New Clause 5A&20A in Listing Agreement as amended-unclaimed shares,common notice period, dividend per share basis&voting rights pattern are the updates…

Click here for the amendments in Listing Agreement as on 24th April 2009 http://www.sebi.gov.in/circulars/2009/circfd04.pdf

All the following amendments shall come into force with immediate effect.

To put it simply,

• The unclaimed shares in escrow account shall be transferred to Demat Suspense A/c. after 3 reminders, including corporate benefits, if any and its voting rights will be frozen until claimed.
• The timelines of notice period for record date & board meeting, which were applicable only to rights issue is now made applicable for all corporate actions including mergers, demergers, bonus, buy back, etc…
• “The Issuer agrees to declare and disclose the dividend on per share basis only”.  So, you won’t see hereon 100% or 200%, etc…
• Shareholding pattern to be given for each class of security and voting rights pattern also to be given.

Uniform procedure for dealing with unclaimed shares – Insertion of clause 5A in Listing Agreement
It has been brought to the notice of the Board that there is a large quantum of shares issued pursuant to the public issues, which remain unclaimed despite the best efforts of the Registrar to Issue or Issuers and that there is no uniform practice for dealing with such shares.

It has been decided to provide a uniform procedure for dealing with unclaimed shares i.e., shares which could not be allotted to the rightful shareholder due to insufficient/incorrect information or any other reason (in escrow A/c.). Accordingly, the new Clause 5A is to be inserted, which, inter alia, provides the following:

• The unclaimed shares shall be credited to a demat suspense account opened by the issuer with one of the depository participants after giving 3 reminders at the address mentioned in the depositories database. [Cl 5A(a)]
• Any corporate benefit in terms of securities, accruing on unclaimed shares such as bonus shares, split etc., shall also be credited to such account. [Cl 5A(b)]
• Details of shareholding of each individual allottee whose shares have been credited to such suspense account shall be properly maintained by the issuer. [Cl 5A(c)]
• The allottee’s account shall be credited as and when he/she approaches the issuer, after undertaking the proper verification of identity of the allottee. [Cl 5A(d)]
• The voting rights of these shares will remain frozen till the rightful owner claims the shares. [Cl 5A(f)]
• Details (in aggregate) of shares in the suspense account including freeze on their voting rights, shall be disclosed in the Annual Report as long as there are shares in the suspense account. [Cl 5A(g)]

Notice period for Record Date and Board Meeting – Amendments to clause 16 and clause 19
It has been decided to reduce the timelines for notice period for all corporate actions like dividend, bonus, rights, mergers, demergers, splits, etc, for all scrips whether in demat or physical, whether in F&O segment or not.

The notice period for record date has been reduced to 7 working days (now there is no confusion of whether 30 days or 21 days or 15 days or 7 days) and for board meeting has been reduced to 2 working days (now there is no confusion of whether 7 days or 2 days). 

Kindly note, it is the board meeting intimation where buy back is proposed to be considered as per Cl 19(d) is also 2 working days (not 7 days as earlier).

Uniformity in dividend declaration – Insertion of clause 20A
It has been decided to mandate that listed companies shall declare their dividend on per share basis only. This is expected to bring uniformity in the manner of declaring dividend amongst the listed companies.

 

Cl 20A - “The Issuer agrees to declare and disclose the dividend on per share basis only”.

 

Shareholding pattern for each class of shares and voting rights pattern – Amendment to clause 35
It is clarified that clause 35 of the listing agreement which gives a format for disclosures of shareholding pattern, is required to be given for each class of security separately. Further, it has been decided to amend clause 35 to provide an additional format for disclosures of voting rights pattern in the company.  For the new formats, click http://www.sebi.gov.in/circulars/2009/circfd04.pdf or wait for the amendments in Listing Agreement.

[IDR]Only audited financial statements, neither affairs/status & IOSCO recognised & Interim audit, if more than 180 days

G.S.R 251 (E) - Companies (Issue of Indian Depository Receipts) (Second Amendment) Rules, 2009.  dated 15th April 2009

In the Schedule to IDR Rules (Matters to be specified in Prospectus), under Point No.6 – REPORTING,

6 (i) - Where the law of a country, in which the Issuing company is incorporated, requires annual statutory audit of the accounts of the Issuing company, a report by the statutory auditor of the Issuing company, in such form as may be prescribed by SEBI on -
(A) the audited financial statements and financial status (deleted) of the Issuing Company in respect of 3 financial years immediately preceding the date of prospectus, and
(B) (amended) the interim audited financial statements in respect of the period ending on a date which is less than 180 days prior to the date of opening of the issue, if the gap beween the ending date of the latest audited financial statements disclosed under clause (A) and the date of the opening of issue is more than 180 days.

Provided that if the gap between such date of latest audited financial statements and the date of opening of issue is 180 days or less, the requirement under clause (B) shall be deemed to be complied with if a statement, as may be specified by SEBI, in respect of changes in the financial position of issuing company for such gap is disclosed in the Prospectus.

Provided further that in case of an Issuing Company which is a foreign bank incorporated outside India and which is regulated by a Central Bank which, in turn, is (deleted) a member of Bank for International Settlements or a member of the International Organisation of Securities Commission (IOSCO) which is a signatory to a Multilateral Memorandum of Understanding with India, the requirement under this paragraph, in respect of period beginning with last date of period for which the latest audited financial statements are made and the date of prospectus shall be satisfied, if the relevant financial statements are based on limited review report of such statutory auditor.

