News Letter

JAYA sHArMA & AssOCIAtes

PrACtCING COMPANY seCretArIes

Issue for the month of December 2016

Our office is presently situated at - Our email address is 2101, 21st Floor, Sai Akashdeep CHSL, jaya@jsa-cs.com, Saibaba Park, Evershine Nagar, jaya.jscs@gmail.com Malad (West), Mumbai – 400 064. Contacts: +91 9819501557 Tele Fax: +91 22 28818135

DIsCLAIMer This News Letter provides general information available at the time of preparation. The News Letter is intended as a news update and Jaya Sharma & Associates 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 News Letter. It is recommended that professional advice be taken based on the specific facts and circumstances. This News Letter does not substitute the need to refer to the original pronouncements.

Legal Updates Links of important Notification & Circulars:

Authority Dated Notification & Circulars Name of Link MCA Notification S.O…(E)

December 26, 2016

Commencement of sections 248 to 252 of Companies Act, 2013 www.mca.gov.in

MCA Notification S.O. 4090 (E)

December 19, 2016

Delegations of Powers to Regional Directors under section 458 of CA, 2013

www.mca.gov.in

MCA Notification G.S.R. (E)

December 09, 2016

Corrigendum notification relating to amendment in Schedule II www.mca.gov.in

MCA Notification S.O. 3677 (E)

December 07, 2016

Commencement notification dated 07.12.2016 www.mca.gov.in

General Circular 16/2016 December 26, 2016

Removal of names of companies from the Register of Companies- clarification regarding availability of Form STX on MCA-21 portal

www.mca.gov.in

General Circular 15/2016 December 07, 2016

Clarification regarding due date of transfer of shares to IEPF Authority

www.mca.gov.in

General Circular 14/2016 December 07, 2016

Relaxation of additional fees on Annual filing upto 31.12.2016 – in the State of J&K

www.mca.gov.in

General Circular 13/2016 December 05, 2016

Clarification Regarding Filing of Offline Challans with IEPF Authority under Companies Act.

www.mca.gov.in

Rule (G.S.R. (E)) December 29, 2016

Companies (Incorporation) 5th amendment rules 2016 dated 29.12.2016

www.mca.gov.in

Rule (G.S.R. (E)) December 26, 2016

Companies (Removal of names of companies from the Register of Companies) Rules 2016

www.mca.gov.in

Rule (G.S.R. 1159 (E)) December 20, 2016 NCLT (Amendment) Rules, 2016 www.mca.gov.in

Rule (G.S.R. 1147 (E)) December 15, 2016

NCLT (Procedure for reduction of share capital of company) Rules, 2016

www.mca.gov.in

Rule (G.S.R. 1134 (E)) December 14, 2016

Companies (Compromises, Arrangements and Amalgamations) Rules, 2016

www.mca.gov.in

Rule (G.S.R. 1119 (E)) December 07, 2016

Companies (Transfer of Pending Proceedings) Rules 2016

www.mca.gov.in

CIR/IMD/DF/146/2016 December 29, 2016

Continuous disclosures and compliances by REITs

www.sebi.gov.in

SEBI/HO/MRD/DP/CIR/P/2016/143

December 27, 2016

Review of the position limits available to Stock Brokers / Foreign Portfolio Investors (FPIs)

www.sebi.gov.in

- Category I & II / Mutual Funds (MFs) for stock derivatives contracts

CIR/IMD/DF/141/2016 December 26, 2016

Disclosure of financial information in offer document for REITs

www.sebi.gov.in

SEBI/HO/IMD/DF1/CIR/P/2016/140

December 23, 2016

Filing of Forms PAS-4 and PAS-5 in case of issuance of debt securities on private placement basis

www.sebi.gov.in

CIR/IMD/DF/136/2016 December 19, 2016

Guidelines for public issue of units of REITs

www.sebi.gov.in

SEBI/HO/CDMRD/DMP/CIR/P/2016/137

December 16, 2016

Applicability of Principles of Financial Market Infrastructures (PFMIs) on Commodity Derivatives Exchanges

www.sebi.gov.in

RBI/2016-17/200 - FIDD.MSME & NFS.BC.No.20/06.02.31/2016-17

December 29, 2016 Sanction of Additional Working

Capital Limits to Micro and Small Enterprises (MSEs)

