RTGS charges for customers - revision

RBI has vide its notification dated 4th february, 2016 revised the RTGS charges for bank members and customers alike. The variation in charges for customers which will come into effect from 1st
april, 2016 is as follows:

1) Processing charges per transaction: - There will be a flat processing charge of Rs.0.50 per outward transaction and a time varying charge as follows:

Between 8 to 11 hours - NIL
From 11 hours to 13 hours - Rs.2 per transaction
From 13 hours to 1630 hours - Rs.5 per transaction
After 1630 hours - Rs. 10 per transaction

The time is reckoned as settlement at RBI. All charges are out outward transactions, NONE for inward transaction. All rates mentioned above are exclusive of service tax.

2) The maximum anount that the member can recover from its customer (if it so desires) will remain unchanged as under:

For inward transactions NIL
For outward transactions
Amount between Rs.2 lakhs to Rs.5 lakhs - Rs.25 plus applicable time varying charge, subject to maximum of Rs.30/-
Amount above Rs.5 lakhs - Rs.50 plus applicable time varying charge, subject to maximum of Rs.55/-

The RBI notification is available here i.e. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=10260&Mode=0

Safe deposit locker facility from NBFCs

RBI has vide its notification dated 28th January, 2016 clarified that safe deposit locker facilities being offered by certain NBFCs is a fee based service and shall not be reckoned as part of the financial business provided by NBFCs and further that this facility is not being regulated by RBI. NBFCs have to disclose to their customers that this activity is not regulated by RBI. 

Acquisition & transfer of immoveable property outside India

RBI has vide its notification dated 21st January, 2016 upgraded the FEM (Acqusition and transfer of immoveable property outside India) REgulations 2015. 

As per these regulations:

3. Restriction on acquisition or transfer of immovable property outside India:-

Save as otherwise provided in the Act or in these regulations, no person resident in India shall acquire or transfer any immovable property situated outside India without general or special permission of the Reserve Bank.

4. Exemptions:-

Nothing contained in these regulations shall apply to the property -

1. held by a person resident in India who is a national of a foreign state;
2. acquired by a person resident in India on or before 8th July 1947 and continued to be held by him with the permission of the Reserve Bank.

5. Acquisition and Transfer of Immovable Property outside India:-

(1) A person resident in India may acquire immovable property outside India, -

(a) by way of gift or inheritance from a person referred to in sub-section (4) of Section 6 of the Act, or referred to in clause (b) of regulation 4;

(b) by way of purchase out of foreign exchange held in Resident Foreign Currency (RFC) account maintained in accordance with the Foreign Exchange Management (Foreign Currency accounts by a person resident in India) Regulations, 2015;

(c) jointly with a relative who is a person resident outside India, provided there is no outflow of funds from India;

(2) A person resident in India may acquire immovable property outside India, by way of inheritance or gift from a person resident in India who has acquired such property in accordance with the foreign exchange provisions in force at the time of such acquisition.

(3) A company incorporated in India having overseas offices, may acquire immovable property outside India for its business and for residential purposes of its staff, in accordance with the direction issued by the Reserve Bank of India from time to time.

Explanation:

For the purposes of these regulations, 'relative' in relation to an individual means husband, wife, brother or sister or any lineal ascendant or descendant of that individual.

Possession and Retention of Foreign Currency

RBI has vide its notification dated 4/2/2016 updated the Foreign Exhange Management (Possession and Retention of Foreign Currency) Regulations 2015 whereby limits for possession and retention of foreign currency in the form of notes, coins & travellers cheques have been laid down. 

A. Following are the limits for possession or retention of foreign currency or foreign coins, namely :-

1. possession without limit of foreign currency and coins by an authorised person within the scope of his authority ;
2. possession without limit of foreign coins by any person;
3. retention by a person resident in India of foreign currency notes, bank notes and foreign currency travellers' cheques not exceeding US$ 2000 or its equivalent in aggregate, provided that such foreign exchange in the form of currency notes, bank notes and travellers cheques;

1. was acquired by him while on a visit to any place outside India by way of payment for services not arising from any business in or anything done in India; or
2. was acquired by him, from any person not resident in India and who is on a visit to India, as honorarium or gift or for services rendered or in settlement of any lawful obligation; or
3. was acquired by him by way of honorarium or gift while on a visit to any place outside India; or
4. represents unspent amount of foreign exchange acquired by him from an authorised person for travel abroad.

B. A person resident in India but not permanently resident therein may possess without limit foreign currency in the form of currency notes, bank notes and travellers cheques, if such foreign currency was acquired, held or owned by him when he was resident outside India and, has been brought into India in accordance with the regulations made under the Act.

Explanation: for the purpose of this clause, 'not permanently resident' means a person resident in India for employment of a specified duration (irrespective of length thereof) or for a specific job or assignment, the duration of which does not exceed three years.