 

6(ii) - Where the law of the country, in which the Issuing company is incorporated, does not require annual statutory audit of the accounts of the Issuing company, a report, in such form as may be specified by SEBI, certified by a Chartered Accountant in practice within the terms and meaning of the Chartered Accountant Act, 1949 on -
(A) the financial statements (affairs) of the Issuing Company, in particular on the profits and losses for each of the 3 financial years immediately preceding the date of prospectus and upon the
assets and liabilities of the Issuing Company and

(B) (amended) the interim financial statements in respect of the period ending on a date which is less than 180 days prior to the date of opening of the issue, if the gap beween the ending date of the latest audited financial statements disclosed under clause (A) and the date of the opening of issue is more than 180 days.

Provided that if the gap between such date of latest audited financial statements and the date of opening of issue is 180 days or less, the requirement under clause (B) shall be deemed to be complied with if a statement, as may be specified by SEBI, in respect of changes in the financial position of issuing company for such gap is disclosed in the Prospectus.

For the status hitherto, click http://yehseeyes.blogspot.com/2009/01/idr-rules-amendednon-residents-can.html

[FEMA]FC-TRS reporting amended & is subject to KYC & to be submitted within 60 days of consideration for transfer of equity instruments involving foreign nationals or NRI’s

Foreign Direct Investment in India -
Transfer of Shares / Preference Shares / Convertible Debentures
by way of Sale - Modified Reporting Mechanism

Vide RBI/2008-09/447 A. P. (DIR Series) Circular No.63 dated April  22, 2009

1.In order to capture the details of investment received by way of transfer of the existing shares / compulsorily and mandatorily convertible preference shares (CMCPS) / debentures [hereinafter referred to as equity instruments], of an Indian company, by way of sale, in a more comprehensive manner, the form FC-TRS has been revised (format in Annex I). Accordingly, the proforma for reporting of inflows / outflows on account of remittances received / made in connection with the transfer of equity instruments by way of sale, submitted by IBD/FED/nodal branch of the AD Category – I bank to the Reserve Bank has also been modified (format in Annex III).
2.The sale consideration in respect of equity instruments purchased by a person resident outside India, remitted into India through normal banking channels, shall be subjected to a KYC check (format in Annex II) by the remittance receiving AD Category – I bank at the time of receipt of funds. In case, the remittance receiving AD Category – I bank is different from the AD Category - I bank handling the transfer transaction, the KYC check should be carried out by the remittance receiving bank and the KYC report be submitted by the customer to the AD Category – I bank carrying out the transaction along with the form FC-TRS.
3.Further, in order to ensure that the form FC-TRS is submitted within a reasonable timeframe, it has been decided that henceforth, the form FC-TRS should be submitted to the AD Category – I bank, within 60 days from the date of receipt of the amount of consideration.  The onus of submission of the form FC-TRS within the given timeframe would be on the transferor / transferee, resident in India.
4.In case of transfer of equity instruments where the non-resident acquirer proposes deferment of payment of the amount of consideration, prior approval of the Reserve Bank would be required, as hitherto. Further, in case approval is granted for a transaction, the same should be reported in form FC-TRS, duly certified by the AD Category – I bank, within 60 days from the date of receipt of the full and final amount of consideration.
5. These directions will become operative with immediate effect.

Kindly note,

Attention of the Authorised Dealer Category – I (AD Category - I) banks is invited to paragraph 6 of the Annex to A. P. (DIR Series) Circular No.16 dated October 4, 2004, wherein, it has been stipulated that in case of transfer of shares from a resident to a non-resident / non-resident Indian and vice versa, the transferee / his duly appointed agent is required to approach the investee company to record the transfer in their books along with the certificate in form FC-TRS from the designated AD branch that the remittances have been received by the transferor / payment has been made by the transferee.  In addition, the designated AD branch is also required to submit two copies of the form FC-TRS received from their constituents / customers together with the statement of inflows / outflows on account of remittances received / made in connection with transfer of shares, by way of sale, to IBD/FED or the nodal office designated for the purpose by the AD Category – I bank. The IBD/FED or the nodal office of the AD Category – I bank in turn submits a consolidated monthly statement in respect of all the transactions reported by the branches to the Reserve Bank, in the prescribed proforma.  Further, it may be noted that in terms of Regulation 2 of Notification No. FEMA 20/2000-RB dated 3rd May 2000, as amended from time to time, "preference shares" mean compulsorily and mandatorily convertible preference shares and "debenture" means compulsorily and mandatorily convertible debentures.

[ECB] No objection for Corporate Guarantee after Board Resolution

External Commercial Borrowings Policy – Liberalization Issue of Guarantee for operating lease

As all of you aware that in term of AP DIR Circular No.24 dated March 01, 2002 AD Category – I banks have been permitted to allow payment of lease rentals, opening of letters of credit towards security deposit, etc. in respect of import of aircraft / aircraft engine / helicopter on operating lease basis subject to the terms and conditions mentioned therein.

Further, in terms of AP DIR Circular No.01 dated July 11, 2008, as a measure of rationalization of the existing procedures, AD Category - I banks have been allowed to convey ‘no objection’ under the Foreign Exchange Management Act (FEMA), 1999 for creation of charge on immovable assets, financial securities and issue of corporate or personal guarantees in favour of overseas lender / security trustee, to secure the ECB to be raised by the borrower, subject to compliance of prescribed conditions.

As part of further rationalization, vide AP (DIR Series) Circular No.62 dated April 20, 2009, it has been decided to allow AD Category – I banks to convey ‘no objection’ from the Foreign Exchange Management Act (FEMA), 1999 angle for issue of corporate guarantee in favour of the overseas lessee, for operating lease in respect of import of aircraft / aircraft engine / helicopter.

