Asset reconstruction companies

RBI has vide its circular dated 15th June, 2020 laid down fair practices code for Asset Reconstruction Companies and mandated them to adopt the same and abide by the same. 

The Gist of the Fair Practices Code is given below:

Fair Practices Code for Asset Reconstruction Companies In order to achieve the highest standards of transparency and fairness in dealing with stakeholders, Asset Reconstruction Companies (ARCs) are advised to put in place Fair Practices Code (FPC) duly approved by their Board. The following paragraphs provide the minimum regulatory expectation while each ARC’s Board is free to enhance its scope and coverage. The FPC must be followed in right earnest and the Board must involve itself in its evolution and proper implementation at all times. The FPC shall be placed in public domain for information of all stakeholders. 1. ARC shall follow transparent and non-discriminatory practices in acquisition of assets. It shall maintain arm’s length distance in the pursuit of transparency. 2. In order to enhance transparency in the process of sale of secured assets, (i) invitation for participation in auction shall be publicly solicited; the process should enable participation of as many prospective buyers as possible; (ii) terms and conditions of such sale may be decided in wider consultation with investors in the security receipts as per SARFAESI Act 2002; (iii) spirit of Section 29A of Insolvency and Bankruptcy Code, 2016 may be followed in dealing with prospective buyers. 3. ARCs shall release all securities on repayment of dues or on realisation of the outstanding amount of loan, subject to any legitimate right or lien for any other claim they may have against the borrower. If such right of set off is to be exercised, the borrower shall be given notice about the same with full particulars about the remaining claims and the conditions under which ARCs are entitled to retain the securities till the relevant claim is settled/ paid. 4. ARCs shall put in place Board approved policy on the management fee, expenses and incentives, if any, claimed from trusts under their management. The Board approved policy should be transparent and ensure that management fee is reasonable and proportionate to financial transactions. 5. ARCs intending to outsource any of their activity shall put in place a comprehensive outsourcing policy, approved by the Board, which incorporates, inter alia, criteria for selection of such activities as well as service providers, delegation of authority depending on risks and materiality and systems to monitor and review the operations of these activities/ service providers. ARC shall ensure that outsourcing arrangements neither diminish its ability to fulfil its obligations to customers and the RBI nor impede effective supervision by RBI. The outsourced agency, if owned/controlled by a director of the ARC, the same may be made part of the disclosures specified in the Master Circular. 6. In the matter of recovery of loans, ARCs shall not resort to harassment of the debtor. ARCs shall ensure that the staff are adequately trained to deal with customers in an appropriate manner. (i) ARCs shall put in place a Board approved Code of Conduct for Recovery Agents and obtain their undertaking to abide by that Code. ARCs, as principals, are responsible for the actions of their Recovery Agents. (ii) It is essential that the Recovery Agents observe strict customer confidentiality. (iii) ARCs shall ensure that Recovery Agents are properly trained to handle their responsibilities with care and sensitivity, particularly in respect of aspects such as hours of calling, privacy of customer information, etc. They should ensure that Recovery Agents do not induce adoption of uncivilized, unlawful and questionable behaviour or recovery process. 7. ARCs should constitute Grievance Redressal machinery within the organisation. The name and contact number of designated grievance redressal officer of the ARC should be mentioned in the communication with the borrowers. The designated officer should ensure that genuine grievances are redressed promptly. ARCs' Grievance Redressal machinery will also deal with the issue relating to services provided by the outsourced agency and recovery agents, if any. 8. ARCs shall keep the information, they come to acquire in course of their business, strictly confidential and shall not disclose the same to anyone including other companies in the group except when (i) required by law; (ii) there is duty towards public to reveal information; or (iii) there is borrower’s permission. 9. Compliance with FPC shall be subject to periodic review by the Board. Copy of RBI circular can be found here

Lifeboat

https://www.youtube.com/watch?v=w8f-wy7qwi8

A classic Alfred Hitchcock movie (1944) that is shot entirely on a lifeboat. A ship is torpedoed in the second world war and few of the inhabitants find refuge in a lifeboat. Among them are a columnist Connie Porter (Tallulah Bankhead) Alice MacKenzie (Mary Anderson). Also pulled in is a German guy who does not speak English. Initially there is much resistance to the German's presence on the boat but they allow him to survive considering he is a prisoner of war. Subsequently they have to depend on the German navigation skills when a storm breaks out. They all assume they are heading for Bermuda on the basis of sun position and planets but the German knows otherwise. Its a cat and mouse psychological drama played between the characters on the lifeboat. Meanwhile one guy Gus Smith (William Bendix) has to have his leg amputated as gangrene sets in. They run out of water and food and there is a lot of flare up between the characters. There is love interest between Stanley (Hume Cronyn) and Alice and sparks fly between Connie and John Kovac (John Hodiak). The story is written by John Steinbeck of the "Grapes of Wrath" fame. Alfred Hitchcock has done a brilliant job with the direction, but it is the cinematography which is breathtaking. Shot entirely in black and white, the film did run into some controversy with its sympathetic portrayal of the Germans. This is one movie in which Alfred Hitchcock does not appear himself in a cameo role, he could not have since the movie was shot entirely on a lifeboat. 

