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Creating Connections –Building Bridges…Together 1

Editor

CS HitESH KotHAri

EditoriAl BoArd (in AlpHABEtiCAl ordEr)

CS AnKur SrivAStAvA CS B v dHolAKiA CS dipiKA KAtAriA (MS.) CS nArEndrA SingH CS piyuSH BindAl CS rAjKuMAr AduKiA (dr.) CS riddHi tHAKKAr (MS.) CS uMESH vEd

ContEntS

pAgE no. pArtiCulArS

2-4 CHAirMAn proFilE And MESSAgE 6-15 ArtiClE on (i) rEviEw oF tHE proCEdurAl

rEquirEMEntS For FASt trACK MErgEr And AMAlgAMAtion u/S 233 (ii) AnAlySiS oF CErtAin proviSionS

oF tHE CoMpAniES (AMEndMEnt) ACt, 2017

16-17 updAtES 18 liSt oF inCHArgE/ExECutivE

oFFiCErS oF wirC CHAptErS 20-22 ACtivity rEport 23-28 pHoto gAllEry 29-32 upCoMing EvEnt AnnounCEMEnt 33 CSBF AppEAl

puBliSHEr dr. rAjESH KuMAr AgrAwAl, rEgionAl dirECtor- iCSi wirC

Disclaimer: You are receiving this e-Newsletter since you are a member of ICSI. Views expressed in this newsletter are of authors and not necessarily of ICSI or WIRC of ICSI. ICSI or WIRC of ICSI does not verify authenticity of legal provisions contained in this newsletter. Neither authors, editors, publishers nor printers and distributers would be liable in any manner to any person by reason of any mistake or omission in this newsletter or for any action taken or omitted to be taken or advice rendered or accepted on the basis of this work. All rights reserved. All claims, disputes or complaints will be subject exclusively to jurisdiction of courts/ forums/ tribunal at Mumbai only.

WIRC of ICSI Premises :

13, 56 & 57, Jolly Maker Chambers No. 2 (1st & 5th Floors), Nariman Point, Mumbai – 400021 e-mail: [email protected], Phone Nos. : 022- 61307900 / 61307901 / 61307902


CHAIRMAN PROFILE

CS AMIT KUMAR JAIN

Professional CS Amit Kumar Jain, a Fellow member of ICSI assumed the office of Chairman, WIRC

from 19th June 2018. He is also a Law Graduate. CS Jain got elected to the WIRC for the first time in the

year 2011 and is serving the council in various capacities. He brings with him vast experience of

serving the Institute from Chapter level to Regional Level. He has headed various committees of WIRC

including Public Relations, Library, Placements, Training Programmes, Editorial Board and many

more. CS Jain also served as the Treasurer of WIRC during the year 2014. CS Jain also is the First and

only member till date who got elected from the city of Bhopal, Madhya Pradesh.

He is Member of Auditing Standard Board (ASB) of ICSI, the Board which is Instrumental in

formulating the Standards for the Different Audits. He is having the vast experience of more than a

decade in the Corporate legal, Taxation & Finance Services. He started his career in the year 2003 and

joined the Chartered Accountant Firm in Bhopal where he got the experience of various Audits like,

Bank Audit, Stock & Book Debt Audit, Internal Audit etc. Then he moved to another firm which deals

in Taxation to get the rich experience in Taxation viz, Income Tax, Sales, Service Tax. After qualifying

as a Member of ICSI he started his Whole time practice in Bhopal. He is a Founder and Director at M/s

Mentor Corporate Services Private Limited, leading Corporate Legal, Taxation finance services

Company and proprietor of M/s Amit Kumar Jain & Associates, Company Secretaries of Bhopal. He is

the regular speaker at the Conferences, Seminars, workshops and other professional programmes. He is

also the visiting faculty for many Management Institutes.

CS Jain is also an active contributor in social front and has spearheaded various social service activities.

He is the President of Digamber Jain Social Group Professional Bhopal since 2012 and also a committee

member of Bhartiya Jain Sanganthana, Pune.


CHAIRMAN’S MESSAGE

Dear Professional Colleagues,

I am feeling highly privileged and honored in sharing blueprint of my thoughts after assuming the August office of the Chairman of one of the leading Regional Council of ICSI. I am thankful to each one of you and all my esteemed council colleagues for whole hearted support and reposing confidence for assigning the responsibility of region as Chairman – WIRC ICSI and expressing my sincere gratitude to our predecessors and stalwarts serving from last 50 yrs to bring our institute to great heights and specially to Immediate Past Chairman – WIRC CS Hitesh Kothari for his outstanding efforts and many achievements during his tenure. We the Chairman are playing the role of Olympic player where we all have same goal to serve the profession selflessly and pass on the Baton to next Chairman for the fulfillment of ultimate goal. I sincerely thank our President-ICSI CS Makrand Lele from our own Western Region for his continuous guidance and support to innovative ideas and initiatives. It is a big responsibility to carry the baton of ICSI WIRC especially for a person who began his career from tier -2 cities like Bhopal. Authority comes with responsibility and now its my responsibility to meet up the expectation of each WIRCian who are passionate members and students from 5 states i.e Maharashtra, Gujarat, Madhya Pradesh, Chattisgarh and Goa and 2 Union Territories i.e Daman & Diu and Dadar & Nagar Haveli. I take the pledge along with each of you, to take up the profession of ICSI to greater heights, which is positively possible with the support and guidance of all stakeholders. Every one of us is passionate and are having many plans and dreams to serve the Institute selflessly, which many of us are currently doing by contributing in a small or big way in own area of specialization. I believe in inclusive leadership and personally invites each WIRCian to give/share their ideas and suggestions with a good implementation plan to shape these ideas into reality for betterment of profession. “Innovative new areas for Capacity Building”: Company Secretaries always love challenges and look forward to walk on “Road less travelled.” We are in talks with Indian Banks Association, Mutual Fund Companies and Insurance sector to generate new profiles for job and venture into new areas of practice like Credit Manager, Credit Analyst, Research Analyst, Data Analyst, Risk Manager, Internal Audit, Concurrent Audits etc. in the Banking, Mutual Fund & Insurance Sector. We shall be starting rigorous “Capacity building” programmes in this area. Start ups is one of the upcoming area where Young CS and existing members can venture by providing Legal consultancy to Startups right from Legal structuring, Compliance, IPR generation and various legal services to listing on SME platform. We can encourage our Yuva CS to think “Out of box” and be young entrepreneurs who will be catalysts to generate more employability.