The ‘no objection’ to the Indian importer for issue of corporate guarantee under FEMA, 1999 may be conveyed after obtaining –

• Board Resolution for issue of corporate guarantee from the company issuing such guarantees, specifying names of the officials authorised to execute such guarantees on behalf of the company.
• Ensuring that the period of such corporate guarantee is co-terminus with the lease period.

Click here - AP (DIR Series) Circular No.62 dated April 20, 2009

Supreme Court gives statutory shield to SEBI from SAT

THE Supreme Court on Tuesday said the Securities Appellate Tribunal (SAT) has no discretionary power to interfere with orders passed by market regulator Securities & Exchange Board of India (SEBI). Allowing SEBI’s plea, the court said the tribunal has to do what is prescribed under the statute.

“When something is to be done statutorily in a particular way, it can only be done that way. There is no scope for taking shelter under a discretionary power,” said a bench comprising Justice Arijit Pasayat and Justice LS Panta. The court rejected the plea that the tribunal can interfere with the order passed by SEBI. The court also turned down the plea that under section 15 T (4) of the Act, the tribunal is empowered to pass such orders on the appeal as it thinks fit, confirming, modifying or setting aside the order of SEBI.

SEBI had filed two appeals against order passed by the tribunal. In one case, Saikala Associates acted as a sub-broker at the National Stock Exchange with 2 NSE Members — MIS PCS Securities and M/S Zen Securities — without being registered as a sub-broker with SEBI between 2000 and May 2002. It had created the value of Rs 403.29 crore in breach of section 12(1) of the Securities and Exchange Board of India Act, 1992 (read with Rule 3 of the Securities and Exchange Board of India (Stock Brokers & Sub Brokers) Rules, 1992.)

In the second case Shilpa Stock, registered as a SEBI broker while executing trades on behalf of its client Kamlesh Shroff had dealt with Jairam Enterprises, an un-registered sub-broker. Again, it was in violation of SEBI rule. The tribunal had said the proved charges were not serious enough to warrant suspension of certificate of registration and had set aside the SEBI order. SEBI challenged this in the apex court. The regulator had said in terms of Regulation 25 of the SEBI regulations & circulars, (stock brokers and sub-brokers), which was applicable prior to the amendment with effect from November 2, 2003, it was provided that any contravention of any provisions of the Act, rules and regulations is to be dealt with in the manner provided in Regulations 26 to 32 of the Regulation prior to the amendment with effect from September 27, 2002.

 

The provisions of section 12(3) of the 1992 Act confer power on SEBI, by an order, to suspend or cancel a certificate of registration in such manner as may be determined by regulations, provided that no order under the said section will be made unless the person concerned has been given a reasonable opportunity of being heard, the appellant had said. It had further said as per Rule 3 of the Securities and Exchange Board of India (Stock Brokers & Sub Brokers) Rules, 1992, the existing brokers & sub-brokers were allowed to continue business pending registration but no new person commencing the business of the broker or sub-broker after August 20, 1992 could do the business pending registration and could commence only after being registered.

The court said, “In the instant case, the position of broker/sub-broker in case of violation is statutorily provided under Section 12 of the Act, which has to be read along with Rule 3 of the Rules. No power is conferred on the tribunal to travel beyond the areas covered by section 12 and Rule 3.”

Source: The Economic Times

The concerned citation of the case is S.E.B.I  Versus Saikala Associates Ltd. with CIVIL APPEAL NO. 4640 OF 2006 and the date of judgement is April 21, 2009. For complete judgement one can check SC website or else follow the below URL :-
 

http://judis.nic.in/supremecourt/helddis3.aspx

 
Thanks - CS Monika Bhardwaj of CS Mysore

File Offer Documents (50 crores) at SEBI Western Regional Office, Ahmedabad from 1st May 2009

Schedule XXII of SEBI (DIP) Guidelines, 2000 (click here for the latest guideline) got amended enabling Merchant Bankers  to file the draft offer documents (public issue & rights issue) of size up to Rs. 50 crores, of the companies whose registered office falls in Gujarat and Rajasthan, with the regional office of SEBI in Ahmedabad.

Securities and Exchange Board of India

Western Regional Office

Unit No: 002, Ground Floor, SAKAR I,

Near Gandhigram Railway Station,

Opposite Nehru Bridge, Ashram Road,

Ahmedabad – 380 009.

Phone: (079) 26583633, 26583634 and 26583635.

Click here for the said circular http://www.sebi.gov.in/circulars/2009/cfdcir04.pdf

[FTP-Hp] LUT & BG for duty credit scrips before realisation of export proceeds

Obtaining transferable duty credit scrips made easier

Source: TNC Rajagopalan / New Delhi April 06, 2009, 0:09 IST

Ref: Handbook of Procedures (FTP)

The Director General of Foreign Trade has notified the procedures for executing legal undertaking and bank guarantee for obtaining transferable duty credit scrips under Duty Entitlement Passbook scheme and under the reward schemes such as Focus Product Scheme, Focus Market Scheme etc. before realisation of export proceeds. The formats of legal undertaking and bank guarantee have also been notified

The good news is recognised export houses and PSUs need not furnish bank guarantees. Manufacturer exporters registered with Central Excise and with exports in the preceding two years of at least Rs 1 crore and manufacturer exporters who have paid excise duty of over Rs 1 crore in the preceding year need not execute bank guarantee.

The relevant Public Notice (no. 167/2008 dated 30th March 2009) says the applicant shall execute the legal undertaking and bank guarantee as per Customs circular no. 58/2004 dated 21st October 200 4. The said circular exempts exporters who have a turnover (physical exports) of Rs 5 crore in the current or preceding fiscal and having a track record of three years of exports.

Other manufacturer exporters need furnish bank guarantee of only 15 per cent of the amount of legal undertaking. Other exporters have to furnish bank guarantee covering 100 per cent of the amount involved.

