CA Final Old/CA Final New/CMA Final CS Executive/CS ...€¦ · Page | 2 © Siddharth Agarwal. All...

Page | 1

© Siddharth Agarwal. All Rights Reserved.

CA Final Old/CA Final New/CMA Final CS Executive/CS Professional

Sl. No. Topic Detailed Explanations 1 Start Up Start-Up Companies

2 Govt Co. Amendment in Exemption Notification to Govt Cos.

3 Private Co. Amendment in Exemption Notification to Pvt. Cos.

4 Section 8 Co. Amendment in Exemption Notification to Sec 8 Cos

5 Auditors Amendment in Companies (Audit and Auditors) Rules, 2014

6 Directors Amendment in Companies (Appointment and Qualification of Directors) Rules, 2014

7 Board Meeting, AC & NRC

Amendment in Companies (Meetings of Board and its Powers) Rules, 2014

8 Investigation SFIO Enforcement of Section 212(8), (9), & (10) on 24.08.2017

9 Striking Off Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016.

10 Registered Valuers Section 247 - Valuation by Registered Valuers Companies (Registered Valuers and Valuation) Rules, 2017

11 Arrest Rules SFIO Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017

12 2 layer Rules Companies (Restriction on number of layers) Rules, 2017

Page | 2


Start-Up Companies As per the definition Notified in the Gazette of India vide G.S.R. 180(E) dated 17th February, 2016, an entity shall be considered as a 'STARTUP'- (a) Up to 5 years from the date of its incorporation/registration, (b) If its turnover for any of the financial years has not exceeded Rupees 25 crore, and (c) It is working towards innovation, development, deployment or commercialization of new

products, processes or services driven by technology or intellectual property; Provided that any such entity formed by splitting up or reconstruction of a business already in existence shall not be considered a 'startup'; Provided further that in order to obtain tax benefits a startup so identified under the above definition shall be required to obtain a certificate of an eligible business from the lnter-Ministerial Board of Certification. Startups shall be allowed to self-certify compliance with labour and environment laws. Profits of startups as defined are exempted from income-tax for a period of 3 years with a view to facilitate growth of business and availability of working capital during the initial years of operation. The exemption shall be available subject to non-distribution of dividend by the startup.

Topic Detailed Explanations

Amendment in Exemption Notification to Govt Cos.

Section 152 (6) & (7) -

Exemption to Government Companies Section 152(6) & (7) shall not apply to – (a) a Government company, which is not a listed company, in which not less than

51%. of PUSC is held by the CG, or by any State Government or Governments or by the CG and one or more SG;

(b) a subsidiary of a Government company, referred to in (a) above.

Section 230 to Section 232 (Restructuring of Government companies)

The word "Tribunal “wherever it occurs in sections 230 to 232, the words "CG” shall be substituted.

Insertion of Para 2A Exemption Notification to Government Cos.

All the exceptions, modifications and adaptations shall be applicable to a Government company if it has NOT committed a default in filing of its FS or Annual Return.

Amendment in Exemption Notification to Pvt. Cos.

Section 143(3)(i) – Exemption Notification from Auditor’s Report on Internal Financial Controls

Section 143(3)(i), shall not apply to a private company:- (i) which is a OPC or a small company; or (ii) which has turnover < ` 50 cr. as per latest audited financial statement or which

has aggregate borrowings from banks or financial institutions or anybody corporate at any point of time during the financial year < ` 25 Cr.

Section 173(5) to be substituted

Page | 3



A OPC, small company, dormant company and a private company (if such private company is a start-up) shall be deemed to have complied with the provisions of this section if at least 1 meeting of the BOD has been conducted in each half of a calendar year and the gap between the two meetings is not less than 90 days. Provided that nothing contained in this subsection and in section 174 shall apply to OPC in which there is only 1 director on its Board of Directors.

Section 174(3) – Exception in case of private company

Exception - It shall apply with the exception that the interested director may also be counted towards quorum in such meeting after disclosure of his interest pursuant to section 184.

Insertion of Para 2A Exemption Notification to Private Cos.

All the exceptions, modifications and adaptations shall be applicable to a Private company if it has NOT committed a default in filing of its FS or Annual Return.

Amendment in Exemption Notification to Sec 8 Cos

Section 149(1)(b) & 1st Proviso

Every company shall have a Board of Directors consisting of individuals as directors and shall have – (a) Minimum 3 directors in public co, 2 directors in private co, 1 director in OPC. (b) a maximum of 15 directors. 1st Proviso Provided that a company may appoint more than 15 directors after passing SR.

Section 149(1)(b) & 1st Proviso shall not apply on Section8 companies but Section 149(1)(a) shall apply on Sec 8 Companies.

.

Section 186(7) – Proviso Inserted

Rate of Interest - No loan shall be given under this section at a rate of interest lower than the prevailing yield of 1 year, 3 year, 5 year or 10 year Government Security closest to the tenor of the loan.

Proviso Inserted Provided that nothing contained in this sub-section shall apply to a company in which ≥ 26%. of the PUSC is held by the CG or one or more SG or both, in respect of loans provided by such company for funding Industrial Research and Development projects in furtherance objects as stated in its Memorandum of Association.

