Between 2019 and 2020, there is just a difference of 1 year. Infact between 31st and 1st it is the same 24 hours cycle as between any 2 days of the year. Yet, the transition is significant since it is the end of the ‘teens’ so to say, as the year steps in to a ‘matured 20’, heralding the beginning of a new decade for humanity. Let’s take a leap of faith in ourselves and the people around us so that together we build a Better Tomorrow – away from conflict to consensus, from disorder to direction, from sorrow to song, from poverty to prosperity, from mistrust to trust – something that we will be proud of and our future generations will be grateful for.
As I look back on the decade that went by, I am grateful for all the Ups and Downs and thankful for the strength and support received. As I look ahead, I am hopeful of a more fulfilling life. As I look around, I do see a lot of helpful people – ordinary people with no great power or position, no special expectations, who simply want to touch others’ lives in their own way, in their seemingly day to day activities. Despite the overwhelming pessimism and cynicism from the nay-sayers. Yes, these are the people who keep humanity alive and remind us of gratitude & hope.
I draw inspiration from observing such ordinary people I meet in my life rather than some celebrities that I only read of. Jayanti is one such young lady I saw in the Diagnostic Lab on a busy Monday morning when I had registered myself for some routine health check-ups. She was smart, efficient, helpful, welcoming and well-dressed. She wore the best accessory – I mean a beautiful SMILE that stayed throughout the day. Single-handedly she managed about 100 patients welcoming them as if it were a family function, addressing every single person by name, guiding them which test to take after what, enquiring if they had drunk enough water, if they had had breakfast, reminding them to keep their bladder full, giving them a helping hand wherever required, directing the staff to escort senior citizens and sick people – all with a genuine smile and warmth that we rarely find today in a stressed job at the counter where people are impatient and anxious. The best part was she was a multi-linguist speaking in 5-6 different languages with utmost ease and comfort, each time remembering which patient is from which part of India. The confidence and assurance she exuded ensured that patients were all relaxed and smiling. Perhaps it showed in their reports too ! I bet even an Alexa or a Siri cannot perform as efficiently as Jayanti did – even if they could, can they radiate the human smile and the warm spirit ? As for me, I am carrying the happy images of a smiling, helpful Jayanti – grateful for people like her and hopeful of her clan to grow. Let us continue to foster this inherent characteristics of a human being even in a technology driven decade of the 20s !!
We bid good bye to 2019 with a few updates from IBC, GST and SEBI in this 227th issue of Samhita. Defaulting directors beware – your companies will be shut down and bank accounts frozen if you miss out on complying with annual ROC filings. Banks get this update directly from MCA, perhaps even before you know that you have lost your company. Diligence and Vigilance is the need of the hour, dear entrepreneurs ! Read our update on this. Mr. Vittal Rao’s article under the Labour Law series analyses specific clauses in employment contracts relating to non-disclosure and confidentiality. Decided case laws where injunction was granted and where injunction was not granted are dealt with in a lucid and easy-to-understand manner. More often than not restrictive clauses in employment contracts have been struck down in favour of the employee, more so if employer tries to enforce post the employment period.
Wishing all of you a Happy, Healthy & Fulfilling New Year 2020 !!
MCA Updates :
Struck-off companies- freezing of bank accounts
MCA continues its tirade against companies failing to file their financial statements and annual returns, by striking off their names from the official Register of Companies. This means the struck-off companies can’t continue their operations even if they have business, employees, customers, vendors etc., unless they approach NCLT and obtain a revival order. Of course many such companies have approached High Courts to get relief but what is significant to note is that banks of such companies have started to freeze their bank accounts as soon as the struck-off companies list is published by MCA and shared with IBA (Indian Banks Association).
A sample communication from Corporation Bank explaining freezing of the account can be referred to.
Extension of due date- CRA-4
The due date for filing Form CRA-4 (Cost Audit Report) for FY 2018-19 has been further extended till 29.02.2020 without payment of additional fees.
Non-Disclosure Agreement and Confidentiality clause
In the previous article restrictive or negative covenants in an Employment Agreement and Noncompete clause were discussed.