The notification has come into force from December, 29, 2015. 

Online filing of FDI forms

RBI has vide its notification dated 1st February 2016 mandated that all forms for Foreign Direct Investment reporting i.e. Advance Remittance Form (ARF), FC-GPR and FC-TRS should be mandatorily filed with the online e-biz platform of RBI. Physical forms have been discontinued with effect from 8th February, 2016.

The relevant extracts of RBI notification is given below:

2. With a view to promoting the ease of reporting of transactions related to Foreign Direct Investment (FDI), the Reserve Bank of India, under the aegis of the e-Biz project of the Government of India has enabled online filing of the following returns with the Reserve Bank of India viz.

- Advance Remittance Form (ARF) which is used by the companies to report the FDI inflows to RBI;

- FCGPR Form which a company submits to RBI for reporting the issue of eligible instruments to the overseas investor against the above mentioned FDI inflow; and

- FCTRS Form which is submitted to RBI for transfer of securities between resident and person outside India.

3. At present both the options, i.e. online filing and physical filing of abovementioned forms, are available to the users.

4. Based on the experience it has been decided that beginning February 8, 2016 the physical filing of forms ARF, FCGPR and FC-TRS will be discontinued and forms submitted in online mode only through e-Biz portal will be accepted.

TRAI disallows discriminatory tarriffs for data

TELECOM REGULATORY AUTHORITY OF INDIA (TRAI) issued the ‘Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016’ today. This would disallow service providers to offer or charge discriminatory tariffs for data services on the basis of content being accessed by a consumer. 

TRAI had earlier issued a Consultation Paper on ‘Differential Pricing for Data Services’ in December, 2015. This Consultation primarily sought the views of the stakeholders on whether the service providers should be allowed to charge differential tariffs based on the websites/applications/platforms being accessed on the internet. Based on the responses received and the internal deliberations, the Authority has now issued these Regulations. These Regulations, are aimed at ensuring that consumers get an unhindered and non-discriminatory access to the internet. These Regulations intend to make data tariffs for access to the internet non discriminatory on the basis of the content. 

An overwhelming number of detailed and well reasoned responses, representing a diverse set of views were received in the consultation process. There were views suggesting both in support and against ex ante steps for regulating differential tariff for data services based on content. After careful examination of all the comments and feedback, the Authority has decided that ex ante regulation, rather than a case by case tariff intervention regime would be more appropriate as it would give the much needed certainty to industry participants. Such a step is also warranted in view of the high costs of regulation in terms of time and resources that will be required for investigating each case of tariff discrimination. 

The Authority has therefore mandated the following: 

a) No service provider shall offer or charge discriminatory tariffs for data services on the basis of content. 

b) No service provider shall enter into any arrangement, agreement or contract, by whatever name called, with any person, natural or legal, that has the effect of discriminatory tariffs for data services being offered or charged by the service provider for the purpose of evading the prohibition in this regulation. 

c) Reduced tariff for accessing or providing emergency services at times of public emergency has been permitted. 

d) Financial disincentives for contravention of the regulation have also been specified. 

TRAI had issued the Consultation Paper on ‘Differential Pricing for Data Services’ on 9th December, 2015. Opportunity for submitting written comments and counter comments was given to the stakeholders till 7th January, 2016 and 14th January, 2016 respectively. An Open House Discussion was held on 21st January, 2016 and further time to submit additional comments was given up to 25th January, 2016. 

TRAI will keep a close watch on the implementation of the mandate by the service providers and may undertake a review after two years or at an earlier date as it may deem fit. 

Report of the Company Law Committee

Some of the recommendations made by the Company Law Committee to streamline further the company law regime in India.

The Companies Law Committee was constituted in June 2015 for examining and making recommendations on the issues arising out of implementation of the Companies Act, 2013. The Committee submitted its report to the Government today.

2.         The Committee was chaired by Secretary, Ministry of Corporate Affairs and consisted of Shri Bharat Vasani, nominee of the Confederation of Indian Industries (CII), Smt. Reva Khetrapal, Judge (Retd.), Delhi High Court, Shri Y.M. Deosthalee, nominee of the Federation of Indian Chambers of Commerce and Industry (FICCI), Dr. A.S. Durga Prasad, President of the Institute of Cost Accountants of India, Shri Manoj Fadnis, President of the Institute of Chartered Accountants of India, Shri Atul Mehta, President of the Institute of Company Secretaries of India, Shri N.S. Vishwanathan, Executive Director from RBI and Shri P.K. Nagpal, Executive Director from SEBI as co-opted members and Joint Secretary (Policy), Ministry of Corporate Affairs as Member Convener.

3.         The Committee had extensive consultations with stakeholders before making its recommendations. More than 2000 suggestions were received during the consultation process.  The stakeholders consulted included all Industry Chambers, Professional Institutes, law firms, financial sector and other regulators. Six broad based groups were set up to review the suggestions received during the public consultation, each group being convened by a member of the Committee, and consisting of subject-matter experts including industry representatives, lawyers, company secretaries, cost accountants, investors’ representatives and chartered accountants.

