Free 3rd party ATM transactions down to 2 per month

I have not been able to find out any RBI notification or circular or press release in this regard, but it seems RBI has restricted free third party ATM transactions to only two per month down from five per month. The five free 3rd party ATM transactions were reasonable considering that one can never find your home bank ATMs near your residence. Anyway withdrawing money from your bank account need not cost anything, but considering the costs incurred by banks, five free 3rd party ATMs was completely reasonable and RBI should not have tinkered with that limit. It shows that RBI barely cares for customers and customer service and I don't understand how they are going to meet their mantra of financial inclusion if they go on imposing unreasonable costs on the customers. And then there is a limit of maximum withdrawal of Rs.10,000/- at any one time, which means that if you withdraw more than Rs.20,000/- in a month, you are liable to pay charges on such withdrawals. What nonsense. As it is banks impose huge costs on the customer by way of cheque book charges, maintenance charges, debit card fees and what not for which they don't even write proper entries in the pass book.

http://www.deccanchronicle.com/140802/business-latest/article/third-party-atm-transactions-limit-go-down-five-two

Related Party - clarifications

The Ministry of corporate affairs has vide its clarification letter dated 17th july 2014 clarified a few aspects on the intriguing aspect of related party transactions and the compliances thereof. Really had the Ministry taken a little trouble in drafting the original provisions correctly, the spate of clarifications that they are issuing would not have been necessary.

The clarifications that they have issued vide the above circular are briefly summarised as under :

1) The shareholder who is the related party will not be allowed to vote on the resolution laid before the general meeting only in respect of such contracts/ transactions in respect of which he is the related party. If he is a related party within the general definition of "related party" under the Companies Act, 2013 but he is not concerned or interested in the contract or arrangement which has been put up for approval at the general meeting, then he will be allowed to vote;

2) Corporate restructuring or amalgamations will not be covered under the definition of related party transactions;

3) Related party contracts which have already been approved under the old provisions of Companies Act, 1956 will not need fresh approval until the term of the contract is over. However any alteration or variation in the contracts will need fresh compliances under the Companies act, 2013.

Stay tuned for more such compliance news

Online copyright applications

Effective from 1st August 2014 onwards copyright applications can be made only online on www.copyright.gov.in. or offline by post.

The online facility was launched on 17th February 2014 onwards and since then both online and offline facility was available. However the government has decided to close the copyright counter from 1st August, 2014 in order to promote the online filings.

The applicants can also send applications by speed post/ registered post in the prescribed format.

Dr. Suresh Chand, the Dy. Registrar of Copyrights has issued a notification to that effect on 22nd July 2014

Related Party Transactions Compliances

A related party with reference to a company means the following

(1) director or his relative

(2) key managerial personnel or his relative 

(3) a firm in which director, manager or relative is a partner

(4) a private company in which director or manager or his relative is a member or director

(5) a public company in which director or manager is a director or holds along with his relatives more than 2% of its paid up share capital

(6) any body corporate whose Board of Directors, managing director or manager is accustomed to act in accordance with the instructions, directions or advice of the director or manager 

(7) any person on whose advise, instructions or directions, the director or manager is accustomed to act. 

(8) any body corporate in which such director singly or in association with another director holds more than 2% shareholding of that body corporate or is a promoter, chief executive officer or manager of that body corporate 

(9) any firm or other entity in which such director is a partner, owner or member. 

Related party contract or arrangement pertains to 

(a) sale, purchase or supply of any goods or materials;

(b) selling or otherwise disposing of, or buying, property of any kind; (so immoveable property is covered)

(c) leasing of property of any kind;

(d) availing or rendering of any services;

(e) appointment of any agent for purchase or sale of goods, materials, services

or property;

(f) such related party's appointment to any office or place of profit in the company,

its subsidiary company or associate company; and 

(g) underwriting the subscription of any securities or derivatives thereof, of the

company:

It will not be construed as a related party if the transaction entered into by the company is in the ordinary course of business and is on arms length basis. 

BOD consent is required for entering into related party contracts. 