Apparently, the amount of legal undertaking should cover the full duty credit amount. The exporter, however, has the option to file a revolving legal undertaking for a higher amount which will act as a limit i.e., within the limit, it will be debited if a duty credit scrip is issued and credited whenever the exporter submits evidence of realisation of export proceeds relating to any shipping bill against which the duty credit scrip was issued.

The revolving legal undertaking has to be submitted separately for each scheme. The legal undertaking/bank guarantee should be kept valid for 24 months from the let export order date. Perhaps, the DGFT expects that few payments will be delayed beyond 24 months from the date of exports.

The DGFT circular says that in case the export proceeds are not realised within 12 months of export, the exporter should either produce Reserve Bank approval extending the period for realisation of export proceeds or deposit amount equal to the duty credit or produce duty credit scrip for debit of equivalent amount within further 60 days failing which he will have to pay, in addition, 15 per cent per annum interest on the duty credit amount. The legal undertaking/bank guarantee will be enforced if the exporter does not surrender the benefits.

The Customs credit the duty drawback at All Industry Rates in the exporter’s bank account immediately after shipment based on only a declaration along with the shipping bill. The exporter is not required to submit a bond or bank guarantee but a six monthly certificate of export bills outstanding beyond the period allowed by RBI from authorised dealer(s) or chartered accountant.

Click here to understand Foreign Trade Policy 2004-2009.

Download LLP Act, 2008 word format – soft copy in editable form of Limited Liability Partnership Act & Rules, 2009

Yes,

 

To download editable soft copy in word form of Limited Liability Partnership Act, 2008, Click here.

 

Click here to download the Government notification on Limited Liability Partnership Act, 2008 i.e, LLP Act, 2008 in PDF format.

 

Click here to read the Government Notification on LLP rules with forms in word form i.e, Limited Liability Partnership Rules, 2009 in editable soft copy.

 

Click here to read more on LLP – http://yehseeyes.blogspot.com/search/label/LLP

 

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Must read FAQ’s on Limited Liability Partnership (LLP) in India–a mandatory read through for every one

Every limited liability partnership shall have either the words “limited liability partnership” or the acronym “LLP” as the last words of its name. LLPs would not be given names, which, in the opinion of the Central Government, are undesirable. 

 

This article is selective extract from the FAQ’s of LLP from http://www.llp.gov.in .  It is classified into 5 heads for the purpose of understanding – Basics, Transactional, Compliance, Penal & Conversion provisions on LLP.

 

BASICS

 

Whether the LLP Act is applicable to any specific services like professional services regulated by Statutes?

No. Any two or more persons associating for carrying on a lawful business with a view to profit may set up an LLP.

 

Likely users/beneficiaries of the LLP Law?

It is likely that in the years to come Indian professionals would be providing accountancy, legal and various other professional/technical services to a large number of entities across the globe. Such services would require multidisciplinary combinations that would offer a menu of solutions to international clients.  In view of all this, the LLP framework could be used for many enterprises, such as:-

·                  Persons providing services of any kind

·                  Enterprises in new knowledge and technology based fields where the corporate form is not suited.

·                  For professionals such as Chartered Accountants (CAs), Cost and Works Accountants (CWAs), Company Secretaries (CSs) and Advocates, etc.

·                  Venture capital funds where risk capital combines with knowledge and expertise

·                  Professionals and enterprises engaged in any scientific, technical or artistic discipline, for any activity relating to research production, design and provision of services. 

·                  Small Sector Enterprises (including Micro, Small and Medium Enterprises)

·                  Producer Companies in Handloom, Handicrafts sector

 

What are the restrictions in respect of minimum and maximum number of partners in an LLP?  

A minimum of two partners will be required for formation of an LLP. There will not be any limit to the maximum numberof partners.

 

Whether a body corporate may be a partner of an LLP?

Yes.

 

What are the qualifications for becoming a partner?

Any individual or body corporate may be a partner in a LLP. However an individual shall not be capable of becoming a partner of a LLP, if—

(a)   he has been found to be of unsound mind by a Court of competent jurisdiction and the finding is in force;

(b)   he is an undischarged insolvent; or

(c)   he has applied to be adjudicated as an insolvent and his application is pending.

 

What are the requirements in respect of “Designated Partners”?

Appointment of at least two “Designated Partners” shall be mandatory for all LLPs. “Designated Partners” shall also be accountable for regulatory and legal compliances, besides their liability as ‘partners, per-se”.

 

Who can be a “Designated Partner”?

Every LLP shall be required to have atleast 2 Designated Partners who shall be individuals and at least 1 of the Designated Partner shall be a resident of India. In case of a LLP in which all the partners are bodies corporate or in which one or more partners are individuals and bodies corporate, at least two individuals who are partners of such LLP or nominees of such bodies corporate shall act as designated partners.

 

Should the number of designated partners resident in India not be more than partners from outside India?

LLPs, particularly those as may be engaged in the services or technology-based sectors, may provide services globally. This may require any number of its partners to locate them abroad.  In view of liability structure of partners, designated partners and LLP, clearly provided for in the Act, there does not appear to be any necessity and justification for restriction relating to designated partners to out-number partners located abroad. In fact it may pose unnecessary restriction.

 

Whether there would be any requirement of ‘identification number’ of Designated Partner? Whether Designated Partners would be subject to any other condition/requirement before they are appointed as such?

Every Designated Partner would be required to obtain a “Designated Partner’s Identification Number” (DPIN) on the lines similar to “Director’s Identification Number” (DIN) required in case of directors of companies. Enabling provisions have been made to prescribe under rules conditions, which would have to be fulfilled by an individual who is eligible to be appointed as a ‘designated-partner’.

