e-Way Bill

Happy Financial New Year

Wish you a Happy New Financial Year! Let this year brings you more profit and wealth to your business and your clients. Generation of e-Way Bill is required for all Inter-State movement from 1st April 2018. Presently, e-way bill operations are not available for intra-state (within the state) movement of goods, except for States of Karnataka, Andhra Pradesh, Gujarat, Kerala, Telangana and Uttar Pradesh. E-way bill operations for intra-state (within the state) will be made available in a phased manner, as and when instructed by GST Council.

In this month, we are going to see in detail about this new addition to GST from this year along with our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST.

Saranya Deivasigamani,
CEO

e-Way Bill

e-Way bill is a document required to be carried by a person in charge of the conveyance carrying any consignment of goods of value exceeding fifty thousand rupees as mandated by the Government in terms of Section 68 of the Goods and Services Tax Act read with Rule 138 of the rules framed thereunder. It is generated from the GST Common Portal for e-Way bill system by the registered persons or transporters who cause movement of goods of consignment before commencement of such movement.

The consignor or consignee, as a registered person or a transporter of the goods can generate the e-way bill. The unregistered transporter can enroll on the common portal and generate the e-way bill for movement of goods for their clients. Any person can also enroll and generate the e-way bill for movement of goods for his/her own use.

Registration

All the registered persons under GST need to register on the portal of e-way bill namely: www.ewaybillgst.gov.in using GSTIN.

Enrollment

There may be some transporters, who are not registered under the Goods and Services Tax Act, but such transporters cause the movement of goods for their clients. They need to enroll on the e-way bill portal to get 15 digit Unique Transporter Id.

The transporter is required to provide the essential information for enrolment on the EWB portal. The transporter id is created by the EWB system after furnishing the requisite information.

TRANSIN

TRANSIN or Transporter id is 15 digit unique number generated by EWB system for unregistered transporter, once the transporter enrolls on the system which is similar to GSTIN format and is based on state code, PAN and Check sum digit. This TRANSIN or Transporter id can be shared by transporter with clients, who may enter this number while generating e-waybills for assigning goods for transportation.

Pre-requisite

The pre-requisite for generation of e-Way bill is that the person who generates e-Way bill should be a registered person on GST portal and should register in the e-Way bill portal. If the transporter is not registered person under GST it is mandatory to get enrolled on e-waybill portal (https://ewaybillgst.gov.in) before generation of the e-way bill. The documents such as tax invoice or bill of sale or delivery challan and Transporter’s Id, who is transporting the goods with transporter document number or the vehicle number in which the goods are transported, must be available with the person who is generating the e-way bill.

Generation of e-Way Bill

The e-way bill can be generated by the registered person in any of the following methods;-

Web based system
SMS based facility
Android App
Bulk generation facility
Site-to-Site integration
GSP ( Goods and Services Tax Suvidha Provider)

Correction of Details

Any mistake, incorrect or wrong entry in the e-way bill cannot be edited or corrected in the system. Only option available for the transporter is cancellation of e-Way bill and generate a new one with correct details.

Exemptions

The e-way bill is required to transport all the goods except exempted under the notifications or rules. Movement of handicraft goods or goods for job-work purposes under specified circumstances also requires e-way bill even if the value of consignment is less than fifty thousand rupees.

Validity

Validity of the e-Way bill depends upon the distance the goods have to be transported. In case of regular vehicle or transportation modes, for every 100Kms one day is a validity period for EWB as per rule and for part of 100 KM one more day is added. For ex. If approx. distance is 310Kms then validity period is 3+1 days. For movement of Over Dimensional Cargo (ODC), the validity is one day for every 20 KM (instead of 100 KM) and for every 20KM or part thereof one more day is added.

This can be explained by following examples –

(i) Suppose an e-way bill is generated at 00:04 hrs. on 14th March. Then first day would end on 12:00 midnight of 15 -16 March. Second day will end on 12:00 midnight of 16 -17 March and so on.

(ii) Suppose an e-way bill is generated at 23:58 hrs. on 14th March. Then first day would end on 12:00 midnight of 15 -16 March. Second day will end on 12:00 midnight of 16 -17 March and so on.