(1) The agenda of the Board meeting at which the resolution is proposed to be moved shall disclose-

(a) the name of the related party and nature of relationship;

(b) the nature, duration of the contract and particulars of the contract or arrangement;

(c) the material terms of the contract or arrangement including the value, if any;

(d) any advance paid or received for the contract or arrangement, if any;

(e) the manner of determining the pricing and other commercial terms, both included as part of contract and not considered as part of the contract;

(f) whether all factors relevant to the contract have been considered, if not, the details of factors not considered with the rationale for not considering those factors; and

(g) any other information relevant or important for the Board to take a decision on the proposed transaction.

The interested director shall not be present at the Board meeting where the discussion pertaining to the said related party is taking place. 

 

Prior Special resolution will be required if 

(i) the paid up share capital of the company is Rs.10 crores or more 

(ii) the sale, purchase, supply of any goods or materials directly or though appointment of agents exceeds 25% of the annual turnover, 

(iii) selling or otherwise disposing of property of any kind directly or though agents exceeding 10% of the net worth

(iv) leasing property of any kind exceeding 10% of the net worth or turnover

(v) availing or rendering of services directly or through agents, exceeding 10% of the net worth

(vi) appointment to any office or place of profit in the company or subsidiary or associate company at a monthly remuneration exceeding Rs.2.5 lakhs 

The interested director and the related parties who are members in this particular contract or arrangement shall not vote on the said resolution.

The explanatory statement to be annexed to the notice of a general meeting convened to consider related party transactions shall contain the following particulars namely:-

(a) name of the related party ;

(b) name of the director or key managerial personnel who is related, if any;

(c) nature of relationship;

(d) nature, material terms, monetary value and particulars of the contract or arrangement;

(e) any other information relevant or important for the members to take a decision on the proposed resolution.

The company is required to maintain register of contracts or arrangements in which directors are interested in form MBP-4 and shall enter therein following particulars. 

(1) names of companies, firms, bodies corporates, or other association of individuals in which director has any concern or interest

(2) particulars of contracts or arrangements with related parties 

Entries to be made in the register immediately at once whenever there is a cause to make entry in a chronological order and entries to be authenticated by a company secretary or by any person authorised by the Board for that purpose. 

Revised pricing guidelines on issue/ transfer of securities to non residents

RBI has vide its circular no. 4 dated 15th July 2014 revised the pricing guidelines in respect of issue/ transfer of shares to non residents.

While the pricing guidelines in respect of listed companies will remain the same i.e. SEBI guidelines, the changes have been made in respect of unlisted companies.

In such unlisted companies, the fair valuation of shares shall be done as per any internationally accepted pricing methodology for valuation of shares on arm's length basis duly certified by a chartered accountant or a SEBI registered merchant banker. The guiding principle is that the non resident is not guaranteed any assured exit price at the time of making such investment/ subscription and shall exit at fair price subject to lock in period requirement, if any.

The Indian company recording the sale of its shares or convertible debentures from resident to non resident or vice versa shall record in its balance sheet for the financial year in which the transaction takes place the details of the valuation of shares or debentures, the pricing methodology adopted for the same and the agency which gave the certificate/ valuation.

The RBI circular is available here

ST on services provided by director

Ministry of Finance has vide notification no. 9/2014 dated 11th July 2014 amended Service Tax Rules, 1994 to provide that in respect of services provided or agreed to be provided by a director of a company or a body corporate to the said company or body corporate, the service tax is payable by the recipient of such service. Here the amendment has been that "body corporate" has been added to the clause which hitherto included only company The definition of "body corporate" is the same as is given in the Companies Act, 1956 which is now the Companies Act, 2013. As per the Companies Act, 2013, the definition of "body corporate" includes company incorporated outside India but does not include co-operative society or any other body as may be specified by the Central Government.

online payment of service tax

The Ministry of Finance has vide notification no. 9/2014 dated 11th July 2014 stipulated that with effect from 1st October, 2014, every assessee shall pay the service tax through internet banking. Only the Assistant Commissioner or Deputy Commissioner, shall have the power to allow payment through any other means for reasons to be recorded in writing.

Previously the service tax was payable only where the total service tax paid by the assessee in a financial year exceeded Rs.1 lakh. In such cases payment of service tax was required to be done by online transfer.

Now with effect from 1st October, 2014 all assessees have to make the payment of service tax by internet banking