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Hi Folks

1st issue of the 10th year edition of Samhita in the 1st fortnight of 2019 ! Publishing issue after issue over the decade has surely sharpened my thinking and writing skills as also broadened the expanse and realm of my thoughts. It is a sort of mental-gym work out. Swami Vivekananda (whose 156th birth anniversary was celebrated on 12th January) rightly said “The world is the great gymnasium where we come to make ourselves strong.”

While he may have said it in a different context, I definitely feel as governance professionals we are in a gymnasium of a different sort ‘working out’ day in and day out with demanding laws and unreasonable regulators. What else can I say when the Tribunal asks for a report of the ROC in a certain matter and he questions under which section am I required to give this ? why should I give ? Am I here only to keep giving reports ? who are we to advise who is right and who is wrong ? Are we supposed to carry these messages between 2 arms of legal machinery or throw up our hands before the clients who quote ‘Ease of Doing Business’ and demand an end-date that is forever elusive !

What else can I say when the Government at the top is promoting entrepreneurship in all sectors including not-for-profit but the Government representative who has the power to ‘licence’ such an activity (read Section 8, not-for-profit company) restricts the entity from pursuing more than one objective ? Despite explaining the promoters’ background and establishing their genuine intent to carry on charitable activities, he simply refuses to allow activities in different sectors, quoting ‘misuse’. The same office, a couple of years ago allows something and today they do a volte face. How do we as professionals face the entrepreneurs who again quote ‘Ease of Doing Business’ and demand an explanation, where there is none thanks to the whims and fancies of the regulators ! Should we advise them to opt for the less-regulated Trust or Society route which are more vulnerable to misuse ? Typical case of “Devaru vara kottaru, poojari vara kodalla” (a Kannada proverb which means “Even if God gives his blessings, the priest doesn’t allow it”). With increased interest from a large section of professionals pledging their time and efforts to social sector objectives like education, health, farming, science & technology, women empowerment, disabilities etc., coupled with corporates and Government itself pledging funding support, it is high time, the regulators de-shackle themselves from the ‘licence-raj’ mindset and enable businesses. They are not meant to RESTRICT or STOP. They are meant to FACILITATE & ENABLE ENTRY.

What else can I say when the Government has re-introduced a provision for filing Commencement of Business e-form on the MCA portal since November, 2018 but has not released the e-form till date ? Is the entrepreneur supposed to wait patiently and not carry on his business till the technology enables the form ? or is he to focus on signing up clients and invoicing and take shelter that the form is not yet available ? Is it not the Ministry’s responsibility to make rules and simultaneously enable compliance with the same ? There are several provisions that cannot be complied today because of similar inexplicable situation. I wonder whether this is ‘Ease of Doing Business’ or ‘End of Doing Business’ !! One thing is for sure….this definitely is a unique ‘gymnasium’ that calls for a dynamic ‘work-out-regime’ ….we as professionals do not give in simply because we believe in ourselves and our strong social intelligence quotient !

Not one to complain, I thought this medium must be used to convey certain difficult situations at the ground level so that all the stakeholders set their expectations right. Now, let me help you focus on your expectations from this 204th issue of Samhita. Apart from the regulatory updates, I would urge you to read the 5th (in a series) article on why Mediation is a preferred choice of Dispute Resolution Mechanism, scripted by Ms. Saradha Kumar, Advocate and ADR practitioner associated with CAMP Arbitration and Mediation Services Pvt. Ltd. Another insightful article is by Mr. Vittala Rao, Management Consultant on Contract Labour differentiating between “Contract for Service” and “Contract of Service”. His deep knowledge and wide experience in the subject is aptly reflected in his writing.

For any previous issues of Samhita and the readers feedback, please visit https://sharadasc.com/resource-center/

Happy Reading

“Contract of Service” & “Contract for Service”

Mr. K Vittala Rao, Management consultant demystifies the key elements of contract labour – in particular clarifying what constitutes “Contract of Service” & “Contract for Service”. The article is based on his in depth knowledge and vast experience in contract labour management.

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In most countries of the world, especially the developed countries, over 90 per cent of cases are settled out of court.  In these countries, the dispute between parties is legally allowed to go to trial only when there is a failure to reach a resolution through Alternative dispute resolution mechanisms. In India, this rule was prescribed by the Malimath Committee and the 129th Law Commission report…Read more

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MCA updates :
Companies (Amendment) Ordinance, 2019

The Companies (Amendment) Ordinance, 2018 (the Ordinance) has been passed in the Lok Sabha on 4th January, 2019. The Ordinance could not be taken for consideration and thus is pending in the Rajya Sabha. It shall cease to operate on the 21st January, 2019 and to give continued effect to the provisions of the same, the President has promulgated the Companies (Amendment) Ordinance, 2019 and which shall be deemed to have come into force on 2nd November, 2018.

DIPP Updates :
FDI in e-commerce clarified

DIPP (Department of Industrial Policy & Promotion) has modified clause 5.2.15.2 of the consolidated FDI policy of 2017 dealing with FDI (Foreign Direct Investment) in e-commerce to clarify marketplace and inventory based trade in goods and services. It is intended to make the government’s stand clear in this matter, in response to the curbs demanded by offline businesses on the online model.

  • Inventory of a vendor will be deemed to be controlled by e-com marketplace entity if more than 25% of purchases of such vendor are from the marketplace entity or its group companies.
  • E-commerce marketplace entity will not mandate any seller to sell any product exclusively on its platform only.
  • Services (warehousing, fulfilment, logistics, etc.) by the e-commerce marketplace entity must be provided to the vendors in a fair and non-discrminatory manner i.e., no preference to one over the other.
  • E-commerce marketplace entity will be required to furnish a certificate along with a report of statutory auditor to RBI, confirming compliance of above guidelines, by the 30th of September of every year for the preceeding financial year.

Corresponding RBI notification is awaited.

Income Tax Updates :
Extension of due date for Form 3CEAC

The due date for the report in form 3CEAC under Rule 10DB relating to furnishing of report of an International Group has been extended until March 31, 2019 for reporting periods up to Feb 2018.

Nil / Lower TDS – Revised Procedure

Procedure, format and standards for filing an application for grant of certificate for deduction of tax at lower rates or no deduction under Section 197(1) and 206C(9) of the Income Tax Act have been revised.

GST Updates :
Summary of Several GST changes

A separate note has been prepared detailing the several changes made in GST, including clarifications, amendments and insertions issued by the CBIC (Central Board of Indirect Taxes and Customs) since 31st December, 2018.

SEBI Updates :
Transmission of Securities in Demat form

In order to harmonize the procedures for transmission of securities in dematerialized mode with that of transmission of securities in physical mode, SEBI has issued a circular to the effect that transmission of securities held in dematerialized mode shall be dealt in line with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Sixth Amendment) Regulations, 2018.

Probate of Will or Will for Transmission of Securities held in dematerialized mode will be accepted.

Reporting of AI and ML used by stock market intermediaries

We carried an article on the impact of Artificial Intelligence and Machine Learning on business world over including the initiatives taken by stock exchanges.

Now we find that, recognizing the use of AI and ML by various market intermediaries that has a bearing on financial products sold and dealt with, SEBI has mandated all market participants / depositories to report about applications and systems using such initiatives including Fin-Tech and Reg-Tech.

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.
sharadasc.com Phone : +91 80 25534374 , +91 80 25536618 Email: [email protected]