The validity of the e-way bill starts when first entry is made in Part-B i.e. vehicle entry is made first time in case of road transportation or first transport document number entry in case of rail/air/ship transportation, whichever is the first entry.It may be noted that validity is not re-calculated for subsequent entries in Part-B.

The approximate distance for movement of consignment from the source to destination has to be considered based on the distance within the country. That is, in case of export, the consignor place to the place from where the consignment is leaving the country, after customs clearance and in case of import, the place where the consignment is reached the country to the destination place and cleared by Customs.

If validity of the e-way bill expires, the goods are not supposed to be moved. However, under circumstance of ‘exceptional nature and trans-shipment’, the transporter may extend the validity period after updating reason for the extension and the details in PART-B of FORM GST EWB-01.

Type of Transactions

For transportation of goods in relation to all types of transactions such as outward supply whether within the State or interstate, inward supply whether from within the State or from interstate including from an unregistered persons or for reasons other than supply also e-way bill is mandatory. However, from 1st April 2018, e-way is required only for interstate movement. The e-way requirement for intra state movement will be notified later.

Part-A & B Slip

Part-A Slip is a temporary number generated after entering all the details in PART-A. This can be shared or used by transporter or the registered person later to enter the PART-B and generate the E-way Bill.

Sometimes, taxpayer wants to move the goods to self. e-Way bill Portal expects the user to enter transporter ID or vehicle number. So if the user wants to move the goods to self, they can enter GSTIN in the transporter Id field and generate Part-A Slip. This indicates to the system that the user is a transporter and can enter details in Part-B later when transportation details are available.

The person in charge of a conveyance shall carry the invoice or bill of supply or delivery challan, bill of entry as the case may be and a copy of the e-way bill number generated from the common portal. Please refer relevant rules for details.

The registered person can generate the e-way bill from their account from any registered place of business. However, he/she needs to enter the address accordingly in the e-way bill. He/she can also create sub-users for a particular business place and assigned the role for generating the e-way bill to that sub user for that particular business place.

When consignee or recipient rejects to take the delivery of consignment, the transporter can get one more e-way bill generated with the help of supplier or recipient by indicating supply as ‘Sales Return’ with relevant documents, return the goods to the supplier as per their agreement.

Multiple invoices

If multiple invoices are issued by the supplier to recipient, that is, for movement of goods of more than one invoice of same consignor and consignee, multiple EWBs have to be generated.

Bill to-Ship to

The tax payer raises the bill to somebody and sends the consignment to somebody else as per the business requirements their details are provided under Bill to—Ship to details.

Bill From—Dispatch From

The supplier prepares the bill from the business premises to consignee, but moves the consignment from some others’ premises to the consignee as per the business requirements. These details are provided under Bill From—Dispatch From details.

Forms

Forms used in e-Way bill system are:

Form Name	Use
Form GST EWB-01	E-Way Bill
Form GST EWB-02	Consolidated E-Way Bill
Form GST EWB-03	Verification Report
Form GST EWB-04	Report of detention
Form GST ENR-01	Application for Enrolment under section 35 (2)
Form GST INV-1	Generation of Invoice Reference Number

The Registration and Compliance of e-Way can be made through ewaybillgst.gov.in It is the additional opportunity and exploring area for professionals like GST experts, CA, CS and CMA who work on GST.

Legal Term

Injuria sine damno

Injury without damage.

MCA Updates

Constitution of Steering Committee on Corporate Social Responsibility to review the functioning of CSR enforcement & to recommend a uniform approach for its enforcement.

SEBI Updates

Guidelines for issuance of debt securities by Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)”.
Investments by FPIs in Government and Corporate debt securities.
Performance disclosure post consolidation/ Merger of Schemes.
Clarifications with respect to circular on “Specifications related to International Securities Identification Number (ISINs) for debt securities issued under the SEBI (Issue and Listing of Debt Securities) Regulations, 2008.

RBI Updates

Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (Amended up to April 06, 2018) .
Foreign Exchange Management (Cross Border Merger) Regulations, 2018 .

Income Tax Updates

Income-tax (3rd—5th Amendment) Rules, 2018.

GST Updates

Advisory for change in taxpayer type from SEZ to Regular or Regular to SEZ.

