MCA Updates

COVID-19 vaccination for non-employees eligible as CSR expenditure

Vide Circular dated 23.03.2020, MCA had clarified that spending of CSR Funds on COVID-19 related activities shall be eligible as CSR expenditure under Schedule VII of Companies Act, 2013. In continuation of the same it has been clarified vide Circular dated 30.07.2021, that CSR Funds spent on COVID-19 vaccination on persons other than the employees and their families shall qualify as eligible CSR expenditure. At best vaccination cost incurred on employees could be accounted as HR business expenditure.


Open General Circular No. 13/2021 dtd. 30.07.2021

Exemptions for foreign Cos in IFSCs located in SEZs

MCA Notification dated 05.08.2021 exempts foreign companies in International Financial Services Centres (IFSC) set up in Special Economic Zones (SEZ) from Sections 387 (Dating of prospectus and particulars to be contained therein) and 392 (Punishment for Contravention) of Companies Act, 2013, thereby relaxing fund raising norms.

For this purpose, vide Notification dated 05.08.2021, MCA has added an Explanation that clarifies that electronic based offering of securities, subscription or listing of securities in the IFSCs set up in SEZs shall not be construed as ‘electronic mode’ for Foreign company as defined in Section 2(42) of Companies Act, 2013.


Open Notification No. S.O. 3156(E) dtd. 05.08.2021

Open Notification No. G.S.R, 538 (E) dtd. 05.08.2021
SEBI Update

SEBI (LODR)(Third Amendment) Regulations, 2021

SEBI vide Notification dated 03.08.2021 notified the SEBI (LODR)(Third Amendment) Regulations, 2021. Amendments notified shall come into effect from 01.01.2022.

The SEBI (LODR)(Third Amendment) Regulations, 2021 focuses primarily on the roles and responsibilities of IDs, their appointment, re-appointment & removal, need for a time bound shareholders approval and the grounds for determination of their independence with regards to pecuniary relationship with the company. Highlights of the Amendments include:

  • Criteria for pecuniary relationship between ID and company redefined
    • The period in clause referring to material pecuniary relationship has been reduced from 3 immediately preceding years to 2 immediately preceding years.

    • Pecuniary relationship w.r.t. relatives of the ID – none of the relatives of the ID:

      1. is holding securities of or interest in the listed entity, its holding, subsidiary or associate company during the 3 immediately preceding FYs or during the current financial year of face value of > 50 Lakhs or 2% of the paid-up capital in the listed entity, its holding, subsidiary or associate company

      2. is indebted to the listed entity, its holding, subsidiary or associate company or their promoters or directors, in excess of such amount as may be specified during the 3 immediately preceding FYs or during the current financial year;

      3. has given guarantee / provided any security in connection with the indebtedness of any third person to the listed entity, its holding, subsidiary or associate company or their promoters or directors, for such amount as may be specified during the 3 immediately preceding FYs or during the current financial year

      4. has any other pecuniary transaction or relationship with the listed entity, its holding, subsidiary or associate company amounting to 2% or more of its gross turnover or total income.

      The pecuniary relationship or transaction with the listed entity, its holding, subsidiary or associate company or their promoters, or directors in relation to above shall not be >2% of its gross turnover or total income or 50 Lakhs, whichever is lower.

  • Shareholders approval for appointment of Director – To be taken in the next general meeting or within 3 months from date of appointment, whichever is earlier.
  • Composition of Audit Committee (AC) – Atleast 2/3rds of the AC shall be IDs.
  • Composition of Nomination and Remuneration Committee (NRC) – Atleast 2/3rd should be IDs as against earlier requirement of 50%.
  • Approval of Related Party Transactions (RPT) by AC – Only IDs from the AC can approve RPTs.
  • Appointment and re-appointment of IDs
    1. To be approved by shareholders by passing a special resolution

    2. Directors and Officers Insurance for all IDs to be taken by top 1,000 listed entities based on their Market Capitalisation w.e.f. 01.01.2022.

    3. ID who resigns from the Board of a listed entity cannot be appointed as a whole time / executive director in the company or it’s holding, subsidiary or associate company for a 1year period from date of resignation.

  • Details regarding ID proposed to be appointed to be disclosed to shareholders – shall include the number of companies from which the ID has resigned in the past 3 years.
  • NRC to evaluate the skills, knowledge and experience of the ID proposed to be appointed on the Board – NRC may do so by taking the help of an external agency.
  • Letter of Resignation of IDs along with detailed reasons to be submitted to Stock Exchange – as against the current practice of the company merely informing the Stock Exchange of IDs resignation.

  • Open Notification No. SEBI/LAD-NRO/GN/2021/35. dtd. 03.08.2021

    SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021

    SEBI has notified the Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 (“the Regulations”) on 09.08.2021. The Regulations shall come into force on the 7th day from date of publication in the Official Gazette.

    The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 is a combination of SEBI (Issue & Listing of Debt Securities) Regulations, 2008 (ILDS Regulations) and SEBI (Issue & Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (NCRPS Regulations) which have since been repealed.

