263 / 2021
Quote of the day
A few months ago, I heard Dr. Mahanthesh, Founder Trustee of Samarthanam Trust (www.samarthanam.org) delivering a keynote address. It was not only inspirational but also thought provoking. Even after several months, one statement he made is still with me – “We have an inclusive recruitment policy and welcome all to join.”. This seemingly innocuous statement can be better appreciated if you know that Samarthanam is a Trust for the Disabled set up by Dr. Mahanthesh 25 years ago in Bangalore.
A disability rights advocate, motivational speaker, an avid traveller, technology follower, blind cricket player (President of World Blind Cricket Council that conducts international blind cricket tournaments), English literature enthusiast, notable academician, he is a visionary leader who says “I believe in building a society where people with disabilities are potential tax-payers but not dole recipients.” Who says you need Vision to be a Visionary ? Now, coming back to his statement on inclusivity, my take was that he was referring to a large section of us from the main-stream population who are supposed to be ‘fully abled”. While we are under the false notion that specially abled brethren require an inclusive policy since they are marginalised, try entering into their world and see. Can we resonate with them, empathise with them and work as well as they do unless they have an ‘inclusive mindset’ too ? The majority need not always think that we are being generous and benevolent in letting the minority into our world. It can be reverse too. Needs a large heart and futuristic thinking to create a world where there are no barriers and pathways like ‘inclusive’ and ‘exclusive’ but just a fair and common ground for all to live together – much like the animal world and the plant kingdom where the philosophy of “Live and Let Live” rules !
Contrast this with what a deplorable experience one of my fellow cancer survivors had recently with recruitment. An IT industry star performer, he shared that he was not considered for some senior position in a new company because of his social media presence. And what was his crime ? Merely showcasing on facebook and Linkedin, his activities in a voluntary cancer support group ! Can you believe that a well-known MNC can discriminate against a person for advocating wellness and cancer awareness ? It left me fuming with indignation and I retorted “why don’t you say no to such MNCs instead of they rejecting you?”. For reasons best known to him, my good friend has become rather quiet and discrete in his support to our Voluntary Cancer Support Group, working only on the tech bit in the background with no public appearances whatsoever. Hard to digest that such discriminatory policies still exist in the corporate world. But let me also share that there are several others out there who encourage such voluntary activities and infact recognise employees for their contribution. Thanks to such corporates, during the covid pandemic we were able to conduct several Corporate Connect programmes on wellness from our Cancer Support Group. Thanks to me being my own boss, I have the freedom and discretion to stand up for whatever I believe in and advocate its cause.
If digital technology was meant to bridge the gap between urban and rural students, lack of appropriate infrastructure is increasing the divide. One of my employees who is from the Malnad region in Karnataka was lamenting about how children in his village are unable to attend the online classes due to connectivity issues. Only when a group of angry youngsters made a video (that went viral) of students scampering up to hilltops to find the right internet spot did it catch the attention of the Minister. It was quite unfortunate to see how parents were holding umbrellas for their children while they sat on the hillocks trying to catch up with their daily lessons in the rain. Pandemic has been unforgiving in many ways but government apathy with respect to digital infrastructure creation and maintenance in rural areas has been even worse. My employee was quite piqued that this kind of discrimination against rural children is going unnoticed despite claims of so many government schemes. One can argue that the Digital world is One world for All but there is a long way to go. Inclusivity in all forms is still a myth and will always be work in progress !
Let’s now turn our attention to what this 263rd issue of Samhita has in store for you. The highlight is undoubtedly the incisive article titled “Vignettes from the Law and Practice relating to Company Meetings” by CS Ramaswami Kalidas, a veteran Company Secretary, author, speaker and Member of the Expert Group on Secretarial Standards, ICSI. He has discussed the several nuances in law that most of us do not even notice. We can be held guilty of focusing more on the practice and implementation than study and appreciation of the law. Therefore, a critique like Mr. Kalidas is always welcome !