All about Rights Issue

Have you informed about CODS

Hope you have alarmed your clients regarding CODS scheme, only few more days left for the scheme to get over. Utilize the same for reviving the default status of your clients.

We all know what is a rights issue and how to make it. But how sure are we about the details in it? Is there any restriction on time gap between two rights issue in a company? What does Companies Act Says and what does SEBI ICDR says? How each type of company can offer rights issue? This is what we are going to discuss in this edition.

This edition, we will be discussing about new Incorporation procedure and Highlights on Financial Budget, 2018 along with our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST.

Saranya Deivasigamani,
CEO

All About Rights Issue

A rights issue is an offer of shares to the existing shareholders of the Company in proportion to their shareholding. The rights issue is governed by Section 62 of the Companies Act, 2013 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.

According to Section 62 of the Companies Act, 2013, (1) Where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered—

(a) to persons who, at the date of the offer, are holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share capital on those shares by sending a letter of offer subject to the following conditions, namely:—

(i) the offer shall be made by notice specifying the number of shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date of the offer within which the offer, if not accepted, shall be deemed to have been declined;

(ii) unless the articles of the company otherwise provide, the offer aforesaid shall be deemed to include a right exercisable by the person concerned to renounce the shares offered to him/her or any of them in favour of any other person; and the notice referred to in clause (i) shall contain a statement of this right;

(iii) after the expiry of the time specified in the notice aforesaid, or on receipt of earlier intimation from the person to whom such notice is given that he/she declines to accept the shares offered, the Board of Directors may dispose of them in such manner which is not dis-advantageous to the shareholders and the company.

The law has not restricted any Companies from issuing rights issue including One Person Company (OPC). However it is implied that an OPC can offer the rights issue only to the sole member.

When a listed public limited company offer a rights issue it should follow SEBI ICDR, 2009, where the aggregate value of specified securities offered is fifty lakh rupees or more.

The Companies which was listed on recognized stock exchange having nationwide trading terminals for a period of at least 3 years immediately preceding the reference date shall opt for Fast Track Issue of rights issue if its average market capitalization of public shareholding is at least 250 crore rupees.

Common Conditions for rights issue as per ICDR:

No issuer shall make a rights issue of specified securities:

a) if the issuer, any of its promoters, promoter group or directors or persons in control of the issuer are debarred from accessing the capital market by the Board;

b) if any of the promoters, directors or persons in control of the issuer was or also is a promoter, director or person in control of any other company which is debarred from accessing the capital market under any order or directions made by the Board;

c) unless it has made an application to one or more recognised stock exchanges for listing of specified securities on such stock exchanges and has chosen one of them as the designated stock exchange:

Provided that in case of an initial public offer, the issuer shall make an application for listing of the specified securities in at least one recognised stock exchange having nationwide trading terminals;

d) unless it has entered into an agreement with a depository for dematerialisation of specified securities already issued or proposed to be issued;

e) unless all existing partly paid-up equity shares of the issuer have either been fully paid up or forfeited;

f) unless firm arrangements of finance through verifiable means towards seventy five per cent. of the stated means of finance, excluding the amount to be raised through the proposed public issue or rights issue or through existing identifiable internal accruals, have been made.

Warrants may be issued along with rights issue of specified securities subject to the following:

a) the tenure of such warrants shall not exceed 18 months from their date of allotment in the public/rights issue;

b) not more than one warrant shall be attached to one specified security

c) the price or conversion formula of the warrants shall be determined upfront and at least 25% of the consideration amount shall also be received upfront;

d) in case the warrant holder does not exercise the option to take equity shares against any of the warrants held by him, the consideration paid in respect of such warrant shall be forfeited by the issuer.]

The amount for general corporate purposes, as mentioned in objects of the issue in the draft offer document filed with the Board, shall not exceed twenty five per cent of the amount raised by the issuer by issuance of specified securities.

No issuer shall make, (a) a public issue of equity securities, if the issuer or any of its promoters or directors is a wilful defaulter; or (b) a public issue of convertible debt instruments if,

(i) the issuer or any of its promoters or directors is a wilful defaulter, or

(ii) it is in default of payment of interest or repayment of principal amount in respect of debt instruments issued by it to the public, if any, for a period of more than six months.

