274 / 2022
Quote of the day
“Simplicity is the ultimate sophistication” said Leonardo Da Vinci. Several examples of this abound around us.
Recently I heard a speaker use the example of zinc production in ancient India to elucidate the above axiom. It was an eye-opener for many of us that to overcome the problem of smelting zinc which volatalises at about the same temperature of 1000⁰, ancient Indians came up with a simple solution of ‘downward distillation of zinc vapour formed after smelting zinc ore using specifically designed retorts with condensers and furnaces’ so that smelted zinc could drastically cool down and solidify to zinc metal. There is evidence of industrial production in the Zawar area of Rajasthan in the 3rd to 4th century BCE, much much before China or Europe got into it. Isn’t this simplicity in design ?
Meditation is a simple yet sophisticated technique for clearing, calming and controlling the mind, which is anything but simple. It is through meditation that we can reach the highest levels of our consciousness.
Nature is simple, uncomplicated, rooted, grounded. Yet it is sophisticated through its majesty, fierceness, fury, serenity, diversity, inclusiveness, vibrancy, harmony et al. Earth Day observed on 26th March every year, when the lights are off for 1 full hour across the globe, or Save the Soil campaign currently being executed by Sadhguru Jaggi Vasudev or Chipko movement (tree hugging) of the Gandhian, ecological activist, Late Shri Sunderlal Bahuguna are all Simple yet Sophisticated solutions for protecting Mother Earth.
Here is an engineer-turned-defence scientist-turned NGO founder who is an ‘Anna daatha’ (food-giver) for nearly 20 years now, feeding 2 lac+ children every single day in a sustainable manner. Ask how ? Dr. Tejaswini Anathkumar, founder of Adamya Chetana, operating from Bangalore and 6 other cities across India
has stopped using gas cylinders for cooking of industrial scale meals. She has innovated some simple solutions to convert the huge amount of wet waste generated from the Foundation’s daily operations into pellets and briquettes which are used as fuel for cooking, heating water and other activities.
“Anna, Akshara & Arogya” are the 3 pillars of the NGO which is also implementing the ‘Green Sunday’ programme where volunteers plant trees every Sunday across the erstwhile garden-city Bangalore.
Dr. Tejaswini is so passionate about ‘Invest in our Planet’ (theme for Earth Day 2022) that since several years she has stopped using plastic bottles, containers and even paper cups and napkins. She carries her steel water bottle to all functions in a cotton bag right upto the stage, when she is to address any gathering. Experienced this when she addressed the 1st Women Company Secretaries Conference in Bangalore recently and felicitated some of us women (past and serving office bearers).
She also has a unique environment-friendly initiative where people can borrow upto 1500 steel plates and glasses free-of-cost for use in functions and events, if they want to avoid plastic and paper.
Another of her simple tips “Don’t snip off the milk cover packets. Instead slit it open which alone saves Bangalore of at least 50lac small plastic pieces being thrown into the garbage everyday !”.
All these are acts of simplicity leading to sophisticated living. However, the same cannot be said of the government regulations which seem to get complex by the day. Case in question is the SEBI circular dated 30th March, 2022 on Related Party Transactions (amended Regulation 23 of SEBI(LODR), 2015 effective from 1st April, 2022) which is meant to clarify the original Notification issued on 9th November, 2021. It merely reiterates the position when the expectation of corporates and professionals was that SEBI would relent and simplify / modify / withdraw. The responsibility on a Company Secretary and the Board remains onerous and stringent with respect to disclosure of RPTs and the approval process. To refresh the impact, click here for our 270th issue of Samhita that carried an article on this, authored by a subject-matter expert CS Ramaswami Kalidas.
For updates from MCA (on LLPs) & SEBI, grammar lessons in English (Let’s excel in English) and statutory calendar, do scan the other parts of this 274th issue of Samhita, our monthly newsletter that is running its 13th year now ! For any previous issues of Samhita and the readers’ feedback, please visit http://www.sharadasc.com/resource-center/.