SEBI - relaxations

SEBI has vide its circular dated 15th July, 2020 given relaxations in respect of debt listing, listing of non convertible redeemable preference shares and commercial papers to use unaudited financials with limited review provided that these unaudited financials are not more than 6 months old. 

It has also extended the timelines for submission of quarterly/ half-yearly/ yearly financial accounts as on 31st march, 2020 to 31st July, 2020.

Those issuers who propose to list their debentures/ preference shares/ commercial papers during the month of July, 2020 can use the available financial statements as on 31st December, 2019.

Copy of SEBI circular can be found here 

NBFC - audit of accounts

RBI has vide its circular dated 6th July, 2020 extended the timeline for finalisation of accounts of listed systemically important non deposit taking and deposit taking companies by such period as is allowed by SEBI. 

Hitherto, the time allowed for finalisation of accounts of systemically important deposit taking and non deposit taking companies is 3 months from the financial period closure i.e. by 30th June, in case the fianncial year closes on 31st March. But with this circular RBI has given relief only to listed such entities as they are also governed by SEBI regulations. 

Copy of the RBI circular can be found here

The Unquiet Sleep

The Unquiet Sleep by William Haggard is a British novel about a miracle drug gone wrong or potentially wrong. It is a drug manufactured by a pharma company in which the Junior Minister of Social Welfare or Parliamentary Secretary as he was called in the novel was working previous to his political career. The drug has some powers but not tested fully so is sent to the laboratory for full check. Meanwhile Greek Cypriot gangsters are interested in the drug to black market it and earn some money. The kingpin of the drug lords one Dick Asher ingratiates himself with the wife of this minister who is philandering. The junior minister's boss the senior minister Robert Seneschal is in trouble with the Prime Minister for the handling of this affair. Meanwhile Colonel Charles Russell heading a fictional Security Executive a kind of non official dirty works department and his lieutenant one Rachel Borrodaile who has previous experience in the French Resistance get into the act and try to sort things out. William Haggard a.k.a. Richard Henry Michael Clayton has written a lot of fictional thrillers set in the 1960s tto 1980s. His narrative in this novel becomes ponderous at times, when he goes on describing the procedures at Whitehall or when the characters go on a silent dialogue with their thoughts. Goodreads 3/5 

 

MSME - Udyam Registration

All MSME units as per the new definition of MSME (including those who are already registered in the Udyog Aadhar portal) are required to register/ re-register in the Udyam Registration portal (https://udyogaadhaar.gov.in/)

The classification of MSME units are as follows:

(i) a micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;
(ii) a small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and
(iii) a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

REGISTRATION PROCESS:

(1) Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.
(2) On registration, an enterprise (referred to as ―Udyam‖ in the Udyam Registration portal) will be assigned a permanent identity number to be known as ―Udyam Registration Number‖.
(3) An e-certificate, namely, ―Udyam Registration Certificate‖ shall be issued on completion of the registration process.

(4) Aadhaar number shall be required for Udyam Registration.
(5) The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
(6) In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
(7) In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
(8) No enterprise shall file more than one Udyam Registration:
Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.

(9) All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1
st day of July, 2020.
(10) All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
(11) The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021.
(12) An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

Copy of MSME notification in this regard can be found here

https://msme.gov.in/sites/default/files/IndianGazzate_0.pdf 

investment advisors

SEBI has notified certain amendments to SEBI (Investment Advisors) Regulations 2013.

Gist of these amendments are as follows

A. Segregation of Advisory & Distribution Activities
• Segregation of Advisory & Distribution Activities at client level to avoid conflict of interest.
• An individual shall have the option to register as an Investment Adviser or
provide distribution services as a distributor.
• A non-individual investment adviser shall have client level segregation at group level for investment advisory and distribution services and maintain an arm’s length relationship between its activities by providing advisory services through a separately identifiable department or division.
B. Implementation services
• Investment Advisers are allowed to provide implementation services (Execution) through direct schemes/ products in the securities market. However, no consideration can be received directly or indirectly, at investment adviser’s group or family level for these services.
C. Agreement between Investment Adviser and client
• Mandatory agreement to be entered between Investment Adviser and the client for ensuring greater transparency with reference to advisory activities.
D. Fees
• The fee charged by the Investment Adviser for providing Investment Advice from a client shall be in the manner as specified by SEBI.
E. Eligibility Criteria for IAs
• Enhanced eligibility criteria for registration as an Investment Adviser including net worth of Rs.50 lakhs for non-individuals and Rs. 5 lakhs for individuals.
• Individual investment adviser or a principal officer of a non-individual investment adviser to have enhanced professional or post-graduate qualification in relevant subjects and relevant experience of five years while grandfathering existing Individual Investment Advisers from complying with the enhanced qualification and experience as specified by SEBI.
• Individuals registered as investment advisers whose number of clients exceed 150 in total, shall apply for registration with SEBI as non-individual investment adviser.

https://www.sebi.gov.in/media/press-releases/jul-2020/sebi-notifies-amendments-to-sebi-investment-advisers-regulations-2013_47006.html