Insertion of Para 2A Exemption Notification to Sec 8 Cos.

All the exceptions, modifications and adaptations shall be applicable to a Section 8 company if it has NOT committed a default in filing of its FS or Annual Return.

Amendment in Companies (Audit and Auditors) Rules, 2014

Enforcement of the Companies (Audit and Auditors) 2nd Amendment Rules, 2017 on 22 June 2017 in exercise of powers conferred by section 139.

Principle Rule as per Companies (Audit and Auditors) Rules, 2014 as amended via Companies (Audit and Auditors) 2nd Amendment Rules, 2017

Rule 5: Class of Companies -

Page | 4



Rotation of Auditors

For the purposes of sub-section (2) of section 139, the class of companies shall mean the following classes of companies excluding one person companies and small companies: (a) all unlisted public companies having paid up share capital of rupees 10

crore or more; (b) all private limited companies having paid up share capital of rupees 20 50

crore or more; (c) all companies having paid up share capital of below threshold limit

mentioned in (a) and (b) above, but having public borrowings from financial institutions, banks or public deposits of rupees 50 crores or more.

. Amendment in Companies (Appointment and Qualification of Directors) Rules, 2014 Independent directors

Rule 4 - The following class or classes of companies shall have at least 2 directors as independent directors – 1) Public Companies having PUSC ≥ ` 10 Crores 2) Public Companies having Turnover ≥ ` 100 Crores 3) Public Companies having Outstanding loans, debentures and deposits > ` 50

crores Rule 4 shall be numbered as Rule 4(1), the following sub-rule shall be inserted namely: Rule 4(2) The following classes of unlisted public company shall not be covered under sub-rule (1), namely: (a) A joint venture; (b) A wholly owned subsidiary; and (c) A dormant company. Note: It means that the above companies though satisfying 10/100/50 shall not be needed to appoint Independent Directors and also not needed to constitute an Audit Committee and Nomination and Remuneration Committee.

Amendment in Companies (Meetings of Board and its Powers) Rules, 2014 BM by Video Conferencing AC & NRC

In Rule 3(e), the following shall be substituted, - (e) Any director who intends to participate in the meeting through electronic mode may intimate about such participation at the beginning of the calendar year and such declaration shall be valid for 1 year: Provided that such declaration shall not debar him from participation in the meeting in person in which case he shall intimate the company sufficiently in advance of his intention to participate in person.

In the principal rules, for rule 6, the following rule shall be substituted, namely:-

Rule 6 - Committees of the Board: The Board of directors of every listed company and a company covered under rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an 'Audit Committee' and a 'Nomination and Remuneration Committee’ of the Board.

Enforcement of Section 212(8), (9), & (10) on 24.08.2017

Covered in Arrest Rules in these Notes.

Page | 5


Rule 3. Removal of name of company from the Register on suo-moto basis. (1) The ROC may remove the name of a company from the REGISTER of companies u/s 248 (1) of the

Act: Provided that following categories of companies shall NOT be removed from the register of companies under Rule 3 & 4, namely: - (a) Listed companies; (b) Companies that have been delisted due to non-compliance of listing regulations or listing

agreement or any other statutory laws; (c) Vanishing companies; (See Below Explanation) (d) Companies where inspection or investigation is ordered and being carried out or actions on such

order are yet to be taken up or were completed but prosecutions arising out of such inspection or investigation are pending in the court;

(e) Companies where notices u/s 206 or 207 of the act have been issued by the ROC or inspector and reply thereto is pending or report under section 208 has not yet been submitted or follow up of instructions on report under section 208 is pending or where any prosecution arising out of such inquiry or scrutiny, if any, is pending with the court;

(f) Companies against which any prosecution for an offence is pending in any court; (g) Companies whose application for compounding is pending before the competent authority for

compounding the offences committed by the company or any of its officers in default; (h) Companies, which have accepted public deposits which are either outstanding or the company

is in default in repayment of the same; (i) Companies having charges which are pending for satisfaction; and (j) Companies registered u/s 8 of the act (Not-for-profit companies).

Explanation. - “VANISHING COMPANY” means a company, listed with Stock Exchange which 1) Has failed to file its returns with the ROC & Stock Exchange for consecutive 2 years, and 2) Is not maintaining its registered office at the address notified with the ROC or Stock Exchange

and 3) None of its directors are traceable.

(2) ROC shall give a notice in writing in Form STK 1 which shall be sent to all the directors of the

company, by registered post or by speed post. (3) Notice shall contain the REASONS on which the name of the company is to be removed from the

register of companies and shall seek REPRESENTATIONS, if any, against the proposed action from the company and its Directors along with the copies of relevant documents, if any, within a period of 30 days from the date of the notice.

Rule 4. Application for removal of name of company. (1) An application for removal of name of the company u/s 248(2) shall be made in Form STK-2 along

with the fee of ` 5,000.