LLP (Second Amendment) Rules, 2022
Vide notification dated 04.03.2022, MCA has notified the LLP (Second Amendment) Rules,2022 (“Amendment Rules”), which has amended the LLP Rules, 2009. Highlights of the Amendment Rules are as follows:
Changes w.r.t. incorporation of LLPs:
Rule 11(1) – Earlier while filing for incorporation through Form FiLLiP, DIN could be applied for only 2 proposed Designated partners (DP). Now 5 DIN applications can be made through FiLLiP.
Rule 11(3) – The revised FiLLiP enables data to be filled in for PAN and TAN. Accordingly, the Certificate of Incorporation issue by the Registrar will also contain the PAN and TAN allotted to the LLP.
Form 9 – Consent to act as DP has been made an e-Form with an option for proposed DPs to apply for DIN through the FiLLiP form and submit the same as a PDF attachment.
Other noteworthy changes:
The latitude and longitude details of the Registered address of the LLP is to be mentioned in the FiLLiP Form. This is similar to the Form INC-22A (ACTIVE) notified in 2019 through which all Companies were required to intimate Registered office details to the Registrar.
The form allows details of proposed DPs to be auto populated from Digilocker.
Form 29 for intimating changes in foreign LLP omitted and included in Form 28 (Reporting of alteration or closure).
Signing of Statement of Account and Solvency and Annual Return by Insolvency Resolution Professional or Resolution Professional or LLP administrator in case of Corporate Insolvency Resolution Process under IBC or liquidation under LLP Act has been added.
In case of LLPs having turnover upto 5 crores or contribution upto 50 lakhs, the Annual Return needs to be certified by the DP as well.
Web based forms have been introduced for all LLP filings.
Ind AS standards amended as part of Annual Improvements to Ind AS (2021)
In February, 2021 the International Accounting Standards Board had made various changes to the International Financial Reporting Standard (IFRS). Consequently, changes were made to the Indian Accounting Standards (“Ind AS”) to align them with IFRS as part of the Annual Improvements to Ind AS (2021).
In continuation of the same MCA has notified amendments to the Companies (Indian Accounting Standards) Rules, 2015 which shall take effect from 01.04.2022. Following Ind ASs have been amended:
Ind AS 101 - First time adoption of IndAS
Ind AS 103 - Business Combination
Ind AS 109 - Financial Instruments
Ind AS 16 - Property, Plant and Equipment
Ind AS 37 - Provisions, Contingent Liabilities and Contingent Assets
Ind AS 41 - Agriculture
Please refer to the notification for details.
Valuation Certificate for transfer of shares should not be older than 90 days
The RBI Master Direction on Foreign Investment in India has been updated upto 17.03.2022. Post the updation, under the heading:
8.10 -Non-applicability of pricing guidelines
8.10.3 has been added as below:
The valuation certificate issued by a Chartered Accountant or a SEBI registered Merchant Banker or a practicing Cost Accountant must not be more than ninety days old as on the date of the transfer.
The general understanding is that the Valuation certificate is valid for 6 months from the date of issue. It is interesting to note that for the first time RBI mentions the validity as 90 days and that too w.r.t. “date of transfer”. Does it mean that this validity period is not relevant for issue of Equity Instruments?
Although, Authorised Dealer Banks have been following the practice of ensuring the Valuation Certificate is not older than 90 days, for the first time the same has been introduced through the Master Direction. However, no amendment has been carried out to the Non-Debt Instruments Rules, 2019.
Separation of Roles of CEO/MD and Chairperson
SEBI had amended Schedule II of the LODR Regulation vide notification dated 22.03.2022, pursuant to which every listed entity is mandatorily required to appoint different persons as the Chairperson and MD/CEO and the Chairperson shall be a non-executive director and not be a relative of the CEO/MD.
The notification also omitted sub-regulation 1(B) under Regulation 17 - Composition of Board which required only top 500 listed entities to appoint a Chairperson who is a non-executive director and not a relative of MD/CEO.
The separation of roles has to be ensured by all listed entities now.