Listing non-compliances

SEBI has issued a circular dated 22nd January 2020 standardising the fees for various non compliances by listed companies of the provisions of the Listing Obligations and Disclosure Requirements Regulations 2015. Some of the fines are indeed very steep and prohibitive and it is therefore in the company's interests to be fully compliant both in letter and spirit of the law.

https://www.sebi.gov.in/legal/circulars/jan-2020/non-compliance-with-certain-provisions-of-the-sebi-listing-obligations-and-disclosure-requirements-regulations-2015-and-the-standard-operating-procedure-for-suspension-and-revocation-of-trading-of-_45752.html

Details are in the above link. 

Rights Issues

SEBI has issued a circular dated 22nd January, 2020 streamlining the process of issue and allotment of rights shares by listed companies.

https://www.sebi.gov.in/legal/circulars/jan-2020/streamlining-the-process-of-rights-issue_45753.html

Salient features of the amendments are as follows:

1.1 The period for advance notice to stock exchange(s) under Regulation 42(2) of LODR Regulations has been reduced from at least 7 working days to at least 3 working days (excluding the date of intimation and the record date), for the purpose of rights issue.

1.2 Issuance of newspaper advertisement disclosing date of completion of dispatch and intimation of same to the stock exchanges for dissemination on their websites, as per Regulation 84 (1) of ICDR Regulations, shall be completed by the issuer at least 2 days before the date of opening of the issue.

1.3 Introduction of dematerialized Rights Entitlements (REs) –
1.3.1. In the letter of offer and the abridged letter of offer, the issuer shall disclose the process of credit of REs in the demat account and renunciation thereof.
1.3.2. REs shall be credited to the demat account of eligible shareholders in dematerialized form. 1.3.3. In REs process, the REs with a separate ISIN shall be credited to the demat account of the shareholders before the date of opening of the issue, against the shares held by them as on the record date.
1.3.4. Physical shareholders shall be required to provide their demat account details to Issuer / Registrar to the Issue for credit of REs not later than two working days prior to the issue closing date, such that credit of REs in their demat account takes place at least one day before the issue closing date.

1.4 Trading of dematerialized REs on stock exchange platform -
1.4.1. REs shall be traded on secondary market platform of Stock exchanges, with T+2 rolling settlement, similar to the equity shares. Trading in REs on the secondary market platform of stock exchanges shall commence along with the opening of the issue and shall be closed at least four days prior to the closure of the rights issue.
1.4.2. Investors holding REs in dematerialized mode shall be able to renounce their entitlements by trading on stock exchange platform or off-market transfer. Such trades will be settled by transferring dematerialized REs through depository mechanism, in the same manner as done for all other types of securities.

1.5. Payment mode - Application for a rights issue shall be made only through ASBA facility.

1.6. No withdrawal of application shall be permitted by any shareholder after the issue closing date.

GST - staggered returns

Ministry of Finance press release dated 22nd January, 2020

Considering the difficulties faced by trade and industry in filing of returns, the government has decided to introduce several measures to ease the process. The Finance Ministry today said that now GST taxpayers can file their GSTR-3B returns in a staggered manner.

Presently the last date of filing GSTR-3B returns for every taxpayer is 20th of every month. From now on, the last date for filing of GSTR-3B for the taxpayers having annual turnover of Rs 5 crore and above in the previous financial year would be 20th of the month. Thus, around 8 lakh regular taxpayers would have the last date of GSTR-3B filing as 20th of every month without late fees.

The taxpayers having annual turnover below Rs 5 crore in previous financial year will be divided further in two categories. The tax filers from 15 States/ UTs, i.e., Chhattisgarh, Madhya Pradesh, Gujarat, Daman and Diu, Dadra and Nagar Haveli, Maharashtra, Karnataka, Goa, Lakshadweep, Kerala, Tamil Nadu, Puducherry, Andaman and Nicobar Islands, Telangana and Andhra Pradesh will now be having the last date of filing GSTR-3B returns as 22nd of the month without late fees. This category would have around 49 lakh GSTR-3B filers who would now have 22nd of every month as their last date for filing GSTR-3B returns.

For the remaining 46 lakh taxpayers from the 22 States/UTs of Jammu and Kashmir, Laddakh, Himachal Pradesh, Punjab, Chandigarh, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Bihar, Sikkim, Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Meghalaya, Assam, West Bengal, Jharkhand and Odisha having annual turnover below Rs 5 crore in previous financial year will now be having last date of filing the GSTR-3B as 24th of the month without late fees.