 

TRANSACTIONAL PROVISIONS

 

Whether LLP Agreement would be mandatory for all LLPs?

As per provisions of the LLP Act, in the absence of any LLP agreement, the mutual rights and liabilities shall be as provided for under Schedule I to the Act. Therefore, in case any LLP proposes to exclude provisions/requirements of Schedule I to the Act, it would have to enter into an LLP Agreement, specifically excluding applicability of any or all paragraphs of Schedule I.

 

What is the manner in which a partner of an LLP can bring his contribution? How will it be recorded/disclosed in the accounts?

Partner’s contribution may consist of both tangible and/or intangible property and any other benefit to the LLP. The monetary value of contribution of each partner shall be accounted for and disclosed in the accounts of the limited liability partnership in the manner as may be prescribed in the rules (see section 32).

 

Whether a partner would be able to give loan to or transact other commercial transactions with LLP? What will be his rights and obligations in this regard?

A partner may lend money to and transact other business with the LLP and shall have the same rights and obligations with respect to the loan or other transactions as a person who is not a partner.

 

What is the nature & extent of liability of a partner of an LLP?

Every partner of an LLP would be, for the purpose of the business of the LLP, an agent of the LLP but not of the other partners. Liability of partners shall be limited except in case of unauthorized acts, fraud and negligence. But a partner shall not be personally liable for the wrongful acts or omission of any other partner. An obligation of the limited liability partnership whether arising in contract or otherwise, is solely the obligation of the limited liability partnership. The liabilities of LLP shall be met out of the property of the LLP.

 

How penal action on errant partners who are not residents of India will be taken?

For statutory compliances provisions of at least one resident designated partner (DP) in every LLP is would ensure that at least one partner is available in India for at least six months for regulatory compliance requirements. The LLPs would have freedom to appoint more than one resident as DP. LLP as an entity would always remain liable for regulatory or other compliances. Civil liability on such a partner would be adjudicated by the courts under civil law which recognises ‘foreign awards’. Criminal liability would require adjudication/ enforcement by the courts including using the extradition process. Position would be similar to the cases of directors of companies who are foreign nationals.  

 

COMPLIANCE PROVISIONS

 

Whether every LLP would be required to maintain and file accounts?

An LLP shall be under obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A “Statement of Accounts and Solvency” in prescribed form shall be filed by every LLP with the Registrar every year.

 

Whether audit of all LLPs would be mandatory?

Audit of LLPs shall be mandatory. However a more simplified compliance regime for small LLPs is being proposed by exempting such LLPs from the requirement of audit by exemption through notification by the Central Government. 

 

Whether any Annual Return would be required to be filed by an LLP?

Every LLP would be required to file with ROC, every year, an Annual Return, contents of which would be prescribed under rules.

 

Which documents will be available for public inspection in the office of Registrar?

The following documents/information will be available for inspection by any person:-

·                  Incorporation document,

·                  Names of partners and changes, if any, made therein,

·                  Statement of Account and Solvency

·                  Annual Return

The manner and fees for such inspection shall be prescribed in the rules.

 

How would compliance management (i.e. ensuring that LLPs file their documents with Registrars timely and otherwise comply with other procedural requirements under the Act) be ensured in the Act?

The provisions of the Act require LLPs to file the documents like Statement of Account and Solvency (SAS) and Annual Return (AR) and notices in respect of changes among partners etc. within the time specifically indicated in relevant provisions. The Act contains provisions for allowing LLPs to file such documents after their due dates on payment of additional fees. It has been provided that in case LLPs file relevant documents after their due dates with additional fees upto 300 days, no action for prosecution will be taken against them. In case there is delay of 300 days or more, the LLPs will be required to pay normal filing fees, additional fee and shall also be liable to be prosecuted. 

The Act also contains provisions for compounding of offences which are punishable with fine only.

 

PENAL PROVISIONS

 

 

The offences can be punished either (i) through payment of fine or (ii) through payment of fine as well as imprisonment of the offender. The Judicial Magistrate of the first class, or, as the case may be, the Metropolitan Magistrate shall have jurisdiction to try offences under the LLP Act.

Though most of the offences in the Act provide for punishment by way of charging fine, imprisonment has been provided for in respect of violations relating to

(i) making by any person a false statement at the time of incorporation of LLP (ii) carrying on business of LLP with intent to defraud or for any fraudulent purposes and (iii) making, knowingly, false statements or omitting any material fact, in any return, documents etc under the Act. The offences which are punishable with fine only can be compounded by the Central Government, by collecting a sum not exceeding the amount of maximum fine prescribed for the offence.

Further, for defaults/non-compliance on procedural matters such as time limits for filing requirements provisions have been made for charging default fees (on daily basis) in a non-discretionary manner.

 

CONVERSION PROVISIONS

Limited Liability Partnership Act, 2008 provides for conversion of partnership firm, private limited company and unlisted public limited company into an LLP but all such provisions are not made effective till date.  Only new LLP’s can be formed from 1^st April 2009. 

 

Further, provision to convert a private limited company or an unlisted public limited company may be enabled by amending the Companies Act, 1956 by providing a provision for the same.

 

Secretarial practice to form Limited Liability Partnership (LLP) in India

Steps to form an LLP

 

1. Every name application shall be in Form 1 and be accompanied by fee as mentioned in Annexure ‘A’ and the Registrar shall inform to the applicant for reservation or non reservation of the changed name or the name with which the proposed LLP is to be registered ordinarily within 7 days of the receipt of application.

 

2. Where the Registrar informs applicant about reservation of name with which the LLP is to be registered or changed name, as the case may be, such name shall be available for reservation for a period of 3 months from the date of intimation by the Registrar. 