An issuer making a rights issue of specified securities, shall make disclosures as specified in Part G of Schedule VIII, in the offer document and abridged letter of offer, if the issuer or any of its promoters or directors is a wilful defaulter.

In case of a rights issue of specified securities referred to in sub-regulation (6), the promoters or promoter group of the issuer, shall not renounce their rights except to the extent of renunciation within the promoter group.

Procedure to make a rights issue:

i. Convene a Board Meeting offering the rights issue, its terms, conditions and offer details. Pass a resolution for approving “Letter of Offer” or “Offer Document”. The offer letter shall include right of renunciation also.

ii. In case of Listed Company—appoint one or more merchant banker with at least one of whom shall be a lead merchant banker. Perform due diligence, issue newspaper advertisement in English and regional language newspapers.

iii. File offer document with the Board at least 30 days prior to registering the prospectus, red herring prospectus or shelf prospectus and receive observation and modifications.

iv. Dispatch Letter of Offer, Offer Document and other issue material including forms for ASBA to the shareholders, stock exchange, syndicate members as the case maybe.

v. Open the offer for a period not less than 15 days and not exceeding 30 days from the date of offer.

vi. On expiry of offer period, receive acceptance, renunciations, rejections of rights from the shareholders. If no response were received from the shareholders on expiry of 30 days, consider the offer to be rejected by such shareholder.

vii. Convene a Board Meeting approving the rights issue, detailing acceptance, renunciation and rejection of offer. Pass a resolution for approving the rights issue.

viii. File e-Form MGT-14 within 30 days of Board Meeting.

ix. File e-Form PAS-3 within 30 days of Allotment of Shares.

Restriction on further capital issue—as per ICDR:

No issuer shall make any further issue of specified securities in any manner whether by way of public issue, rights issue, preferential issue, qualified institutions placement, issue of bonus shares or otherwise:

(a) in case of a fast track issue, during the period between the date of registering the red herring prospectus (in case of a book built issue) or prospectus (in case of a fixed price issue) with the ROC or filing the letter of offer with the designated stock exchange and the listing of the specified securities offered through the offer document or refund of application moneys; or

(b) in case of other issues, during the period between the date of filing the draft offer document with the Board and the listing of the specified securities offered through the offer document or refund of application moneys; unless full disclosures regarding the total number of specified securities and amount proposed to be raised from such further issue are made in such draft offer document or offer document, as the case may be.

Nowhere in the act specifies any time limit within 2 rights issue or public issue unless the restrictions detailed above.

Legal Term

Indictment

Noun: a formal charge or accusation of a serious crime.

MCA Updates

Forms revised recently are—INC-28, AOC-4, IEPF-1, SPICe, CODS 2018, CRL-1, DIR-3, DPT-3, MGT-6, MGT-15, MGT-14, ADT-1, ADT-2, SH-7 and URC-1 .
Chapter IX, Section 129 shall not apply to the companies engaged in defence production to the extent of application of relevant Accounting Standard on segment reporting.

SEBI Updates

Revision of limits relating to requirement of underlying exposure for currency derivatives contracts.
Separate limit of Interest Rate Futures (IRFs) for Foreign Portfolio Investors (FPIs).
Manner of Achieving Minimum Public Shareholding.
Easing of Access Norms for investment by FPIs.
Compensation to Retail Individual Investors (RIIs) in an IPO.

RBI Updates

Discontinuance of Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits.
Hedging of Commodity Price Risk and Freight Risk in Overseas Markets (Reserve Bank) Directions.
Separate limit of Interest Rate Futures (IRFs) for Foreign Portfolio Investors (FPIs).
Risk Management and Inter-bank Dealings: Revised guidelines relating to participation of a person resident in India and Foreign Portfolio Investor (FPI) in the Exchange Traded Currency Derivatives (ETCD) Market.
Ombudsman Scheme for Non-Banking Financial Companies, 2018.

Income Tax Updates

The substituted Form 10A – Application for registration of charitable or religious trust or institution etc. is now available for e-Filing.

GST Updates

New version of GSTR-4 offline tool is now available.
Advisory to Taxpayers on Improved GSTR-3B Return Filing Process. And for filing Table 6A of GSTR-1 and return on GST Portal

New Incorporation Procedure and Highlights on Budget, 2018

Are we really growing?

