262 / 2021
Quote of the day
“Sometimes in the winds of change we find our true direction” said Ciara Neff. For some reason we always think change means doing something new, something not done in the past, changing the status quo. Is it true ? Isn’t going back to some good old habits a change too ?Don’t you think it is time we retraced our paths to find our true North ? Isn’t the pandemic indicating the same ? It isn’t just winds of change. It has turned into a storm of chaos sweeping away all that comes in its way including Dear Life.
Despite our boastful claims of a better life, we are as vulnerable as our forefathers were, fighting pandemics that seem to be mirroring the past. Jimmy Dean said “When you cant change the direction of the wind – adjust your sails”. Now than ever before, humanity feels directionless, leaderless and helpless. Perhaps it is time each one of us take matters into our hands and adjust our sails, find the proverbial ‘wind beneath our sails’ to stand up, look up and live once again. It is ironical that even as a privileged few are looking ahead to breaking the last frontier to travel to space, a large populace is pushed to look back and reflect on what has gone wrong on Ground Zero, what can be done to “Reimagine, Recreate & Restore” the womb of Mother Earth. Well, while this is the theme of World Environment Day 2021 (5th June), I feel it is time we retrace our habits to “Reuse, Reduce, Recycle” if we as a civilisation are to live, laugh and play once again !
The above thoughts take me back to a journey that I took with my family to Chitradurga (a historical city in Karnataka famous for its forts) more than 40 years ago. It was to meet my father’s side of the family, to see the ancient house where he grew up in a large joint family, to meet Dodanna (big brother in Kannada) his eldest maternal uncle and patriarch of the family. A strict disciplinarian, he was tall, lean and fit. Clad in a spotless white dhothi-kurta, at 85 his back was as straight as a ramrod. His authoritarian tone indicated clearly that he was still the Man of the House. He welcomed us warmly as he sat at the verandah at his writing table with lot of used envelopes, paper knives, scales and a box of green, red and black colour ball pens. As we sat down to chat with him, I saw what he was upto. He was very proud of his ‘productive activity’ borne out of his thrifty nature, so common to people of his times (a rarity today and almost looked down upon !). Dodanna was very conscious of not wasting a single paper, not even an envelope which he received (yes those were snail mail days when people wrote on post cards, inland letters and even sheets of papers). He would very neatly tear open the entire envelope using a sleek, sharp, special knife, lay it on the table and even out all the folds and corners so that it turns into a plain sheet of paper. He would turn it inside-out, fold it back into an envelope once again and write his ‘From’ address using the green colour pen. ‘To’ would be in red colour and left blank for future use. To make it attractive he would draw double lines in green and red along the length and breadth of the envelope, giving it life and importance. Some of the envelopes I saw were in their original avataars with no inside-out transformation. He slit open so carefully that it could be used once again as if it were new. These were the ‘reply envelopes’ where he would use the sender’s envelopes only with the ‘From’ and ‘To’ positions altered using green and red pens. At times just 2 arrows pointing to these positions would do the job. He was very proud of this activity (amongst so many other jugaad ones) and had piled up a stack on his low, work table. Back then it seemed silly and bizarre but today it seems significant and becoming ! Well, may not be the recycling of the envelope itself but the philosophy behind it – of reuse, reduce & recycle. It is perhaps time for us to retrace our path and discover the simplicity of the past so that we can find our direction to a sustainable, safe and happy future. After all, we are neither the creators nor the owners but merely the trustees of Mother Earth for the future generation !
Tracing the path of my profession, I am proud to share with all of you that exactly 33 years ago on this very day, 15th June, in 1988 the profession of “Practising Company Secretary” was born with the recognition granted to a CS to certify the Annual Return under the erstwhile Companies Act, 1956. To commemorate this, 15th June is celebrated as PCS Day by the Institute of Company Secretaries of India, of which I am a proud and grateful alumna. Then to now, the journey has been long and tough, eventful and exciting, even as newer and greater opportunities are opening up for us to serve the country. The question I ask is not what the profession has done for us but what we have done to the profession ? Because it is our knowledge, our conduct, our service and our attitude that makes us the champions of corporate governance, the conscience-keepers of Corporate India !! Wishing all my PCS family a Happy PCS Day, as we pledge to continue to uphold our motto “Satyam vada, Dharmam chara” meaning “Speak the truth, abide by the law”.
