The MCA vide its notification dated 13 July 2017 has amended the Companies (Meetings of Board and its Powers) Rules, 2014. With this amendment, the MCA has amended the provisions relating to:
- Intimation of a Director to participate by way of Video Conference where such a facility has been provided by the Company: (1) Any director who intends to participate in the meeting through electronic mode may intimate about such participation at the beginning of the calendar year and such declaration shall be valid for one year: (2) Provided that such declaration shall not debar him from participation in the meeting in person in which case he shall intimate the company sufficiently in advance of his intention to participate in person
- Preservation of draft Minutes circulated to the Board of Director: The draft minutes so recorded shall be preserved by the company till the confirmation of the draft minutes
- Committee of the Board: The Board of directors of every listed company and a company covered under rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 shall constitute an ‘Audit Committee’ and a ‘Nomination and Remuneration Committee of the Board.
The Central Board of Direct Taxes vide Notification No. 61/2017 dated 12 July 2017 has notified final rules for valuation of unquoted equity shares for the purposes of Sec. 56(2)(x) and Sec. 50CA.
As per Erstwhile Rule 11UA of Income Tax Rules 1962, the Fair Market Value (FMV) of unquoted equity shares was calculated on the basis of book value of all assets as reduced the liabilities of the company on the valuation date. Pursuant to this notification the revised calculation of FMV is as below:
FMV = (A + B + C + D – L) × (PV)/(PE)
A = Book value of all assets (other than assets in B, C & D below) in the balance sheet, as reduced by:
- amount of income-tax paid less amount of income-tax refund claimed, and
- amount shown as asset including unamortized amount of deferred expenditure which does not represent value of any asset
B = Price which the jewellery and artistic work would fetch if sold in the open market on the basis of valuation report obtained from a registered valuer
C = FMV of shares and securities as determined in the manner provided in this rule
D = Value adopted or assessed or assessable by any authority of the Government for the purpose of payment of stamp duty in respect of the immovable property
L= Book Value of liabilities shown in balance sheet, but not including the following amounts:
- paid-up capital in respect of equity shares
- amount set apart for payment of dividends on (preference/equity) shares where such dividends have not been declared before date of transfer at general body meeting of the company
- reserves and surplus, by whatever name called, even if the resulting figure is negative, other than those set apart towards depreciation.
- amount representing provision for taxation, other than amount of income-tax paid less amount of income-tax claimed as refund to the extent of excess over tax payable with
- amount representing provisions made for meeting liabilities (other than ascertained liabilities) and
- amount representing contingent liabilities other than arrears of dividends payable in respect of cumulative preference shares.
PE = Total amount of paid up equity share capital as shown in the balance-sheet
PV= Paid-up value of such equity shares
The Ministry of Electronics and Information Technology released a press brief on 31 July 2017, in order to inform the general public that in light of the growth of the digital economy and increased dependence on digital data, the Government has constituted a Committee of Experts to deliberate on the creation of a Data Protection Framework in India. The responsibilities of this Committee will include studying the various issues related to data protection in India, and making suggestions to the Central Government on a draft data protection bill, as soon as possible.
On 30 November 2016, the Telecom Regulatory Authority of India (“TRAI”) had released a Consultation Paper on “Issues Related to closure of Access Services”. This was released as a result of great inconvenience being caused to subscribers while accessing Access Services, which was in turn caused due to licensee (the service providers) failing to re-acquire spectrum post expiry, changing technology, or selling/trading their spectrum without informing the customers. On the basis of the comments received from the various stakeholders in response to the above-mentioned Consultation Paper, the TRAI has released the following recommendations:
- The inclusion of various time-lines to be followed by the DoT and the Licensee in the spectrum trading process. If the entire spectrum in all bands is being sold by a licensee, which will result in discontinuation of services, recommended timelines will remove uncertainties and facilitate the TSPs to give 60 days’ notice to DoT/TRAI and 30 days’ notice to its subscribers.
- If a UAS licensee decides to close down its wireless access services, which were being provided through the administratively assigned spectrum, it must surrender such spectrum immediately upon closure of wireless access services.
- In case of closure of access services through any technology in the entire service area or a part of it, the TSP should be mandated to give a 60 days’ notice to the Licensor and TRAI and 30 days’ notice to its effected subscribers.