(2) Every application shall accompany a NO OBJECTION CERTIFICATE from appropriate Regulatory Authority concerned in respect of following companies, namely: -

Page | 6


(a) Companies which have conducted or conducting non-banking financial and investment activities as referred to in the Reserve Bank of India Act, 1934;

(b) Housing finance companies as referred to in the Housing Finance Companies (National Housing Bank) Directions, 2010 issued under the National Housing Bank Act, 1987;

(c) Insurance companies as referred to in the Insurance Act, 1938; (d) Companies in the business of capital market intermediaries as referred to in the SEBI Act, 1992; (e) Companies engaged in collective investment schemes as referred to in the SEBI Act, 1992; (f) Asset management companies as referred to in the SEBI Act, 1992; (g) Any other company which is regulated under any other law for the time being in force.

(3) The application in Form STK 2 shall be accompanied by -

(a) INDEMNITY BOND duly notarised by every director in Form STK 3; (b) A STATEMENT OF ACCOUNTS containing assets and liabilities of the company made up to a day,

not more than 30 days before the date of application and certified by a CA; (c) An AFFIDAVIT in Form STK 4 by every director of the company; (d) A copy of the SPECIAL RESOLUTION duly certified by each of the directors of the company or

consent of 75% of the members of the company in terms of PUSC as on the date of application; (e) A statement regarding pending litigations, if any, involving the company.

Rule 5. Manner of filing of application. (1) The application in Form STK 2 shall be signed by a director duly authorised by the Board in their

behalf. (2) Where the director concerned does not have a registered digital signature certificate, a physical

copy of the form duly filled in shall be signed manually by the director duly authorised in that behalf and shall be attached with the Form STK 2 while uploading the form.

Rule 6. Form to be certified. The Form STK 2 shall be certified by a CA/CS/CMA in practice. Rule 7. Manner of publication of notice (1) The notice u/s 248 (1) or (2) shall be in Form STK 5 or STK 6, as the case may be, and be-

(a) Placed on the official website of the MCA; (b) Published in the Official Gazette; (c) Published in English language in a leading English newspaper and at least once in vernacular

language in a leading vernacular language newspaper. Provided that in case of any application made u/s 248(2) of the Act, the company shall also place the application on its website, if any, till the disposal of the application.

(2) The ROC shall, simultaneously intimate the concerned regulatory authorities regulating the company, viz, the Income-tax authorities, central excise authorities and service-tax authorities having jurisdiction over the company, about the proposed action of removal or striking off the names of such companies and seek objections, if any, to be furnished within a period of 30 days from the date of issue of the letter of intimation and if no objections are received within 30 days from the respective authority, it shall be presumed that they have no objections to the proposed action of striking off or removal of name.

Rule 9. Notice of striking off and dissolution of company. The Registrar shall cause a notice u/s 248(5) of striking off the name of the company from the register of companies and its dissolution to be published in the Official Gazette in Form STK 7 and the same shall also be placed on the official website of the MCA.

Page | 7



Section 247(1) Appointment of Valuer

Where a valuation is required to be made in respect of any property, stocks, shares, debentures, securities or goodwill or any other assets (herein referred to as the assets) or net worth of a company or its liabilities under the provision of this Act, it shall be valued by a person having such qualifications and experience and registered as a valuer in such manner, on such terms and conditions as may be prescribed a person having such qualifications and experience, registered as a valuer and being a member of an organisation recognised, in such manner, on such terms and conditions as may be prescribed [Notified via Companies (Removal of Difficulties) Second Order, 2017] and appointed by the audit committee or in its absence by the Board of Directors of that company.

Section 247(2) Impartial & Diligent

The Valuer appointed as above shall- a) Make an impartial, true and fair valuation of any assets which may be required

to be valued; b) Exercise due diligence while performing the functions as valuer; c) Make the valuation in accordance with such rules as may be prescribed; and d) Not undertake valuation of any assets in which he has a direct or indirect

interest or becomes so interested at any time during or after the valuation of assets.

Section 247(3) Punishment for contravention

Offence Punishment

Contravention of this Section or Rules ` 25,000 ≤ Fine ≤ ` 1 lakh

If the Valuer has contravened such provisions with the intention to defraud the company or its members

Imprisonment ≤ 1 year AND

` 1 lakh ≤ Fine ≤ ` 5 lakhs

.

Section 247(4) Refund & Damages

Where a valuer has been convicted as above, he shall be liable to— a) Refund the remuneration received by him to the company; and b) Pay for damages to the company or to any other person for loss arising out of

incorrect or misleading statements of particulars made in his report.

In exercise of the powers conferred by section 247, the Central Government hereby enforced the Companies (Registered Valuers and Valuation) Rules, 2017.