Arise ! Awake ! and stop not until the Goal is reached.

Swami Vivekananda


“Volunteer for Profession digitally”: Company Secretary is a knowledge profession and we invite positive contribution to profession from passionate members and students. You can volunteer and contribute at least one hour a day and we would like to know your area of interest in which you can contribute from remotest place and even from home. A separate google form for the survey of area of interest for voluntary contribution shall be circulated to all member’s and student’s. “Study Executive New Syllabus Digitally”: Being in Digital era, we shall soon be starting Online Courses especially for students who shall be appearing for December, 2018 attempt. Detailed announcement for the same shall be soon published. Intrapreneurs: Bridging industry-academia gap: Grooming Semi-Qualified Company Secretary as per Industry Requirement We shall also be exploring mutual collaboration with Industry houses/Practicing CS/Law firm/academia who shall be working closely with semi-qualified Company Secretary mainly for grooming Students in soft-skill training and shall organize industry wise compliance workshops and industry wise job opening in other specific role. Our Motto and our profession journey from Secretary to Good Governance Professional to Independent Director: We have completed long journey from only to be known as “Secretary to “KMP”. Our collaborative efforts will help next generation Yuva CS to earn respectful position of CS, CEO, CFO, CLO and the passionate CS who have “fire in balley” to reach esteemed position of independent director, which can happen, if we Company Secretaries also start taking interest and working in the field of Accounts, Finance and Taxation, which completes the expectation of the Corporate world from Professionals. Expansion plans for better visibility of brand: To conduct in-house the professional development program, research programs and initiate other initiative in-house, we visualize to improve/ grow the infrastructure at ICSI-WIRC at Mumbai as well as all other ICSI-WIRC chapter level within the structured parameters of ICSI for having better visibility of brand –ICSI . You suggestions and ideas are invited @ [email protected] to achieve the broader objective of ICSI- WIRC collaboratively. Once again thanking each & every member, students of CS fraternity, Regional Director and staff of ICSI at all level without whose untiring efforts any initiative at ICSI-WIRC will not see the light of the day. . Best wishes, CS Amit Kumar Jain Chairman- WIRC of ICSI


ARTICLES


Review of the procedural requirements for Fast Track Merger and Amalgamation u/s 233

In view of the achievement of the target for ease of doing business in India and to improve its rank in the world for simplified procedure for merger and amalgamation of the certain type of companies, the Central Government has notified section 233 of the Companies Act, 2013 w.e.f. 15th December, 2016 providing path for the eligible companies with the approval of the Central Government (Powers delegated to the Regional Directors having territorial jurisdictions on the registered office of the Transferee companyw.e.f. 19-12-2016). Therefore, time consuming compliances and costly process for seeking approval of National Company Law Tribunal on the merger and amalgamations under section 230-232 has been liberalised and simplified to certain extent. Eligible Companies: Under section 233, for obtaining approval by the Central Government route, only following class of companies are eligible to apply for merger or amalgamation; (a) Two or more small companies; or (b) Two or more wholly-owned subsidiary company(ies) into its holding company. Procedural requirements: The procedural requirements have been stage wise categoried as under: Stage 1: Board process by the Transferor and Transferee Company (a) Review the main business object clause of the transferee company, to confirm that it covers the main business

object clause of the transferor company; (b) Review that the ancillary object clause, provides powers for the merger and amalgamation with other

company (c) Call a meeting of the Board of directors of the transferor and transferee companies involved in the Scheme to

consider all the matter relating to merger and amalgamation and to take approval for the following activities; (i) appointment of the consultant, valuer for the Scheme; (ii) authorizing to director/company secretary to submit application and affidavits, statements, etc. to the

Registrar, Official Liquidator and the Regional Director and to make necessary changes in the notice of general meetings, and the proposed scheme as may be required;

(iii) draft of the Scheme of Merger and Amalgamation; (iv) latest financial statement (not older than 6 months prior to the date of application to the Regional

Director; (v) Board report on the Scheme of Amalgamation; (vi) Approval of the share exchange ratio, if required; (vii) Appointed date for the Scheme; (viii) Cut off date to determine the list of the shareholders, secured and unsecured creditors, eligible to attend

and vote at their respective meetings; (ix) Notice of the meetings and authority to the director/company secretary to issue the notice of the same

to the shareholders, secured and unsecured creditors as may be required.