www.rbi.org.in

RBI/2016-17/199 - FMRD.DIRD.12/14.01.011/2016-17

December 29, 2016 Introduction of Interest Rate

Options in India

www.rbi.org.in

RBI/2016-17/198 - DBR.No.BP.BC.49/21.04.048/2016-17

December 28, 2016

Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances

www.rbi.org.in

RBI/2016-17/197 A.P. (DIR Series) Circular No.23

December 27, 2016

Purchase and sale of securities other than shares or convertible debentures of an Indian company by a person resident outside India

www.rbi.org.in

RBI/2016-2017/194 FIDD.No.FSD.BC. 19/05.04.02/2016-17

December 26, 2016

Interest Subvention Scheme for Short Term Crop Loans during the year 2016-17- Grant of grace period of 60 days beyond due date

www.rbi.org.in

RBI/2016-2017/188 IDMD.CDD.No.1454/14.04.050/2016-17

December 16, 2016

Pradhan Mantri Garib Kalyan Deposit Scheme (PMGKDS), 2016 - Operational Guidelines

www.rbi.org.in

Case Laws:

1. Arbitration and Conciliation Act does not exclude any category of disputes terming them to be

non-arbitrable. So mere allegation of fraud simiplicitor may not be a ground to nullify the effect of arbitration agreement between the parties:

Supreme Court of India, in case of “A Ayyasamy Vs. A Paramasivam and Others” decided on October 04, 2016. Gist of the Case:

In this case, brothers entered into deed of partnership to carry on hotel business. Some disputes arose between them. Despite partnership deed having an arbitration clause, respondents filed a civil suit seeking, inter alia, declaration that as partners they are entitled to participate in administration of hotel. On receiving summons of suit, appellant moved application under section 8 for reference of dispute to arbitration, which was dismissed by trial court relying upon Supreme Court judgment in N Radhakrishnan (supra). The appellant preferred revision petition before the High Court pleading that the judgment in the said case was held to be per in curium, and trial court had committed jurisdictional error in rejecting the application under section 8. The High Court too chose to go by the dicta laid down in Radhakrishnan’s case observing that the said judgment was rendered by a Division Bench of the Supreme Court and was binding. Aggrieved by this order, the petitioner preferred appeal before the Supreme Court. The Supreme Court held that the allegations of purported fraud were not so serious which could not be taken care by the arbitrator and the court below, therefore, fell in error in rejecting the application under section 8. Reversing these judgments, the Court allowed the appeal and as a consequence, application under section 8 in the suit was allowed thereby relegating the parties to the arbitration.

2. Where the facts of the case demonstrate the falsity of the claim that the forfeiture was due to failure to comply with call notice, the company petition under section 397/398 would be maintainable: Supreme Court of India, in case of “Tin Plate Dealers Association (P.) Ltd. and others Vs. Satish Chandra Sanwalka and Others” decided on October 07, 2016. Gist of the Case: Where not only the call notice had not been proved to have been issued as required by section 53 but also notice did not mention the consequence of non-payment and also the fastening of the liability to pay unpaid amount of the forfeited shares is contrary to the articles of association of the company, it cannot be said that the forfeiture was due to failure to comply with the terms of the call notice and the company petition under section 397/398 would be maintainable. The Supreme Court dismissed the appeal in view of specific findings of the High Court which are wholly adverse to the appellant-group observing that the question whether a single act of oppression would enable the Company Law Board to intervene or oppression must be the cumulative resort of continuous act should not require any debate in the facts of the present case which demonstrate a series of unacceptable decisions and actions on the part of the appellant-group and in the last resort, satisfaction that oppression has been committed has to be reached in the facts of each case. The Supreme Court pointed out that the failure of the High Court to frame a substantial question of law to hear the appeal before it can hardly invalidate the order passed, the order of the High Court being an order of affirmation.

3. There is no merit in the contention that the National Company Law Tribunal (NCLT) has no

subject-matter jurisdiction to deal with the cases filed under sections 163 and 219 of the Companies Act, 1956, and transferred to the NCLT, as the jurisdiction conferred upon the Company Law Board under sections 163 and 219 of that Act has not been extended under the corresponding sections 94 and 136 of the Companies Act, 2013 (the 2013 Act):

