It is not March. It is still November and not known for ‘women related month’. So I thought, until I read that 11th November has a significance and so does 19th November. The later first. On November 19th, UNDP marks Women’s Entrepreneurship Day, a day spearheaded by the Women’s Entrepreneurship Day Organization to celebrate and support women in business worldwide. This number is rising and justifiably so. Yet it is not enough when we look at the super capable women folk around us. More need to participate as entrepreneurs themselves or as enablers in the ecosystem. Fortunately a Falguni Nayar successfully listing a Nykaa in her late 50s or a Jaswantiben Jamnadas Popat (founder of the hugely successful women-driven Shri Mahila Griha Udyog Lijjat Papad) receiving a Padma Shri at the ripe age of 91 (definitely deserved a higher award much earlier) inspire a whole generation of women to plunge into entrepreneurship and the men to stand by them. A day in a year is just symbolic of the life long efforts such women put in !
Well, these are women with fire in their belly. Let me now share with you the significance of 11th November – ‘Onake Obavva Jayanti’ announced by the State of Karnataka. Obavva had fire in her belly and in her eyes too, when she single handedly massacred many of Hyder Ali’s soldiers to protect the fort of Chitradurga, way back in the 18th century. Obavva was not any trained soldier or a warrior queen unlike many other brave women of our history that are coming to light of late. She was the wife of an ordinary guard at the fort’s watchtower, but it was her presence of mind, bravery and love for the land that inspired her to make the supreme sacrifice of life. Her heroic story is mesmerizingly enacted by the well-known Kannada star of yesteryears, Jayanthi in the movie ‘Naagarahaavu’ (remade as Zehreela Insaan in Hindi) which won the actor a national award. A short, gripping role that brought the actor lot of fame. The song which depicts the whole story is so fresh in my memory that I cannot visualise Onake Obavva as anything but Jayanthi, the actor ! Gives me goosebumps even now when I watch the song.
The legendary woman was not born to fight nor was she educated or trained. The story goes that one afternoon as Obavva is serving food to her husband, he asks her to fetch water. She steps out but hears the whispers of enemy soldiers near a hole (kindi in Kannada) in the rocks half-way up the hill. Sensing an attack from Hyder Ali, whom the King, Madakari Nayaka of Chitradurga was planning to counter, Obavva quietly picks up a ‘Onake’ (pestle), tucks her saree between her legs and watches guard at the hole. Not wanting to disturb her husband at his lunch, she does not even alert him. As each soldier crawls through a narrow hole and comes out, she stands at the opening and hits his head with the pestle, using it as a weapon. Unaware of the ‘Goddess of Death’ waiting at the opening, soldier after soldier is bludgeoned by Obavva quietly, blessed by some unknown power and divinity. The ‘Veera Vanithe’ (valiant woman) pulls across the dead soldiers one after another throwing them into a heap of dead bodies. When she doesn’t return with water even after a long time, her husband gets anxious and steps out of his house – only to witness the bloody massacre of enemy soldiers by his fearless wife. He is shocked to see the blood-soaked pestle in her hands and the mountain of dead bodies. He sees the fury in her eyes and the passion in her heart to protect the kingdom in her own way. Obavva continues to slay the soldiers and gestures to her husband to blow the trumpet, signalling a war-cry to the soldiers of Madakari Nayaka. In the meanwhile, one of Hyder Ali’s soldiers realises that none of his men are coming out of the hole and that something is amiss. He soon sees the lady with her ‘weapon’ single-handedly finishing the soldiers, in a ‘Dance of Death’. Unfortunately, unaware of him sneaking from behind her, Obavva succumbs to his attack laying down her life as a true warrior. She is part of our history books, literature, folklore, sculpture, music, drama and films. The Government has taken the right step honouring Obavva with a day dedicated to her and her selfless sacrifice. She represents true ‘Shakthi’ (power) and stands as Karnataka’s pride, a symbol of woman empowerment in an unusual way. Who says a woman is ‘abala’ (weak, fragile) – she can be both compassionate as well as merciless, if required.
Coming back to the present, what does this 270th issue of Samhita have in store for you ? It features a critical analysis of the recent changes announced by SEBI on Related Party Transactions. Known for his sharp critiques and bold stand CS Ramaswami Kalidas, a seasoned Company Secretary has contributed this incisive article which calls for your careful and patient reading, given its comprehensive coverage. I would like to thank him for his continuous encouragement and contribution to Samhita. Apart from this the regular regulatory changes from various arms of the Government ministries find place in this issue, as also English language enhancement tips from Balaji Ramaswamy N, yet another contributor and well-wisher.
One factor that makes one’s language impressive is the use of comparisons. Similes like ‘She is strong like a lioness’ or ‘She is as strong as a lion’ or metaphors like ‘She is a lioness’ take one’s language to the next level. In one of the videos, the renowned motoring journalist, Jeremy Clarkson compares two cars – BMW and Goft GTI. He uses a number of interesting similes, metaphors and personifications like
Both are as strong and long lasting as the Edinburg castle
All organized as James May’s sock drawer
Only way to get three people at the back seat of a BMW is by sawing their legs
Rear wheel drive does rob boot space
When we claim to be interested in enhancing our vocabulary, one of our main intentions is to say things in a different way rather than the usual boring manner. If we use complicated vocabulary, many people may not be able to understand our message. Instead, it is better to use interesting expressions and metaphors or similes to make our language look good.
Manager: It’s been ages since you start work on the task and I wonder why things are moving at a snail’s space. Do you need any help?
Subordinate: My apologies. Thank you for offering to help. I do understand that I have a target to be met. But, I am afraid I am not good enough at convincing people yet. The only help I need is that I need someone who could coach me and mentor me. So that, I can start living up to the expectations of the organization.
