Volume #15 | IssueNo. 293/2023 | September 2023
Dreams do come true!
October 11th is celebrated as the International day of the Girl Child. Theme for 2023 is “Invest in Girls’ Rights: Our Leadership, Our well-being.” While the media is busy highlighting the absence of girl child’s rights and what the world needs to do about it, there is a girl out there simply following her dreams and taking up responsibilities without being bothered about her rights. She is creating a world for herself by investing in her education, demonstrating leadership and ensuring the well-being of her family. No, the media hasn’t yet spotted her in a big way though she is taking baby-steps in the fashion world.
Let me share the incredible journey of a young girl who is winning laurels as a fashion designer and walking the ramp along with models, even while continuing to work as a house maid to support herself and her family. Bhavani (name changed) is a 20 year old who works along with her mother at my relative’s house. She comes in as early as 6 am to wash dishes, clean the house and cut vegetables, before rushing to her college where she is pursuing a course in fashion designing. Evening again she is back to scrubbing and cleaning as a house maid in other houses, to help her mother run the family. The young girl is a commerce graduate who completed her degree last year following a rigorous daily routine. Alongside educating herself and working as a housemaid, she also learnt tailoring and worked as an assistant in a fashion boutique store. Armed with some savings accumulated over an year and loan taken from my relative, she joined the fashion designing course.
While her mother would always chide her for being an introvert and not socialising enough, the shy girl startled all of us recently, when she shared pictures of herself with a model who was wearing one of her themed designer clothes. It was outstanding work to say the least. In the interest of privacy, I am constrained not to share the picture but I bet you cannot make out that the dress is designed by a student coming from the underprivileged class. Bhavani herself was dressed in elegant clothes and matching accessories and looked stunning as she stood next to the model, brimming with joy. It was hard to believe that it was the same girl who doubles up as a maid otherwise.
The best is yet to come……..at a recently held fashion show in an upmarket location of Bangalore, her creation was adjudged the best. As the organisers called out her name, she confidently walked down the ramp along with the model. This video which did rounds in our family circles gave us all goose bumps. It was a dream come true for young Bhavani who is still a student. Her passion, determination and hard work is exemplary.
What struck me the most was that she reported to her ‘housemaid duties’ the next morning with the awards and pictures. Despite my relative’s protests, she washed the dishes saying this was her primary duty and she had to support her mother. There was Bhavani’s mother, gazing lovingly at her dear daughter who had indeed done her proud. Together, they were a sight to behold. So many untold words. So many hidden emotions! Not only is the girl focussed and ambitious, but is also grounded and sensitive to the family’s needs. She is not fighting for her ‘so-called’ rights. She is displaying traits of leadership and ensuring the ‘well-being’ of herself and her family!
Jai Bhavani! Wishing victory to the young girl-child, let’s move on to catch up with what the various ministries had to offer during October, 2023. Do scroll down to read the notifications, circulars and press releases that the 293rd issue of Samhita carries.
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Dematerialisation of securities by Private Companies
In September 2018, the Ministry of Corporate Affairs (MCA) had mandated dematerialisation of securities being issued by Unlisted Public Companies. Subsequently, filing of form PAS-6 for Reconciliation of Share Capital held in Physical and Demat form, on a half-yearly basis was also notified. 4 years have gone by and MCA has now introduced a similar provision for Private Companies with a certain timeline to comply. This will have a major impact since only those companies which are Small Companies as on year ending on or after March 31, 2023, have been excluded from complying with this requirement.
While this may seem like an increase in cost of compliance, it is a firm move by the Ministry to curb malpractices of tampering and forgery of share certificates and other records of a company. Issues such as loss of share certificates, issue of split and duplicate share certificates, maintenance of register of members etc will soon be a thing of the past. With loopholes being plugged one by one, the overall corporate governance standards in the country are enhanced.
The MCA notification dated October 27, 2023 also prescribes rules for dematerialisation of share warrants issued by public companies prior to the commencement of the Act. Highlights of the said MCA notification are summarized below:
1. Dematerialisation of Share Warrants- Rule 9(2)
- Public companies which have issued share warrants prior to the commencement of the Companies Act, 2013 and are not yet converted into shares shall inform the details of such share warrants to the ROC. These details are required to be filed in Form PAS-7 within 3 months from date of notification.
