In view of reports of misuse of multiple layers of companies, where companies create shell companies for diversion of funds or money laundering, MCA vide its notification dated 20 September 2017 has notified the Companies (Restriction on the number of layers) Rules, 2017.
- The restriction under sub-section (1) of section 186 on investment through not more than two layers of investment companies continue to apply and such investment companies are included in the count for the purposes of layer requirements.
- It allows a holding company to have up to two layers of subsidiaries (excluding one layer of wholly owned subsidiary).
- It does not restrict a holding company from acquiring a subsidiary incorporated in a country outside India if such subsidiary has subsidiaries in compliances with the laws of such country.
- The rule does not apply to Banking Company, Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India, Insurance Company, a Government company.
- Every company, which has number of layers of subsidiaries in excess of the layers shall file, with the Registrar of Companies (the RoC) a return in Form CRL-1 disclosing the details specified therein, within a period of one hundred and fifty days from the date of this notification and cannot add any additional layer of subsidiaries.
- If any company contravenes any provision of these rules the company and every officer of the company who is in default shall be punishable with fine which may extend to ten thousand rupees and where the contravention is a continuing one, with a further fine which may extend to one thousand rupees for every day after the first during which such contravention continues.
The Union Cabinet has approved the introduction of this Bill in the Parliament. The main purpose of this Bill is to increase the ceiling of Gratuity Payments for private sector employees, in line with the ceiling for Government employees, which currently stands at INR 20,00,000/-. The change for Government employees was initially brought about via the revision to the Central Civil Services (Pension) Rules, 1972, in 2016.
On 10 August 2017, the Code of Wages Bill, 2017, was introduced before the Lok Sabha. This is part of the initiative to rationalise the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976 into one consolidated and updated legislation. The Bill proposes the following:
- At present, the provisions do not cover a substantial number of workers, as the applicability of the Acts is restricted to the Scheduled Employments / Establishments. However, the new Code on Wages will ensure minimum wages to one and all and timely payment of wages to all employees irrespective of the sector of employment without any wage ceiling;
- A statutory National Minimum Wage for different geographical areas. This will ensure that no State Government fixes the minimum wage below the National Minimum Wages for that particular area as notified by the Central Government.
- The payment of wages through cheque or digital/ electronic mode, to promote digitization and extend wage and social security to the worker. Provision of an Appellate Authority has also been made between the Claim Authority and the Judicial Forum which will lead to speedy, cheaper and efficient redressal of grievances and settlement of claims.
- The Central Government, before fixing the national minimum wage, may obtain the advice of the Central Advisory Board, having representatives from employers and employees. Thus, the Code provides for a consultative mechanism before determining the national minimum wage.
The SEBI vide its circular no. IMD/FPIC/CIR/P/2017/113 dated 4 October 2017 has revised Foreign Portfolio Investors (FPI) debt limits for investment in Government securities for the October-December 2017 quarter as below:
- FPI investment limit in Central Government securities has been raised to Rs. 189,700 Crore for boosting inflows of foreign funds into Indian capital markets.
- Limit for Long Term FPI (Sovereign Wealth Funds (SWFs), Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks) in Central Government securities is revised to Rs. 60,300 Crore.
- The limit for investment by all FPIs in State Development Loans (SDL) has been enhanced as follows:
- SDL-General shall be enhanced to Rs. 30,000 Crore.
- SDL-Long Term shall be enhanced to Rs. 9,300 Crore.
The move is in line with RBI revising the limit for investment by FPIs in government securities. Source:http://www.sebi.gov.in/legal/circulars/oct-2017/investments-by-fpis-in-government-securities_36165.html
SEBI vide its circular dated 4 August 2017 had directed listed companies to disclose details on defaults of loan payment from banks and other financial institutions to the public within one working day.
Now, SEBI vide its circular dated 29 September 2017 has deferred the implementation of its rule announced on 4 August 2017 which mandated listed firms to disclose loan defaults to stock exchanges starting 1 October 2017.
The SEBI vide its notification dated 14 August 2017, has amended Regulation 10 (General Exemptions from making Open Offer) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2017. This regulation shall not be applicable in case of acquisition of shares as lender pursuant to conversion of debt as part of debt restructuring scheme or purchase from the lenders at the time of lenders selling their shareholding or enforcing change in ownership in favour of such person(s), pursuant to a debt restructuring scheme, if the following conditions are fulfilled:
- While determining the purchase price for conversion of debt shall be as specified by the Reserve Bank of India.
- the purchase price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder. Till the relevant Rules for registered valuer comes into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years;
- The securities allotted shall be a lock-in for three years from the date of purchase.
- a special resolution has been passed by shareholders of the issuer before the purchase
- applicable provisions of the Companies Act, 2013 are complied with.
The SEBI vide its notification dated 14 August 2017, has amended Regulation 70 of the SEBI (Issue of capital and disclosure requirements) Regulations, 2009. In case of Conversion of debt into equity under strategic debt restructuring scheme, the pricing guidelines have been made in line with the Companies act 2013. With this amendment, the said regulation shall not be applicable in case of conversion of their debt, as part of a debt restructuring scheme, if the following conditions are satisfied:
- The listed entities, while determining the conversion price for conversion of debt shall be as specified by the Reserve Bank of India and the shall be in compliance with the applicable provisions of the Companies Act, 2013.
- the conversion price shall be certified by two independent qualified valuers, and for this purpose ‘valuer’ shall be a person who is registered under section 247 of the Companies Act, 2013 and the relevant Rules framed thereunder. Till the relevant Rules for registered valuer comes into force, valuer shall mean an independent merchant banker registered with the Board or an independent chartered accountant in practice having a minimum experience of ten years;
- The securities allotted shall be lock in for one year from the date of allotment. Prior to this amendment, lock in would start from the date of trading approval.