    The Regulations shall apply to:

    • issuance and listing of debt securities and non-convertible redeemable preference shares by an issuer by way of public issuance;

    • issuance and listing of non-convertible securities by an issuer issued on private placement basis which are proposed to be listed; and

    • listing of commercial paper issued by an issuer in compliance with the guidelines framed by the RBI

    Highlights of Regulations include:

    • The requirement of minimum issue size of Rs.100 crores for debt securities has been done away with

    • Introduction of Call and Put option for debt securities issued on Private Placement basis

    • Period for exercise of Call and Put options reduced to 12 months from 24 months

    • The provisions of creation of charge have been harmonised with that of Companies Act, 2013

    • Company Secretaries have been recognised as “Compliance Officer” for the issue

    Please refer to the Regulations for details.

    An operational circular has also been released by SEBI on 10.08.2021 (“the circular”), which is a consolidation of related existing circulars with consequent changes. The circular provides a chapter-wise framework for the issuance, listing and trading of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities or Commercial Paper. The circular also gives a list of Circulars which shall be superseded by it as an Annexure to the circular.

    Please refer to the circular for details.


    Open Regulations

    Open operational circular
    RBI updates

    Explanation added to indirect foreign investment definition

    Vide notification dated 06.08.2021 the Ministry of Finance has notified the FEMA (Non-Debt Instruments) (Amendment) Rules, 2021 which shall come into force with immediate effect. The Amendment Rules have added an explanation to Rule 23(7)(i) which deals with the definition of indirect foreign investment. The explanation inserted states that investment made by an Indian Entity owned by NRIs on non-repatriation basis, shall not be considered for calculation of indirect foreign investment.


    Open Notification No. S.O. 3206(E) dtd. 06.08.2021
    IT Updates

    Extension of due dates

    Vide Circular dated 03.08.2021, CBDT relaxed various due dates. Highlights of the due dates extended are as follows:

    • The Quarterly statement in Form No. 15CC – to be furnished by authorized dealer in respect of remittances made for the quarter ending on 30th June, 2021, required to be furnished on or before 15th July, 2021 under Rule 37BB of the Rules, as extended to 31st July, 2021 vide Circular No.12 of 2021 dated 25.06.2021, may be filed on or before 31st August, 2021;

    • The Equalization Levy Statement in Form No.1 for the Financial Year 2020- 21 – which was required to be filed on or before 30th June, 2021, as extended to 31st July, 2021 vide Circular No.12 of 2021 dated 25.06.2021, may be filed on or before 31st August, 2021;

    • The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64D for the Previous Year 2020-21– required to be furnished on or before 15th June, 2021 under Rule 12CB of the Rules, as extended to 15th July, 2021 vide Circular No.12 of 2021 dated 25.06.2021, may be furnished on or before 15th September, 2021;

    • The Statement of Income paid or credited by an investment fund to its unit holder in Form No. 64C for the Previous Year 2020-21– required to be furnished on or before 30th June, 2021 under Rule 12CB of the Rules, as extended to 31st July, 2021 vide Circular No.12 of 2021 dated 25.06.2021, may be furnished on or before 30th September, 2021;

    • Intimation to be made by a Pension Fund in respect of each investment made by it in India in Form No. 10BBB for the quarter ending on 30th June,2021– required to be furnished on or before 31st July,2021 under Rule 2DB of the Rules, may be furnished on or before 30th September, 2021;

    • Intimation to be made by Sovereign Wealth Fund in respect of investments made by it in India in Form II SWF for the quarter ending on 30th June, 2021 – required to be furnished on or before 31st July, 2021 as per Circular No.15 of 2020 dated 22.07.2020, may be furnished on or before 30th September, 2021.

    Open Circular No. 15/2021 dated 03.08.2021
    GST updates

    GST Audit by CA or Cost accountant exempt from 01.08.2021

    Sections 110 and 111 of the Finance Act, 2021 have been notified to be applicable from 1st August 2021 pertaining to GST audit. Taxpayers need not get their accounts audited by a Chartered Accountant or a Cost Accountant w.e.f. 1st August, 2021.

    Further, taxpayers are required to furnish a self-certified reconciliation statement in FORM GSTR-9C along with annual return in FORM GSTR-9 from FY 2020-21.

    Open Notification 29/2021 dated 30.07.2021

    CGST (6th Amendment) Rules, 2021

    Vide Notification dated 30.07.2021, CBIC has notified the Central Goods and Services Tax (Sixth Amendment) Rules, 2021 which shall come into force on 01.08.2021. Highlights of the Notification are:

    • Every registered person, other than an Input Service Distributor, a casual taxable person, a non-resident taxable person and any person paying TDS / TCS under CGST Act, shall furnish an annual return electronically for every financial year in FORM GSTR-9 on or before 31 December following the end of such financial year through the common portal;

    • Taxable person registered under composition levy scheme needs to furnish the annual return in FORM GSTR-9A;

    • An electronic commerce operator collecting tax at source shall furnish annual statement in Form GSTR-9B;

    • In form GSTR-9C the need for certification has been amended with self-certified reconciliation statement by the registered person, other than an Input Service Distributor, a casual taxable person, a non-resident taxable person and any person paying TDS / TCS under CGST Act, whose aggregate turnover during a financial year exceeds five crore rupees.

    Open Notification 30/2021 dated 30.07.2021

    Exemption for filing GSTR-9

    Registered persons whose aggregate turnover in the FY 2020-21 is up to 2 crore rupees have been exempted from filing the annual return in FORM GSTR-9.

    Open Notification 31/2021 dated 30.07.2021