Page | 8


CHAPTER II

ELIGIBILITY, QUALIFICATIONS AND REGISTRATION OF VALUERS

Valuer = V Valuation Professional Organisation = VPO

Rule 3. Prohibition. A. Except as provided elsewhere in these Rules, no person shall practice as a registered valuer without

obtaining a certificate of registration. B. Any person who, not being a registered valuer -

(a) practices as a registered valuer, under any name, style, title or description; or (b) holds himself/ itself out, whether directly or by implication, to be a registered valuer shall be

liable for punishment u/s 247(3). C. Any person who has been convicted u/s 247 (3) of the Act shall not be eligible for registration under

these rules until expiry of 3 years from the date of completion of punishment. Rule 5. Eligibility. No individual shall be eligible to be a registered valuer if he- (a) has not passed the Valuation Examination in the 3 years preceding the date of making an application

under Rule 7: Provided that if an individual has completed 50 years of age and has been substantially involved in at least 10 valuation assignments of the assets (for valuation of which class of assets he is seeking registration) amounting to 5 crore rupees or more, during the 5 years preceding the commencement of these rules, he shall not be required to pass the Valuation Examination;

(b) does not have the qualification and experience specified in Rule 6; (c) is a minor; (d) has been declared to be of unsound mind; (e) is an undischarged bankrupt, or has applied to be adjudicated as an bankrupt; (f) is a person not resident in India; (g) has been convicted by any competent court for an offence punishable with imprisonment for a term

exceeding 6 months or for an offence involving moral turpitude, and a period of 5 years has not elapsed from the date of expiry of the sentence: Provided that if a person has been convicted of any offence and sentenced in respect thereof to imprisonment for a period of 7 years or more, he shall not be eligible to be registered;

(h) is not a valuer member (holding certificate of practice) of a valuation professional organisation; or (i) is not a fit and proper person:

Explanation: For determining whether an individual is a fit and proper person under these Rules, the Registration Authority may take account of any relevant consideration, including but not limited to the following criteria-

• integrity, reputation and character,

• absence of convictions and restraint orders, and

• competence, including financial solvency and net worth. Rule 6. Qualifications and experience. An individual shall have the following qualifications to be eligible for registration under Rule 5 -

Page | 9


a. Post-graduate degree, in the specified discipline and at least 3 years of experience in the discipline thereafter; or

b. A bachelor’s degree, in the specified discipline and at least 5 years of experience in the discipline thereafter; or

c. Membership of a professional institute set up under an act of parliament and at least 5 years’ experience after such membership. Explanation: The ‘specified discipline’ referred to in (i) and (ii) shall mean the specific discipline which is relevant for valuation of the class of asset for which the registration is sought and a VPO recognised under these rules.

Rule 7. Application for certificate of registration. a. An individual may make an application to the Registration Authority. b. A partnership entity may make an application to the Registration Authority. c. The Registration Authority shall examine the application, and give an opportunity to the applicant

to remove the deficiencies, if any, in the application. d. If the Registration Authority is satisfied, after such scrutiny, inspection or inquiry as it deems

necessary, that the applicant is eligible under these Rules, it may grant a certificate of registration to the applicant to carry on the activities of a registered valuer for the relevant class of assets, within 60 days of receipt of the application.

Rule 8. Refusal to grant certificate. A. If the Registration Authority is of the prima facie opinion that the registration ought not be granted,

it shall communicate the reasons for forming such an opinion within 45 days of receipt of the application.

B. The applicant shall submit an explanation as to why his/its application should be accepted within 15 days of the receipt of the communication.

C. After considering the explanation, the Registration Authority shall communicate its decision to-

• accept the application, along with the certificate of registration, or

• reject the application by an order, giving reasons thereof within 30 days of receipt of explanation.

Rule 9. Conditions of Registration. The registration granted under Rule 7 or 8 shall be subject to the conditions that the valuer shall – (a) At all times comply with the provisions of the Act and these Rules; (b) At all times comply with the Valuation Standards; (c) Not conduct valuation of the assets or class of assets other than for which he/it has been registered

by the Registration Authority; (d) Take prior permission of the Registration Authority for shifting his/ its membership from one VPO

to another; (e) Take adequate steps for redressal of grievances; (f) Maintain records of all assignments undertaken by him/it under the Act and these Rules for at least

3 years from the completion of such assignment; (g) Comply with the Code of Conduct of the VPO; (h) Allow only the partner who is a registered valuer for the class of assets that are being valued to sign

and act on behalf of it, where it is a partnership entity; (i) Be jointly and severally liable with the partnership entity; and (j) Comply with such other conditions as may be imposed by the Registration Authority.

Page | 10


CHAPTER III RECOGNITION OF VALUATION PROFESSIONAL ORGANISATIONS

Rule 12. Eligibility for valuation professional organisations. An organisation may be recognised as a VPO for valuation of a specific class or classes of assets of valuation if it:- A. Has been -

• Set up under an act of parliament, or;

• Registered u/s 8 of Companies Act, 2013, or;

• Registered as a society under the Societies Registration Act, 1860 or any relevant state law, or;

• Set up as a trust governed by the Indian Trust Act, 1882; B. Conducts an examination for the individuals who are its members or intend to be its members and,

possessing qualifications in specific discipline with regard to valuation of specific class of assets for which it is recognised as a VPO before granting membership or certificate of practice to them;

C. Grants membership or certificate of practice, to individuals or partnership entities, who fulfil the requirements laid down by it in this regard, in respect of valuation of class of assets for which it is recognised as a VPO;

D. Conducts training for the individual members before a certificate of practice is issued to them; E. Lays down a code of conduct for valuers who are its members; Rule 13. Application for recognition. A. An applicant organisation which meets the conditions prescribed in Rule 12 may make an

application for recognition as a VPO. B. The Registration Authority shall examine the application, and give an opportunity to the applicant

to remove the deficiencies, if any, in the application. C. If the Registration Authority is satisfied, after such scrutiny, inspection or inquiry as it deems

necessary that the applicant is eligible under these Rules, it may grant a certificate of recognition as a VPO.

