Responsible Business Conduct

PIB press release dated 13th March, 2019

Ministry of Corporate Affairs has revised the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011 (NVGs) and formulated the National Guidelines on Responsible Business Conduct (NGRBC). These guidelines urge businesses to actualise the principles in letter and spirit.

These principles are:

1.      Businesses should conduct and govern themselves with integrity in a manner that is Ethical, Transparent and Accountable.

2.      Businesses should provide goods and services in a manner that is sustainable and safe

3.      Businesses should respect and promote the well-being of all employees, including those in their value chains.

4.      Businesses should respect the interests of and be responsive to all their stakeholders.

5.      Businesses should respect and promote human rights.

6.      Businesses should respect and make efforts to protect and restore the environment.

7.      Businesses, when engaging in influencing public and regulatory policy, should do so in a manner that is responsible and transparent.

8.      Businesses should promote inclusive growth and equitable development.

9.      Businesses should engage with and provide value to their consumers in a responsible manner.

The Ministry of Corporate Affairs has been taking various initiatives for ensuring responsible business conduct by companies. As a first step towards mainstreaming the concept of business responsibility, the 'Voluntary Guidelines on Corporate Social Responsibility’ were issued in 2009. These guidelines were subsequently revised as 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business, 2011 (NVGS)’ after extensive consultations with business, academia, civil society organisations and the government. The NVGs were developed based on India’s socio-cultural context and priorities as well as global best practices.

There have been various national and international developments in the past decade that have nudged businesses to be sustainable and more responsible, prior most being the United Nations Guiding Principles on Business & Human Rights (UNGPs).  These became the key drivers for further revision of the guidelines. Some of these include the thrust of Companies Act, 2013 (Act) on businesses to be more mindful of their stakeholders.  The Act casts fiduciary duties on the Directors of a Company (S. 166) requiring them to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment. There was also a need to demonstrate more visibly India’s implementation of the UNGPs based on UNHRC’s ‘Protect, Respect & Remedy’ Framework and also make evident India’s commitment to Sustainable Development Goals (SDGs).

The Securities and Exchange Board of India (SEBI) through its ‘Listing Regulations’  in 2012 mandated the top 100 listed entities by market capitalisation to file Business Responsibility Reports (BRRs) from an environmental, social and governance perspective. These BRRs enabled business to demonstrate the adoption of the NVG principles and the attendant core elements with the intent of engaging businesses more meaningfully with their stakeholders going beyond regulatory financial compliance. This was extended to top 500 companies in FY 2015-16. This, for the first time, introduced voluntary sustainability reporting among companies in India which is still in a nascent stage.

In furtherance to updation of NVGs and formulation of the NGRBCs, the Ministry of Corporate Affairs has constituted the Committee on Business Responsibility Reporting (BRR) to develop BRR formats for listed and unlisted companies. Non-financial reporting is increasingly forming the basis for enhancing investor confidence in businesses and increasing their creditworthiness. The Committee is to develop comprehensive yet simple formats situating the various stakeholders at the center so as to not increase or duplicate reporting burden. The proposed formats are to reflect linkages to prevalent non-financial reporting formats, viz, Global Reporting Initiative (GRI), Integrated Reporting (IR) etc., and SDGs from a NGRBC perspective.

The Ministry of Corporate Affairs is also in the process of developing India’s National Action Plan on Business & Human Rights (NAP) in consultation with various Ministries and State Governments by 2020. A Zero Draft of India’s NAP demonstrating implementation of the three pillars of UNGPs has also been released and uploaded on the website of the Ministry.

gratuity - tax free

CBDT has vide its notification dated 8th March, 2019 enhanced the tax free limit for gratuity paid to an employee to Rs.20 lakhs. Earlier the limit was Rs.10 lakhs.

This notification comes into effect from 29th March, 2018 so it has retrospective effect.

Copy of the said notification can be found here

mutual funds

SEBI circular dated 8th march, 2019

Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 (MF Regulations) on

Advertisement   material,

requires   Mutual   Funds   to   submit   to   SEBI,   the

advertisements issued

by

them,

within 7 days

fro

m the date of issue

.

2

.

In continuation to the various

Go Green initiatives in Mutual Funds, the Mutual

Funds are now advised to submit links to access the advertisements to be filed

under  the  MF  Regulations  by  sending  the  same  through  e

-

mail  to  SEBI  at

mf_advertisement@sebi.gov.in

.

However,    advertisement    materials    like

pamphlets may be submitted as attachment along with e

-

mail, if the size of the

attachment does not ex

ceed 250 KB.

3

.

Mutual  Funds  shall  however,

maintain  copy  of  advertisements  for  future

references.

4

.

While  sending  the  e

-

mail,  the  compliance  officer  of  respective  Mutual  Fund

shall  expressly  confirm  that  the  advertisement  is  in  compliance  with  the

Advertisement code specified in the sixth schedule

of the MF Regulations.

5

.

This circular shall come in force with immediate effect.

Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 (MF Regulations) on

Advertisement   material,

requires   Mutual   Funds   to   submit   to   SEBI,   the

advertisements issued

by

them,

within 7 days

fro

m the date of issue

.

2

.

In continuation to the various

Go Green initiatives in Mutual Funds, the Mutual

Funds are now advised to submit links to access the advertisements to be filed

under  the  MF  Regulations  by  sending  the  same  through  e

-

mail  to  SEBI  at

mf_advertisement@sebi.gov.in

.

However,    advertisement    materials    like

pamphlets may be submitted as attachment along with e

-

mail, if the size of the

attachment does not ex

ceed 250 KB.

3

.

Mutual  Funds  shall  however,

maintain  copy  of  advertisements  for  future

references.

4

.

