non oil companies allowed to market transport fuels

PIB press release dated 23rd October, 2019

Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi has approved the Review of Guidelines for Granting Authorization to market Transportation Fuels. This marks a major reform of the guidelines for marketing of petrol and diesel.

The existing policy for granting authorization to market transportation fuels had not undergone any changes for the last 17 years since 2002. It has now been revised to bring it in line with the changing market dynamics and with a view to encourage investment from private players, including foreign players, in this sector. The new Policy will give a fillip to ‘Ease of Doing Business’, with transparent policy guidelines. It will boost direct and indirect employment in the sector. Setting up of more retail outlets (ROs) will result in better competition and better services for consumers

Salient features & Major Impact:

• Much lower entry barrier for private players - the entities seeking authorisation would need to have a minimum net worth of Rs.250 crore vis-à-vis the current requirement of Rs. 2000 crore prior investment.
• Non – Oil Companies can also invest in the retail sector. Requirement of prior investment in Oil and Gas Sector, mainly in exploration and production, refining, pipelines/terminals etc., has been done away with.
• The entities seeking market authorisation for petrol and diesel are allowed to apply for retail and bulk authorisation separately or both
• The companies have been given flexibility in setting up a Joint Venture or Subsidiary for market authorisation.
• In addition to conventional fuels, the authorized entities are required to install facilities for marketing at least one new generation alternate fuel, like CNG, LNG, biofuels, electric charging, etc. at their proposed retail outlets within 3 years of operationalization of the said outlet
• More private players, including Foreign players, are expected to invest in retail fuel marketing leading to better competition and better services for consumers
• The new entities will bring in latest technology for marketing of fuels and also encourage digital payments at the ROs.
• Entities will also encourage employment of women and ex-servicemen at the retail outlets.
• CCTV facilities will be set up at all retail outlets
• The authorised entities are required to set up minimum 5% of the total retail outlets in the notified remote areas within 5 years of grant of authorisation. A robust monitoring mechanism has been set up to monitor this obligation.
• An individual may be allowed to obtain dealership of more than one marketing company in case of open dealerships of PSU OMCs but at different sites.

independent directors - online test

MCA has vide amendment to the Companies (Appointment & Remuneration of Directors), Rules, 2014 mandated that all independent directors have to register themselves on an online link provided by the Indian Institute of Corporate Affairs (IICA). He has to apply online to register his name in a data bank provided by the IICA and that registration can be for 1 year, 5 years or lifetime. The independent director should ensure that his registration at the IICA portal is there as long as he is continuing to be an independent director. The registration at the portal should be done within 3 months of the commencement of this amendment, which is 22nd October, 2019. Therefore, the registration should be done on or before 21st January, 2020.

There is a renewal process also whereby the independent director concerned can renew his registration at this portal for a further period of 1 year, 5 years as the case may be within 30 days of the expiry of the first registration. Obviously, the renewal process is not applicable to those persons who have registered themselves for a lifetime basis at this portal.

Every independent director should also give a declaration of compliance of this rule alongwith their annual declaration of compliance as required u/s 149 of the companies act, 2013 ("the Act").

Every independent director should also pass an online proficiency self assessment test conducted by the IICA within a period of one year from the date from which his name is included in the data bank, or else his name will be removed from the data bank.

The companies should in their Directors' Report add a paragraph regarding opinion of the Board with regard to integrity, expertise and experience (including proficiency) of the independent directors appointed during the year. This provision has been made in an amendment to the Companies (Accounts) Rules, 2014. This amendment will come into force with effect from 1st December, 2019.
The explanation to this amendment clarifies that the proficiency is to be determined on the basis of the online proficiency test conducted by the IICA.

Passing marks for clearing this online proficiency test by the IICA is 60%. An individual can take any number of attempts in order to pass the test.

There are exceptions such as : those individuals who have served for not less than 10 years in any company or one or two companies put together either as a Director or as KMP in listed public companies and unlisted public companies having paid up capital of Rs.10 crores and above are not required to take the online proficiency test.

Individuals can also voluntarily apply to be included in the above said data bank and it includes persons not presently having a DIN also.

All this does not come free, so there shall be a reasonable fee to be charged from an individual whilst registering his name on the data bank, and also to the companies who refer to this data bank whilst selecting independent directors for their companies. There shall be no fees, however, for taking the online test.