4.         The Committee has endeavoured to reconcile the competing interests of the various stakeholders keeping in mind the difficulties and challenges expressed by them, and also being mindful of the Government’s objective of furthering ease of doing business, encouraging start-ups and the need for harmonising various laws.  The Committee also kept in mind the need to bring in greater clarity in the Act and Rules and harmonizing the various provisions thereof while making its recommendations.

5.         After exhaustive deliberations, the Committee has proposed changes in 78 sections of the Companies Act, 2013, which along with consequential changes, would result in about 100 amendments to the Act.  Approximately fifty amendments to the Rules have also been proposed. The recommendations cover significant areas of the Act, including definitions, raising of capital, accounts and audit, corporate governance, managerial remuneration, companies incorporated outside India and offences/ penalties.

6.         Some of the key changes proposed are listed below:

a)             Managerial remuneration to be approved by shareholders. [s. 197, 198]

b)             Modify definition of associate company and subsidiary company to ensure that ‘equity share capital’ is the basis for deciding holding-subsidiary relationship rather than “both equity and preference share capital”. [s. 2]

c)             Private placement process to be substantially simplified, doing away with separate offer letter, making valuation details public, details/record of applicants to be kept by company and to be filed as part of return of allotment only, and reducing number of filings to Registrar. [s. 42]

d)            Incorporation process to be made easier and allow greater flexibility to companies: An unrestricted objects clause to be allowed in the Memorandum of Association dispensing with detailed listing of objects, self-declarations to replace affidavits from subscribers to memorandum and first directors; changes also in various Forms. [s. 4, 7]

e)             Provisions relating to forward dealing and insider trading to be omitted from Companies Act. Listed companies are covered under SEBI Act/Regulations. [s. 194, 195]

f)              Companies may give loans to entities in which directors are interested after passing special resolution and adhering to disclosure requirement. [s. 185]

g)             Restriction on layers of subsidiaries and investment companies to be removed. [s. 2(87), 186(1)]

h)             Change in the definition of term ‘relative’ for determining disqualification of auditor [s. 141]

i)               Rationalize penal provisions with reduced liability for procedural and technical defaults. Penal provisions for small companies to be reduced. [ various sections]

j)               No filing fees if financial statements and annual returns filed within prescribed time. [s. 403]

k)             Auditor to report on internal financial controls with regard to financial statements. [s. 143]

l)               Frauds less than Rs. 10 Lakh to be compoundable offences. Other frauds to be continued to be non-compoundable. [s. 447]

m)           Reducing requirement for maintaining deposit repayment reserve account from 15% each for last two years to 20% during the maturing year.

n)             Foreign companies having insignificant/incidental transactions through electronic mode to be exempted from registering and compliance regime under Companies Act, 2013. [s.  379]

o)             Disclosures in the Directors’ Report to be simplified and duplications with SEBI’s disclosure requirements and financial statements to be removed while retaining the informative content for shareholders. [s. 134, Rules]

p)             Increased threshold for unlisted companies for compliance in context of requirement for Independent Directors (IDs), Audit Committee and Nomination and Remuneration Committee. [s. 149, 177, 178]

q)             Test of materiality to be introduced for pecuniary interest for testing independence of ID; thresholds for relatives’ pecuniary interest to be revised to make it more practical. [s. 149]

r)              Requirement for a managerial person to be resident in India for twelve months prior to appointment to be done away with. [Schedule V]

s)              Disclosures in the prospectus required under the Companies Act and SEBI Regulations to be aligned, with a view to make these simpler, by allowing prescriptions to be as per SEBI Regulations. [s. 26]

t)              ESOPs to be allowed to promoters working as employees/directors [s.62, Rules]

u)             Limit on sweat equity to be raised from 25% of paid up capital to 50% for start-ups. [s.54]

v)             Recognition of the concept of beneficial owner of a company proposed in the Act. Register of beneficial owners to be maintained by a company, and filed with the Registrar. [new section]

w)           Provisions with regard to consolidation of accounts to be reviewed and those with respect to attachment of standalone accounts of foreign subsidiaries to be relaxed in certain cases. [s. 129, 136]

x)             Re-opening of accounts to be limited to 8 years. [s. 130]

y)             Mandatory requirement of taking up some items only through postal ballot to be relaxed in case of a company that is required to provide electronic voting at its General Meetings. [s. 110]

z)             Requirement for annual ratification of appointment/continuance of auditor to be removed. [s. 139]

7.         The report is available on the website of the Ministry of Corporate Affairs, www.mca.gov.in, and public comments on the report are invited online till 15 February 2016 on the facility made available specifically for the purpose at the portal.