 

3. Enter the details of 2 proposed Designated Partners and 1 of whom should be resident of India.

 

“The Resident of India” means a person who has stayed in India not less than 182 days during immediately preceding 1 year.

 

“Designated partner” may be individual, LLP, company, LLP incorporated outside India(LIOI), company incorporated outside India (CIOI).

 

4. Enter the DPIN (Designated Partner Identification Number), if any or Income Tax PAN or Passport No. of the applicant in Form 1 for reservation of name.  Hence, one can reserve the name for LLP even before obtaining DPIN also.

 

5. How to Obtain Designated Partners Identification Number (DPIN)

 

·        All designated partners of the proposed LLP shall obtain “Designated Partner Identification Number (DPIN)” by filing an application individually online in Form -7 along with Rs. 100/-.

·        Take the print out of the application form, affix a latest passport size photograph and get it attested/certified for submission physically along with documentary evidences for proof of identify and proof of residence with the Registrar LLP.

·        The provisional DPIN will be valid for 60 days from the date on which it was generated.

·        Deliver the printed and signed application form, along with the prescribed documents by hand/courier/registered post to the Office of Registrar, Ministry of Corporate Affairs,  3^rd Floor, “Paryavaran Bhawan”, CGO Complex,

Lodhi Road, New Delhi

-110003.

6. LLP to intimate your DPIN to Registrar - After the designated partner has intimated the DPIN allotted to the LLP, the LLP is then required to intimate the DPINs of its designated partner to Registrar the in Form 4.

7. Then, one can proceed to file Incorporation document and statement in form 2 for formation of LLP, as pre-certified by a professional.

·        On submission of complete documents the Registrar after satisfying himself about compliance with relevant provisions of the LLP Act will register the LLP, maximum within 14 days of filing of Form-2 and will issue a certificate of incorporation in Form-16.

·        Form 3 (Information with regard to LLP agreement and changes, if any made therein) and Form-4 (Notice of Appointment of Partner/Designate Partner, his consent etc.) may be filed with the prescribed fee simultaneously at the time of filing Form-2 or within 30 days of the date of incorporation or within 30 days of such subsequent changes.

 

To understand the LLP Act, 2008, LLP Rules, 2009, LLP Forms, Statutory Fees or Professional service to form an Limited Liability Partnership (LLP), kindly visit What Professionals should know about Limited Liability Partnership (LLP) law in India as on 1st April 2009

 

 

No more triplicate or duplicate, the effect of eforms in Companies Act, 1956

The Ministry of Corporate Affairs (MCA) has made e-filing mandatory for most of the aspects in the Companies Act.  As a result of which there is no more meaning to the words duplicate or triplicate copies to be filed of a particular document as its made online.

 

Hence, MCA vide notification G.S.R. 70(E) dated 3.2.2009 has amended sections 220, 303 & 594 of Companies Act, 1956 by substituting the word COPY instead of triplicate or duplicate in relevant places.

 

Click here for the details of notification G.S.R 70 (E) - Modifications in section 220, 303 and 594 of Companies Act, 1956.

Schedule VI Horizontal Form of Balance Sheet under Companies Act in 6th Column....& AS 11

Yes, MCA vide Notification No. GSR 226(E) dated 31.03.2009 has made the following amendments in Schedule VI of Companies Act, 1956.

 

The following Explanation 1 & Explanation 2 as given in the Second Paragraph of the last column (6th Column) of A. Horizontal Form of Balance Sheet under Schedule VI of Companies, 1956 shall be omitted with effect from 31st March 2009.  For details, click Notification No. GSR 226(E) dated 31.03.2009

 

Explanation 1: This paragraph shall apply in relation to all balance-sheets that may be made out as at the 6th day of June,1966, or any day thereafter and where, at the date of issue of the notification of the Government of India, in the Ministry of Industrial Development and Company Affairs (Department of Company Affairs), G.S.R. No. 129, dated the 3rd day of January, 1968, any balance sheet, in relation, to which this paragraph applies, has already been made out and laid before the company in Annual General Meeting, the adjustment referred to in this paragraph may be made in the first balance-sheet made out after the issue of the said notification.

 

Explanation 2.—In this paragraph, unless the context otherwise requires, the expressions "rate of exchange", "foreign currency" and "Indian currency" shall have the meanings respectively assigned to them under sub-section (1) of section 43A of the Income-tax Act, 1961 (43 of 1961), and Explanation 2 and Explanation 3 of the said sub-section shall, as far as may be, apply in relation to the said paragraph as they apply to the said sub-section (1).

 

Further, The Companies (Accounting Standard) Amendment Rules, 2009 has amended Accounting Standard 11 (AS 11) on the effects of changes in Foreign Exchange Rates by including a provision no. 46 after 45.  The details of which can be accessed from Notification No. GSR 225(E) dated 31.03.2009

All PAN details online & you can verify it too now, keep filing

Thanks Ms. Monica Bhardwaj of CS Mysore 

Dear Professionals,

 

To enable eligible Entities verify Permanent Account Numbers (PANs), Income Tax Department (ITD) has authorized National Securities Depository Limited (NSDL) to launch an online PAN verification service for verification of PANs by authorized entities.

Entities who can avail of this facility:

• Government Agencies (Central/State)
• Reserve Bank of India
• Banks
• Depositories
• Depository Participants
• Mutual Funds
• Companies (Required to furnish Annual Information Return)
• Credit card Companies / Institutions
• Any other entity required to furnish Annual Information Return
• Stock Exchanges
• Companies and Government deductor (Required to file TDS/TCS return)

Service

This service has three modes of verification:
(1) Screen based verification
(2) File based verification
(3) Software (API) Based Verification

It would not be possible to mail you all the details since they are very exhaustive.

