Hi Folks
Is it intriguing to see a cute, fat, little piggy on our 190th issue banner ? and that too with RBI making some announcements ? To whom, for what, on what ? Hold on. Last time I let out steam and for a valid reason. Whether it was my steam or a twitter outpour by one of my aggrieved clients or the dogged follow ups by professionals over the months, there is some progress on the LLP front. See our news update below on the same. Existing LLPs can now include new Partners by getting DIN for them. A system is in place. However new LLPs need to wait. For reasons best known to it, MCA seems to be working at its own snail-pace (5 months !) and doesn’t feel the need to put out any reasons too for the inaction in these days and times of ‘responsible governance’ !
Back to the pink piggy, stuffed with currency notes with a LSF inscribed on its tummy For the uninitiated, LSF is the ‘Late Submission Fee’ being levied by RBI of late, for late reporting of FDI (Foreign Direct Investment) remitted by NRIs & foreign investors in Companies. Whenever an Indian company receives investment in the form of shares or debentures from non-residents, it must report certain details within 30 days in Form ARF. Again after allotment of such securities, the company must within 30 days, file certain details in Form FCGPR. Entrepreneurs / Startups / Companies / Professionals / Bankers are all too familiar with the issues and delays involved in completing this seemingly simple filings.
Over the years, FDI into India has increased by leaps and bounds. So also the complexities and issues in RBI reporting that have ballooned. Instead of making good the offence (of late or incomplete reporting) by paying a penalty (after a process called compounding) which runs into lakhs (usually depending on the investment amount), Companies can now get away with paying the Late Submission Fee ! It is a business-friendly move no doubt by RBI. It was a pain not only for Companies but also a drain on the RBI resources, compounding lakhs of FDI offences. RBI has eased this by levying very nominal LSF in lieu of compounding – can you believe it is as less as 1 rupee in a case ? sometimes it is Rs. 252, 350 etc. depending on the nature of offence. This is a welcome step no doubt but is it worth collecting such paltry sums ? what about the cost of this process which involves a notice by RBI and payment by the Company by way of a Demand Draft deposited in RBI offices ? in these days and times of email notice and online payments, should the Central Bank not have a better mechanism ??!! Well, the elephant that it is, RBI is slowly but surely trudging along the e-path. Just read another news item below where RBI is introducing a Simplified e-Form for all types of reporting.
Ok, so much for the piggy, snail, elephant ! Animal lovers – no offence meant. All these species contribute more to a sustainable world than the homo sapien !! Gratitude to them, as I recall the World Environment Day on 5th June. This 190th issue carries many important and useful updates (from the stables of MCA, RBI, IBBI & GST). Do read and reflect over the weekend. If you want to catch up with the older issues of Samhita, tune in to
Before I sign off today (15th June)……don’t forget to pay the Advance Tax (due today). Also, on this PCS Day, wishing all my fellow Practising Company Secretaries a happy, meaningful, responsible, ethical & prosperous professional journey ahead ! Again, gratitude to our employees, customers & families for supporting us always.

Happy Reading

Limited Liability Partnership (LLP) (Amendment) Rules, 2018, provides that every individual intending to be appointed as designated partner of an existing LLP, shall make an application in Form DIR-3 for obtaining Designated Partner Identification Number (DPIN – interchangeable with DIN). In case of changes in the particulars of DPIN an application shall be made in Form DIR-6 to intimate such changes within 30 days to Central Government.
In line with the above changes, Form DIR-3 and Form DIR-6 shall be substituted under Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2018.
The impact of this is that allotment of DIN for new partners in case of existing LLPs is now possible whereas the suspension of DIN for partners of new LLPs still continues. This means entrepreneurs planning to register an LLP afresh must wait until further notification by MCA lifting the suspension on allotment of DIN.