Manager: You could have said this earlier. Never mind, I will assign someone who would be your mentor for a month.
Subordinate: Thanks a lot. I feel as if the weight of the universe has been lifted off my shoulders. I assure you that I will achieve the goals with the help of my mentor.
CS. Ramaswamy Kalidas, an eminent Company Secretary and law practitioner, has critically analysed the amendments notified by SEBI w.r.t. RPT disclosures. The article titled “Law relating to related party transactions tweaked again by SEBI-Implications of the Changes brought about by Notification dated November,9, 2021” contains the insights of the Author on the topic.
A summary of the Amendments are as follows:
SEBI notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)(Sixth Amendment) Regulations, 2021 (“the Amendment Regulations”) on 09.11.2021 which shall come into force form 01.04.2022. The Amendment Regulations tightens the RPT reporting norms. Highlights of the same are as follows:
Definition of Related Party amended to include:
any person or entity forming a part of the promoter or promoter group of the listed entity; or
any person or any entity, holding equity shares 20% or more; or 10% or more (w.e.f. 01.04.2023)
in the listed entity either directly or on a beneficial interest basis as provided under section 89 of the Companies Act, 2013, at any time, during the immediate preceding financial year; shall be deemed to be a related party.
This would mean that promoters and promoter group would fall under the definition of Related Party irrespective of their shareholding. The decrease in the equity shareholding to 10% from 01.04.2023 is noteworthy.
Scope of RPTs broadened by inclusion of following under the ambit of RPTs:
A transaction involving a transfer of resources, services or obligations between:
a listed entity or any of its subsidiaries on one hand and a related party of the listed entity or any of its subsidiaries on the other hand; or
a listed entity or any of its subsidiaries on one hand, and any other person or entity on the other hand, the purpose and effect of which is to benefit a related party of the listed entity or any of its subsidiaries, (w.e.f. 01.04.2023)
regardless of whether a price is charged and a “transaction” with a related party shall be construed to include a single transaction or a group of transactions in a contract.
Certain corporate actions including payment of dividend, subdivision or consolidation of securities rights issue, bonus issue, buy back etc by listed entities uniformly to all shareholders, have been explicitly excluded from the definition of RPTs.
Materiality of RPT – Threshold
A transaction with a related party shall be construed as material if the transactions to be entered into individually or taken together with previous transactions during a financial year:
Is > INR 1,000 Crores or
10% of the annual consolidated turnover as per the last audited financial statements whichever is lower.
Role of AC in approval of RPTs – enhanced
Audit Committee (AC) to define “material modifications”. Such material modifications shall require prior approval of the AC.
RPTs where the subsidiary is a party but the listed entity is not will also require prior approval of AC if the value of the transaction exceeds 10% of annual consolidated turnover. W.e.f. 01.04.2023 any such transaction > 10% annual standalone turnover shall require prior approval of AC.
Approval of shareholders of the listed entity shall not be required for RPT transaction where the subsidiary is a party but the listed entity is not a party. Approval of the shareholders of the subsidiary shall suffice in such cases.
Approval of AC is not required for transactions between 2 wholly owned subsidiaries whose consolidated financials are presented at the AGM.
Stricter disclosure timelines
W.e.f. 01.04.2022 the listed entity is required to make disclosures within 15 days of publication of half yearly standalone and consolidated financials
W.e.f. 01.04.2023 the disclosure is to be made on the same day
The current requirement is for the disclosures to be made within 30 days of publication.
Additional disclosure in Corporate Governance Report
The Corporate Governance Report of the Company to include a point on ‘Loans and advances in which directors are interested by name and amount’.
Additional disclosure to AC and shareholders for RPTs
SEBI vide notification dated 09.11.2021 notified certain additional disclosure and approval requirement for RPT transactions. Vide Circular dated 22.11.2021, SEBI has prescribed the information required to be submitted to AC, shareholders and the Stock Exchange. The format for the half yearly disclosure on RPT can be found as an Annexure to the Circular.
The Circular shall come into force from 01.04.2022.
Additional disclosures w.r.t. filing of Scheme of Arrangement
Vide Circular dated 16.11.2021, SEBI has prescribed additional documents which need to be submitted to the Stock Exchange by the listed entity for filing of Scheme of Arrangement. The additional documents include:
Valuation Report along with undertaking from the listed entity stating that no material event impacting the valuation has occurred during the intervening period of filing the scheme documents with Stock Exchange and period under consideration for valuation.
Declaration on any past defaults of listed debt obligations of the entities forming part of the scheme.
No Objection Certificate from the lending scheduled commercial banks/financial institutions.
MCA had flagged the DINs of Directors found to be disqualified pursuant to Section 164(2)(a) of the Companies Act, 2013 w.e.f. 01.11.2016 for a period of 5 years. MCA vide a Public Notice, informed the DIN holders whose DINs were so disqualified that the DINs eligible to be deflagged on expiry of the 5 years have been deflagged and the disqualification has been removed.
IEPFA (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2021
MCA vide Notification dated 09.11.2021 notified the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Second Amendment Rules, 2021. Highlights of the Amendment Rules include:
Requirement of Advance receipt from claimants claiming refunds from IEPF – removed
Requirement of Succession Certificate / Probate of Will / Will – relaxed for claims upto Rs. 5 lakhs from the existing Rs. 2 lakhs limit
Requirement of Notarisation of various documents to be submitted in case of loss of physical share certificate – replaced with self-attestation
Companies have been given flexibility w.r.t. documents to be accepted for transmission of shares i.e. companies can accept documents as per internal procedures put in place for the same
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]