National Company Law Tribunal, Mumbai Bench, in case of “Anilkumar Poddar Vs. Prime Focus Ltd. and others” decided on September 26, 2016. Gist of the Case: NCLT has jurisdiction to deal with all transferred cases. Section 434 of the 2013 Act is constituted primarily for transfer of pending proceedings from the Company Law Board and other forums to the NCLT while the provision straight away dealing with the repeal and savings of the 1956 Act is section 465 of the 2013 Act and not section 434. Since section 6 of the General Clauses Act says that the repeal of the old Act shall not affect any legal proceeding pending immediately passing of new enactment, the acts or offences ante to the new Act will be governed by the repealed enactment. Moreover, Central Government has issued a Gazette Notification dated 1st June 2016 invoking clause (a) of sub-section (1) of section 434 to say that all matters transferred to the NCLT shall be disposed of by the NCLT in accordance with the provisions of 2013 Act or the 1956 Act. The National Company Law Tribunal has decided the point raised by the petitioner holding that the NCLT has jurisdiction to deal with the transferred matter filed under sections 163 and 219 of the 1956 Act in accordance with the provisions of the 1956 Act or the 2013 Act as per General Clauses Act, as also as per repeal and savings section 465 of the 2013 Act, which has also been stated by the notification issued on the point by the Ministry of Corporate Affairs.

4. There is no rule that evidence of the hand writing expert shall be accepted under all

circumstances:

National Company Law Tribunal, Allahabad Bench, in case of “Pawan Tiwari Vs. Shri Ganga Sheetgrih (P).Ltd. and Others” decided on September 21, 2016. Gist of the Case: The court has a duty before acting upon the evidence of handwriting expert to satisfy with two things to have been proved : firstly, that genuineness of the specimen/handwriting of the concerned person, and secondly, the handwriting expert is competent, reliable and dependable witness whose evidence inspires confidence. Therefore, placing non-reliance upon the expert’s opinion is the final outcome of appreciation thereof in the light of other evidence, circumstances, etc., to be done at the final stage of the matter. The National Company Law Tribunal has dismissed a petition seeking rejection of report of handwriting expert at the threshold.

NEWS HIGHLIGHTS: 1. SYSTEM-DRIVEN DISCLOSURES IN SECURITIES MARKET:

• SEBI, vide circular dated December 01, 2015, had introduced the system-driven disclosures in

securities market detailing the procedure to be adopted for its implementation with effect from January 01, 2016.

• As per the procedure laid down in the circular, the Depositories provide daily trade data of the promoters/promoter group to the Registrar and Share Transfer Agents (RTAs) and the RTAs provide the necessary information to the stock exchanges for dissemination of disclosures to the public in terms of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015.

• Based on the experience gained from the implementation of the system, it has now been decided in discussion with the stock exchanges, depositories and RTAs, to streamline the procedure such that the depositories shall provide the transaction data of promoters/promoter group on a daily basis directly to the stock exchanges for dissemination of the necessary disclosures.

• The Depositories and Stock Exchanges are advised to make necessary arrangements so that the disclosures of all transactions of promoters/promoter group in dematerialized mode beyond the threshold limits as per the modified procedure may be disseminated on their websites from January 02, 2017.

• A copy of the circular is available on SEBI website at www.sebi.gov.in under the categories

“Legal Framework/Circulars”

2. STREAMLINING THE PROCESS FOR ACQUISITION OF SHARES PURSUANT TO TENDER-OFFERS MADE FOR TAKEOVERS, BUY BACK AND DELISTING OF SECURITIES: • SEBI had issued circular No. CIR/CFD/POLICY CELL/1/2015 dated April 13, 2015 on

Mechanism for acquisition of shares through stock exchange mechanism pursuant to tender-offers for the purpose of takeovers, buy back and delisting of securities.

• In the current mechanism, the shareholders submit their bids through stock brokers and subsequently, the brokers transfer the shares to the special account of the clearing corporation. Likewise, the consideration payable to shareholders for the shares accepted in the offer are routed through stock brokers. Also, the shares not accepted in the offer are returned to shareholders through the stock brokers.

• It has now been decided in consultation with the stock exchanges and depositories that transfer

of shares of shareholders under the tender offers would be made directly to the account maintained by the clearing corporation. After such transfer of securities, the clearing corporation will be allowed to utilize the securities towards the settlement obligations under such offers. Further, consideration for the accepted shares in the tender offer and shares tendered but not accepted under such offer would be credited directly to shareholders' bank and demat accounts respectively.

• The aforesaid measures will reduce the systematic risk for investors and ease the process of implementation.

• The said revised procedure shall be applicable to all the offers for which Public Announcement is made on or after January 02, 2017.