MCA has notified the following Sections and Rules of the Companies (Amendment) Act, 2017 w.e.f 13th June, 2018:
S.No Notified Sections of CA, 2017 Sections of Amendments of CA, 2013 Title Changes made
1 S. 22 S. 90 Investigation of Beneficial Ownership of Shares in Certain Cases
  • A new concept of significant beneficial ownership introduced.
  • Companies (Significant Beneficial Owners) Rules, 2018 notified.
2 S. 24 S. 93 Return to be Filed with Registrar in Case Promoters’ Stake Changes Section 93 omitted – Listed companies need not file separate Return with Registrar disclosing the change in shareholding pattern of the promoters and top 10 shareholders.
3 S. 25 S. 94 Place of keeping and Inspection of Registers, Returns, etc.
  • Need to give a copy of proposed special resolution in advance to ROC for keeping the registers, returns, etc in a place other than registered office is not there.
  • Certain particulars of registers or index or returns need not be made available for inspection or extracts or copies given – What are such particulars are yet to be prescribed.
4 S. 26 S. 96 Annual General Meeting
  • AGM of an unlisted company can be held anywhere in India – if required consent is given by all members in writing or through electronic mode in advance.
  • EGM of Wholly owned subsidiary company of a foreign company can now be held outside India.
  • A company other than wholly owned subsidiary of a company incorporated outside India must hold EGM at a place within India.
5 S. 71 S. 216 Investigation of Ownership of Company Central Government can now appoint inspectors for determining true persons who have or had beneficial interest in shares of a company or who are or have been beneficial owners or significant beneficial owner of the company.
*Companies (Management and Administration) 2nd Amendment Rules, 2018 also notified w.r.t Rules governing Sections 93, 94 and 96 as above.
The Institute of Chartered Accountants of India (ICAI) issues Valuation Standards as a benchmark for Valuation Practices applicable for Chartered Accountants. These Indian Valuation Standards will be applicable for all valuation engagements on mandatory basis under the Companies Act 2013. In respect of Valuation engagements under other Statutes like Income Tax, SEBI, FEMA etc, it will be on recommendatory basis for the members of the Institute. These Valuation Standards are effective for the valuation reports issued on or after 1st July, 2018 and shall be valid till such time Central Government issues its own valuation standards in terms of Rule 18 of the Registered Valuer Rules.
RBI has introduced Single Master Form (SMF) to be filed online with an objective of integrating the extant reporting structures of various types of foreign investment in India. Prior to the implementation of the SMF, RBI would provide an interface to the Indian entities, to input the data on total foreign investment in a specified format. The interface will be available on RBI website from 28th June, 2018 to 12th July, 2018. Indian entities not complying with this pre-requisite will not be able to receive foreign investment including indirect foreign investment and will be non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder.
A detailed Entity master and SMF Form needs to be filled up – For such detailed information for each entity for all the past investments, it is shocking that less than 15 days are provided for updation!
The reporting format of ECB 2 Return is revised wherein the details of the hedges for External Commercial Borrowings are captured through a simplified format. Revised monthly reporting format of ECB 2 Return would be applicable from the end of June 2018.
Insolvency and Bankruptcy Board of India (IBBI) has prescribed the conditions for enrolment as Valuer Member by Registered Valuers Organisation (RVO). Basically, RVO shall admit only individuals who possess the educational qualifications, experience and other eligibility requirements. The applications for registration as registered valuer shall be submitted online w.e.f 1st July, 2018.
In order to expedite the process of recommending Insolvency Professionals (IP) by IBBI to the Adjudicating Authority (AA) to act as Interim Resolution Professionals (IRPs) or Liquidators as part of Corporate Insolvency Resolution Process (CIRP), the IBBI has issued fresh guidelines effective from 1st July, 2018
Following are the highlights of aforesaid guidelines:
➢AA to make a reference to the IBBI for recommendation of IP who may act as an IRP, in case an operational creditor has made an application and has not proposed an IRP. The IBBI, must recommend a eligible IP within 10 days of receiving the reference from the AA.