The Government of India is continuously taking significant initiatives to strengthen the economic credentials of the country and make it one of the strongest economies in the world. But are the initiatives fair enough to lead to growth? Are we really growing or making ourselves believe that we are growing? Each initiatives will have its own pros and cons. Praising the pros alone is not enough but getting a remedial action for cons is equally important to make the initiative successful.

How good is the Zero fee incorporation is what we will be discussing in this edition.

Saranya Deivasigamani,
CEO

New incorporation procedure

In this article we are going to discuss whether Zero fee incorporation is a boon or indirect threat to business aspirants and share our experience and opinion. Right to an opinion does not make the opinion right. If our opinion is not your reality, do not worry it need not match always.

Last year, The Ministry of Corporate Affairs focused on the agenda of incorporating a company in India in just 1 day. Now the campaign of ease of doing business in India has levelled up its bar by:

· Waiving off the Incorporation fee.

· Introducing a new Web Form for Name Approvals.

· Streamlining DSC and DIN.

To foster and promote new startups and businesses, the Ministry of Corporate Affairs (MCA) has announced zero fees of incorporation for SPICE Forms, e-MoA and e-AoA. This will enable the saving of a few thousand rupees, thereby encouraging more startups to formally register their company. Stamp duty will still be applicable at a rate depending upon the state of incorporation.

The zero fees incorporation scheme is really an appreciable step taken by MCA. Another one is Reserve Unique Name (RUN), the Government Process Re-engineering (GPR) initiatives for making the incorporation process speedy, smooth, simple and reducing number of procedures involved for starting a business. DSC & DIN not required for filing of RUN form for reservation of Name. Only account of MCA portal is mandatory.

Every applicant if they want can file the web-based Reserve Unique Name form before filing the SPICe form for incorporation. The RUN form gives an applicant only a single chance to get a suitable unique name approved. In case of rejection of the name due to any similarity of name with a registered company, an LLP or a trademark or due to non-adherence of the Companies (incorporation) Rules, 2014; there are no second chances available. In every good there is one bad, likewise though the Act talks about many merits about RUN web form there are some demerits which need to be considered for the sake of professionals and business aspirants.

Usually in incorporation process initial step is Name Approval. The Act introduces RUN instead of INC-1 and states that it was introduced to reduce the procedures in incorporation. But in our experience we would say it’s quite a risky procedure and it is difficult for professionals to convey the risky parts to clients. Using RUN service we can give only one name which must be unique and our form will be either approved or rejected by Central Registration Center (CRC) and now on wards we will not get re-submission (RSUB). While using INC-1 we had option to give 6 names of the proposed company in order of preference but now this option is no more available in RUN.

In the RUN form there is one option called Auto check, if we type the companies name and click that it will shows the availability. But, our bad we can’t trust it because it checks generally and not deeply. Few months back we are into incorporation of a Private Limited Company. A client of us wanted to incorporate their company with name something like “IKYA”. We checked in MCA and Trademark website and got “no match found”. Bingo! we are ready to get the name. But guess what there exist a Company with name “AIKYA” and the form got rejected because of that. Common Sense! In TradeMark Search you have options to search the word start with, contain, match with, etc., but MCA name search will search only start with but no other option of end with or contain or match with. How can we guess that there is a similar company existing? Even now the name search remains the same. Expecting atleast RUN form will give a solution to it, we tried the names “IKYA Private Limited” and “AIKYA Private Limited” in RUN form using Auto check. To our surprise it showed that the name is available and we can apply. Reason is as simple as that it checks only the name “Aikya Private Limited” and not bothered about the uniqueness. As like, as per RUN’s auto check, “Zappy Private Limited” is available and “Zappy Consults Private Limited” is not available. As professionals, we know if we apply with these flaws in the system there are more possibilities to get our forms rejected and as additional bonus we do not have any option for resubmission.