You will be required to visit the following links to get the exact details viz.
1. For Charges:
http://www.tin-nsdl.com/onlinepancharges.asp

2. For Pre-Requisites:
http://www.tin-nsdl.com/onlinepanprereq.asp

3. For Registration:
http://www.tin-nsdl.com/onlinepanreg.asp

4. For Registration Status Tracking
http://www.tin-nsdl.com/onlinepanregstatus.asp

5. For Authorisation:
http://www.tin-nsdl.com/onlinepanauth.asp

6. For Uploading Procedure:
http://www.tin-nsdl.com/onlinepanupproc.asp

All this is links are on the left panel of the below webpage: 
http://www.tin-nsdl.com/onlinepanintro.asp

Enjoy filing....

Swipe freely your Debit & ATM cards without any second thought now…

<>Customer charges for use of ATMs for cash withdrawal and balance enquiry RBI/2007-2008/260 DPSS No.1405 / 02.10.02 / 2007-2008 dated 10th March 2009 </> Sr.No. Service Charges (i) For use of own ATMs for any purpose Free (with immediate effect) (2) For use of other bank ATMs for balance enquiries Free (with immediate effect) (3) For use of other bank ATMs for cash withdrawals Free - with effect from April 1, 2009. For the services at (1) and (2) above, the customer will not be levied any charge under any other head and the service will be totally free. The service charges for the following types of cash withdrawal transactions may be determined by the banks themselves: (a) cash withdrawal with the use of credit cards (b) cash withdrawal in an ATM located abroad. Read the RBI circular in 83421.pdf

FII’s rush with your debt request to SEBI tonight when clock ticks 23:59 PM IST

Yes, as you are aware the Government of India reviewed the External Commercial Borrowing policy and increased the cumulative debt investment limit by USD 9 billion (from USD 6 billion to USD 15 billion) for FII investments in Corporate Debt.  Click here for the amendment.

1. As per SEBI circular No. IMD/FII & C/37/2009 dated February 06, 2009 USD 8 billion shall be allocated to the FIIs/ sub-accounts in an open bidding platform.
2. The remaining limit for investment in corporate debt shall be allocated among the FIIs/sub-accounts on a ‘first come first served’ basis in terms of SEBI circular dated January 31, 2008, subject to a ceiling of Rs.249 cr. per registered entity.
3. The debt requests in this regard shall be forwarded to the dedicated email id fii_debtrequests@sebi.gov.in . The window for first come first served process shall open at 23:59 PM IST, March 17, 2009. Time period for utilization of the allocated debt limit through first come first served shall be 11 working days from the date of the allocation.

Find more details of this circular no. IMD/FII & C/38/2009 dated March 13, 2009 in http://www.sebi.gov.in/circulars/2009/fii382009.html

Now Buy Back FCCB till 31st December 2009

1. Attention of Authorized Dealer Category - I (AD Category - I) banks is invited to the A. P. (DIR Series) Circular No.39 dated December 08, 2008 on the captioned subject. In terms of Para 7 of the above circular, the entire procedure of buyback should be completed by the Indian Companies by March 31, 2009.

2. It has been decided to extend the date for completing the entire procedure for buyback of FCCBs from March 31, 2009 to December 31, 2009. Accordingly, the entire procedure of buyback should be completed by December 31, 2009.

3. All the other terms and conditions of buyback / prepayment of FCCBs as mentioned in A. P. (DIR Series) Circular No.39 dated December 08, 2008, shall remain unchanged.

For the status before this amendment, kindly click Prepayment of FCCB.

Click here for the said amendment RBI/2008-09/411 A. P. (DIR Series) Circular No. 58 dated 13th March 2009.

SEBI guidelines for Exit option to Regional Stock Exchanges

RSE means Recognised Stock Exchange u/s. 4 of SCRA as Regional Stock Exchange concept is almost extinct.

For - Regional Stock Exchanges (RSEs) whose recognition is withdrawn and/or renewal of recognition is refused by SEBI and RSEs who may want to surrender their recognition

1. The brokers/trading members of such de-recognised stock exchanges shall be liable to pay SEBI registration fees as per Schedule III of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992 till the date of such de-recognition. Dues of the brokers to SEBI shall be recovered by the exchange out of the brokers’ deposits / capital / share of sale proceeds / winding up proceeds / dividend payable, etc. available with the exchange and transferred to SEBI.
2. In case the stock exchange, after de-recognition, continues as a corporate entity under the Companies Act, 1956, it shall not use the expression ‘stock exchange’ or any variant in its name or in its subsidiaries name so as to avoid any representation of any present or past affiliation with the stock exchange.
3. The companies which are listed in such de-recognised RSEs and also listed in any other stock exchange(s) may continue to remain listed in the other stock exchange(s). In case of companies exclusively listed on those de-recognised stock exchanges, it shall be mandatory for such companies to either seek listing at other stock exchanges or provide for exit option to the shareholders as per SEBI Delisting Guidelines / Regulations after taking shareholders’ approval for the same, within a time frame, to be specified by SEBI, failing which the companies shall stand delisted through operation of law.

Find full details in SEBI Circular MRD/DoP/SE/Cir- 36 /2008 dated 29.12.2008

CS, CA & CWA can certify under Consortium lending of banks is clarified with revised formats

Lending under Consortium Arrangement / Multiple Banking Arrangements

1. Please refer to  circular RBI/2008-09/354/UBD.PCB.No.36/13.05.000/2008-09 dated January 21, 2009 on the captioned subject.
2. In terms of Paragraph 2(iii) of the above circular, in order to strengthen the information sharing system among banks in respect of the borrowers enjoying credit facilities from multiple banks, the banks are required to obtain regular certification by a professional, preferably a Company Secretary, regarding compliance of various statutory prescriptions that are in vogue, as per specimen given in Annex III to the above circular.