Authored by: CS (Dr.) D.K.Jain CS Ishan Jain Practicing Company Secretary Practicing Company Secretary Indore Indore [email protected] [email protected]


Stage 2: Forwarding the Scheme of Amalgamation to the RoC and Official Liquidator and issuance of notice of the general meetings

(i) Send a notice of the Scheme in the Form CAA-9 to Registrar (with the Form GNL-1) and Official Liquidatorby the companies involved in the proposed scheme, inviting objections or suggestions in the scheme, if any;

(ii) Obtain comment within thirty days of the notice issued by the transferor company or companies and the transferee company;

(iii) Incorporate the necessary observations,if any in the explanatory statement to the notice of the general meetings needs to be sent to the members, secured and unsecured creditors by each of the respective companies;

(iv) Dispatch the notice of the general meeting by Registered post/courier/ email, etc. by providing at least 21 clear days and preserve the evidence thereof;

(v) Submit compliance on the observations to the Registrar and the Official Liquidator

Stage 3: Approval of Members and secured and unsecured creditors

(i) The objections and suggestions received from the Registrar and/or the Official Liquidator needs to be considered in their respective general meetings;

(ii) The scheme needs to be approved by the respective members or class of members at a general meeting holding at least 90% of the total number of shares and atleast 9/10in value of the creditors or class of creditors;

Analysis regarding meetings: It may be noted that there is no provision in the section for dispensing of the requirement to hold meetings and consent of the members present by number must be obtained with the approval of 90% shares as well as 90% of the creditors in value at their respective meetings. The requirement of seeking approval of the members and/or creditors including proxy actually attended the meeting. Further that, there is no requirement for appointment of the independent chairman and observer for the meeting by the Regional Director as well as publication of notice in the newspaper for the date of meeting. Stage 4: Filing of Declaration of Solvency to the RoC and application to the Regional Director

(i) each of the companies involved in the merger is required to file a declaration of solvency, in theForm CAA-10 with form GNL-1 to the Registrar;

(ii) the transferee company shall file a copy of the schemein the Form CAA-11 (attached with the Form RD-1) so approved along with the filing fee.

Observations: There is a compulsory requirement that every company involved in the Scheme must be solvent and a declaration of solvency needs to be provided by two directors of each of the company involved in the Scheme. Further that the application to the Regional Director must be submitted to the Regional director in the Form RD-1 (attached with the Form CAA-11) within 7 days from the date of the general meetings in which requisite approval is received. It is required to be filed by the Transferee Company only. Stage 5: Comments on the Scheme is required by the Regional Director from the Registrar and the Official Liquidator

(i) On receipt of the application in the Form CAA-11 the Regional director shall require the comments from the Registrar of Companies for the companies involved in the Scheme;

(ii) Regional director shall require the comments from the Official Liquidator for the Transferor companies involved in the Scheme, within 30 days of the notice given by the Regional Director;


(iii) The Official Liquidator may appoint the chartered Accountant for obtaining report on the financial viability of the Scheme and scrutiny of the accounts, comments of the auditors, etc.

(iv) Submit necessary information’s as may be desired by the Official Liquidator, Registrar of Companies and Chartered Accountants;

Provided that if no such communication is made, it shall be presumed by the Regional Director that theyhaveno objection to the scheme. Stage 6: Hearing/ approval of the Scheme by the Regional Director

(i) The Regional Director may ask for any further information or clarification, statement, affidavit, etc for his satisfaction and after being satisfied shall approve the Scheme and shall issue his order in the Form CAA-12 within 60 days from the date of receipt of the application in the Form CAA-11;

(ii) If the Regional Director after receiving the objections or suggestions or for any reason is of the opinion that, such a scheme is not in public interest or in the interest of the creditors, it may file an application before the Tribunal in the Form CAA-13 within a period of sixty days of the receipt of the scheme with the Form CAA-11 stating its objections and requesting that the Tribunal may consider the scheme under section 232.

(iii) On receipt of an application if any from the Regional Director or from any person, if the Tribunal, for reasons to be recorded in writing, is of the opinion that the scheme should be considered as per the procedure laid down in section 232, the Tribunal may direct accordingly or it may confirm the scheme by passing such order as it deems fit: Provided that if the Central Government does not have any objection to the scheme or it does not file any application under this section before the Tribunal, it shall be deemed that it has no objection to the scheme.

There is no requirement for publication of notice for date of hearing in the newspapers. Normally the chamber hearing is required. Stage 7: Filing of the Orders of the Regional Director- Effective date of the Scheme

(i) A copy of the order confirming the scheme shall be communicated to the Registrar with the Form INC-28 within 30 days of the Order by all the companies involved in the Scheme and the Registrar shall register the scheme and issue a certificate for confirmation thereof to the companies involved in the Scheme.

(ii) The registration of the scheme shall be deemed to have the effect of dissolution of the transferor company without process of winding-up.

(iii) Section 233(11) provides that the transferee company shall file an application with the Registrar along with the scheme registered, indicating the revised authorised capital and pay the prescribed fees due on revised capital:

Provided that the fee, if any, paid by the transferor company on its authorised capital prior to its merger or amalgamation with the transferee company shall be set-off against the fees payable by the transferee company on its authorised capital enhanced by the merger or amalgamation. Observation: On registration of the Scheme by approval of the Form INC-28, the Registrar shall issue a certificate to that effect, showing the appointed date, date of the Order being the effective date for each of the Company. All the charges outstanding, if any at the portal of MCA, shall be automatically merged and reflected with the Transferee Company. Further that, the status of the Transferor Companies will be reflected at the portal of MCA as “Amalgamated”. Thereafter, the Transferor Companies will not be eligible to file any documents electronically at the portal of MCA.