The fee of RUN form is ₹.1,000 and once it gets rejected we have to again file with fresh form with fees. So, getting a name approval will become a big task. To our view, the MCA would have given 3 chances or no fee for name approval. Though, we can avoid this by filing spice form with proposed name to avoid extra fees but, if the name gets rejected we have to file all with proposed name again till it gets approval and we have only 2 chances. RUN has indeed proved to be a blessing in disguise with its user-friendly form which will make the applicant pay off more.

Cost Comparison of RUN vs. SPICe (stamp duty for Delhi)

Let us evaluate the number of chances we get in SPICe form over the RUN web form when you pay about the same price.

Particulars	Cost for Run (exclusive of SPICe)	Cost for SPICe	Cost You save for opting for SPICe
First attempt	.1,000/-	.600/-	.1,000/-
Second attempt	.1,000/-	Nil	.2,000/-
Third attempt	.1,000/-	.600/-	.2,400/-
Fourth attempt	.1,000/-	Nil	.3,400/-
Fifth attempt	.1,000/-	.600/-	.3,800/-
Sixth attempt	.1,000/-	Nil	.4,800/-
Total cost for 6 name options	*6,000 +600 =**.6600/-	.1,800/-	You end up saving .4,800/- for 6 name options

This comparison makes the ambiguity of opting for RUN web form over SPICe form, more clear.

The MCA always try to introduce a new innovative things and it is really an appreciable try but manytimes it is ignoring the technical difficulties and practical difficulties that are causing to the stakeholders. They must be more caution and make hassle free incorporation for both the professionals and business aspirants. If it is hassle free then more persons will be impressed to start their own business at zero fees and it will reduce an unemployment rate and will raise the Government revenue and India will become a developed country in few years. As learned professionals, if you have any ideas to give a push to MCA for technology upgradation, please write to us.

Vidhyaa Ragavendran,
Executive Consultant

HIGHLIGHTS OF BUDGET, 2018

Some of the key highlights of the budget are given hereby for the reference:

Minimum support price for kharif crops will now be 1.5 times the production cost.
The government plans to set up an agricultural market fund with corpus of .2,000 crore.
Government proposes to launch Operation Green for which a sum of .500 crore will be allocated.
The government will contribute 12 percent EPF in wages of new employees in all sectors. Women contribution to EPF slashed for initial three years to 8 per cent.
SEBI will consider mandating large corporates to meet 25 percent of debt needs from the market.
For senior citizens, exemption of interest income on bank deposits raised to .50,000.
For 2018-19, the disinvestment target is set at .80,000 crore.
Proposed spending on rural infra is .14.34 lakh crore.
Custom duty on mobile phones increased from 15 to 20 percent.
Revised fiscal deficit for 2017-18 is at .5.95 lakh crore or 3.5 percent of GDP. Fiscal deficit at 3.3 percent of GDP for 2018-19.
Corporate tax for 2018-19 has been cut to 25 percent for companies with revenue up to .250 crore.
Standard deduction of .40,000 for salaried taxpayers.
Capital gains exceeding .1 lakh to be taxed 10 percent without indexation benefit with certain cautions.
Equity Oriented Mutual Funds will now face a dividend distribution tax of 10 percent.
PAN to be used as Unique Entity Number for non- individuals from April 1.
PAN is mandatory for any entity entering into a financial transaction of .2.5 lakh or more.
Budget proposes to tax long term capital gains exceeding .1 lakh at 10 per cent without indexation. Short term capital gains tax to remain unchanged at 15 per cent.

Legal Term

De Minimis

An abbv. form of the Latin Maxim de minimis noncurat lex, “the law cares not for small things.” A legal doctrine by which a court refuses to consider trifling matters.

MCA Updates

Notification regarding Exemption to Government Companies under section 129(6) of Companies Act, 2013 from recognizing Deferred Tax Assets/ Deferred Tax Liability under AS-22/Ind AS-12.
Appointment and Qualification of Director Amendment rules 2018.
Companies (Regn office and fees) Amendment Rules 2018.

SEBI Updates

Online Registration Mechanism and Filing System for Stock Exchanges.
Online Filing System for Offer Documents, Schemes of Arrangement, Takeovers and Buy backs.
Charging of additional expenses of upto 0.20% in terms of Regulation 52 (6A) (c) of SEBI (Mutual Funds) Regulations, 1996.

RBI Updates

Relief for MSME Borrowers registered under Goods and Services Tax (GST).