The Finance Ministry said that the necessary notification in this regard would be issued later by the competent authority.

In a statement issues, the Ministry further said that it has also taken a note of difficulties and concerns expressed by the taxpayers regarding filing of GSTR-3B and other returns. The matter has been discussed by the GSTN with Infosys, the Managed Service Provider, which has come out with above solution to de-stress the process as a temporary but immediate measure. For further improving the performance of GSTN filing portal on permanent basis, several technological measures are being worked out with Infosys and will be in place by April 2020.

Rupee Derivatives

RBI circular dated 21st January, 2020 allowing rupee derivatives (with settlement in foreign currency) by the IFSC Banking Units.

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11794&Mode=0

Please refer to RBI circular DBR.IBD.BC.14570/23.13.004/2014-15 dated April 01, 2015, as modified from time to time, setting out RBI directions relating to IFSC Banking Units (IBUs).

2. The Task Force (TF) on Offshore Rupee Markets chaired by Smt. Usha Thorat had recommended introduction of non-deliverable Rupee Derivatives in IFSCs in a phased manner, starting with exchange traded currency derivatives (ETCD) to be followed by Over the Counter (OTC) derivatives at a later stage.

3. RBI’s decision to accept the above recommendation and permit Rupee derivatives (with settlement in foreign currency) to be traded in IFSC was announced in para 2 of the Statement on Developmental and Regulatory policies issued on October 04, 2019. Accordingly, a new paragraph No.2.6 (xiv), has been added to Annex I and II of the aforesaid circular dated April 1, 2015, which reads as under:

“IBUs are allowed to participate in exchange traded currency derivatives on Rupee (with settlement in foreign currency) listed on stock exchanges set up at IFSCs. Banks shall ensure that their IBUs have necessary expertise to price, value and compute the capital charge and manage the risks associated with the products / transactions intended to be offered and should also obtain their Board’s approval for undertaking such transactions. IBUs shall follow all other risk mitigation and prudential measures as applicable and detailed in this circular while participating in these products. Further, IBUs may also be guided by A.P (DIR Series) Circular No. 17 on “Introduction of Rupee derivatives at International Financial Services Centres (IFSCs)” dated January 20, 2020.”

4. Further, the existing paragraph 2.6(vii) of Annex I and II of the aforesaid circular dated April 01, 2015, is amended by adding the following at the end thereof:

“This is subject to the provisions of paragraph 2.6(xiv).”

5. All other terms and conditions contained in the aforementioned circular remain unchanged.

6. An updated copy of the RBI circular on IBU dated April 01, 2015 incorporating the amendments made hitherto is available on RBI’s website.

Rupee Derivatives

RBI circular dated 20th January, 2020 regarding introduction of rupee derivatives in international financial services centre

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11791&Mode=0

Attention of Authorised Dealers is invited to the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 (Notification No. FEMA. 339/2015-RB dated 2nd March, 2015).

2. As announced in the statement on Developmental and Regulatory Policies dated October 4, 2019, it has now been decided to allow Rupee derivatives (with settlement in foreign currency) to be traded in International Financial Services Centres (IFSCs), starting with Exchange Traded Currency Derivatives(ETCD).

3. Currency futures contracts may be listed on recognised stock exchanges at IFSCs subject to the Currency Futures in International Financial Services Centre (Reserve Bank) Directions, 2020 (Notification No.FMRD.FMD.01/ED(TRS)-2020 dated January 20, 2020), issued by the Reserve Bank of India, a copy of which is annexed (Annex I).

4. Currency options contracts may be listed on recognised stock exchanges at IFSCs subject to the Currency Options in International Financial Services Centre (Reserve Bank) Directions, 2020 (Notification No.FMRD.FMD.02/ED(TRS)-2020 dated January 20, 2020), issued by the Reserve Bank of India, a copy of which is annexed (Annex II).

5. Necessary amendments to the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 (Notification No. FEMA. 339/2015-RB dated 2nd March, 2015) have been notified in the Official Gazette vide Gazette Id no.CG-DL-E-17012020-215530 dated January 16, 2020 a copy of which is annexed (Annex-III).