Effect of the approval of the Scheme of amalgamation: Section 233(9) provides that upon the registration of the scheme by the Registrar it shall have the following effects, namely:— (a) transfer of property or liabilities of the transferor company to the transferee company so that the property

becomes the property of the transferee company and the liabilities become the liabilities of the transferee company;

(b) the charges, if any, on the property of the transferor company shall be applicable and enforceable as if the charges were on the property of the transferee company;

(c) legal proceedings by or against the transferor company pending before any court of law shall be continued by or against the transferee company; and

(d) where the scheme provides for purchase of shares held by the dissenting shareholders or settlement of debt due to dissenting creditors, such amount, to the extent it is unpaid, shall become the liability of the transferee company.

(e) Section 233(1) provides that a transferee company shall not on merger or amalgamation, hold any shares in its own name or in the name of any trust either on its behalf oron behalf of any of its subsidiary or associate company and all such shares shall be cancelled or extinguished on the merger or amalgamation.

Applicability of section 230(1) and 232(1)(b) on the application under section 233:

Section 233(12) provides that the provisions of this section shall mutatis mutandisapply to a company or companies specified in 230(1) in respect of a scheme of compromise or arrangement referred or division or transfer of a company referred in 232(1)(b). Section 233(14) provides that a company covered under this section may use the provisions of section 232 for the approval of any scheme for merger or amalgamation. By the Rule 25(8) it has been clarified that with respect to schemes of arrangement or compromise falling within the purview of section 233 of the Act, the concerned companies may, at their discretion, opt to undertake such schemes under sections 230 to 232 of the Act, including where the condition prescribed of section 233(1)(d) of the Act has not been met. Conclusion: The provisions incorporated under section 233 of the Companies Act, 2013 were first time incorporated under the Companies Act as such, which provides simple procedure for merger of the small companies as well as 100% Wholly Owned subsidiary companies with their holding company. However, the option is also given to the eligible companies to process under the normal NCLT approval route under section 230-232. In fact, in case where the holding company is a listed company, therefore, it is advisable to adopt the normal NCLT route under section 230-232. Since the Act and rules do not provide authority to the Regional Director to dispense off the requirement to conduct the general meetings of the members, secured and/or unsecured creditors, it takes additional 1month time to comply with the requirement, which can be avoided by the amendment in the section and Rules. Further the Companies Act is very liberal regarding the eligibility criteria of the paid up capital not exceeding Rs. 10 crore and turnover upto Rs. 100 Crores, as may be notified by the Central Government, but unfortunately the Central Government has noticed the upper cap so far, therefore, so many small companies are not become eligible to take benefit of the section 233 of the Act. However, the provisions of section 233 are deemed to be very liberal and provide fast track for merger and amalgamation within a period of 80 to 90 days as against 150-210 days required under the Tribunal route under section 230-232 of the Act in addition to the cost effectiveness.


Analysis of certain provisions of the Companies (Amendment) Act, 2017

Introduction

On 3 January 2018, the Companies(Amendment) Act,2017 (Amendment Act, 2017) received the assent of the President of India. The various provisions of the Amendment Act,2017 would come into force on the date of their notification in the Official Gazette by the central government. Different dates could be appointed for different provisions of the Amendment Act,2017.

The Ministry of Corporate Affairs (MCA) has notified the enforcement of the provisions of Section 1 and Section 4 of the Amendment Act, 2017 with effect from 26 January 2018. Additionally, MCA notified 43 sections with effect from 9 February 2018. The key sections notified were:

Declaration of dividend (Section 123 of the Companies Act, 2013(2013 Act))

Powers and duties of auditors and auditing standards (Section 143 of the 2013 Act)

Related party transactions (Section 188 of the 2013 Act).

Recently, MCA through its notification dated 7 May 2018 notified certain sections of the Amendment Act, 2017. Additionally, MCA issued amendment to certain rules under the Companies Act, 2013 (2013 Act). The notified provisions are effective from 7 May 2018.

The author in this article aims to provide an overview of the recently notified sections of the Amendment Act, 2017 and the amendments issued to the rules to the 2013 Act.

The amendments are in respect with following provisions:

1. Loans and investments by Companies

2. Financial reporting-Accounts of foreign subsidiaries

3. Appointment and qualification of Directors

4. Meetings of Board and its powers

5. Audit and auditors

Loans and investments by companies

Loan to directors, etc. (Section 185)

Companies can now provide loan, guarantee or security in connection with any loan, to any person with whom the director is interested, subject to prior approval by a special resolution. Additionally, such loans should be utilized by the borrowing company for its principal business activities.

Further, companies that provide loans, give guarantees, or securities in the normal course of business, are permitted to do so at specified interest rate i.e. not less than the rate of prevailing yield of one year, three year, five year or ten year government security, closest to the tenure of the loan(currently, specified interest rate is rate not less than the bank rate declared by the Reserve Bank of India(RBI)).