The Central Government notified the Indian Accounting Standards (Ind AS) which are in-line with International Financial Reporting Standards (IFRS). Consequently, the Finance Act, 2017, has amended the provisions of section 115JB of the Income-tax Act, 1961 (‘the Act’) for Ind AS compliant companies w.e.f. 1 April 2017.
The Central Board of Direct Taxes (‘the Board ‘) has received representations from various stakeholders seeking clarifications on certain issues arising therefrom. The Committee after considering the representations has issued clarifications by way of FAQs. The FAQs may be accessed on the below link.
The Lok Sabha has passed the Companies (Amendment) Bill, 2017 on 27 July 2017.The Bill amends the Companies Act 2013 and the highlights are as follows:
Section 2(6)- Definition of ‘associate company’ and ‘Joint Venture’
- The Bill proposes amendment providing for change in explanation of the term ‘significant influence’. Significant influence is proposed to mean control of atleast 20% of the voting power or control of or participation in business decision under an agreement. Currently the Companies Act 2013 provides for control of at least 20% total share capital.
- The Bill further defines the term ‘Joint Venture’ to mean a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.
- The term Joint Ventureis used in the definition of Associate Company but the same is not defined in the Companies Act 2013.
Section 2(41)- Definition of ‘Financial year’
- The Bill proposes that associate company of a company incorporated outside India can also apply to the Tribunal for a different financial year.
Section 4- Memorandum of Association – Reservation of Name
- The Bill proposes that in case of incorporation, name reserved by the RoC shall be valid for 20 days from date of the approval or such other period as may be prescribed instead of 60 days from the date of application.
- In case of change in name by an existing company, name reserved by the RoC shall be valid for 60 days from the date of approval.
Section 42- Private placement
The entire section is proposed to be substituted, but major changes proposed are:
- Return of allotment has to be filed within 15 days instead of 30 days.
- Money received under the private placement shall not be utilized unless the return of allotment is filed with the ROC.
- Private Placement offer letter shall not contain any right of renunciation.
- For the delay in filing E-Form PAS 3- penalty for each default of one thousand rupees for each day during which such default continues but not exceeding twenty-five lakh rupees
Section 184- Disclosure of interest by directors
- The Bill proposes to omit the minimum penalty with respect to failure by directors to disclose interest.
- The Bill proposes to exempt body corporate where any director or two or more of them holds or hold not more than 2% of the paid-up share capital, from the applicability of the section 184.
Section 185- Loan to directors, etc.
- Under the Companies Act 2013, companies are not allowed to advance any loan to its directors or persons related to the Director. The Bill proposes to relax this restriction and allow companies to extend its Directors or related persons, after passing a special resolution.
- An additional clause has also been introduced to punish Directors who use loans against conditions under which it was extended.
Section 186- Loan and Investment by Company.
- Sub-section (1) of the principal act has been omitted. Thereby the bill proposes to omit the restrictions on the layers of investment Companies.
- The Bill also proposes to exclude employees from the ambit of this section.
- The Bill also proposes that the shareholders’ approval will not be required where a loan or guarantee is given or where a security has been provided by a company to its wholly owned subsidiary company or a joint venture company, or acquisition is made by a holding company, by way of subscription, purchase or otherwise of, the securities of its wholly owned subsidiary company.
Section 188- Related Party Transaction
- The bill proposes that the requirement related to the restriction on voting by relatives in the general meeting shall not apply to a company in which ninety per cent or more members in numbers are relatives of promoters or related parties.
- The Bill Also provides that non -ratification of transactions shall be voidable at the option of the Board or shareholders, as the case may be.
Section 195- Prohibition on Insider trading of securities
- The Bill proposes to remove the provisions related to this section.
- It shall be regulated only under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
On 31 July 2017, the TRAI released the above consultation paper in light of the exponential growth in the broadcasting sector in recent years, resulting in an increased need to ensure the ease of doing business to continue facilitating this growth. The consultation paper seeks to collect the stakeholders’ views on the following matters:
- Identifying procedural bottlenecks that affect the ease of doing business, and suggesting new and simplified rules, regulations and policies for the same;
- Removing entry barriers via transparent policies, thereby promoting competition;
- Facilitating innovation and technology adoption in the broadcasting sector, coupled with attracting more investments; and
- Promoting indigenous manufacturing of broadcasting equipment.