- The bearers of such share warrants shall, within a period of 6 months from the commencement of the amended rules, surrender the warrants to the company and get the same dematerialised. In case the bearers do not want to surrender within the said period, the company shall convert the share warrants to dematerialised form and transfer the same to IEPF.
- The company shall issue a notice in Form PAS-8 to the bearers of share warrants for surrendering the warrants and shall also place the same on its website, if any. Further, such notice shall be published by the company in a newspaper in the vernacular language which is in circulation in the district and in English language in an English newspaper, widely circulated in the State in which the registered office of the company is situated.
2. Dematerialisation of Securities- Rule 9B
- Every private company which as on the last day of financial year ending on or after March 31, 2023 is not a small company as per audited financial statements for such financial year, shall within 18 months of closure of financial year comply with the requirement of issuing securities in demat form and facilitate dematerialisation of all its securities.
- Any Private Company as covered above, intending to make any offer for issue of any securities or buy-back or issue of bonus shares or rights offer, after the aforesaid timeline of 18 months, shall ensure that entire holding of securities of its promoters, directors, key managerial personnel has been dematerialised before making such offer.
- Every holder of securities of any Private Company as covered above, who intends to transfer securities or subscribe to securities on or after the aforesaid timeline of 18 months, shall ensure all his securities are dematerialised before such transfer or subscription as the case may be.
- The above provisions shall not apply to Government Company.
- Further provisions of sub-rule (4) to (10) of Rule 9A of the Companies (Prospectus and Allotment of Securities) Rules, 2014 relating to facilitating demat, payment to Depositories etc shall mutatis mutandis apply to dematerialisation of securities under Rule 9B.
It follows that holding-subsidiary companies, Section 8 Companies and non-small companies must demat their securities. Timelines – on or before September 30, 2024 for FY ending March 31, 2023 and on or before June 30, 2025 for FY ending December 31, 2023.
MCA vide notification dated October 27, 2023 has notified amendments to the Limited Liability Partnership Rules, 2009, aimed at bringing greater accountability and transparency in the ownership of LLPs. Highlights of the amendments are as follows:
1. Register of Partners
- Every LLP from the date of its incorporation shall maintain a register of its partners in Form 4A (in the prescribed format) and such register shall be kept at the registered office of the LLP.
- Existing LLPs shall maintain the said register within 30 days from the commencement of this notification ie. by November 26, 2023.
- Any change in partner shall be entered in the register within 7 days of such change.
- Rectification, if any made in the register pursuant to any order passed by the competent authority under any law, the necessary reference of such order shall be indicated in the respective register and the reasons shall be recorded in writing.
- Details such as personal details of partner, date of becoming partner, date of cessation, amount and nature of contribution with monetary value and any other interest, if any are required to be maintained in the register.
2. Declaration in respect of beneficial interest in any contribution
Similar to the provisions of Section 89 under the Companies Act, 2013, declaration for beneficial interest in contribution has been introduced for LLPs as follows:
- A person whose name is entered in the register of partners of LLP but does not hold any beneficial interest fully or partly in contribution, such person (“Registered Partner”) shall submit a declaration in Form 4B with the LLP, within a period of 30 days from the date on which his name is entered in the register of partners.
- Every person who holds or acquires a beneficial interest in the contribution of an LLP but whose name is not registered in the register of partners ( “Beneficial Partner”), such person shall file with the LLP, a declaration disclosing such interest in Form 4C within a period of 30 days after acquiring such beneficial interest in the contribution of the LLP.
- Within a period of 30 days of from the date of receipt of Form 4B or 4C, the LLP shall file the declaration(s) in Form 4D.
- Every LLP shall specify a designated a partner who will be responsible for furnishing information and extending co-operation to the ROC or any other officer authorised by the Central Government with respect to beneficial interest in the contribution of the LLP. Details of such person shall be filed with the Registrar in Form 4.
- Until a Designated Partner is specified for said purpose, every Designated Partner of the LLP shall be deemed to be responsible for the same.
MCA vide Notification dated October 27, 2023 notified amendments to Rule 9 of the Companies (Management and Administration) Rules, 2014. These amendments are effective immediately. Highlights of the same are as follows:
1. Companies have been mandated to have a Designated Person for furnishing information and extending co-operation to the ROC or any other authorised officer with respect to beneficial interest in shares in terms of Section 89 of the Companies Act, 2013.