Authored by: G.Balasubramaniam, Company Secretary Roots Multiclean Ltd, Coimbatore [email protected]


Loan and investment by company (Section 186 and the Companies (Meetings of Board and its Powers) Amendment Rules, 2018-(Meetings Amendment Rules, 2018))

Currently, under the 2013 Act, a company could give loan/guarantee or provide any security in connection with the loan to any person/other body corporate that exceeds 60 per cent of its paid-up share capital, free reserves and securities premium account or 100 per cent of its free reserves and securities premium account, whichever is more, only if a special resolution is passed.

The Amendment Act, 2017 clarifies that the companies cannot give loan/guarantee or provide any security to any person/other body corporate in excess of the specified limit. However, in case where the aggregate of the loans or investment made, guarantee given or security provided together with the proposed loan/guarantee/ security exceeds the specified limit, a special resolution would be required to provide any investment/loan/guarantee or security.

Additionally, it has been clarified that the company is allowed to give loan to its employees in excess of the specified limits without passing a special resolution. Similarly, the requirement of special resolution would not be applicable in cases where a loan, guarantee, or security is provided to the company’s wholly owned subsidiary or a joint venture, or the company acquires the securities of its wholly owned subsidiary.

In this relation, MCA amended Companies (Meetings of Board and its Powers), Rules 2014, to provide that special resolution should specify the total amount up to which the Board of Directors (BoD) are authorised to provide such loan or guarantee, security or acquire shares of other companies.

Additionally, definition of an investment company has been modified to provide that a company would be deemed to be principally engaged in the business of acquisition of shares, debentures or other securities, if its:

Assets in the form of investment in shares, debentures or other securities constitute not less than 50 per cent of its total assets, or

Its income derived from investment business constitutes not less than 50 per cent as a proportion of its gross income.

As a result of the above non Banking Financial Companies fulfilling the criteria may also take advantage of the amendment. The newly notified provision permits companies to provide loans/guarantees/security to any person in whom the director is interested, subject to specified conditions. This is a welcome step as it is expected to provide significant relief to the companies and to resolve practical issues being faced in genuine transactions of financing among group companies due to complete restriction on providing loans enforced by the 2013 Act.

On the other hand, it would also put onerous responsibility on the management to clearly distinguish the transactions entered into with persons in whom its directors are interested.

The Amendment Act, 2017 provides relaxation to companies in relation to loans/security/ guarantee provided to the company’s wholly owned subsidiary or a joint venture, or when the company acquires the securities of its wholly owned subsidiary. The relaxation was earlier available in Rule 11 of the Companies (Meetings of Board and its Powers) Rules 2014. The change introduced through the Amendment Act, 2017 incorporates the provisions into the 2013 Act, hence, resolve the anomaly.

Financial reporting- Accounts of foreign subsidiaries

Copy of financial statements filed with registrar (Section 137)

Currently under the 2013 Act, every company with subsidiary(ies) is required to file with the Registrar of Companies (ROC) accounts of its foreign subsidiary(ies).

The Amendment Act,2017 clarifies that if the accounts of foreign subsidiary(ies) are not required to be audited, then Indian holding company should file such unaudited financial statements to the RoC along with the declaration to this effect. In case such financial statements are in a language other than English a translated copy of the financial statements would also be filed.


A listed company with a foreign subsidiary(ies) has also been provided some relief in relation to submission of financial statements with RoC. If the accounts of foreign subsidiary(ies) are not required to be audited, then Indian holding company would need to file such unaudited financial statements with the RoC along with the declaration to this effect. The notification providing relaxation is timely as companies are in the process of filing their financial statements for the year ended 31 March 2018.

Appointment and qualification of directors

Resident director (Section 149)

The requirement for a director to be resident in India would be met if he stays in India for a total period of 182 days or more during the financial year (earlier the 2013 Act referred to previous calendar year and now changed to financial year).

However, in case of a newly incorporated company the above requirement would apply proportionately at the end of the financial year in which a company has been incorporated.

Independent director (Section 149 and the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018)

Following changes have been introduced with respect to provisions of an independent director:

• Pecuniary relationship will not include the remuneration received by an independent director and any amount from a transaction which does not exceed 10 per cent of his/her total income (or such amount as may be prescribed).

• Section 149(6)(d) has been amended with respect to the scope of restriction on a ‘pecuniary relationship or transaction’ entered by a relative and has been made more specific by clearly categorising the types of transaction. The Amendment Act, 2017 provides that the none of the relatives of independent director :

i. Should hold any security of or interest in the company, its holding, subsidiary or associate company during the two immediately preceding financial years or during the current financial year.

However, the relative may hold security or interest in the company of face value not exceeding INR50lakh or two per cent of the paid-up capital of the company, its holding, subsidiary or associate company or such higher sum as may be prescribed;

ii. Is indebted to the company, its holding, subsidiary or associate company or their promoters, or directors, in excess of such amount as may be prescribed during the two immediately preceding financial years or during the current financial year(the Companies (Appointment and Qualification of Directors)Rules specify that indebtedness should not be in excess of INR50 lakh)

iii. Has given a guarantee or provided any security in connection with the indebtedness of any third person to the company, its holding, subsidiary or associate company or their promoters, or directors of such holding company, for such amount as may be prescribed during the two immediately preceding financial years or during the current financial year (the Companies (Appointment and Qualification of Directors) Rules specify that such indebtedness should not be in excess of INR50 lakh), or

iv. Has any other pecuniary transaction or relationship with the company, or its subsidiary, or its holding or associate company amounting to two per cent or more of its gross turnover or total income singly or in combination with the transactions referred to in above clause (i),(ii) or (iii).

