CORPORATE LAW UPDATES
CIRCULAR NO. SEBI/HO/IMD/ FPI&C/CIR/P/2022/57, DATED 29-04-2022
SEBI modifies guidelines for FPIs, Designated Depository Participants and ‘Eligible Foreign Investors’
Editorial Note : SEBI vide SEBI Circular No. IMD/FPI&C/- CIR/P/2019/124 dated 05-11-2019 issued operational guidelines for FPI, DDP, and FI whereby the designated depository participant is required to grant certificate of registration, bearing the registration number generated by NSDL in a centralised manner. SEBI has decided to modify the operational guidelines. Now, the designated depository participant is required to grant the certificate of registration, bearing the registration number generated by SEBI.
CIRCULAR NO. SEBI/HO/M- RD1/MRD1_DTCS/P/- CIR/2022/58, DATED 02-05-2022
SEBI revises audit framework of MIIs; requires reporting of major non-compliances in system and network audits
Editorial Note : The SEBI vide Circular dated 07.01.2020, mandated annual system audit by an independent auditor for Market Infrastructure Institutions (MIIs). The SEBI has revised existing system audit framework so as to cover the network audit under the ambit of the revised system. Now, MIIs are required to conduct system and network audit. MIIs are also required to submit information w.r.t. exceptional major Non-Compliances (NCs)/ minor NCs observed in System and Network audit as per specified format.
NOTIFICATION NO. G.S.R 335(E), DATED 04-05-2022
MCA tweaks Form SH.4 to include a declaration from transferee that no Govt. approval is required under FEMA (NDI) rules
Editorial Note : The MCA has notified the Companies (Share Capital and Debentures) Amendment Rules, 2022 whereby ‘Securities Transfer Form’ i.e. Form SH-4 has been revised to include a declaration from the transferee that “no Govt. approval is required under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares or where the transferee is required to obtain the Govt. approval prior to the transfer of shares, the same has been obtained and enclosed here with the form.”
LETTER REF. NO. SEBI/HO/CFD/ DCR1/MB/OW/P/2021/29815/1, DATED 25-10-2021
Transactions of the amalgamation scheme will be exempt from making open offers under SEBI (SAST) Regulations, 2011; SEBI
Editorial Note : SEBI through its informal guidance clarified that the transactions forming part of the amalgamation scheme will be exempt from making open offer under regulation 3 and 4 of SEBI (Substantial Acquisition Of Shares And Takeovers) Regulations, 2011 provided the amalgamation scheme is approved by NCLT.
NOTIFICATION NO. G.S.R 338(E), DATED 05-05-2022
Now body corporates from border sharing countries can’t invest in privately placed securities without Govt.’s nod
Editorial Note : The MCA has notified the Companies (Prospectus and Allotment of Securities)
Amendment Rules, 2022. As per amended norms, a company shall not make any offer or invitation of securities to a body corporate incorporated in, or a national of, a country sharing a land border with India unless prior approval of Govt. has been taken by the body corporate under the FEM (Non-debt Instruments) Rules, 2019. The same is required to be attached with private placement offer cum application letter (PAS-4).
GENERAL CIRCULAR NO. 2/2022, DATED 05-05-2022
Extension of timelines to hold AGM via VC/OAVM shouldn’t be construed as an extension of time of AGM: MCA clarifies
Editorial Note : The MCA vide. its earlier General Circular permitted companies whose AGMs are falling in the year 2022, to conduct their AGMs on or before December 31, 2022, through VC or OAVMs. Now, the MCA has clarified that this circular shall not be read as allowing any extension of time for holding of AGMs by the companies under the Companies Act, 2013. Further, the companies which fail in holding AGM within the specified time limit shall be liable for legal action under the Companies Act.