6. Amendments to Currency Futures (Reserve Bank) Directions, 2008 (Notification No.FED.1/DG(SG) - 2008 dated August 6, 2008), as amended from time to time, and Exchange Traded Currency Options (Reserve Bank) Directions, 2010 (Notification No. FED.01/ED(HRK) - 2010 dated July 30, 2010), as amended from time to time, is annexed as Annex IV & V respectively.

7. The above Directions have been issued under Section 45W of the Reserve Bank of India Act, 1934 and the above Regulation have been issued under Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999).

8. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions /approvals, if any, required under any other law.

CS regulations

Govt. of India has vide its notification dated 17th January 2020 approved the following amendments to the Company Secretaries Regulations 1982

1) Introduction of entrance test (CSEET) in place of Foundation program for CS students
2) Introduction of uniform training structure of 24 months for the students after the Executive program;
3) Gap of 6 months between enrolment and examinations (for both Executive & Professional) for all modules and gap of 4 months between enrolment and examinations for single group or modules;
4) Introduction of Secretarial Executive Certificate for the Executive passed students;
5) Provision of Specialised, Advanced and Refresher course for the members;
6) Orientation program for the members for issuance of Certificate of Practice;
7) Pre-examination tests for enrolment into examinations.

reporting of large exposures

RBI circular dated 16th January, 2020 wherein they have streamlined the reporting of large exposures of Primary Urban Co-operative Banks having total assets of Rs.500 crores and above. Exposures to include all fund based, non fund based including investment exposure on the borrower. They have set up a three pronged strategy to report large exposures viz. exposure to large borrowers, reporting of technically/ prudentially written off accounts and reporting of balance in current account.

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11790&Mode=0

We draw your attention to RBI Circular DOR (PCB). BPD.Cir.No.7/13.05.000/2019-20 dated December 27, 2019 on "Reporting of Large Exposures to Central Repository of Information on Large Credits (CRILC) - UCBs". In terms of the instructions, Primary (Urban) Co-operative Banks (UCBs) having total assets of ₹500 crore and above as on 31st March of the previous financial year (hereinafter referred to as “banks”) shall report credit information, including classification of an account as Special Mention Account (SMA), on all borrowers having aggregate exposures of ₹5 crore and above with them to Central Repository of Information on Large Credits (CRILC) maintained by the Reserve Bank. Aggregate exposure shall include all fund-based and non-fund based exposure, including investment exposure on the borrower.

2. The operational guidelines for reporting the CRILC– UCBs return are as follows:

i. The reporting frequency of the CRILC– UCBs return is quarterly to start with. The banks need to submit the data on large exposures within 30 days from the end of the quarter through XBRL reporting platform of RBI. Banks may put in place appropriate systems to be in readiness to submit the return on a more frequent periodicity.

ii. CRILC – UCBs return will comprise of three sections viz. Section 1: Exposure to Large Borrowers, Section 2: Reporting of Technically / Prudentially Written-off Accounts and Section 3: Reporting of Balance in Current Account, as below:

1. In Section 1: Exposure to Large Borrowers, the bank needs to report the credit information of all borrowers having aggregate exposures (fund-based, non-fund based and investment exposure) of ₹5 crore and above.
2. In Section 2: Reporting of Technically / Prudentially Written-off Accounts, the bank needs to report the data on the amount written off, if any, for borrowers whose technically/prudentially written off amount is ₹5 crore or more and which are not reported in Section 1.
3. In Section 3: Reporting of balance in Current Account, the bank needs to report the data on Current Account holders whose (i) balance (either credit or debit) in current account as on reporting date is ₹1 crore and above or (ii) total of credit summation (sum of all credit transactions) during the reporting quarter is ₹5 crore and above or (iii) total of debit summation (sum of all debit transactions) during the reporting quarter is ₹5 crore and above.

iii. The detailed instructions for each Section is provided in the CRILC-UCBs return installer (macro enabled excel template).

iv. Banks are advised to take utmost care about data accuracy and integrity while submitting the data on large credits to the Reserve Bank of India, failing which penal action would be undertaken.

3. In the light of DoR instructions referred above and in exercise of the powers conferred under Section 27 (2) read with Section 56 (a)(i) of the Banking Regulation Act, 1949(AACS), you are advised to submit the data in CRILC-UCBs return with effect from the quarter ended December 31, 2019. The format of reporting is enclosed.

Hedging Report

RBI circular dated 15th January 2020 stipulating report to RBI in respect of hedging of commodity price risk and freight risk in overseas markets will now be made in XBRL format instead of excel mode as was stipulated earlier.