2. The company may designate the following persons for the said purpose:
- A company secretary if there is a requirement for such appointment under the Act or
- a Key Managerial Personnel other than CS or
- any Director if there is no CS or KMP.
3. Until a person is designated as above, the following persons will be deemed to be the designated person:
- A company secretary if there is a requirement for such appointment under the Act or
- every Managing Director or Manager, in case a CS has not been appointed or every director, if there is no CS or MD or Manager.
4. Details of the Designated Person shall be informed through Annual Return
5. Any change in Designated Person shall be informed through form GNL-2
MCA vide notification dated October 20, 2023 has amended Rule 30 of the Companies (Incorporation) Rules, 2014 relating to Shifting of Registered Office from one State or Union Territory to another state. Following amendments have been notified:-
- No cost will be levied on the order approving alteration of Memorandum of Association for shifting of registered office from one State or Union Territory to another state.
- Allows shifting of registered office of those companies whose management has been taken over under a resolution plan approved under section 31 of the Insolvency Bankruptcy Code, 2016 and no appeal against the resolution plan is pending in any Court or Tribunal and no inquiry, inspection, investigation is pending or initiated after the approval of the said resolution plan.
Provision for permitting certain class of public companies to list their securities on stock exchanges in permissible foreign jurisdictions was introduced through the Companies Amendment Act, 2020. MCA vide notification dated October 30, 2023 has notified that the said provision is effective immediately. The rules for the same are yet to be notified but this will certainly open doors for public companies to directly list their securities overseas.
Pro Planet People- Government’s Green Initiatives
To promote environment conservation and sustainable lifestyle, the Ministry of Environment, Forest and Climate Change (“MOEFCC”) had introduced ‘LiFE – Lifestyle for Environment‘ campaign in 2021. In furtherance to the same, the MOEFCC has notified Green Credit Program (GCP) and Ecomark Scheme on October 13, 2023. These two initiatives have been introduced with a similar framework of implementation and provide for appointment of an administrator, formation of Technical Committee and Steering Committee for administration of the Scheme and maintenance of Registry.
GCP focuses on incentivizing environment friendly practices such as tree plantation, water management, waste management, sustainable agriculture, sustainable building etc, by corporates and individuals through a market-based mechanism. Whereas Ecomark Scheme is meant for building consumer awareness and encouraging the consumers to make conscious choices. The two green Initiatives have been introduced through two separate notifications which are linked to the MOEFCC’s Press Release dated October 13, 2023. To read the press release, click on the link below.
SEBI vide notification dated October 09, 2023 has notified amendment to Regulation 30(11) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR”) relating to disclosure of events or information. SEBI has deferred the compliance for top 100 listed entities and top 250 listed entities to confirm or deny any reported event or information to stock exchanges to such time as may be notified by SEBI. The amendment is effective from October 01, 2023.
SEBI vide Circular dated October 07, 2023 has extended the relaxation from sending physical copies of financial statements under Regulation 36(1)(b) for Annual General Meeting and under Regulation 44(4) for general meetings till September 30, 2024. This is in view of extension granted by MCA vide its General Circular No. 09/2023 dated September 25, 2023. It may be noted that earlier SEBI had granted the relaxation till September 30, 2023.
RBI vide notification dated October 16, 2023 has amended the Foreign Exchange Management (Debt Instruments) Regulations, 2019. Following are the amendments:
- Persons resident outside India who maintain rupee account as per Foreign Exchange Management (Deposit) Regulations, 2016 are now permitted to purchase, sell dated Government Securities/Treasury Bills as per terms and conditions specified by RBI.
- The consideration for above purchase shall be paid out of funds held in the rupee account maintained as per the Foreign Exchange Management (Deposit) Regulations, 2016.
- The sale/maturity proceeds (net of taxes, if applicable) of instruments held by persons resident outside India shall be credited to the said rupee account.
Considering India is a signatory to Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment, the MCA vide notification dated October 03, 2023 has notified that the provisions of Section 14(1) of the Insolvency and Bankruptcy Code, 2016 i.e. moratorium shall not apply to the transactions, arrangements or agreements entered by the Corporate Debtor under the Convention and the Protocol, relating to aircraft, aircraft engines, airframes and helicopters.