Rule 14. Refusal to grant recognition A. If, after considering an application made under Rule 13, the Registration Authority is of the prima

facie opinion that recognition ought not to be granted, it shall communicate the reasons for forming such an opinion within 45 days of receipt of the application.

B. The applicant shall submit an explanation as to why its application should be accepted within 15 days of the receipt of the communication.

C. After considering the explanation, if any, given by the applicant, the Registration Authority shall communicate its decision to- (a) accept the application, along with the certificate of registration; or (b) reject the application by an order, giving reasons thereof within 30 days of receipt of

explanation.

CHAPTER IV VALUATION STANDARDS (VS)

Rule 16. Valuation Standards. A. A registered valuer shall make valuations as per the VS notified by the CG. B. Until such time as the VS are notified, a valuer shall make valuations as per-

• Internationally accepted valuation methodology;

• VS adopted by any VPO; or

Page | 11


• VS specified by RBI, SEBI or any other statutory regulatory body. Rule 17. Advisory Committee CG may constitute an Advisory Committee to advise it and the Registering Authority on issues relevant to formulation and prescription of VS and policies pertaining to valuation. Rule 18. Valuation Report.- The valuer shall, in his/ its report, state the following:- (a) Background information of the asset being valued; (b) Purpose of valuation and appointing authority; (c) Identity of the valuer and any other experts involved in the valuation; (d) Disclosure of valuer interest/conflict, if any; (e) Date of appointment, valuation date and date of report; (f) Sources of information; (g) Procedures adopted in carrying out the valuation; (h) Valuation methodology; (i) Major factors that influenced the valuation; (j) Conclusion; and (k) Caveats, limitations and disclaimers

CHAPTER V

DISCIPLINARY PROCEEDINGS Rule 19. Cancellation or suspension of certificate of registration or recognition. The Registration Authority may cancel or suspend the registration of a V/VPO -

(a) in public interest; or (b) on violation of the provisions of the Act, Rules or any condition of registration in the manner

prescribed in Rule 20. Rule 20. Disciplinary Proceedings. A. Based on the findings of an inspection or investigation, if the Registration Authority is of the prima

facie opinion that sufficient cause exists to cancel/suspend the registration of a V/VPO, it shall issue a show-cause notice to the V/VPO.

B. The show-cause notice shall be served in the following manner by- (a) sending it to the V/VPO by registered post; or (b) email.

C. The Registration Authority shall dispose of the show-cause notice by reasoned order in adherence to the principles of natural justice.

D. The order in disposal of a show-cause notice may provide for- (a) no action; (b) warning; or (c) suspension or cancellation of the registration or recognition.

E. An order passed for cancelling the recognition of a VPO, shall specify the time within which its members may take membership of another VPO.

F. The order passed shall be published on the website of the Registration Authority. G. The order passed shall not become effective until 30 days have elapsed from the date of issue of

the order.

Page | 12


Rule Description

Arrest Rules According to the Rule where any person has been guilty of any offence punishable under section 212 of the Act, he may be arrested as per the respective rules.

Rule 2 Arrest in any Company other than Govt Co or Foreign Co.

(1) Where the Director, Additional Director or Assistant Director of the SFIO investigating into the affairs of a company other than a Government company or foreign company has, on the basis of material in his possession, reason to believe that any person has been guilty of any offence punishable u/s 212 of the Act, he may arrest such person; Provided that in case of an arrest being made by AD/AD, the prior written approval of the Director SFIO shall be obtained.

(2) The Director SFIO shall be the competent authority for all decisions pertaining to arrest.

Rule 3 Arrest in Govt Co or Foreign Co.

Arrest in Govt Co or Foreign Co. Where an arrest of a person is to be made in connection with a Government company or a foreign company under investigation, such arrest shall be made with prior written approval of the Central Government.

Government Company Arrest Provided that the intimation of such arrest shall also be given to the MD or the person in-charge of the affairs of the Government Company and where the person arrested is the Managing Director or person in-charge of the Government Company, to the Secretary of the administrative Ministry concerned, by the arresting officer.

Rule 4 Arrest Order & PSM

The Director, AD or AD shall sign the ARREST ORDER together with PERSONAL SEARCH MEMO and shall serve it on the arrestee and obtain written acknowledgement of service.

Rule 5 Copy to Director SFIO.

The Director, AD or AD shall forward a copy of the arrest order along with the material in his possession and all the other documents including personal search memo to the office of Director, SFIO in a sealed envelope so as to reach the office of the Director, SFIO within 24 hours through the quickest possible means.

Rule 6 Arrest Register

An arrest register shall be maintained in the office of Director, SFIO and the Director shall ensure that entries with regard to particulars of the arrestee, date and time of arrest and other relevant information pertaining to the arrest are made in the arrest register.

Rule 7 Entry in Arrest Register

The entry regarding arrest of the person and information given to such person shall be made in the arrest register immediately on receipt of the documents as specified under rule 5 in the arrest register maintained by the SFIO office.

