BEN-2 - extension of last date

MCA has issued a notification on 29th July, 2019 extending the last date for submission of BEN-2 form from 31st July, 2019 to 30th September, 2019.

Its good that MCA extended the last date because the form BEN-2 had too many complications, which the MCA was unable to understand and resolve. For eg. in one company, at the reporting company level, the member was a foreign company, but the ultimate holding was with a trust. So when we enter other body corporate as the member, we are unable to choose trustee as the SBO. This is an anomaly. This also shows the complexity of organisation structures created worldwide.

Secondly, the SBO id is not being pre-filled - so this is supposedly another technical issue, which I hope they sort it out soon.

This is a complicated form where the parties are totally reluctant to give out any information. In most cases the information has to come from abroad, which is taking a lot of time.

A copy of the notification can be found at the MCA site. 

motor vehicles - microdots

PIB press release dated 29th July, 2019

The Ministry of Road Transport & Highways has issued a draft notification GSR 521(E) dated 24^thJuly 2019, amending Central Motor Vehicle Rules, allowing motor vehicles and their parts, components, assemblies, sub-assemblies to be affixed with permanent and nearly invisible microdots that can be read physically with a microscope and identified with ultra violet light source.

Microdot technology involves spraying the body and parts of the vehicle or any other machine with microscopic dots, which give a unique identification. Use of this technology will help check theft of vehicles and also use of fake spare parts.  

The microdots and adhesive will become permanent fixtures/affixation which cannot be removed without damaging the asset, that is the vehicle itself. The notification says that the microdots, if affixed, will have to comply with AIS 155 requirements.

The Ministry has sought comments / objections on the draft notification within thirty days.

historical monuments

PIB press release dated 29th July, 2019

Union Culture Minister (IC) Shri Prahlad Singh Patel announced that opening hours of 10 historical Monuments across the country has been increased and now these Monuments will remain open from Sunrise to 9 pm for common public. The decision made public by Culture Minister while talking to media in New Delhi. Earlier these monuments used to open from 9am to 5.30 pm for general public. Shri Patel said that this decision has been made for the benefit of general public/tourists who can visit and appreciate the beauty of such historical sites for long hours.

The Minister also informed that other than these 10 monuments some other historical monuments are also under consideration for long opening hours for visitors. These 10 Monuments have been selected in first phase, he added.

The list of 10 historical Monuments is given below -

SL No.	Name Of Monuments	District	State
1	Rajarani Temple Complex	Bhubaneswar	Odisha
2	Dulhadeo Temple, Khajurao	Chattarpur	Madhya Pradesh
3	Sheikh Chilli Tomb, Thanesar	Kurukshetra	Haryana
4	Safdarjung Tomb	Delhi	Delhi
5	Humayun’s Tomb, Delhi	Delhi	Delhi
6	Group of Monuments at Pattadakkal, Karnataka	Bhagalkot	Karnataka
7	Gol Gumbaz	Vijayapura	Karnataka
8	Group of Temples, Markanda, Chamursi	Gadchiroli	Maharashtra
9	Man Mahal, Vaidhshala	Varanasi	Uttar Pradesh
10	Rani-ki-Vav	Patan	Gujarat

IBBI amendments

PIB press release dated 27th July, 2019

The Insolvency and Bankruptcy Board of India (IBBI) notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019 and the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 today.

The salient amendments affected by the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2019 are:

(a) The amendments specify the process for withdrawal of applications before constitution of committee of creditors (CoC), after constitution of CoC but before issue of invitation for expression of interest, and after issue of invitation for expression of interest.

(b) The amendments require that while approving a resolution plan or deciding to liquidate the corporate debtor, the CoC may:

(i) approve a plan providing for contribution for meeting the liquidation costs, 

(ii) recommend sale of the corporate debtor or sale of business of the corporate debtor as a going concern, and

(iii) fix, in consultation with the RP, the fee payable to the liquidator, if an order for liquidation is passed by the Adjudicating Authority.

The salient amendments affected by the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2019 are:

(i) The amendments specify the process for (i) sale of corporate debtor as going concern, and (ii) sale of business of corporate debtor as going concern under liquidation. These also provide that where a corporate debtor is sold as a going concern, the liquidation process shall be closed without dissolution of the corporate debtor.

(ii) The amendments require completion of liquidation process within one year of its commencement, notwithstanding pendency of applications for avoidance transactions. These provide a model timeline for each task in the liquidation process. It also specifies a maximum time of 90 days from the order of liquidation for completion of compromise or arrangement, if any, proposed by the stakeholders under section 230 of the Companies Act, 2013. These will ensure that liquidation process is closed at the earliest.

(iii) The amendments require the financial creditors, who are financial institutions, to contribute towards the liquidation cost, where the corporate debtor does not have adequate liquid resources to complete liquidation, in proportion to the financial debts owed to them by the corporate debtor, in case the CoC did not approve a plan for such contribution during corporate insolvency resolution process.  However, such contribution along with interest at bank rate thereon shall form part of liquidation cost, which is paid in priority.