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11789&Mode=0

Please refer to Foreign Exchange Management (Foreign Exchange Derivative Contracts) Regulations, 2000 (Notification No. FEMA 25/RB-2000 dated May 3, 2000), as amended from time to time, and Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions, 2018 (issued vide A.P. (DIR Series) Circular No. 19 dated March 12, 2018).

2. Para 10 of the Directions ibid shall be substituted with following:

“10. Report to Reserve Bank - Banks shall submit a quarterly report to the Chief General Manager, Financial Markets Regulation Department, Reserve Bank of India through Extensible Business Reporting Language (XBRL) accessible at https://xbrl.rbi.org.in/orfsxbrl/ in the format provided in Annexure I. In case of no transactions, a “Nil” report shall be submitted by the bank.”

3. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions /approvals, if any, required under any other law.

security in credit cards

RBI circular dated 15th January, 2020 enhancing security of card transactions

https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11788&Mode=0

Over the years, the volume and value of transactions made through cards have increased manifold. To improve user convenience and increase the security of card transactions, it has been decided as under:

a) At the time of issue / re-issue, all cards (physical and virtual) shall be enabled for use only at contact based points of usage [viz. ATMs and Point of Sale (PoS) devices] within India. Issuers shall provide cardholders a facility for enabling card not present (domestic and international) transactions, card present (international) transactions and contactless transactions, as per the process outlined in para 1 (c).

b) For existing cards, issuers may take a decision, based on their risk perception, whether to disable the card not present (domestic and international) transactions, card present (international) transactions and contactless transaction rights. Existing cards which have never been used for online (card not present) / international / contactless transactions shall be mandatorily disabled for this purpose.

c) Additionally, the issuers shall provide to all cardholders:

1. facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions – domestic and international, at PoS / ATMs / online transactions / contactless transactions, etc.;
2. the above facility on a 24x7 basis through multiple channels - mobile application / internet banking / ATMs / Interactive Voice Response (IVR); this may also be offered at branches / offices;
3. alerts / information / status, etc., through SMS / e-mail, as and when there is any change in status of the card.

2. The provisions of this circular are not mandatory for prepaid gift cards and those used at mass transit systems.

3. Issuers and card networks may give wide publicity to the provisions of this circular.

4. These directions are issued under Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect from March 16, 2020.

voluntary liquidation

The Insolvency and Bankruptcy Board of India (IBBI) has notified the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) (Amendment) Regulations, 2020 on 15th January. 2020.

The aforesaid amendment provides that a Liquidator shall deposit the amount of unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process along with any income earned thereon into the Corporate Voluntary Liquidation Account before submission of an application for dissolution of the corporate person. It also provides a process for a stakeholder to seek withdrawal from the Corporate Voluntary Liquidation Account.

The amended regulations are effective from 16th January, 2020. These are available at www.mca.gov.in and www.ibbi.gov.in.

FASTag

Ministry of Road Transport & Highways circular dated 15th January, 2020. FASTag rules relaxed for 65 high cash tollways for one month.

Ministry of Road Transport and Highways has decided to relax the conditions regarding declaration of FASTag Fee lanes for 30 days from today at the identified 65 high cash transactions fee plazas of NHAI. The concerned fee plazas have been allowed to convert up to 25 per cent of all fee lanes to hybrid (cash plus FASTag) lanes during this time.

The move comes in the wake of NHAI raising concerns regarding high cash transactions on its 65 identified fee plazas. NHAI has pointed out that most of the fee plazas are functioning with one hybrid lane on each side and while efforts are being made to bring more fee plazas within the ambit, the said identified fee plazas were facing heavy traffic rush on the hybrid lanes.

With a view to save the citizens from inconvenience, the Ministry has decided that depending on the traffic pile up at these 65 fee plazas, not more than 25 percent FASTag lane of Fee Plaza may be temporarily converted to hybrid lanes.  This is to be considered and decided on a case to case basis not below the level of the RO concerned. In a directive issued to NHAI in this regard, the Ministry has said that daily evaluation of such cases be made to take necessary corrective action and a summary report on daily basis be sent to the Ministry. 

The Ministry has further asked NHAI to ensure that the least possible number of the declared FASTag lane of Fee Plaza be converted into the hybrid lanes temporarily and further that at least 75% lanes of these 65 fee plaza remain declared and operational as ‘FASTag lane of Fee Plaza’ in order to incentivize the vehicles carrying FASTag.

