registration of charges

MCA has made changes to section 77 of the Companies Act, 2013 vide the Companies Ordinance, 2019 which has been gazetted on 12th January, 2019.

Earlier section 77 allowed charges to be filed within 300 days of its creation. Now that 300 days period has been reduced to 60 days. Under the old Companies Act, 1956, the charges were required to be filed within 30 days of its creation failing which the matter has to be settled by filing a extension of time application to the then Company Law Board.

Under the Companies Act, 2013 when it was first enacted, this period was enhanced to 300 days as a measure of ease of doing business.

Now again it has been reduced to 60 days from the date of its first creation.

If the charges are created before the Companies Act Ordinance 2019 then still the charges can be filed within 300 days, but if the charges are created after the Ordinance has come into force, i.e. 12th January, 2019, then 60 days is the time limit. Even for the 60 days, there will be additional filing fees after 30 days.

If the registration is not made within 300 days under the old provision, then it can still be made within 6 months of the Ordinance coming into force with additional filing fees being paid. This means that the government has given sufficient time for filing of the charges, if the charges were created before the Ordinance came into force - 300 days + 6 months after the ordinance

If the charges are created after the Ordinance has come into force and still the form is not filed within 60 days, then on application further 60 days is given, but here the additional fees will be on ad valorem basis. The ad valorem basis will be prescribed by the government.

appointment of KMP

Section 203(5) of the Companies Act, 2013 has been amended vide Companies Ordinance, 2019 as follows:

Section 203(5) after amendment reads as follows:

"If any company makes a default in complying with the provisions of this section, such company shall be liable to a penalty of Rs.500,000 and every director and KMP of the company who is in default, shall be liable to a penalty of Rs.50,000 and where default is a continuing one, with a further penalty of Rs.1000/- per day after the first day, during which such default continues but not exceeding Rs.500,000/-.

The earlier section mentioned penalty of not less than Rs.100,000 on the company, but which may extend to Rs.500,000/- Now it is one figure of Rs.500,000/- All other provisions are the same except the wordings earlier was "shall be punishable with fine" has been replaced with  "shall be liable to penalty".

Unable to comprehend the meaning of this phrase change.

Section 203 pertains to appointment of managing director, CEO or manager, company secretary and chief financial officer in certain specified companies. The specifications are contained in Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 wherein it is stated that every listed company and every public company having paid up share capital of Rs.10 crore or more shall have whole-time key managerial personnel. It also applies to private company having paid up share capital of Rs.5 crores or more and they are required to appoint whole time company secretary.

External Commercial Borrowings

RBI has vide its notification dated 16th January, 2019 rationalised the ECB framework to improve the ease of doing business.

Salient features of the new ECB framework are as follows:

1. Merging of Tracks: Merging of Tracks I and II as “Foreign Currency denominated ECB” and merging of Track III and Rupee Denominated Bonds framework as “Rupee Denominated ECB”.
2. Eligible Borrowers: This has been expanded to include all entities eligible to receive FDI. Additionally, Port Trusts, Units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, viz., registered not for profit companies, registered societies/trusts/cooperatives and non-government organisations can also borrow under this framework.
3. Recognised Lender: The lender should be resident of FATF or IOSCO compliant country. Multilateral and Regional Financial Institutions, Individuals and Foreign branches / subsidiaries of Indian banks can also be lenders as detailed in Annex.
4. Minimum Average Maturity Period (MAMP): MAMP will be 3 years for all ECBs. However, for ECB raised from foreign equity holder and utilised for specific purposes, as detailed in the Annex, the MAMP would be 5 years. Similarly, for ECB up to USD 50 million per financial year raised by manufacturing sector, which has been given a special dispensation, the MAMP would be 1 year as given in the Annex.
5. Late Submission Fee (LSF) for delay in Reporting: Any borrower, who is otherwise in compliance of ECB guidelines, except for delay in reporting drawdown of ECB proceeds before obtaining LRN or Form ECB 2 returns, can regularize the delay by payment of LSF as per the laid down procedure.

4. ECB up to USD 750 million or equivalent per financial year, which otherwise are in compliance with the parameters and other terms and conditions set out in the new ECB framework, will be permitted under the automatic route not requiring prior approval of the Reserve Bank. The designated AD Category I bank while considering the ECB proposal is expected to ensure compliance with applicable ECB guidelines by their constituents. Any contravention of the applicable provisions will invite penal action or adjudication under the Foreign Exchange Management Act, 1999.

The copy of the RBI notification can be found here

Cartelisation - Dry Cell batteries market

The Competition Commission of India (‘CCI’) passed a Final Order imposing penalty on Panasonic Energy India Co. Limited (‘Panasonic’) and Godrej and Boyce Manufacturing Co. Limited (‘Godrej’) for colluding to fix prices of zinc-carbon dry cell batteries in India. In respect of Panasonic, CCI granted 100 percent reduction in penalty by invoking the provisions of Section 46 of the Competition Act, 2002 (‘the Act’) read with the Competition Commission of India (Lesser Penalty) Regulations, 2009 (‘Lesser Penalty Regulations’).  