3. In this context it is clarified that in addition to Company Secretaries, banks can also accept the certification by Chartered Accountants & Cost Accountants. Further, on the basis of suggestions received from Indian Banks Association, Annex III – Part I & Part II (copy enclosed)has also been modified. 

Find the said RBI/2008-2009/382 UBD.PCB.No. 49  /13.05.000/2008-09  in CN49LUCAM.pdf

[MSMED]Small Scale Industry definition only under MSMED Act for IDRA too

Small Scale & Ancillary Industry becomes Small or Medium Enterprise even for the purpose of IDRA.

Rescinding of Notification No.857(E) dated 10 December, 1997

The above said notification lists the factors on the basis of which an industrial undertaking shall be regarded as a small scale or as an ancillary industrial undertaking for the purposes of Industries (Development and Regulation) Act, 1951 (IDRA).  It is the impact of Micro, Small & Medium Enterprises Development Act, 2006, the said notification was rescinded.  Read about MSMED Act in http://yehseeyes.blogspot.com/2007/11/micro-small-and-medium-enterprises.html

The central Government considers it necessary with a view to ascertain which ancillary and small scale industrial undertakings need supportive measures, exemption or other favourable treatment under the Industries (Development and Regulation) Act, 1951 (65 of 1951) herein after referred to as the said Act) to enable them to maintain their viability and strength so as to be effective in –

1. promoting in a harmonious manner the industrial economy of the country and easing the problem of unemployment, and

2. securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good.

& for which purpose has rescinded the above said notification vide Notification SO. 563(E) dated 27th February 2009.

Consequently even the format of Industrial Entrepreneurial Memorandum (IEM) got amended, which now reads instead for IDRA – enterprise for goods pertaining to Schedule-I industry or employing plant & machinery as value addition to final product with distinct name/character/use. Find the said amendment in http://www.laghu-udyog.com/publications/circulars/GazNot/SO-199(E).pdf

Keep tracking Industries amendment using Industries DIPP updates

[Press Note 2009]FDI, Downstream Invesment, clarification & types of companies

Downstream investment refers to either fresh investment or acquisition by foreign-owned Indian holding company in a project of different activity which may or may not belong to the same group.

Click here for Press Note 2 of 2009 series regarding "Guidelines for calculation of total foreign investment i.e. direct and indirect foreign investment, including downstream investment in any or all Indian companies". 'Downstream investment' means indirect foreign investment by one Indian company into another Indian company by way of subscription or acquisition in terms of Press Note 2 of 2009. Para 5.2 of the said Press Note provides the guidelines for calculation of indirect foreign investment with conditions specified in para 5.5. It has definition of terms "when an Indian Company is owned and controlled by resident Indian citizens" OR "when an Indian company is owned or controlled by non-resident entities" OR "foreign investment". Download Press Note 2 from http://siadipp.nic.in/policy/changes/pn2_2009.pdf

Click here for Press Note 3 of 2009 series regarding "Guidelines for transfer of ownership or control of Indian companies in sectors with caps from resident Indian citizens to non-resident entities" with definition of terms "owned by resident Indian citizens & Indian companies" OR "controlled by resident Indian citizens or Indian companies" OR "owned by non-resident entities" OR "controlled by non-resident entities". It is clarified that these guidelines will not apply for sectors/activities where there are no foreign investment caps, that is, 100% foreign investment is permitted under the automatic route. Download Press Note 2 from http://siadipp.nic.in/policy/changes/pn3_2009.pdf

Click here for Press Note 4 of 2009 series regarding "Clarificatory guidelines on downstream investment by Indian Companies". The 'guiding principle' is that downstream investment by companies 'owned' or 'controlled' by non resident entities would require to follow the same norms as a direct foreign investment i.e. only as much can be done by way of indirect foreign investment through downstream investment in terms of Press Note 2 (2009 series) as can be done through direct foreign investment and what can be done directly can be done indirectly under same norms. It has definitions of "operating company" OR "investing company". It can be downloaded from http://siadipp.nic.in/policy/changes/pn4_2009.pdf

The classification for the purpose of Foreign Direct Investment (FDI) include:
Only Operating Companies - to comply with respective sectoral conditions & caps for foreign investment.
Operating-cum-investing companies - to comply with respective sectoral conditions & caps for foreign investment and the subject Indian companies into which downstream investments are made by such companies should also comply with its respective sectoral conditions & caps.
Investing companies - require prior approval of Government or FIPB for foreign investment and the subject Indian companies into which downstream investments are made by such companies should also comply with its respective sectoral conditions & caps.
Companies with no operations or downstream investments - require approval of Government or FIPB for foreign investment and when such company commences business or makes downstream investment it will have to comply with its respective sectoral conditions & caps.

Downstream investment by OTHER THAN 'only operating companies' is subject to following conditions:

1. To notify SIA, DIPP and FIPB of its downstream investment within 30 days of such investment even if equity shares/CCPS/CCD have not been allotted;
2. If by way of induction of foreign equity in an existing Indian Company to be duly supported by a resolution of the Board of Directors supporting the said induction as also a shareholders Agreement if any;
3. Issue/transfer/pricing/valuation of shares shall be in accordance with applicable SEBI/RBI guidelines;
4. Investing companies would have to bring in requisite funds from abroad and not leverage funds (not raising debts) from domestic market for such investments.

Thats it about Press Notes 2, 3 & 4 of 2009. TO keep track of Press Notes, click http://yehseeyes.blogspot.com/search/label/Industries%20DIPP

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