While  sending  the  e

-

mail,  the  compliance  officer  of  respective  Mutual  Fund

shall  expressly  confirm  that  the  advertisement  is  in  compliance  with  the

Advertisement code specified in the sixth schedule

of the MF Regulations.

5

.

This circular shall come in force with immediate effect.

1) Regulation 30 of SEBI (Mutual Funds) Regulations, 1996 (MF Regulations) on Advertisement material, requires Mutual Funds to submit to SEBI, the advertisements issued by them, within 7 days from the date of issue.

2. In continuation to the various Go Green initiatives in Mutual Funds, the Mutual Funds are now advised to submit links to access the advertisements to be filed under the MF Regulations by sending the same through e-mail to SEBI at mf_advertisement@sebi.gov.in. However, advertisement materials like pamphlets may be submitted as attachment along with e-mail, if the size of the attachment does not exceed 250 KB.

3. Mutual Funds shall however, maintain copy of advertisements for future references.

4. While sending the e-mail, the compliance officer of respective Mutual Fund shall expressly confirm that the advertisement is in compliance with the Advertisement code specified in the sixth schedule of the MF Regulations.

5. This circular shall come in force with immediate effect.

Copy of the said SEBI circular can be accessed here

white label ATMs

RBI circular dated 7th March, 2019

White Label ATM Operators have been allowed to

1. buy wholesale cash, above a threshold of 1 lakh pieces (and in multiples thereof) of any denomination, directly from the Reserve Bank (Issue Offices) and Currency Chests against full payment.
2. source cash from any scheduled bank, including Cooperative Banks and Regional Rural Banks.
3. offer bill payment and Interoperable Cash Deposit services, subject to technical feasibility and certification by National Payments Corporation of India (NPCI).
4. display advertisements pertaining to non-financial products / services anywhere within the WLA premises, including the WLA screen, except the main signboard. It shall be ensured that the advertisements running on the screen disappear once the customer commences a transaction.

Further, banks may issue co-branded ATM cards in partnership with the authorised WLA Operators and may extend the benefit of ‘on-us’ transactions to their WLAs as well.

5. All guidelines, safeguards, standards and control measures applicable to banks relating to (a) currency handling, and (b) cyber-security framework for ATMs, shall also be applicable to the WLA Operators.

RBI circular can be accessed here

company incorporation

MCA has vide its gazetted notification dated 6th March, 2019 amended the Companies (Incorporation) Rules, 2014 as follows:

1) Companies with authorised share capital of upto Rs.15 lakhs will to pay NIL fees to the MCA. This has been upped from Rs.10 lakhs previously.

2) Secondly, in case of shifting of the registered office from one state or union territory to another state, the newspaper advertisement regarding the shifting which is required to be given in form INC-26 need to be given in a vernacular newspaper with wide circulation in the state in which the registered office is situated. Earlier the word used was "widest", so its more of a drafting error which is being corrected.

MCA circular as above can be found at here 

Hazardous Waste

PIB press release dated 6th March, 2019

In order to strengthen the implementation of environmentally sound management of hazardous waste in the country, the Ministry of Environment, Forest and Climate Change has amended the Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016 vide notification G.S.R.  G.S.R. XX (E), dated 01 March 2019.

The amendment has been done keeping into consideration the “Ease of Doing Business” and boosting “Make in India” initiative by simplifying the procedures under the Rules, while at the same time upholding the principles of sustainable development and ensuring minimal impact on the environment.

Some of the salient features of the Hazardous and Other Wastes (Management& Transboundary Movement) Amendment Rules, 2019 are as follows:

1. Solid plastic waste has been prohibited from import into the country including in Special Economic Zones (SEZ) and by Export Oriented Units (EOU).
2. Exporters of silk waste have now been given exemption from requiring permission from the Ministry of Environment, Forest and Climate Change.
3. Electrical and electronic assemblies and components manufactured in and exported from India, if found defective can now be imported back into the country, within a year of export, without obtaining permission from the Ministry of Environment, Forest and Climate Change.
4. Industries which do not require consent under Water (Prevention and Control of Pollution) Act 1974 and Air (Prevention and Control of Pollution) Act 1981, are now exempted from requiring authorization also under the Hazardous and Other Wastes (Management & Transboundary Movement) Rules, 2016, provided that hazardous and other wastes generated by such industries are handed over to the authorized actual users, waste collectors or disposal facilities.

Hedging of exchange rate risks

RBI has vide its circular dated 1st March, 2019 made operational guidelines for hedging of exchange rate risk by foreign portfolio investors using the VRR route for their debt investments.

Hedging of exchange rate risk by Foreign Portfolio Investors (FPIs) under Voluntary Retention Route

Purpose: To hedge the exposure to exchange rate risk on account of investments made under the Voluntary Retention Route (VRR)

Products: Forwards, options, cost reduction structures and swaps with Rupee as one of the currencies

Operational Guidelines, Terms and Conditions:

i. Authorised dealers may offer derivative contracts using any of the aforementioned products to eligible users under VRR or to its central treasury (of the group and being a group entity). Authorised dealers shall ensure that:

1. The FPI has an exposure to exchange rate risk on account of investments made under VRR.
2. The notional and tenor of the contract does not exceed the value and tenor of the exposure.
3. The same exposure has not been hedged with any other authorised dealer or on the exchange.
4. In cases where the value of the exposure falls below the notional of the derivative, the derivative should be suitably adjusted unless such divergence has occurred on account of change in market value of the exposure, in which case the FPI may, at its discretion, continue with the derivative contract till its original maturity.

ii. Authorised dealers shall allow FPIs to freely cancel and rebook the derivative contracts.

iii. Authorised Dealer shall ensure that all payables incidental to the hedge are met by the FPI out of repatriable funds and/or inward remittance through normal banking channels.

Copy of this said circular can be found here