Rule 8 Preserve

The office of Director, SFIO shall preserve the copy of arrest order together with supporting materials for a period of 5 years from the date of judgment.

Page | 13


Rule Description

Rule 9 CPC

The provisions of the Code of Criminal Procedure, 1973, relating to arrest shall be applied mutatis mutandis to every arrest made under this Act.


Proviso to Section 2(87) Notified on 20.09.2017

The CG hereby appoints the 20.09.2017 as the date on which proviso to clause (87) of section 2 of the said Act shall come into force.

Restriction on number of layers for certain classes of holding companies- No company, other than a company belonging to a class specified above, shall have more than 2 layers of subsidiaries:

2 Exceptions: Provided that the provisions of this sub-rule shall not affect a company from acquiring a company incorporated outside India with subsidiaries beyond two layers as per the laws of such country: Provided further that for computing the number of layers under this rule, one layer which consists of one or more wholly owned subsidiary or subsidiaries shall not be taken into account.

Every company, existing on or before the commencement of these rules (20 Sep 2017), which has number of layers of subsidiaries in excess of 2 layers– (i) shall file, with the Registrar a return in Form CRL-1 disclosing the details

specified therein, within a period of 150 days from the date of publication of these rules in the Official Gazette;

(ii) shall not, after the date of commencement of these rules, have any additional layer of subsidiaries over and above the layers existing on such date; and

(iii) shall not, in case one or more layers are reduced by it subsequent to the commencement of these rules, have the number of layers beyond the number of layers it has after such reduction or maximum 2 layers, whichever is more.

Penalty for contravention = ` 10,000 and ` 1,000 per day for continuing offence.

Restriction on number of layers for certain classes of holding companies NOT to apply in certain cases (Sub Rule 2):

a) a banking company; b) a systematically important NBFC; c) an insurance company; d) a Government company. Note: “systemically important NBFC” means a NBFC registered with the RBI and having a net - worth of > ̀ 500 crores as per the last audited financial statements.

.

Page | 1


CA Final New / CA Final Old

Sl. No.

Chapter New / Old Detailed Explanations

1 The Insolvency & Bankruptcy Code, 2016

New Syllabus + Old Syllabus Section 2, 55 – 59

2 SEBI (ICDR), 2009 New Syllabus + Old Syllabus QIB, Monitoring Agency, Preferential Issue

3 Competition Act, 2002

Old Syllabus Exemptions to several entities form Section 3,5,6

4 Banking Regulation (Amendment) Act, 2017

Old Syllabus Insertion of new sections 35AA and 35AB.

Page | 2



Section 2(a) to 2(d) notified

The Central Government hereby appoints the 1st April, 2017 as the date on which the provisions of clause (a) to clause (d) of section 2 of the Code relating to voluntary liquidation or bankruptcy shall come into force. Section 2 of the Act The provisions of this Code shall apply to— (a) Any company incorporated under the Companies Act, 2013 or under any previous

company law; (b) Any other company governed by any special Act for the time being in force, except

in so far as the said provisions are inconsistent with the provisions of such special Act;

(c) Any LLP incorporated under the LLP Act, 2008; (d) Such other body incorporated under any law for the time being in force, as the CG

may, by notification, specify in this behalf.

Fast Track Insolvency Process

Fast Track Corporate Insolvency Resolution Process The CG hereby appoints the 14th day of June, 2017 as the date on which the provisions of section 55 to section 58 (both inclusive) of the said Code shall come into force. (Vide Notification S.O. 1910(E) dated 14th June 2017)

Corporate Debtors under Fast Track Corporate Insolvency Resolution

In exercise of the powers conferred by section 55(2) of the IBC, 2016 , the CG hereby notifies that an application for fast track corporate insolvency resolution process may be made in respect of the following corporate debtors, namely :- a. A small company, or b. A Start-up (other than the partnership firm), or c. An unlisted company with total assets ≤ ` 1 crore, as reported in the financial

statement of the immediately preceding financial year.

A fast track insolvency resolution is a process wherein the insolvency resolution process shall be completed in an expeditious manner i.e., with 90 days from the insolvency commencement date. The provisions of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 shall, mutatis mutandis, apply to the conduct of a fast track corporate insolvency resolution process.

Sl. No. Detailed Explanation

1 Who may apply?

An application under this category can be made by any corporate debtor falling under any of the

below mentioned category:-

(a) a corporate debtor with assets and income below a level as may be notified by the CG; or

Page | 3


Sl. No. Detailed Explanation (b) a corporate debtor with such class of creditors or such amount of debt as may be notified by the

CG; or

(c) such other category of corporate persons as may be notified by the CG.

2 Time period for completion of fast track corporate insolvency resolution process The fast track corporate insolvency resolution process shall be completed within a period of 90 days from the insolvency commencement date.

3 Extension The Adjudicating Authority may extend time period for fast track corporate insolvency resolution process. The aggrieved may make an application to the Adjudicating Authority and it is satisfied that the fast track corporate insolvency resolution process cannot be completed within a period of 90 days, it may, by order; extend the duration of such process to a further period which shall not be exceeding 45 days. The extension of the fast track corporate insolvency resolution process under this section shall not be granted more than once.