The Ministry has emphasized that this temporary measure is to be adopted for 30 days only for such 65 fee plazas to facilitate smooth flow of traffic so that no inconvenience is caused to the citizens. NHAI shall take necessary measures within this time to ensure smooth flow of traffic through the fee plazas and ensure declaring “FASTag lane of Fee Plaza” for all the lanes within this period.

List of 65 fee plazas of NHAI with relaxation of 30 days wef 15th January 2020
S.no.	PLAZA NAME	RO	PIU
1	Sadahalli	Bangalore	Bangalore
2	Vadodara	Gandhinagar	Ahmedabad
3	Boriach	Gandhinagar	Surat
4	Gharonda Toll Plaza	Chandigarh	Ambala
5	Electronic City Elevated: 1) Bangalore Up Ramp @ chainage KM 18/000	Bangalore	Ramnagara
6	Bhagwada	Gandhinagar	Surat
7	Ladowal Toll Plaza	Chandigarh	Ambala
8	Bharthana/ Karjan	Gandhinagar	Bharuch
9	Khaniwade	Gandhinagar	Surat
10	Chandimandir Toll Plaza	Chandigarh	Chandigarh
11	Choriyasi	Gandhinagar	Surat
12	Jaladhulagori toll plaza	Kolkata	Kolkata
13	Charoti	Gandhinagar	Surat
14	Sambhu Toll Plaza	Chandigarh	Ambala
15	L&T PANIPAT	Chandigarh	Ambala
16	Rajchandrapur Toll Plaza	Kolkata	Kolkata
17	Khed-Shivapur	Mumbai	Pune
18	Khedki Daula	Delhi	Gurgaon
19	dapar	Chandigarh	Mohali
20	Krishnagiri	Chennai	Krishnagiri
21	Taswade	Mumbai	Kolhapur
22	Kumbalam	Kerala	Coachin
23	Narmada Bridge	Gandhinagar	Bharuch
24	Towards Bangalore Km.26.075	Bangalore	Bangalore
25	Vikravandi	Chennai	Villupuram
26	Palliyekarra	Kerala	Palakkad
27	Ring Road	Gandhinagar	Ahmedabad
28	beharmpur	Chandigarh	Mohali
29	Kini	Mumbai	Kolhapur
30	Omallur	Chennai	Salem
31	Sengurichi	Madurai	Trichy
32	Ahmedpur	Lucknow - East	Lucknow
33	Anewadi	Mumbai	Pune
34	Brijghat	Lucknow - West	Moradabad
35	Samayapuram	Madurai	Trichy
36	Doddakarernahalli (Nelamangala Toll) Karekal Cross	Bangalore	Hassan
37	Kaniyur	Chennai	Coimbatore
38	Pantagi	Hyderabad	Hyderabad
39	Dankuni	Kolkata	Durgapur
40	Ahmedabad	Gandhinagar	Ahmedabad
41	Vijayamangalam	Chennai	Salem
42	Nawabganj	Lucknow - East	Lucknow
43	Towards Nelamangala Km.14.875	Bangalore	Bangalore
44	Manguli	Bhubaneswar	Bhubaneswar
45	Palayam	Chennai	Salem
46	Raikal	Hyderabad	Hyderabad
47	Dhareri Jattan	Chandigarh	Mohali
48	Paranur	Chennai	Kancheepuram
49	Thirumandurai	Madurai	Trichy
50	Moratandi	Chennai	Villupuram
51	Attibele Grade section Toll Plaza at km 32/700	Bangalore	Ramnagara
52	Kodai	Madurai	Madurai
53	Vaiguntham	Chennai	Salem
54	Negadiya	Jaipur	Udaipur
55	Karabylu(Bellur Toll)	Bangalore	Hassan
56	Gegal	Jaipur	Ajmer
57	Anand	Gandhinagar	Ahmedabad
58	Ronahi	Lucknow - East	Lucknow
59	Barajod (earlier Sikandara )	Lucknow - West	Kanpur
60	Bharudi	Gandhinagar	Rajkot
61	Kishangarh	Jaipur	Jaipur
62	Vasad	Gandhinagar	Ahmedabad
63	Borkhedi	Nagpur	Nagpur
64	Hoskote	Bangalore	Bangalore
65	Samakhiyali	Gandhinagar	Gandhidham