Vide Trade Notice dated October 09, 2023 the Directorate General of Foreign Trade has notified that henceforth the Status Holder Certificate (SHC) for exports will be automatically generated based on export data available in DGCI&S database. The e-SHC will be made available to the exporting entity on their registered email by 15th day of August, every year.
However, since export figures of service exports, deemed exports and double weightage exports are not being compiled by DGCI&S, the e-SHC will have to be applied for in the existing portal. Further, due to inaccurate data there could be cases where e-SHC generated is of lower status category. In such cases, a holder will have to file an amendment application on the portal. To know more, read the Trade Notice issued by DGFT.
Vide Trade Notice dated October 13, 2023, the DGFT has informed about a 2 weeks camp at 11 Regional Authorities to facilitate expedited disposal of pending applications of Export Obligation Discharge Certificate (EODC) for Advance Authorizations and EPCG. The Camp will be held from November 13, 2023 to November 24, 2023. Exporters whose EODC applications are pending and where the licence status is not reflecting as ‘Closed’ on the DGFT website, have been advised to make use of the facility in the Camp.
Vide trade notice dated October 19, 2023, the DGFT has notified the discontinuation of issuance of physical copy of Authorization for Restricted Imports for EDIP ports with immediate effect. Authorization for Restricted Imports for any non-EDI ports will continue to be issued on paper. Further, amendment or revalidation of any Authorization for Restricted Imports issued prior to October 19, 2023 will be processed in existing manner wherein paper copy of amendment letter will be issued and the amendment letter will be endorsed on original authorisation.
Vide notification dated October 10, 2023, the CBDT has notified that PAN will not be required for non-resident individuals and foreign companies opening bank accounts in GIFT IFSC. Such non-residents must not have any other taxable income in India. Instead, they can provide Form 60 to the banks for their transactions.
Rule 16D has been inserted under Income Tax rules for introducing form 56F, a report which shall be used for claiming deduction under section 10AA of Income Tax Act, 1961. This report must be prepared by a Chartered Accountant. These amendments shall be deemed to have come into force from July 29, 2021. Taxpayers and accountants should ensure retroactive compliance where necessary.
CBDT vide circular dated October 20, 2023 has announced an extension of due date for filing the report of accountant under Sec. 10AA of the Income Tax Act, 1961 to December 31, 2023. The same has been notified on account of notification relating to relevant Form 56F on October 19,2023 and genuine hardships faced by such assessees.
GSTN has issued an advisory dated October 06, 2023 on the introduction of Compliance Pertaining to DRC-01C (Difference in Input Tax Credit (ITC) available in GSTR-2B & ITC claimed in the GSTR-R3B. Vide Notification No. 38/2023 – CBEC has inserted the Rule 88D to deal with difference in input tax credit available in GSTR-2B and ITC availed in GSTR-3B. If the claimed ITC exceeds the ITC available as per GSTR-2B by predefined limits, as directed by competent authority, the taxpayer shall receive an intimation in the form of Form DRC-01C. Upon receiving the intimation, the taxpayer must file a response using Form DRC-01C Part B. In case, no response is filed by the impacted taxpayers in Form DRC-01C Part B, such taxpayers will not be able to file their subsequent period GSTR-1/IFF.
In terms of the recent amendments in GST, any person located outside taxable territory making supply of online money gaming to a person in taxable territory, is liable to get registered under GST and is required to pay tax on such supply. Such persons are now mandated to take registration/amend their existing registration in accordance with the proposed row (iia) in FORM GST REG-10.
GSTN is in the process of developing the functionality of such new registrations or required amendment in existing registration, as the case may be. Till such time, a workaround may be followed which has been detailed in the GSTN advisory dated October 17, 2023.
CBIC has issued multiple circulars clarifying various issues as follows:
- Circular 14/2023- Clarification that Indian exporters of services who receive payments in INR through designated Special Rupee Vostro Accounts, fulfil the conditions for export of services as per the IGST Act.
- Circular 15/2023- Clarification on the determination of the place of supply in various scenarios.
- Circular 16/2023- Provides clarity on the taxability of personal and corporate guarantees and its valuation. It provides clear guidelines for businesses and tax authorities.
Quote of the day
"When we invest in women and girls, we are investing in the people who invest in everyone else."
- Melinda Gates
Disclaimer: 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.