiLLiP, form 5 (notice for change of name), form 17 (conversion of general partnership firm into LLP) and form 18 (conversion of a private company/ unlisted public company into LLP) consequent to the above amendments. It would be interesting to note form 18 amendments as with the proposed mandatory demat of securities of unlisted public limited companies from 2nd October onwards, many unlisted public companies will seek to convert themselves into LLPs / private companies to avoid that compliance. They might seek to convert themselves into private companies but there is always a lurking fear the mandatory demat of securities could be extended to private companies as well, in the future.

All these changes will take effect from 2nd October, 2018.  

Registration of satisfaction of charges

MCA has vide its notification dated 5th July, 2018 amended the Companies (Registration of Charges), Rules, 2014 wherein it has now allowed the satisfaction of charges to be filed within a period of 300 days from the date of satisfaction/ date of payment.

Hitherto, this period was 30 days from the date of satisfaction and if filed beyond that date, then company had to approach the Regional Director with an application for condonation of delay beyond 30 days, pay fine related to that in the RD order and then the satisfaction would take effect.

Of course, any filing beyond 30 days from the date of satisfaction would attract the additional filing fee as specified in the relevant Rules.

This is a good move by the government as an Ease of Doing Business.