1 Person who may initiate voluntary liquidation proceeding A corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under the provisions of this Chapter V of Part II of the Code.

2 The voluntary liquidation of a corporate person shall meet such conditions and procedural requirements as may be specified by the Board.

3 Conditions of initiation of voluntary liquidation proceedings Voluntary liquidation proceedings of a corporate person registered as a company shall meet the following conditions, namely:— (a) a declaration from majority of the directors of the company verified by an affidavit stating

that— (i) they have made a full inquiry into the affairs of the company and they have formed an

opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and

(ii) the company is not being liquidated to defraud any person; (b) the declaration given above shall be accompanied with the following documents, namely:—

(i) audited financial statements and record of business operations of the company for the previous 2 years or for the period since its incorporation, whichever is later;

(ii) a report of the valuation of the assets of the company, if any prepared by a registered valuer;

(c) within 4 weeks of a declaration, there shall be—

Page | 4



(i) a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator; or

(ii) a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles, or

(iii) on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator:

Provided that the company owes any debt to any person, creditors representing two thirds in value of the debt of the company shall approve the resolution passed under sub-clause (c) within 7 days of such resolution.

4 Notification to Registrar of company and the Board The Company shall notify the Registrar of Companies and the Board about the resolution to liquidate the company within 7 days of such resolution or the subsequent approval by the creditors, as the case may be.

5 Commencement of liquidation proceeding The voluntary liquidation proceedings in respect of a company shall be deemed to have commenced from the date of passing of the resolution.

6 Application of provisions of this Code The provisions of sections 35 to 53 of Chapter III and Chapter VII shall apply to voluntary liquidation proceedings for corporate persons with such modifications as may be necessary.

7 Application to adjudicating authority on complete wound up of the corporate person Where the affairs of the corporate person have been completely wound up, and its assets completely liquidated, the liquidator shall make an application to the Adjudicating Authority for the dissolution of such corporate person.

8 Passing of an order of dissolution The Adjudicating Authority shall on an application filed by the liquidator, pass an order that the corporate debtor shall be dissolved from the date of that order and the corporate debtor shall be dissolved accordingly.

9 Forward of copy of order A copy of an order shall within 14 days from the date of such order, be forwarded to the authority with which the corporate person is registered.

Page | 5



Amendment in Definition of QIB

- Qualified Institutional Buyer

Regulation 2(zd) Qualified Institutional Buyer means: 1. a mutual fund, venture capital fund[, Alternative Investment Fund]9 and foreign

venture capital investor registered with the Board;

2. a foreign portfolio investor other than Category III foreign portfolio investor, registered with the Board;

3. a public financial institution as defined in section 4A of the Companies Act, 1956;

4. a scheduled commercial bank; 5. a multilateral and bilateral development financial institution; 6. a state industrial development corporation; 7. an insurance company registered with the Insurance Regulatory and

Development Authority; 8. a provident fund with minimum corpus of ` 25 crore; 9. a pension fund with minimum corpus of ` 25 crore; 10. National Investment Fund set up by resolution no. F. No. 2/3/2005-DDII dated

November 23, 2005 of the Government of India published in the Gazette of India;

11. insurance funds set up and managed by army, navy or air force of the Union of India;

12. insurance funds set up and managed by the Department of Posts, India; 13. systemically important non-banking financial companies. Note: “systemically important non -banking financial company” means a non-banking financial company registered with the Reserve Bank of India and having a net - worth of more than five hundred crore rupees as per the last audited financial statements.

Amendment in Regulation 16 MONITORING AGENCY

(1) If the issue size, excluding the size of offer for sale by selling shareholders, exceeds ` 100 crores, the issuer shall make arrangements for the use of proceeds of the issue to be monitored by a public financial institution or by one of the scheduled commercial banks named in the offer document as bankers of the issuer: Provided that nothing contained in this clause shall apply to an issue of specified securities made by a bank/PFI/insurance company.

(2) The monitoring agency shall submit its report to the issuer on a quarterly basis, till at least 95% of the proceeds of the issue, excluding the proceeds under offer for sale and amount raised for general corporate purposes, have been utilized.

(3) The Board of Directors and the management of the company shall provide their comments on the findings of the monitoring agency.

(4) The issuer shall, within 45 days from the end of each quarter, publicly disseminate the report of the monitoring agency by uploading the same on its

Page | 6



website as well as submitting the same to the stock exchange(s) on which its equity shares are listed.

Regulation 70 - Preferential Issue These Regulations not to apply in certain cases [Amendment in Regulation 70(1)]

The provisions of this Chapter shall not apply where the preferential issue of equity shares is made: (a) Conversion of Convertible Debentures or Compulsory conversion of loan/

debentures by CG; (b) Pursuant to an Amalgamation /Reconstruction scheme approved by a High Court/

NCLT; (c) In terms of the rehabilitation scheme approved by the Board of Industrial and

Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985 or the resolution plan approved by the Tribunal under the Insolvency and Bankruptcy Code, 2016, whichever applicable.