• The 2013 Act restricts an individual from being appointed as an independent director in case he/she or his/her relative is a Key Managerial Person (KMP) or an employee of the company or its holding, subsidiary or associate company during any of the preceding three financial years. The Amendment Act, 2017, clarifies that this restriction would not apply if a relative of an independent director is employed during preceding three financial years.

Disqualification for appointment of a director (Section 164)

Currently, a director of a company which has defaulted on certain requirements is not eligible to be reappointed as a director of that company or appointed in another company for a period of five years from the date of the failure. Those defaults are as follows:


• Not filed financial statements or annual returns for any continuous period of three financial years or

• Failed to repay the deposits accepted by it or pay interest thereon or to redeem any debentures on the due date or pay interest due thereon or pay any dividend declared for a continuous period of one year.

The Amendment Act, 2017 has clarified that a director would not incur disqualification (if the company has defaulted on the above grounds) for a period of six months from the date of his/her appointment in such company.

The 2013 Act provides that a director would be disqualified in the following scenarios:

• Convicted by a court for any offence • Disqualification as a director on the order of the court/Tribunal and • Convicted in the matter of Related Party Transactions (RPTs).

The Amendments Act, 2017 clarifies that the above disqualifications would continue to apply even if an appeal or petition has been filed against the order of conviction or disqualification.

Vacation of office (Section 167)

Section 167 of the 2013 Act specifically provides that the office of a director would become vacant in case he/she incurs disqualifications specified in the Section 164 of the 2013 Act or becomes disqualified by an order of a court or the Tribunal.

However, the Amendment Act, 2017 clarifies that in case a director gets disqualified on grounds of Section 164(2) of the 2013 Act (i.e. non-filing of financial statements or failure to repay dues),then the office of the director would become vacant in all the companies other than the company which is in default under Section164(2).

Additionally, the Amendment Act, 2017 has provided a relaxation to the effect that a director would not be required to vacate his/her office in respect of disqualification by an order of a court or the Tribunal or conviction for any offence in the following events:

a) For 30 days from the date of conviction or order of disqualification b) Where an appeal or petition is preferred within 30 days as aforesaid against the conviction resulting in

sentence or order, until expiry of seven days from the date on which such appeal or petition is disposed of or

c) Where any further appeal or petition is preferred against order or sentence within seven days, until such further appeal or petition is disposed of.

Earlier the 2013 Act was stringent and required that the office should be vacated by the director even if he/she has filed an appeal against the order of such court.

Resignation of director (Section 168 and the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2018)

The 2013 Act requires resigning director to submit a copy of his/her resignation along with detailed reasons for the resignation in form DIR-11 to RoC within 30 days of the resignation.

The Amendment Act, 2017 makes aforementioned filing optional for such directors. Similar amendments have been incorporated in the Companies (Appointment and Qualification of Directors) Rules, 2014.

Meeting of Board and its powers

Meetings of Board (Section 173 and the Meetings Amendment Rules, 2018)

The 2013 Act empowered the central government to specific matters which should not be dealt in a meeting through video conferencing or other audio visual means. These matters include the approval of the annual financial statements, the approval of the Board’s report, etc.


The Amendment Act, 2017 and the Meetings Amendment Rules, 2018 clarify that in case quorum for a meeting is met through physical presence of directors, then any other director may participate through video conferencing or other audio visual means and discuss the matters as specified.

Audit committee (Section 177 and the Meetings Amendment Rules, 2018)

According to the Amendment Act, 2017, the Board of Directors (BoD) of every listed public company (earlier the 2013 Act referred to every listed company) and such other class or classes of companies, as may be prescribed should constitute an audit committee. Similar amendment has been incorporated in Companies (Meetings of Board and its Powers) Rules, 2014 as well.

The Amendment Act, 2017 clarifies that the existing requirement under the 2013 Act for the audit committee to pre-approve all Related Party Transactions subject to the approval of the BoD or shareholders as required by the Section 188 would continue. Whereas, for transactions that are not covered under the Section 188, the audit committee can give recommendations to the BoD, in case it does not approve the transaction.

Additionally, a transaction (involving an amount up to INR1 crore) entered by a director or officer is voidable at the option of the audit committee if it has been entered without its approval and has not been ratified within three months by it. Further, where the transaction is with a related party of a director, or a director has authorised the transaction, such director would indemnify the company against any loss.

Further, RPTs between a holding company and its wholly-owned subsidiary that do not require board’s approval under Section 188, would not require approval of the audit committee.

Nomination and Remuneration Committee (NRC)(Section 178)

Following changes have been made to the provisions relating to NRC:

Every listed public company (earlier the 2013 Act referred to every listed company) and a company covered under Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 is required to constitute a NRC.

NRC is required to specify the methodology for effective evaluation of the performance of the individual directors, committees of the board and the board as a whole which should be carried out by the board, by the NRC or by an independent external agency and should review its implementation and compliance.

Additionally, companies could place their remuneration policy on their website, if any, and should disclose only the salient features of the policy, the changes, if any, along with the web address of the policy in the board’s report.

Audit and auditors

Appointment of Auditors (Section 139 and the Companies (Audit and Auditors) Amendment Rules, 2018(Auditors Amendment Rules, 2018)

Currently under the 2013 Act, companies are required to appoint their auditors for a period of five years which is subject to annual ratification by the shareholders at the annual general meeting.