Income Tax Updates

Tax Return Preparer (Amendment) Scheme, 2018.

GST Updates

Reduction of late fee in case of delayed filing of FORM GSTR-1, 5, 5A and 6.
First Amendment 2018, to CGST Rules.
Extension of date for filing the return in FORM GSTR-6.,

SARFEASI and Highlights on Companies Act

Zappy Turns 3

A dream becomes a goal when action is taken toward its achievement. Again successfully completed one more year and stepping into the Third Year. Thank you all for supporting and coordinating with us in achieving our goals and chasing our dreams. Zappy’s Team thanks all the clients, stakeholders, family and friends for being with us always. Zappy makes you Happy and we will always try to keep up the same.
This edition, we will be discussing about SARFAESI Act and Highlights on Companies Act Amendments along with our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST.

Saranya Deivasigamani,
CEO

SARFAESI ACT

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (also known as the SARFAESI Act) is an Indian law. It allows banks and other financial institution to auction residential or commercial properties to recover loans. It allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay their loans. It enables banks to reduce their non-performing assets by adopting measures for recovery or reconstruction. Upon loan default, banks can seize the securities (except agricultural land) without intervention of the court. SARFAESI is effective only for secured loans where bank can enforce the underlying security e.g. hypothecation, pledge and mortgages. In such cases, court intervention is not necessary, unless the security is invalid or fraudulent. However, if the asset in question is an unsecured asset, the bank would have to move the court to file civil case against the defaulters.
The SARFAESI Act, 2002 gives powers of ‘seize’ to banks. Banks can give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. If the borrower fails to comply with the notice, the Bank may take recourse to one or more of the following measures:

Take possession of the security for the loan;
Sale or lease or assign the right over the security;
Manage the same or appoint any person to manage the same.

The SARFAESI Act also provides for the establishment of Asset Reconstruction Companies regulated by RBI to acquire assets from banks and financial institutions.
The Central Government has issued the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (Central Registry) Rules, 2011 and prescribed the Forms to be used for the purpose of filing information for registration in respect of transactions of securitisation, asset reconstruction of financial assets and security interest over property. The Forms prescribed by the Central Government for registration are as under:

Form I	For Creation and modification of Charge.
Form II	For particulars of Satisfaction of Charge.
Form III	For Securitisation or Reconstruction of Financial Assets.
Form IV	For Satisfaction of Securitisation or Reconstruction of Financial Assets.

SARFAESI Act Amendments have been made in 2016 because of “Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016. The act added new definitions to SARFAESI, widened the scope of debts and secured creditors and bestowed upon RBI new powers in relation to making of policies.

HIGHLIGHTS OF THE COMPANIES (AMENDMENT) BILL, 2017

The major amendments proposed include simplification of the private placement process, rationalization of provisions related to loan to directors, omission of provisions relating to forward dealing and insider trading, doing away with the requirement of approval of the Central Government for managerial remuneration above prescribed limits, aligning disclosure requirements in the prospectus with the regulations to be made by SEBI, providing for maintenance of register of significant beneficial owners and filing of returns in this regard to the ROC and removal of requirement for annual ratification of appointment or continuance of auditor.
The major official amendments subsequently introduced include continuing with the provisions relating to layers of subsidiaries, continuing with the earlier provisions with respect of memorandum, making offence for contravention of provisions relating to deposits as non-compoundable, requiring attaching of financial statement of associate companies, stringent additional fees of .100 per day in case of delay in filing of annual return and financial statement etc.