In this article, we shall discuss other important clauses in an Employment Agreement namely; nonsolicitation, non-disclosure, confidentiality and breach of Intellectual Property.
a) Non-Solicitation clause in the agreement restricts a person from inducing an employee from taking up assignments with a competitor or starting a parallel business… Read
SEBI updates :
MF investments in the name of minor- process changes
In order to bring about uniform processes across Asset Management Companies (AMCs) in respect of investments made in the name of a minor through a guardian in Mutual Fund units, certain changes have been decided by SEBI
Payment shall be accepted only from the bank account of the minor or from a joint account of the minor with the guardian only.
Upon becoming a major, KYC and bank account details to be updated by the minor.
Similarly in respect of transmission of MF units, SEBI has mandated certain set of do’s and don’ts for AMCs to ensure a uniform and efficient process.
Statement of Deviation / Variation in utilisation of funds raised by listed entities
SEBI has introduced a common format through which listed companies are to report the deviations or variations in utilisation of the funds raised through public issue, rights issue, preferential issue, QIP etc.
The disclosure is to be made on a quarterly and annual basis until such funds are fully utilised or the purpose for which these proceeds were raised has been achieved.
The Audit Committee/ Board of directors of the listed entity must review the report on quarterly and submit to the Stock Exchange along with its comments.
First submission for October-December, 2019, quarter in the new format is due within 45 days from 31.12.2019.
IBBI updates :
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019
Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 has been promulgated w.e.f. 28.12.2019 in place of IBC (Second Amendment) Bill, 2019, which could not be taken up by the Parliament for consideration. Highlights are as below:
Section 5(15) – “interim finance” includes such other debt as may be notified in addition to financial debt raised by the resolution professional during the insolvency resolution process period.
Section 7 – an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than 100 financial creditors in the same class or not less than 10% of the total number of such creditors in the same class, whichever is less. Similar threshold provisions shall be applicable financial creditors who are allottees under a real estate project
Certain types of Corporate Debtors are not entitled to initiate CIRP under Section 11 of the IBC, 2016. However such a Corporate Debtor can initiate CIRP against another Corporate Debtor.
Explanation added to Section 14 – a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other legally constituted authority shall not be suspended or terminated on the grounds of insolvency, provided there is no default in payment of dues arising from such license, permit etc.
Critical supply of goods and services that preserve the value of the corporate debtor as a going concern shall not be terminated, except if any dues from such supply during the moratorium period are not paid by the Corporate Debtor.
Section 16(1) – The limitation of 14 days from insolvency commencement date for appointment of IRP by the Adjudicating Authority is removed.
Section 23(1), proviso substituted- the resolution professional shall continue to manage the operations of the corporate debtor after the expiry of the CIRP period, until an order approving the resolution plan or appointing a liquidator under is passed by the Adjudicating Authority.
Immunity provided to new management after commencement of CIRP in respect of acts or offences committed during the pre-resolution period by the earlier promoter/ management/ related party. Similarly there is immunity provided for property of the Corporate Debtor.
GST updates :
Extension of due date- Form GSTR-9/ 9C
CBIC has extended the last date for furnishing of annual return/reconciliation statement in FORM GSTR-9/FORM GSTR-9C for FY 2017-18 till 31.01.2020.
Electronic invoicing for B2B supplies
CBIC issues notifications dated 13.12.2019 prescribing electronic invoicing for B2B supplies. The key aspects of the notifications are as under:
A registered person with aggregate turnover exceeding Rs. 100 crores is mandatorily required to issue e-invoices for all supplies made to registered persons, i.e. B2B supplies from 01.04.2020
Invoice is to be prepared by including particulars contained in Form GST INV-1 after obtaining Invoice Reference Number (IRN). The IRN would be generated on the GST electronic portal subsequent to the uploading of the relevant information. Any invoice issued without containing the details contained in Form GST INV-1 will be invalid.
10 GST electronic portals have been notified for preparation of e-invoice.
The CGST Rules, 2017 were previously amended with respect to tax invoice to contain a quick response (QR) code. The date of applicability of the said amendment has been fixed from 01.04.2020.
Businesses with aggregate turnover exceeding Rs. 500 crores are required to include QR code on invoices issued to unregistered persons, i.e. B2C invoices
Conditions for use of balance available in the electronic credit ledger
The conditions for use of the balance available in the electronic credit ledger has been further amended to state that only 10% of eligible input tax credit would be allowed in cases of mismatch of invoices as against 20% earlier. Further amendments have been made to state that in case an officer of rank not below an Assistant Commissioner has reason to believe that input credit has been claimed by fraudulent means then it can be entirely disallowed.
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.
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