The case was taken-up by CCI suo motu under the provisions of Section 19 of the Act based on the disclosure made by Panasonic under Section 46 of the Act read with the Lesser Penalty Regulations. From the evidence collected in the case, which included an anti-competitive clause in the written agreement entered into between Panasonic and Godrej for supply of batteries, and e-mail communications between the key managerial personnel of the two of them, CCI found existence of a bi-lateral ancillary cartel between Panasonic and Godrej in the market of institutional sales of dry cell batteries. It was found that Panasonic, which had a primary cartel with Eveready Industries India Ltd. and Indo National Limited as established in Suo Motu Case No. 01 of 2016 by CCI, having fore-knowledge about the time of price increase to be affected by this primary cartel, used such fore-knowledge as leverage to negotiate and increase the basic price of the batteries sold by it to Godrej. Further, Panasonic and Godrej, in accordance with the prices of the primary cartel, used to agree on the market price of the batteries being sold by them, so as to maintain price parity in the market.

Based on the above, CCI found that Panasonic and Godrej have indulged in the anti-competitive conduct of price co-ordination, in contravention of the provisions of Section 3 (3) (a) read with Section 3 (1) of the Act. It was observed that such conduct continued from 13.01.2012, when Panasonic and Godrej entered into a written agreement, till 30.11.2014, when Godrej terminated the said agreement.

Considering all the relevant factors, penalty on Panasonic was levied at the rate of 1.5 times of its profit for each year from January 2012 to November 2014 amounting to INR 31.76 crores, and on Godrej at the rate of 4 percent of its turnover for each year from January 2012 to November 2014 amounting to INR 85 lacs. Also, considering the totality of facts and circumstances of the case, penalty leviable on the individual officials of Panasonic and Godrej was computed at the rate of 10 percent of the average of their income for the preceding three years. As to Panasonic, to the officials of Panasonic also, 100 percent reduction in penalty was granted under the provisions of Section 46 of the Act read with the Lesser Penalty Regulations.

penalty on Chemists & Druggists

The Competition Commission of India (‘Commission’) has found the Chemists and Druggists Association of Baroda (‘CDAB’) to be in contravention of the provisions of the Competition Act, 2002 (‘Act’). A complaint/information was filed with the Monopolies and Restrictive Trade Practices Commission (MRTPC) in 2009 alleging that the CDAB has indulged in restrictive trade practices. The allegations were that the CDAB, through its practices, is limiting and controlling the supply of drugs and medicines in the market by mandating ‘No Objection Certificate’ (‘NOC’) prior to appointment of stockists and payment of ‘Product Information Service’ (‘PIS’) charges prior to introduction of new products in the market by pharmaceutical companies. Besides, there were allegations that CDAB was fixing the trade margins for the wholesalers/retailers. Subsequently, the case was transferred to the Commission by MRTPC under the provisions of Section 66(6) of the Act. The Commission after forming a prima-facie opinion directed the office of Director General (hereinafter, the ‘DG’) to conduct investigation into the matter. 

Investigation carried-out by the DG established contravention on part of the CDAB. After detailed enquiry, the Commission passed an order dated 05.09.2012 wherein it was found that the CDAB was imposing the requirement of mandatory NOC and was also fixing margins for the wholesalers and retailers by enforcing the norms laid down by AIOCD. The same was found to be in contravention of the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act. Accordingly, the Commission imposed a monetary penalty, in addition to cease and desist directions, under Section 27 of the Act.

Pursuant to an appeal filed by CDAB, the erstwhile Hon’ble COMPAT, vide its order dated 18.11.2016, set aside the Commission’s order dated 05.09.2012 on a procedural issue and remanded the matter back to the Commission for fresh adjudication.

Accordingly, the matter was considered afresh. After allowing CDAB with an opportunity to cross-examine various witnesses, the Commission allowed parties to file their written submissions and conducted a detailed hearing in the matter. Based on the material available on record, the Commission found that the CDAB was indulging in the anti-competitive practice of insisting NOC prior to the appointment of new stockists by pharmaceutical companies and was also fixing/prescribing the trade margins during the relevant time period, in contravention of the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act.

Accordingly, CDAB was directed to cease and desist from indulging in the aforesaid anti-competitive practice. Further, the Commission imposed a monetary penalty of Rs. 32,724/- calculated at the rate of 10% of the average relevant income of CDAB for the relevant period, under the provisions of Section 27 of the Act.

The detailed Order can be seen at the Commission’s website www.cci.gov.in.

Interest Equalisation Scheme for exporters

RBI circular dated 11th January, 2019 wherein they have now included merchant exporters also in the category to be eligible for interest equalisation scheme on post and pre shipment export credit. The merchant exporters will be allowed interest equalisation @ 3% on credit for export of products covered under 416 identified tariff lines under the Scheme.