The Amendment Act, 2017 has removed this requirement of annual ratification once the auditors have been appointed for five years. The provision with respect to the annual ratification has been removed from Companies (Audit and Auditors) Rules 2014 as well. Conclusion The enactment of the 2013 Act which became effective 1 April 2014 was one of the most significant legal reforms in India. Since the implementation of 2013 Act, MCA has issued a number of clarifications and amendments to the 2013 Act to resolve the challenges of implementation faced by the Indian Corporate. The introduction of Amendment Act, 2017 is one such step by MCA to address the concerns related to the 2013 Act.


UPDATES

Complied by: CS Swati Bhatt, Practicing Company Secretary

[email protected]

Attention of Authorized Dealer Category I (AD Category I) banks is invited to Annex III of Part V of

External Commercial Borrowings (ECBS) - Monthly Reporting Through ECB 2 Return

Master Direction No.18/2015-16 dated January 01, 2016 on Reporting under Foreign Exchange Management Act, 1999, as amended from time to time. The said Master Direction, inter alia, stipulates the reporting arrangement for ECBs through ECB-2 Return.

2. It has been decided to capture the details of the hedges for ECBs through a simplified format of ECB 2 Return. Part E of the Return, accordingly, is modified so as to include only standard information on hedged/unhedged ECB exposure (Annex). Details of hedging in Part E.1 of the Return and foreign exchange earnings and expenditure in Part E.2 of the Return should be furnished in additive format. Further, for reporting in respect of natural hedge, provisions contained in paragraph 2 (iii) of A.P. (DIR Series) Circular No. 15 dated November 07, 2016 should be followed.

3. Revised monthly reporting format of ECB 2 Return would be applicable from month-end June 2018. It is reiterated that any lapse at the time of reporting through this return and/or failure to adhere to the time line of its submission and/or any lapse at the time of reporting through Form 83 is a contravention of the provision of Foreign Exchange Management Act, 1999 (42 of 1999).

4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers. The aforesaid Master Direction No. 18 dated January 01, 2016 is being updated to reflect the changes.

5. The directions contained in this circular have been issued under sections 10(4) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

Annex

Amended E block in ECB-2 Return

E.1 Hedging details:

Outstanding Principal ECB

amount (in million)*

Currency Financial hedge(s) Natural hedge Annualised percentage cost

of financial hedge(s) for

ECB

Notional value (in million)

% of outstanding ECB amount

Notional value (in million)

% of outstanding ECB amount

*as on the last date of the reporting month

E.2 Foreign exchange earnings and expenditure, if any, for the last three financial years (only corresponding to same currency of ECB):

Financial Year

Currency Foreign Currency earnings (in million)

Foreign Currency expenditure (in million)

Annual EBID** (in INR million)

**Earnings before Interest and Depreciation (EBID), as defined table above = Profit After Tax + Depreciation + Interest on debt + Lease Rentals, if any.


Liberalised Remittance Scheme - Harmonisation Of Data And Definition

Please refer to paragraph 18 of the Statement on Developmental and Regulatory Policies of the Second Bi-monthly Monetary Policy Statement for 2018-19 released on June 6, 2018. As indicated therein, it has been decided that furnishing of Permanent Account Number (PAN), which hitherto was not to be insisted upon while putting through permissible current account transactions of up to USD 25,000, shall now be mandatory for making all remittances under Liberalised Remittance Scheme (LRS).

2. Further, in the context of remittances allowed under LRS for maintenance of close relatives, it has been decided, in consultation with Government, to align the definition of 'relative' with the definition given in Companies Act, 2013 instead of Companies Act, 1956.

3. Master Direction No. 7/2015-16 dated January 01, 2016 on LRS is being updated simultaneously to reflect the above changes.

4. The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.


List of Incharge/Executive Officers of WIRC Chapters

Sr. No. Chapter name Chapter In-Charge Contact No.

e-mail id of Chapter In Charge

1 Ahmadabad CS Ketan Bhalgamiya 079-30025334/35 [email protected]

2 Aurangabad Mr. Subhash Bappi Sinha 0240-2451124 [email protected]

3 Bhayander Ms. Krutika Kargutkar 022-28183888 [email protected]

4 Bhopal Ms. Amita Malviya 0755-2577139 [email protected]

5 Dombivali Mr. Kamal Kumar Soni - [email protected]

6 Goa Mr. Vasant Kerkar 0832-2435033 [email protected]

7 Indore CS Pravin Gupta 0731-4248181 [email protected]

8 Kolhapur Ms. Archana Sawant 0231-2659498 [email protected]

9 Nagpur Mr. Sudhakar 0712-2453276 [email protected]

10 Nashik Mr. Amit Kumar 0253-2509989 [email protected]

11 Navi Mumbai Ms. Lacchmi Bhatt 022-27577816 [email protected]

12 Pune Mr. Anil Tale 020-24263228/0341 [email protected]

13 Raipur Mr. Prafulla Kumar Dash 0771-3267784 [email protected]

14 Rajkot Mr. Aritra Karmakar 0281-3059646 [email protected]

15 Surat Mr. Goutam Karmakar 0261-2463404 [email protected]

16 Thane Ms. Kavita Chavan 022-25891333-3793 [email protected]

17 Vadodara Mr. Amit Kumar Nagar 0265-2331498 [email protected]

mailto:[email protected]�

















ACTIVITY REPORT ICSI celebrates PCS Day on 15th of June every year. Like every year, WIRC elevated the tradition of proudly celebrating PCS Day this year as well. The PCS Committee this time acknowledged the contribution of senior members in Whole time practice from and to felicitate them for their services.