The issue carries other regular features like the fortnightly regulatory updates from several ministries, a statutory dates calendar and English lessons by Balaji. I do hope you will find it worth your time. Want to give us feedback ? Use the Disqus option at the bottom of this newsletter. Sign in as guest and start expressing. For any previous issues of Samhita and the readers’ feedback, please visit http://www.sharadasc.com/resource-center/.
Vignettes from the Law and Practice relating to Company Meetings
CS. Ramaswamy Kalidas, an eminent Company Secretary and author of the book “The Law and Practice relating to Company Meetings” has analysed the provisions w.r.t. Law and practices relating to company meeting in the attached article titled “Vignettes from the Law and Practice relating to Company Meetings”. The article contains an analysis of various provisions relating to meetings, case laws to back them and all of it in simple understandable language.
It’s 15 minutes of your time well spent! Happy reading!
Our Associate CA. R Krishnamurthy has detailed the CBIC Circular dated 21.06.2021, clarifying the applicability of Dynamic Quick Response (QR) Code on B2C. The article has a 5 minutes read time.
Our Associate CA. R Krishnamurthy has compiled the extended due dates for various compliances under Income Tax Act notified by CBDT in the last fortnight.
Please refer to the Notification links in the article for further details.
Relaxation of levy of additional fee upto 31.08.2021
MCA has notified vide Circular dated 30.06.2021 that due to the existing pandemic situation, no additional fee shall be levied upto 31.08.2021 on forms to be filed under Companies Act, 2013 (except for charge related forms) and Limited Liability Partnership Act, 2008 for the forms due for filing between 01.04.2021 and 31.07.2021. Accordingly, only normal fees shall be levied upto 31.08.2021 for forms required to be filed during the period 01.04.2021 and 31.07.2021.
Relaxation of time for filing Charge forms (creation or modification)
As part of the pandemic related relaxation, a scheme had been introduced to condone the delay in filing forms CHG-1(Creation / modification of charge) and CHG-9 (Creation / modification of charge for debenture) for a brief 2 months period i.e. April & May, 2021.
Vide Circular dated 30.06.2021, the scheme has been made available till 01.08.2021. The Scheme shall be applicable for Forms were / are due for filing between 01.04.2021 and 31.07.2021. The other requirements of the Circular shall remain applicable.
Please refer to Samhita #260 for details.
Increased threshold limits for SMCs - Companies (Accounting Standards) Rules, 2021
MCA has notified the Companies (Accounting Standards) Rules, 2021 vide Notification dated 23.06.2021. Effective from 01.04.2021, these Rules have increased the threshold for eligible enterprises to be treated as Small and Medium Sized Companies (SMCs) as below:
Turnover - from 50 crores to 250 crores
Borrowing - from 10 crores to 50 crores
Other criteria for SMC remains the same. This provides exemption and relaxation under Accounting Standards to a higher number of SMCs, aiding the Ease of Doing Business criteria. The Notification calls for an elaborate analysis.
It is interesting to note that a Small Company has a different criteria under Companies Act, 2013 – paid up capital upto Rs. 2 crores and turnover upto Rs. 20 crores read with other conditions. Small enterprise under the MSMED Act, 2006 prescribes yet another criteria – investment in plant & machinery upto 10 crores and turnover upto Rs. 50 crores.
The Companies (Indian Accounting Standards) Amendment Rules, 2021
MCA notified the Companies (Indian Accounting Standards) Amendment Rules, 2021 on 18.06.2021 amending following standards:
Noteworthy changes include:
The extension of benefits of the COVID 19 related rent concession that was introduced last year which allowed lessees to recognize COVID 19 related rent concessions as income rather than as lease modification - upto 30.06.2022.
Additional disclosures related to interest rate benchmark reform to enable users of financial statements to understand the effect of interest rate benchmark reform on an entity's financial instruments and risk management strategy.