GENERAL CIRCULAR NO. 03/2022, DATED 05-05-2022
MCA further extends the timelines to conduct the EGMs via audio visual means up to Dec 31, 2022 Editorial Note : MCA through its circular dated 05th May, 2022 has permitted companies to conduct their Extra Ordinary General Meetings (EGMs) through VC or other Audio Video Means (OAVM) or to transact items through postal ballot up to December 31, 2022, in accordance with the framework as provided in earlier Circulars issued by the MCA. Earlier the MCA had permitted companies to conduct EGMs through VC till June 30, 2022.
NOTIFICATION NO. S.O. 2099(E), DATED 05-05-2022
Govt. designates the Court of Additional Judicial Commissioner, Ranchi as the ‘Special Court’ under Cos Act, 2013
Editorial Note : Central Government has designated the Court of Additional Judicial Commissioner, Ranchi in the State ofJharkhandastheSpecialCourt under Section 435 of the Companies Act, 2013 with the objective of providing a speedy trial of offences punishable with imprisonment of 2 years or more.
NOTIFICATIONNO. SEBI/LAD-NRO/GN/2022/83, DATED 04-05-2022
SEBI specifies separate non-refundable filing fees be paid by InvIT for initial offer and right issues
Editorial Note : SEBI has notified the SEBI (InvITs) (Amendment) Regulations, 2022. Now InvITs are required to pay non-refundable filing fees of 0.1% in case of initial offer and 0.05% in case of right issue of the total issue size including green shoe option at the time of filing of draft placement memorandum or offer letter w.r.t private placement. Earlier, the InvIT was required to pay non-refundable filing fees of 0.1% of the total issue size irrespective of the type of issue.
PRESS RELEASE NO. 15/2022, DATED 06-05-2022
SEBI constitutes advisory committee on Environmental, Social and Governance (ESG) matters
Editorial Note : The SEBI has constituted a committee for advising on ESG-related matters in the securities market. The terms of reference of the Committeeincludesenhancementsin business responsibility and sustainability report (BRSR), disclosures in the rationale by ESG rating providers on what and how qualitative factors were factored in the ESG ratings / observations, examining whether ESG funds need to have prudential norms, long term plan to prescribe ESG disclosures for all the Mutual Fund schemes etc
CIRCULAR NO. SEBI/HO/ CFD/SSEP/CIR/P/2022/66, DATED 19-05-2022
SEBI streamlines the rights issue process
Editorial Note : SEBI vide. Circular dated January 22, 2020, had stipulated procedures streamlining Rights Issue process. Based on market representation that there should be a minimum gap of 3 working days considering 2 days for settlement and 1 additional day for investor to make application, the SEBI has notified that trading in Right Entitlement shall commence on date of opening of issue and shall be closed at least 3 days prior to closure of rights issue. An earlier the timeline was of 4 days.
NOTIFICATION NO. G.S.R 363(E), DATED 20-05-2022
MCA replaces the physical form INC-9 for filing of a declaration by subscribers and first directors with E-form
Editorial Note : The MCA has notified the Companies (Incorporation) Second Amendment Rules, 2022. As per the amended norms, MCA has replaced physical form with the E-form INC 9 with respect to the filing of declaration by the subscribers and first directors to memorandum of
company to the effect that they are not guilty of any offence and has made all the compliances with respect to filing of the documents with the Registrar at the time of incorporation of company.
CIRCULAR NO. SEBI/HO/M- RD1/MRD1_DTCS/P/- CIR/2022/68, DATED 20-05-2022
SEBI modifies ‘Cyber Security and Cyber Resilience Framework’ for Stock Exchanges, Clearing Corporations & Depositories
Editorial Note : SEBI has modified the framework prescribed for Cyber Security and Cyber Resilience for stock exchanges, clearing corporations, and depositories. As per the modified framework, more detailed norms are provided for the classification/designation of critical assets. Further, the report of the Vulnerability Assessment and Penetration Testing (VAPT) and gaps found therein should also be reported to SEBI. The circular is made effective immediately.
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