Basically the exporters will get a rebate on the interest on their borrowings for exports.

This notification is available here

The modus operandi of the interest equalisation scheme is as follows:

A. Procedure for passing on the benefit of interest equalisation to exporters:

1. For the period April 1, 2015 to November 30, 2015, banks shall identify the eligible exporters as per the Government of India scheme and credit their accounts with the eligible amount of interest equalisation.
2. From the month of December 2015 onwards, banks shall reduce the interest rate charged to the eligible exporters as per our extant guidelines on interest rates on advances by the rate of interest equalisation provided by Government of India.
3. The interest equalisation benefit will be available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue. However, the interest equalisation will be available to the eligible exporters only during the period the scheme is in force.

B. Procedure for claiming reimbursement of interest equalisation benefit already passed on to eligible exporters

1. The sector-wise consolidated reimbursement claim for the period April 1, 2015 to November 30, 2015 for the amount of interest equalisation already passed on to eligible exporters should be submitted to RBI by December 15, 2015.
2. The sector-wise consolidated monthly reimbursement claim for interest equalisation for the period December 2015 onwards should be submitted in original within 15 days from the end of the respective month, with bank’s seal and signed by authorised person, in the prescribed format given in Annex I.
3. The claims should be accompanied by an External Auditor’s Certificate (with stamp and membership number) certifying that the claim for interest equalisation of Rupees…………….. for the month ended ………….. has been verified and found to be strictly in accordance with the provisions of the Government scheme enclosed with the circular DBR.Dir.BC.No.62/04.02.001/2015-16 dated December 4, 2015. Claims for reimbursement will be considered for settlement only after receipt of this certificate.
4. The claims may be submitted to the Chief General Manager, Department of Banking Regulation, Reserve Bank of India, Central Office, Shahid Bhagat Singh Marg, Fort Mumbai – 400 001.
5. The reimbursement of interest equalisation claim will be made as and when the funds are received from Government of India

Copy of this notification can be accessed from here

For urban co-operative banks, the procedure is as follows:

A. Procedure for passing on the benefit of interest equalisation to exporters:

(i) For the period April 1, 2015 to January 31, 2016 banks shall identify the eligible exporters as per the Government of India scheme and credit their accounts with the eligible amount of interest equalisation.

(ii) From the month of February 2016 onwards, banks shall reduce the interest rate charged to the eligible exporters as per our extant guidelines on interest rates on advances by the rate of interest equalisation provided by Government of India.

(iii) The interest equalisation benefit will be available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue. However, the interest equalisation will be available to the eligible exporters only during the period the scheme is in force.

B. Procedure for claiming reimbursement of interest equalisation benefit already passed on to eligible exporters:

(i) The sector-wise consolidated reimbursement claim for the period April 1, 2015 to January 31, 2016 for the amount of interest equalisation already passed on to eligible exporters should be submitted to RBI by February 29, 2016.

(ii) The sector-wise consolidated monthly reimbursement claim for interest equalisation for the period February 2016 onwards should be submitted in original within 15 days from the end of the respective month, with bank's seal and signed by authorised person, in the prescribed format given in Annex I.

(iii) The claims should be accompanied by an External Auditor's Certificate (with stamp and membership number) certifying that the claim for interest equalisation of Rupees…………….. for the month ended ………….. has been verified and found to be strictly in accordance with the provisions of the Government scheme enclosed with the circular DCBR.CO.SCB.Cir. No.1/13.05.000/2015-16 dated February 11, 2016. Claims for reimbursement will be considered for settlement only after receipt of this certificate.

(iv) The claims may be submitted to the Principal Chief General Manager, Department of Cooperative Bank Regulation, Reserve Bank of India, Central Office, C-7 Bandra Kurla Complex, 1st and 2nd Floor, Bandra (East), Mumbai – 400051.

(v) The reimbursement of interest equalisation claim will be made as and when the funds are received from Government of India.

This notification is available here

Earlier vide its notification dated 29th November, 2018 the interest equalisation rate was increased from 3% to 5% to units belonging to the MSME sector in respect of pre and post shipment rupee export credit.

This notification is available here

Many Lives, Many Masters

Just finished reading Many Lives Many Masters by Dr. Brian Weiss, a psychiatrist. Its about his treatment of a chronically depressed patient who was having recurring nightmares including fears etc. Normal psychiatric treatment did not help so the Dr. regressed her to hypnosis in which she did reveal past instances of abuse by her father when she was young, which probably explained her torment. But the patient went further into her past lives and starting narrating incidents from it including names, places, scenery etc. This became a fascination for Dr. who kept on probing her including the state when she left her body and floated above it.  Quite an interesting book for those interested in the subject or not so interested also. Goodreads 5/5