Strategic Debt Restructuring Scheme [Amendment in Regulation 70(5)]

Conversion of debt into equity under strategic debt restructuring scheme- (a) The guidelines for determining the conversion price have been specified by the RBI

in accordance with which the conversion price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013.

(b) The conversion price shall be certified by 2 independent qualified Valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder.

(c) Specified securities so allotted shall be locked -in for a period of 1 year from the date of their allotment: Provided that for the purpose of transferring the control, the lenders may transfer the specified securities allotted to them before completion of the lock-in period subject to continuation of the lock-in on such securities for the remaining period, with the transferee;

(d) The lock- in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked -in;

(e) The applicable provisions of the Companies Act, 2013 are complied with, including the requirement of SPECIAL RESOLUTION.

Amendment in Regulation 70(6)

Allotment of fresh equity at the time of lenders selling their holding of specified securities The provisions of this Chapter shall not apply where the preferential issue, if any, of specified securities is made to person(s) at the time of lenders selling their holding of specified securities or enforcing change in ownership in favour of such person(s) pursuant to a debt restructuring scheme implemented in accordance with the guidelines specified by the RBI, subject to the following conditions: (a) The guidelines for determining the issue price have been specified by the RBI in

accordance with which the issue price shall be determined and which shall be in compliance with the applicable provisions of the Companies Act, 2013;

Page | 7



(b) The issue price shall be certified by 2 independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder: The specified securities so allotted shall be locked- in for a period of at least 3 years from the date of their allotment;

(c) The lock-in of equity shares allotted pursuant to conversion of convertible securities issued on preferential basis shall be reduced to the extent the convertible securities have already been locked-in;

(d) A SPECIAL RESOLUTION has been passed by shareholders of the issuer before the preferential issue.

Section 54 – Power of Central Government The Central Government may exempt: 1. Any class of enterprises if such exemption is necessary in the interest of security of the state or public

interest; 2. Any practice or agreement arising out of and in accordance with any obligation assumed by India under

any treaty, agreement or convention with any other country or countries; 3. Any enterprise which performs a sovereign function on behalf of the CG or SG.


Exemption from giving notice in 30 days u/s 6(2)

CG, in public interest, hereby exempts every person or enterprise who is a party to a combination as referred to in section 5 of the said Act from giving notice within 30 days mentioned in section 6(2) of the said Act, subject to the provisions of section 6(2A) {210 days time for effecting a combination) and section 43A (Penalty of 1%) of the said Act, for a period of 5 years from the date of publication of this notification in the Official Gazette.

Exemption to Regional Rural Banks sections 5 & 6

CG, in public interest, hereby exempts the Regional Rural Banks in respect of which the CG has issued a notification under Regional Rural Banks Act, 1976, from the application of provisions of sections 5 and 6 for a period of 5 years from the date of publication of this notification in the Official Gazette.

Exemption to the Vessels Sharing Agreements of Liner Shipping Industry from the provisions of section 3 of the

CG, in public interest, hereby exempts the Vessels Sharing Agreements of Liner Shipping Industry from the provisions of section 3 of the said Act, for a period of 1 year with effect from the 20th June, 2017, in respect of carriers of all nationalities operating ships of any nationality from any Indian port provided such agreements do NOT include concerted practices involving fixing of prices, limitation of capacity or sales and the allocation of markets or customers. During the said period of 1 year, the Director General, Shipping, Ministry of Shipping, Government of India shall monitor such agreements and for which, the persons

Page | 8



said Competition Act, 2002

responsible for operations of such ships in India shall file copies of existing Vessels Sharing Agreements to be entered into with applicability during the said period along with other relevant documents within 30 days of the notification in the Official Gazette or within 10 days of signing of such agreements, whichever is later, with the Director General, Shipping.

Exemptions to nationalized banks, from Sections 5 and 6

CG in the public interest hereby exempts, all cases of reconstitution, transfer of the whole or any part thereof and amalgamation of nationalized banks, under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, from the application of provisions of Sections 5 and 6 of the Competition Act, 2002 for a period of 10 years from the date of publication of this notification in the Official Gazette.


The Banking Regulation (Amendment) Act, 2017

Insertion of new sections 35AA and 35AB- Section 35AA - Power of CG to authorise Reserve Bank for issuing directions to banking companies to initiate insolvency resolution process:

The CG may, by order, authorise the Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016. Explanation — For the purposes of this section, “default” has the same meaning assigned to it in section 3(12) of the Insolvency and Bankruptcy Code, 2016.

Section 35AB – Power of Reserve Bank to issue directions in respect of stressed assets:

(1) Without prejudice to the provisions of section 35A, the Reserve Bank may, from time to time, issue directions to any banking company or banking companies for resolution of stressed assets.

(2) The Reserve Bank may specify one or more authorities or committees with such members as the Reserve Bank may appoint or approve for appointment to advise any banking company or banking companies on resolution of stressed assets.

CA Final Old/CA Final New/CMA Final CS Executive/CS ...€¦ · Page | 2 © Siddharth Agarwal. All...

Documents

Transcript of CA Final Old/CA Final New/CMA Final CS Executive/CS ...€¦ · Page | 2 © Siddharth Agarwal. All...