EGMs through VC/OAVM – extended till 31.12.2021
Considering the COVID-19 pandemic related stress on companies, MCA in 2020 and 2021 had allowed companies to convene their EGMs through Video Conferencing (VC) or Other Audio Visual Means (OAVM) upto 30.06.2021. The facility shall now be available to all companies till 31.12.2021.
Fee for renewal of name in ID data bank
The Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019 notified on 22.10.2019 included an enabling clause allowing the Central Government to prescribe the applicable fee payable by IDs willing to include their names in the ID data bank.
MCA notification dated 18.06.2021 provides for payment of Rs. 1,000 as fee for inclusion or renewal of their name in the databank in case of delayed filing of application. The registration on the data bank is valid either for 1 year or 5 years or lifetime as per the IDs choice. Renewals have to be completed withing 30 days from 1 year or 5 years.
No restriction on matters that can be dealt with in VC / OAVM BMs
Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 listed the matters which cannot be dealt with in a Board Meeting (BM) held through Video Conferencing (VC) or Other Audio Visual Means (OAVM). Considering the COVID-19 pandemic related stress on companies the same was relaxed through various MCA Circulars in the past year.
Vide Notification dated 15.06.2021, Rule 4 has been omitted allowing the following agendas to be considered in BMs held through VC/OAVM:
approval of the annual financial statements (including Audit Committee meetings for the same)
the approval of the Board’s report
the approval of the prospectus
the approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover
With this all matters of the Board can be transacted through VC/OAVM meetings, subject to following the prescribed meeting procedures.
SEBI BM Press release
SEBI after it’s meeting on 29.06.2021 released a press note of the decisions taken in the meeting. The decisions taken include:
Review of regulatory provisions related to Independent Directors
Review and Merger of SEBI (Issue and Listing of Debt Securities) Regulations, 2008 and SEBI (Non-Convertible Redeemable Preference Shares) Regulations, 2013 into a single Regulation – SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
Amendments to SEBI (Infrastructure Investment Trusts) Regulations, 2014 and SEBI (Real Estate Investment Trusts) Regulations, 2014
Amendments to the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
Please refer to the attached article for details of the decision w.r.t. provisions related to Independent Directors.
Revised Framework for Regulatory Sandbox
The Regulatory Sandbox was introduced by SEBI to grant certain facilities and flexibilities to SEBI regulated entities so that they can experiment with FinTech. Updated guidelines including revised eligibility criteria for the project, application and approval process etc. have been notified vide Circular dated 14.06.2021.
Minimum vesting period of ESOPs and SARs - relaxed in case of death of employees
In view of the pandemic situation, to provide relief to the families of the deceased employees of listed companies, vide Circular dated 15.06.2021 SEBI has relaxed the minimum vesting period of 1 year for ESOPs and Stock Appreciation Rights (SARs) in case of death of ESOP or SAR holders. This means that in case of death of an employee, SARs / ESOPs shall vest with his / her legal heir or nominee on the date of death of the employee.
This relaxation shall be available to all such employees who have deceased on or after 01.04.2020.
System Driven Disclosures now applicable for debt securities as well
System Driven Disclosures pertaining to trading in equity shares and Futures and Options by members of promoter group and designated persons in addition to the promoters and directors of company was implemented by SEBI vide Circular dated 09.09.2020. According to the same Circular disclosures of Equity and Futures and Options are displayed on SEBI website.
In addition to the above, listed debt securities of equity listed companies shall also be included in the System Driven Disclosures w.e.f. 16.06.2021
Ministry of MSME: Extended period for Udyam Registration
The Ministry of MSMEs introduced various changes vide master Notification dated 26.06.2020 which included that registration of existing MSME (MSMEs registered prior to 30.06.2020) shall remain valid only till 31.03.2021 post which they were required to take fresh Udyam Registrations. Vide Notification dated 16.06.2021 the said period has been extended upto 31.12.2021.
This seems to be another COVID related extension.