Since times immemorial, stories have been the best form of communication. Even today. Even with fb and whatsapp. The medium is different but stories well told have always worked. Whether grandma’s bedtime stories or stories from our epics or panchatantra or jataka tales or aesop’s fables or from our freedom struggle, stories continue to inspire and entertain. We have seen how corporate communication has also embraced story telling as a powerful medium to connect with employees, vendors, customers, society and the world at large.
Despite knowing that facts tell, stories sell, I was pleasantly surprised to read the following story in the most unexpected place …….guess where…..?? Insolvency and Bankruptcy Board of India (Continuing Professional Education for Insolvency Professionals) Guidelines, 2019 (we have carried this in the IBC section below). I couldn’t believe a regulator has actually used a story to drive home the point about continuing education :
“There was a woodcutter who had been cutting wood for years. But he never got a raise. Others who joined after to him were getting raises every year even though some of them took rest in between, and some others took off for weeks. He met his boss with resentment. The boss replied: “You are cutting the same number of trees today you were cutting five years ago. How can we give a raise?” The woodcutter went back, worked harder, put in longer hours, but not much improvement. He consulted his colleagues and learnt that they took five minutes break each time after cutting a tree. Still they cut more trees. How? They use those five minutes to sharpen the axe. Some of them use tools sharper than axe. The woodcutter realised his folly that he had never sharpened his axe for years, nor tried to use sharper tools. He sharpened the axe and the productivity improved; he got a raise. He learnt to use mechanised tools and productivity improved further. He got further raise.”
What a way to highlight that “An IP needs to continuously upgrade himself through CPE (Continuing Professional Education) to remain relevant and provide value added services. He needs to attend today’s work with today’s technology.” It is true for all of us, whether fresh or experienced, whether through stories or other means. For the so-called seniors, the sharpening includes removing the rust first – unlearning and then relearning without comparing the old. This is the toughest part when old memories refuse to die !
Continued learning has nothing to do with age. Deirdre Larkin from Johannesburg took up running only at 78 and at 86 is the fastest half-marathoner in her age category, with more than 500 medals to her credit. My uncle who passed away at 98 (about whom I have written several times earlier) continued to read about nuclear energy with interest and even wrote a research paper at 96. A super-senior citizen with whom I work very closely is a labour law expert and even today is enthusiastically analysing the new Code on Wages Bill at 75+. How can I not mention about another 75 year young cancer survivor in my group who is staging a play next week along with other young crew members in their 60s & 70s ?☺ Message is – continue to sharpen your axe – if required, use new tools too.
One sure way to keep abreast with the professional knowledge updates is to read Samhita. The 218th issue carries analysis of the Companies (Amendment) Act, 2019 (a must read) and another article in the Mediation series by Saradha Kumar, Advocate & Mediator along with a few other updates, compliance calendar and a thought-provoking banner designed by our tech team, Avohi on the eve of Independence Day. As you enjoy the extended weekend, reflect on what is meant by “Responsibility is the price of Freedom”. Wishing all of you a 71st happy Independence Day !!
Companies (Amendment) Act, 2019, replacing the Companies (Amendment) Ordinance, 2018 & 2019, has received the President’s assent on 31.07.2019.
Majority of the provisions which are already in force on account of the Ordinances continue to be effective from 02.11.2018 while a few more will take effect as and when notified by the MCA.
Many of the partnerships in India are formed based on informal structure and understanding. Most of them are not registered and have very simple partnership agreements. These agreements are drawn up by the partners themselves and do not clearly specify the roles and responsibilities of the partners, which partner is to generate business, how to share the work, how to increase capital, how to bring in new partners, exit of…Read more
Highlights are as below :
Penalty replaces fine under many sections viz., failure or delay in filing financial statements, annual return, explanatory statement, MGT-14, authorized share capital, appointment of KMP, etc. which seem as regular filings but attract penalty in case of delay or non-filing which means Adjudication proceedings can be launched by the RoC
Power to compound offence punishable upto Rs. 25 lacs granted to Regional Director
Alteration of FY and conversion of public to private companies to be done by the Central Government instead of NCLT
CSR provisions made more stringent – Unspent CSR amount to be kept in a separate bank account and utilized
Registration of prospectus not required – filing with RoC will do
Onus to identify SBO shifted from SBO himself to Company
DEMAT provisions extended to unlisted companies also – Government to prescribe the class of Companies
Highlights of the provisions that are carried from the Ordinance to the Amendment Act are listed by ICSI. New provisions are analysed by Mr. Sreenivasan Narasimhan, Associate at our firm. Kindly refer both the articles for details.
IBBI updates :
IBC (Amendment) Act, 2019
The Insolvency and Bankruptcy Code (Amendment) Act, 2019 is effective from 06.08.2019 with the following significant changes :
Resolution Plan shall include restructuring of the corporate debtor by way of merger, demerger and amalgamation.
Time limit for Corporate Insolvency Resolution Process (CIRP) increased from 180 days to 330 days from the commencement of the Insolvency where pending CIRP proceedings have extended beyond 330 days, the same will have to be completed within 90 days from the IBC (Amendment) Act, 2019.
The authorised representative will cast the vote for all financial creditors he represents in accordance with the decision of more than 50% of the voting share of the financial creditors he represents, who have cast their vote (i.e. who are present and voting).
The Resolution Plan approved by the Adjudicating Authority i.e., NCLT is binding not only on the corporate debtor and its employees, members, creditors and guarantors but also the central, state government and local authorities to whom any statutory dues are owed.
The Committee of Creditors (CoC) may decide to liquidate the Corporate Debtors any time before the confirmation of the Resolution Plan including any time before the preparation of the Information Memorandum.
IBBI CPE Guidelines
Through an interesting analogy of a wood cutter, IBBI has explained the need for Continuing Professional Education (CPE) for Insolvency Professionals (IPs) through Insolvency and Bankruptcy Board of India (Continuing Professional Education for Insolvency Professionals) Guidelines, 2019. Effective from 01.01.2020, this contains details of activities to be undertaken for CPE as well as credit hours earned by the IPs on completion of the same. An illustrative list of subjects that can be covered under CPE is also part of the said guidelines. Failure to keep himself updated through CPE can cost the IP his registration and practice.
SEBI updates :
Updation of DN of Shares of Listed Companies
SEBI in its circular dated 05.06.2015 had directed all Issuers / Registrar and Transfer Agents (RTAs) to update Distinctive Number (DN) information in respect of all physical share capital & overall DN range for dematerialized share capital for all listed companies.
Further, if there is any mismatch in DN information with the data provided / updated by Stock Exchanges in the DN database, the Issuer / RTA was to take such steps required to match the records and update the same by 31.12.2015.
Certain companies are yet to comply with the above requirement. In order to protect the interest of investors SEBI w.e.f 01.08.2019 has directed Depositories to:
Freeze all securities held by the promoters and directors of such non-compliant companies and retain the freeze until the directions issued by SEBI are complied with
Not effect any transfer of any securities held by promoters and directors of such non-compliant companies
Freeze all corporate benefits on the Beneficiary Owner a/c
Names of such non-compliant companies shall be disseminated on the website of exchanges / depositories.
Income Tax updates :
Monetary Limits for IT appeals
The monetary limits for filing appeals by the department before the Income Tax Appellate Tribunal, High Courts and Special Leave Petition before the Supreme Court have been enhanced as follows :
Appeals / SLP in Income Tax Matters
Before Appellate Tribunal
Before High Court
Before Supreme Court
Where composite order is passed for more than one assessment year, then appeal can be filed in respect of such assessment year or years in which the tax effect exceeds the limits specified above.
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.