(iv) The amendments provide for constitution of a Stakeholders’ Consultation Committee having representation from secured financial creditors, unsecured financial creditors, workmen and employees, government, other operational creditors, and shareholder/partners to advice the liquidator on matters relating to sale. However, the advice of this committee is not binding on the liquidator.

(v) The amendments require that a stakeholder may submit its claim or update its claim submitted during the corporate insolvency resolution process, as on the liquidation commencement date. Along with submission of claim, a secured creditor shall inform the liquidator of its decision to relinquish its security interest to liquidation estate or to realise its security interest.

(vi) The amendments have introduced a comprehensive compliance certificate to be submitted along with the final report to the Adjudicating Authority.

The amendment Regulations are effective from today. These are available at www.mca.gov.in and www.ibbi.gov.in.

Direct Selling Legislation

PIB press release dated 27th July, 2019

Ministry of Consumer Affairs, Food & Public Distribution, Department of Consumer Affairs notified the Direct Selling Guidelines, 2016 in the Gazette of India on 26.10.2016 as guiding principles for State Governments to consider regulating the business of direct selling and multi-level marketing and strengthen the existing regulatory mechanism on direct selling and multi-level marketing for preventing fraud and protecting the legitimate rights and interests of consumers. State Governments/Union Territories, being enforcement agencies, may take necessary action to implement these guidelines. In terms of the Direct Selling Guidelines, 2016, State Governments will set up a mechanism to monitor/supervise the activities of direct sellers, direct selling entities regarding compliance with the guidelines. Besides, the Consumer Protection Bill, 2019 has been introduced in Lok Sabha on 8th July, 2019 which seeks to provide the measures to be taken by the Central Government to prevent unfair trade practices in direct selling.

In terms of the Direct Selling Guidelines, 2016, no person or entity will participate in money circulation scheme in the garb of direct selling business. Ministry of Finance, Department of Financial Services has intimated that there is no information available with them that law enforcement agencies are wrongfully booking genuine direct selling firms under the Prize Chits and Money Circulation Scheme (Banning) Act, 1978.

This information was given in a written reply by the Minister of State for   Consumer Affairs, Food & Public Distribution, Shri Danve Raosaheb Dadarao in the Rajya Sabha today.

web based DIR-3-KYC

MCA has vide its notification dated 25th June, 2019 amended the Companies (Appointment and Qualification of Directors), Rules, 2014 as follows:

1) a new system of web based DIR-3-KYC is being introduced. Basically it is for those directors who have already done the form based DIR-3-KYC once before.

2) Any Director who holds a DIN as on 31st March of a financial year shall be required to do the form based DIR-3-KYC on or before 30th September of the next financial year, i.e. those directors who were allotted DIN during the financial year 2018-19 will be required to do a one time form based DIR-3-KYC on or before 30th September, 2019. Once he has done a form based DIR-3-KYC, then he need not do the form based compliance again.  On second and subsequent attempts, it is to be a web based DIR-3-KYC compliance for that financial year. Again for the next year, he will have to do a web based DIR-3-KYC compliance.

3) All those directors who did the form based DIR-3-KYC last year, will be required to do the web based DIR-3-KYC this year.

4) Any director who wants to update his personal e-mail id or mobile no. then it has to be done via a form based DIR-3-KYC only.

5) The fee for the form based DIR-3-KYC or the web based DIR-3-KYC is NIL if it is done within the stipulated date. In case of any delay, then fees of Rs.5000/- will be applicable to both the form based DIR-3-KYC and the web based DIR-3-KYC.

The MCA notifications are available on the MCA site.

Bidding guidelines for wind power projects

PIB press release dated 25th July, 2019

MNRE amends bidding guidelines for wind power projects

The Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind Power Projects was notified on 8th December, 2017. Based on experience of bidding and after consultation with stakeholders, following amendment to these standard bidding guidelines for wind power projects, is carried out:

1. The timeline for land acquisition for wind power projects has been extended from seven months to scheduled commissioning date, i.e. 18 months. This will help wind power project developers in states where land acquisition takes longer time.
2. The window for revision of declared Capacity Utilisation Factor (CUF) of wind power project has been increased to three years. The declared CUF is now allowed to revise once within three year of commercial operation date, which was earlier allowed within one year only.
3. The penalty on shortfall in energy corresponding to the minimum CUF, has now been fixed @ 50% (fifty percent) of the PPA tariff for the shortfall in energy terms liable to be paid by the Wind Power Generator to the Procurer. Further, the penalty shall be passed on by the Intermediary Procurer to the End Procurer after deducting the losses of Intermediary procurer.
4. In cases of early part commissioning, the Procurer may purchase the generation, at full PPA tariff.
5. Commissioning Schedule of wind power project has been defined as 18 (eighteen) months from the date of execution of the PPA or PSA, whichever is later.

The amendments intended not only to reduce the investment risks related to the land acquisition and CUF but also to provide incentives for early part commissioning of project. The subjectivity in penalty provisions has been removed and the penalty rate has been fixed. The risk of wind power developers in case of delay in signing of PSA has been mitigated by starting timeline of execution of project from date of signing of PPA or PSA, whichever is later.