This regulatory update blog provides general information existing at the time of preparation and is merely intended as a news update. It does not substitute the need to refer to the original pronouncements or procure professional advice. Alpha Partners neither assumes nor accepts any responsibility for any loss arising to any person acting or refraining from acting as a result of any material contained in this update. Please note that this is not a spam.
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Review IIDL empanels Alpha
Partners was recently empaneled as a law firm with IFCI Infrastructure
Development Limited (IIDL). IIDL, a
wholly owned subsidiary, was promoted by IFCI to leverage its expertise in
the emerging infrastructure and real estate sector. Besides re-development,
modernization, ownership and management of properties owned by IFCI, IIDL
strategically develops properties acquired through NPA resolution from various
Banks and FIs or directly obtained from the Development Authorities.
Section 31D of the Copyright Act, 1957 of India was
introduced vide an amendment to the Act in 2012 which provides for Statutory
licence for broadcasting of literary and musical works and sound recording.
Section provides that any broadcasting organisation desirous of communicating
to the public by way of a broadcast or by way of performance of a literary or
musical work and sound recording which has already been published may do so
subject to the provisions of the Section.
Various stakeholders raised queries as to whether ‘any
broadcasting organisation’ includes internet broadcasting organisations as well
or only includes conventional media such as radio or TV.
The Department of Industrial Policy and
Promotion, Ministry of Commerce and Industry (Copyright Section) has, vide office
memo dated 5.9.17 clarified that ‘any broadcasting organisation’ shall
include internet broadcasting organisations as well. In clarifying the above,
the authority made reference to the definition and meaning of the term ‘communication
to the public’ and observed that the same means and includes any media.
Reserve Bank of India, vide notification No. DNBR.
045/CGM (CDS)-2017 has specified that an institution that carries on ‘the
business of a peer to peer lending platform’ shall be a Non-Banking Financial
The term “the business of a peer to peer lending platform”
shall mean the business of providing under a contract, the service of loan
facilitation, via online medium or otherwise, to the participants who have
entered into an arrangement with that platform to lend on it or to avail of
loan facilitation services provided by it.
RBI had earlier released a consultation
paper on P2P lending platforms where the central bank had proposed certain
minimum eligibility criteria for registration of such platforms which were
necessary in public interest and for regulation of such platforms.
Recognition of the P2P platforms as an NBFC has
been a long standing demand of the industry and it provides a lot of clarity on
how to run the business.
Section 2(87) of the Companies Act, 2013 defines the term ‘subsidiaries’
and recently, the proviso to the sub-section which provides for prescribing a
limit to number of layers of subsidiaries which a holding company may have, has
Companies (Restriction on number of layers) Rules, 2017 (the ‘Rules’)
provides that a company cannot have more than two layers of subsidiaries except
in following cases:
a.A banking company;
b.A systematically important non-banking financial
c.An insurance company;
d.A government company;
e.A company acquiring another company incorporated
outside India with subsidiaries beyond two layers;
f.In computing two layers, a holding company
having one layer of more than one wholly owned subsidiaries will be taken as
g.Those allowed under Section 186(1) of Companies
Every company have more layers than prescribed are required
to file a return with the Registrar of Companies and are restricted to add to
the layers beyond two or such number as is existing as on the date of the
Rules, whichever is more.
It may be noted that both J J Irani Committee report as well
as the Companies Law Committee formed in 2015 recommended against having any restriction on
number of layers of subsidiaries which a company may have, as it will
significantly put Indian companies at a disadvantage vis-à-vis their
Ministry of Labour and Employment increased the wage ceiling under the Payment
of Wages Act, 1936 from INR 18,000 per month to INR 24,000 per month vide notification S.O. 2806 (E) with effect from August 28,
2017. The Payment of Wages Act, 1936 will apply to a larger number of employees
as a result of such increase.
Department of Industrial Policy and Promotion recently released the
consolidated FDI Policy vide circular no. D/o IPP F. No.
dated August 28, 2017 (“New FDI Policy”).
Under the New FDI Policy:
of a LLP having foreign investment into a company and vice versa, is allowed
under automatic route, where there are no FDI linked conditions;
have been recognized under the New FDI Policy and have been allowed to issue
equity shares, equity linked instruments or debt instruments to FVCI. Conditions
for issue of convertible notes by
start-ups to a person resident outside India have also been prescribed;
proposals requiring government approval will be dealt by the competent
authority which has been defined under the New FDI Policy to mean the concerned
administrative ministry/department empowered to grant government approval for
foreign investment under the extant FDI Policy and FEMA Regulations;
approval of Reserve Bank of India shall not be required for establishment of
branch office, liaison office or project office or any other place of business
in India if the applicant is engaged in the business of telecom, defence,
private security or information and broadcasting and the applicant has been
granted a license/permission by the concerned ministry/regulator.
Convertible notes have
been defined to mean an instrument, issued by a start-up against receipt of
money repayable at the option of the holder, convertible into equity shares
within a period not exceeding 5 years.
Institute of Company Secretaries of India notified the withdrawal of Notification
ICSI No.1 (SS) of 2015 with respect to secretarial standards 1 & 2 (“Secretarial Standards”) with effect
from September 30, 2017, vide notification dated August 16, 2017. The
Institute announced that the revised Secretarial Standards will be applicable
for compliance by all the companies (except the exempted class of companies)
with effect from October 01, 2017 and will supersede the text of earlier Secretarial
Standards. The Institute of
Company Secretaries of India has subsequently announced that the Secretarial
Standards on Meetings of the Board of Directors (SS-1) and General
Meetings (SS-2) have been revised and the revised Secretarial Standards have received approval
from the Central Government which shall be applicable for compliance by
Companies from October 1, 2017
Companies Act to
be amended again
Companies (Amendment) Bill, 2017 (“Amendment
Bill, 2017”) introduced in the Lower House of the Parliament received its assent
on July 27, 2017. The Amendment Bill, 2017 seeks to make the following
amendments in the Companies Act, 2013 (“Existing
ØOfficers in whole time
employment of a company at one level below the board of directors are proposed
to be included in the definition of key managerial personnel;
ØThe process and timelines
involved in the private placement of securities are proposed to be amended by
substitution of Section 42 of the Existing Act with a new section;
ØSection 90 of the Existing Act is
proposed to be substituted by a new
section to introduce the concept of significant beneficial owner, to mean an
individual, holding beneficial interest not less than 25% in shares of a
company, whether directly or indirectly;
ØThe annual general meeting are proposed to be allowed to be held at any
place in India if the consent of members has been obtained;
ØExtraordinary general meetings
of a wholly owned subsidiaries are proposed to be allowed to be held at a place outside India as
ØThe requirement of ratification
of auditors at every annual general meeting of a company is proposed to be done
ØSection 185 of the Existing Act
relating to loan to directors is proposed to be substituted by a new section to
provide the conditions of provision of loan to persons in which the directors
ØProvisions relating to forward
dealing and insider trading of securities are proposed to be omitted; and
ØThe requirement of obtaining the
Central Government approval for payment of managerial remuneration by a company
in terms of Section 197 of the Existing Act is proposed to be dispensed with.
- changes introduced in case of relocation from one state to another