The 262nd issue of Samhita helps you keep abreast with the regulatory changes that occurred in the fortnight ending 15th June along with timely reminders for statutory payments and returns. Want to improve your English vocabulary ? Then try the interesting words and phrases used by our English language teacher Balaji in the “Let’s excel in English” feature. Want to give us a feedback ? Use the Disqus option at the bottom of this newsletter to share your feedback. Sign in as guest and start expressing. For any previous issues of Samhita and the readers’ feedback, please visit the resource-center section on our website.
Our Associate CA. R Krishnamurthy has compiled all the amendments, extensions of due dates etc under GST laws for the fortnight. The same has been carried as an article with a 10 minutes read time.
Registration for Shops & Establishment Act to form Part of Incorporation
MCA vide notification dated 07.06.2021 has notified the Companies (Incorporation) Fourth Amendment Rules, 2021. Pursuant to the Rules, the Form AGILE-PRO shall be substituted by Form AGILE-PRO-S, which also includes Shops and Establishment Registration. Similar to GST the option to register under Shops and Establishment through the AGILE form seems to be optional with the yes / no radio buttons made available. It is seen that most professionals are advising GST registration to be taken up after incorporation separately considering the time taken for its approval through the AGILE form. It remains to be seen how quickly the Labour Department in each state responds to the Shops and Establishment registration and how well the system works. It definitely is a good move by the Government towards enabling Ease of Doing Business.
A few observations from our practical experience…..
Start up founders are advised to check the apartment association by-laws if they propose to use their residence for the purpose of Registered Office during incorporation, since most by-laws prohibit such usage. In terms of Sec. 12(3)(a) of Companies At, 2013, name board of a company must be displayed outside the registered office failing which a penalty of Rs. 1,000 per day subject to a maximum of Rs. 1,00,000 may be levied on the company and every officer in default. Using a residential address for commercial purpose may also attract Property Tax, water and electricity at commercial rates. Some of these practical challenges have to be borne in mind while offering a residence as registered office and opting for Shops and Establishment registration. This is not to deny the fact that in most states Shops and Establishment registration is mandatory under the respective State law, whether applied through AGILE-PRO-S or subsequent to incorporation.
Compliance Report on Corporate Governance
As per the Listing Regulations, 2015, a listed entity is required to submit Compliance Reports on Corporate Governance to the Stocks Exchanges in the format specified by SEBI on quarterly basis, at the end of the FY and within 6 months of close of the FY.
In order to bring about transparency and to strengthen the disclosures around loans/ guarantees/comfort letters/ security provided by the listed entity, directly or indirectly to promoter/ promoter group entities or any other entity controlled by them, in addition to the above a Compliance report on Corporate Governance on half yearly basis is required to be submitted from FY 2021-22. The format for the same forms part of the Circular.
Increased overseas investment limits – Mutual Funds
Vide Circular dated 03.06.2021, SEBI has notified that Mutual Funds can make overseas investments subject to a maximum of US $ 1 billion per Mutual Fund, within the overall industry limit of US $ 7 billion.
Mutual Funds can make investments in overseas Exchange Traded Fund (ETF(s)) subject to a maximum of US $ 300 million per Mutual Fund, within the overall industry limit of US $ 1 billion.
DFIA online scrips
Vide Trade Notice dated 29.05.2021, DGFT has introduced a new facility on the DGFT website to record information about transfer of DFIA (Duty Free Import Authorization) scrips. The recording of given information would allow the transferee to apply for ARO (Advance Release Order) / Invalidation against the said DFIA Scrip online.
The issuance of paper copies of DFIA scrips (for EDI Ports) shall be discontinued w.e.f. 07.06.2021 and any transfer of DFIA Scrips issued on or after this date shall be mandatorily recorded in the online system.
The trade notice also mentions in detail the steps to be followed for issue and transfer of DFIA Scrips in paperless/digital mode.
Resolution Framework 2.0 – revision in threshold for MSMEs
RBI vide circular dated 05.05.2021 had introduced the “Resolution Framework 2.0 – Resolution of Covid-19 related stress of MSMEs”. Please refer to Samhita issue #260 for details regarding the Resolution Framework. The eligibility conditions for MSME accounts to be considered for restructuring under the framework, stated that the aggregate exposure, including non-fund based facilities, of all lending institutions to the MSME borrower should not exceed ₹25 crore as on 31.03.2021. Vide Circular dated 04.06.2021, the threshold has been increased from ₹25 crore to ₹50 crores.