For incorporation of company declaration will be required instead of affidavits.
Name reservation in case of new company shall be valid for 20 days from date of approval instead of 60 days from the date of application.
Annual General Meeting of unlisted company can be held anywhere in India.
Every company shall have registered office within 30 days of incorporation instead of current requirement to have registered office within 15 days.
Notice of every changes of situation of the registered office shall be given to ROC within 30 days instead of 15 days as currently provided.
Sweat equity shares can be issued at any time currently it can be issued after 1 year from commencement of business.
In addition to Directors & KMP, any employee of the company can also authenticate company documents as authorised.
Wholly owned subsidiary (WOS) of a company incorporated outside of India is now allowed to hold EGM outside India.
No central govt. approval required for payment of remuneration in excess of 11% of net profit.
Money received under the private placement shall not be utilised unless the return of allotment is filled with the ROC.
Central govt. Can provide any other number to be treated as DIN like Aadhar or Pan.
Where a director incur any of disqualification under section 164(2) due to default of filing of financial statement or annual return or repayment of deposit or pay interest or other mentioned in section, than he shall be vacate office of the director in all the companies other than the company which is in default.
Requirement of filing of form DIR 11 (Filing of a copy of resignation to ROC by director itself) made optional.
Eligibility for doing CSR to be determined based on preceding “Financial Year” instead of “three preceding Financial year”;
The requirement related to annual ratification of appointment of auditor by members is omitted.
CG will prescribe an abridged Board Report for One Person Company and small company.
Disclosure which have been provided in the financial statement shall not be required to be reproduced in the Board Report again.
Disclosure by promotes and top ten shareholder with respect to 2% change in shareholding in a listed company is omitted.
In case delay in filing documents, fact or information required to be submitted under section 92 (Annual Return) or 137 (copy of financial statement), after expiry of prescribed period a flat additional fee of .100 per day shall be paid instead of slab wise additional fee.
For calculation of net worth of the company debit or credit balance of profit and loss account shall be include.

Legal Term

Rebus sic stantibus

A qualification in a treaty or contract, that allows for nullification in the event fundamental circumstances change.

MCA Updates

Companies (cost records and audit) second Amendment Rules, 2017.
Condonation of Delay Scheme 2018.
A new name reservation service is being developed and is likely to be deployed on 26th January, 2018.
MCA is proactively designing a Front Office service (replacing INC-1 eform with Web-Form) for Name Reservation and Change of Name for companies capturing only absolutely essential information from the applicants. The said service is likely to be rolled out on 26th January 2018.
INC-7 form is discontinued w.e.f 10.01.2018. In case the name reserved using INC-1 is to be used for incorporation through SPICe form, users should file the form latest by 17.01.2018.
DIR-3 (Application for Director Identification Number) would be applicable for the allotment of DIN to individuals in respect of existing companies only and shall be filed by the existing company in which the proposed Director is to be appointed.
To facilitate corresponding changes in LLP eforms due to deprecation of DIR-3, it is proposed to temporarily suspend issuance of allotment of new DINs for Designated Partners/Partners of LLPs w.e.f 26th January 2018 till 31st March 2018.
It is proposed to mandate SPICe (with necessary provision for incorporating Producer Companies) as the only form for incorporation of companies w.e.f. 26th January, 2018.

SEBI Updates

Margin provisions for intra-day crystallised losses.
Electronic book mechanism for issuance of securities on private placement basis.
Benchmarking of Scheme’s performance to Total Return Index.
Schemes of Arrangement by Listed Entities and (ii) Relaxation under Sub-rule (7) of rule 19 of the Securities Contracts (Regulation) Rules, 1957.
Transaction Charges by Commodity Derivatives Exchanges.
Exemption application under Regulation 11 (1) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Investments by FPIs in Government Securities.
Disclosure of holding of specified securities and Holding of specified securities in dematerialized form .

RBI Updates

Refinancing of External Commercial Borrowings.
Submission of Financial Information to Information Utilities.

Income Tax Updates

Electoral Bond Scheme, 2018.
The SEEPZ Special Economic Zone Authority, an authority constituted under the Special Economic Zone Act, 2005 by the Government of India.
Income–tax (25th Amendment) Rules, 2017 .

GST Updates

CGST (Fourteenth Amendment) Rules, 2017.
Extends the due dates for monthly furnishing of FORM GSTR-1 for taxpayers with aggregate turnover of both upto and more than ₹.1.5 crores.
Waives the late fee payable for failure to furnish the return in FORM GSTR-4.
Notifies the date from which E-Way Bill Rules shall come into force. Wherever there is a movement of goods, and the value of the goods is above ₹ 50,000 e-waybills are required in case of supply of goods and for reasons other than supply (job work, movement of material on returnable gate pass. Etc.,) is 1st of February 2018.
Central Tax so as to prescribe effective rate of tax under composition scheme for manufacturers and other suppliers .