➢The IBBI will prepare a Panel of IPs for appointment as IRP or Liquidator and share the said Panel with AA. The panel will be renewed every 6 months.
➢The eligible IPs will be included in the panel in order of the volume of ongoing processes they have and the scores allotted by IBBI as per procedure detailed in the regulation.
The President gave assent on 6th June, 2018 to promulgate the IBC (Amendment) Ordinance, 2018, key highlights of which are as below:
  1. Home buyers recognized as financial creditors which would give them due representation in the Committee of Creditors (COC)
  2. MSME Sector provided with a special dispensation under the Code. It does not disqualify the promoter to bid for his enterprise undergoing CIRP provided he is not a willful defaulter and does not attract other disqualifications not related to default.
  3. Withdrawal by applicant after admission under IBC would be permissible only with the approval of the Committee of Creditors with 90% of the voting share.
  4. Further, withdrawal will only be permitted before publication of notice inviting Expressions of Interest.
  5. Voting threshold has been brought down to 66% from 75% for approval of resolution plan, extension of CIRP period, etc.
  6. The voting threshold for routine decisions has been reduced to 51%.
  7. Special resolution required for corporate debtors to themselves trigger insolvency resolution under the Code.
  8. The Resolution applicant to submit an affidavit certifying its eligibility to bid since there is wide range of disqualifications.
  9. Minimum one year grace period allowed for the successful resolution applicant to fulfill various statutory obligations required under different laws.
  10. Moratorium period not applicable to enforcement of guarantee.
IBBI mandates that fees payable to an IP and expenses incurred by him during the CIRP are reasonable and on arms’ length basis. IPs are required to maintain all records relating to the same. IP to get approval of the Committee of Creditors (CoC) for the fee or other expenses, wherever approval is required; and all CIRP-related fees and other expenses should be paid through banking channel.
The last date for filing of return in FORM GSTR-6 by Input Service Distributors for the months from July, 2017 to June 2018 is extended till 31st July, 2018
The following clarifications were issued on GST refund related issues:
Refund to ISD: In case of a claim for refund of balance in the electronic cash ledger filed by an ISD or a composition taxpayer; and the claim for refund of balance in the electronic cash and/or credit ledger by a non-resident taxable person, the filing of the details in FORM GSTR-1 and the return in FORM GSTR-3B is not mandatory. Instead, the return in FORM GSTR-4 filed by a composition taxpayer, the details in FORM GSTR-6 filed by an ISD and the return in FORM GSTR-5 filed by a non-resident taxable person shall be sufficient for claiming the said refund.
Refund of GST on supplies made to SEZ developer or SEZ unit : In this regard, it is clarified that for the tax periods commencing from 01.07.2017 to 31.03.2018, such registered persons shall be allowed to file the refund application in FORM GST RFD-01A on the common portal subject to the condition that the amount of refund of integrated tax/cess claimed shall not be more than the aggregate amount of integrated tax/cess mentioned in the Table under FORM GSTR-3B filed for the corresponding tax period.
LUT in case of zero rated supply of exempted or non GST Goods: In case of zero rated supply of exempted or non-GST goods, the requirement for furnishing a bond or LUT cannot be insisted upon. It is thus, clarified that in respect of refund claims on account of export of non-GST and exempted goods without payment of integrated tax; LUT/bond is not required. Such registered persons exporting non-GST goods shall comply with the requirements prescribed under the existing law (i.e. Central Excise Act, 1944 or the VAT law of the respective State) or under the Customs Act, 1962, if any.
Restriction on claiming refund the CGST Rules: The restriction under CGST Rules is only applicable to those exporters who are directly receiving goods from those suppliers who are availing the benefit under certain specified notifications.

Note: The contents of this Newsletter are only a summary and has not dealt with any issue in detail. Any action taken or proposed to be taken must be in consultation with professionals and not merely based on the articles / news updates. S. C. Sharada & Associates disclaims all liability on action taken without professional advice.

S. C. Sharada & Associates, Company Secretaries. #405, 7th Cross, IV Block, Koramangala, Bangalore – 560 034 Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]

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