The committee has also laid down the norms of eligibility of the PCS who are considered for felicitation. The norms were: Members who are IBC Professional and held COP on 31st March, 2018 or Those members who are pier reviewed or are pier reviewer and held COP on 31st March, 2018

The Celebration was done at all the chapters of WIRC

.

Aurangabad Chapter

Celebration of Golden Jubilee Year PCS Day

Date Friday, 15th June, 2018

Venue Aurangabad Chapter of WIRC of ICSI

Topics Celebration of Golden Jubilee Year PCS Day by covering topics : 1. Existing Recognitions and Emerging Areas of Practice for PCS 2. Peer Review Mechanism and its benefits for a PCS

Chief Guest / Speakers a) CS & CMA Arun Rajabhau Joshi, Practicing Company Secretary & Insolvency Professional, Aurangabad (MH) and b) CS Sagar Ramrao Deo, Fellow Practicing Company Secretary, Aurangabad (MH)

Delegates 20

Bhopal Chapter


Date Friday, 15th June, 2018

Venue Bhopal Chapter of WIRC of ICSI

Topics –Felicitation of Senior Professionals – Panel Discussion on Code of Conduct – Session on Advocacy Skill

Goa Chapter


Date 15th June, 2018

Venue Mahalasa Hall, Panaji, Goa

Topics Indian Accounting Standards (Ind AS) as part of “Recent Developments for the Profession”


Chief Guest / Speakers Shri. K. S. Reddy, Registrar of Companies-cum-Official Liquidator (ROC-cum-OL) Goa, Daman & Diu

Shri. Shatrughan Chauhan, Deputy Registrar of Companies (ROC), Goa, Daman & Diu

CA Satyaprakash Kamath

Delegates Target attendance – 35 Actual attendance - 29

Indore Chapter


Date 15th June, 2018 Venue ICSI Indore Chapter, Indore

Chief Guest / Speakers CS Anurag Gangrade, CS (Dr.) Pinky Shrivastava, CS Ashish Karodia, CS Kamlesh Joshi, CS Ashish Garg

Delegates Target 50 30

INTERNATIONAL YOGA DAY CELEBRATION

Date 21st June, 2018

Venue Col. CK Nayadu Udyaan, Opp. Mayank Hospital, Indore

Chief Guest / Speakers CS Rajendra Kewliya

Delegates Target 15 Actual 03

.

Navi Mumbai Chapter

Seminar on "FEMA & Mergers / Acquisitions and Competition Law"

Date . 30.06.2018 Venue Golf Course, Kharghar, Navi Mumbai- 410 210

Topics FEMA & Mergers / Acquisitions and Competition Law

Chief Guest / Speakers Mr. Arvind Salvi, Ex-DGM RBI

Mr. Surendra U Kanstiya, Practising Company Secretary

Delegates 59


Surat Chapter


Date 15-June-2018. Venue South Chapter office premises

Topics Insolvency & Bankruptcy Code

Chief Guest / Speakers CS Narayan Gajanan Vidvans

Delegates Target: 50 Actual: 24 (Members)

Study Circle Meeting Date 30-June-2018. Venue Agrasen Bhavan, City Light, Surat.

Topics Decoding RERA-Real Estate Regulatory Authority Act, 2016

Chief Guest / Speakers Adv Ritu Soni

Delegates Target: 50 Actual: 44 (Members); 3 (Students)

Vadodara Chapter


Date Friday, the 15th June, 2018

Venue Vadodara Chapter of WIRC of ICSI, Vadodara

Topics Lecture Meeting on “Role of Company Secretary under Goods and Services Tax”

Chief Guest / Speakers CS Gurinder Singh, Head (Indirect Taxes), L & T Power, Vadodara CS D. S. Mahajani, GM (Taxation) and CS, Transpek-Silox Industry Pvt. Ltd., Vadodara

Delegates Target: 50 Actual: 61

Thane Chapter


Date Saturday, the 16th June, 2018 Venue Thane Chapter of WIRC of ICSI, Thane

Topics “Symposium On SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015 And SEBI (Substantial Acquisition Of Shares And Takeovers) Regulations, 2011”

Chief Guest / Speakers Mr. S N Anathasubramanian, Past President ICSI

Delegates 90


PHOTO GALLERY

Convocation 2018

Presentation of Shaheed Ki Beti Certificate to Chief Guest Dr N.S. Umarani –Pro Vice Chancellor, Savitribai Phule Pune University, Pune by President, ICSI

Signing of MOU between ICSI and MIT WPU

Presentation of Shaheed Ki Beti Certificate Certificate to Chief Guest Prof (Dr) E. B. Khedkar, Vice Chancellor, Ajinkya D Y Patil University, Pune

Oath taking ceremony

CS Members present with dignitaries


PCS Day Felicitation 2018

WIRC

WIRC Chapters Aurangabad


Bhopal

Goa


Indore

Nagpur


Raipur

Rajkot

Vadodara


Surat

Thane


ANNOUNCEMENTS


“CS Benevolent Fund is a collective effort towards extending the much needed financial support to the community of Company Secretaries in times of distress Let us lend

support and join for noble cause.”

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