KREO CAPITAL PRIVATE LIMITED SEBI REGISTERED – CATEGORY I - MERCHANT BANKER
NEWSLETTER – TWENTY-FIFTH EDITION, 2020 KREOKREO CAPITAL CAPITAL NEWSLETTERNEWSLETTER - EDITIONTWENTY- FIFTH– JULY, EDITION 2018
Wednesday, 2nd September , 2020 “An investment in knowledge yields the best return.”
In the ever changing and dynamic Capital Market Environment, staying updated with the latest happenings is the need of the hour.
Keeping up to date with laws & notifications is time consuming and legislation itself is complex. However, it is of vital importance that businesses stay up to date on regulations in their sector to keep pace with best practices.
This is our series of knowledge sharing initiative towards sharing regulations and updates on corporate laws.
RBI
MINISTRY OF CAPITAL CORPORATE MARKETS AFFAIRS
Click on individual images for detailed coverage STARTUP INCOME INDIA TAX DEPARTMENT
GST SEBI COUNCIL
Additional section on Covid - 19 1 KREO CAPITAL NEWSLETTER - TWENTY-FIFTH EDITION
BROAD ECONOMIC HIGHLIGHTS
Global stocks, dollar rise with US economic data
Gold, silver futures trade lower on global cues
India-Japan-Australia supply chain in the works to counter China
Alibaba hits pause on its India investments
India may impose 10% safeguard duty on Single Mode Optical fibre imports
Artificial Intelligence could add $450-$500 billion to GDP by 2025
India’s economy faces worst quarterly slump ever after lockdown
Alibaba's Ant Group files for blockbuster Hong Kong, Shanghai dual listing
22 KREO CAPITAL NEWSLETTER - TWENTY-FIFTH EDITION
CAPITAL MARKETS
Kalyan Jewellers files DRHP for Rs 1,750 crore IPO
Reliance Retail buys Future Group's businesses for ₹24,713 crore
Airbnb files confidentially for IPO with travel rebounding
Equitas Small Finance Bank IPO to be launched once business normalcy is restored
Indiabulls Real Estate and Embassy Group sign definitive merger documentation
Reliance Industries arm acquires majority stake in Netmeds
Adani Group acquires 74 per cent stake in Mumbai International Airport
Eicher-Volvo VECV buys Volvo Buses for ₹100 crore
CCI approves Siemens’ acquisition of C&S Electric
23 KREO CAPITAL NEWSLETTER - TWENTY-FIFTH EDITION
SEBI
REPORTING OF MARGINS BY SEBI EXTENDS REGULATORY TRADING MEMBER (TM) AND MEASURES TAKEN TO CURB CLEARING MEMBER (CM) VOLATILITY TILL SEPTEMBER 24
Key Highlights Key Highlights • If TM / CM collects minimum 20% • The Securities and Exchange Board of upfront margin in lieu of VaR and ELM India(Sebi) on Wednesday said all from the client, then penalty for short- regulatory measures taken to curb collection /non-collection of margin volatility would be extended till shall not be Applicable. However, it is September 24. reiterated that Clearing Corporation shall continue to collect the upfront • On review of the COVID-19 pandemic margin from the TM /CM based on related situation, it has been decided VaR and ELM. that the regulatory measures introduced vide SEBI Press Release • The penalty provision for short- dated March 20, 2020 , shall continue collection/ non -collection of upfront to be in force till September 24, 2020 margin in cash segment shall be implemented with effect from • The regulator had put a cap on the September 01, 2020. bearish bets that foreign investors, mutual funds and proprietary desks • SEBI circular dated November 19, 2019 could take on index derivative is modified to the extent of the above. contracts without owning the All other provisions of the said circular underlying shares. Sebi also made it dated November 19, 2019 shall expensive for these big-ticket continue to remain applicable investors to take bullish bets beyond a limit, while restricting trading in stock futures and options.
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SEBI
HANDLING OF SCORES SEBI PROPOSES CHANGES IN COMPLAINTS FOR NON- MINIMUM PUBLIC SHAREHOLDING REDRESSAL OF GRIEVANCES REQUIREMENTS
Key Highlights Key Highlights
• In terms of SEBI circular • Sebi has proposed changes to the SEBI/HO/CFD/CMD/CIR/P/2020/12 minimum public shareholding dated 22 January, 2020, Stock requirements and enhanced Exchanges shall, having regard to the disclosures for companies emerging interest of investors and the out of the insolvency process. securities market, inter alia take • All listed companies are required to action against listed companies for maintain a minimum public non-compliance with the provisions shareholding of at least 25%. However, of the Listing Regulations and companies undergoing insolvency circulars/guidelines issued resolution under the Insolvency and thereunder, including failure to Bankruptcy Code(IBC) have been ensure expeditious redressal of granted certain relaxations from investor complaints under complying with this rule Regulation 13 of the Listing Regulations. • After the corporate insolvency resolution process(CIRP), companies • This circular lays down the may be mandated to achieve10% procedure for handling complaints public shareholding within six months by the stock exchanges as well as and 25% within three years from the standard operating procedure for date of breach of the norm, said Sebi actions to be taken against listed companies for failure to redress investor grievances.
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STARTUP INDIA
CHUNAUTI- NEXTGEN STARTUP DPIIT PREPARES BLUEPRINT FOR CHALLENGE CONTEST MAKING INDIA A MANUFACTURING HUB
Key Highlights Key Highlights
• Next Generation Incubation Scheme • The Department of Promotion of (NGIS) is STPI’s comprehensive Industry and Internal Trade (DPIIT) incubation scheme which has a vision has proposed short- and-long-term to drive the rise of India as a Software measures to turn India into a Product Nation so as to make India a manufacturing hub for 20 champion global player in development, sectors that it has identified. People production and supply of Innovative, in the know have told CNBC-TV18 Efficient and Secure Software Products that DPIIT has proposed incentives thus facilitating the growth across the for the textiles sector, measures for entire spectrum of ICT sector as Food Processing, and Ready to Eat envisioned in the National Policy on sectors as part of the overall push to Software Products (NPSP) – 2019. manufacturing which is part of the Modi government's call for • The challenge invites the Atmanirbhar Bharat. proposals/applications from Start-ups registered with DPIIT under start-up • The DPIIT has suggested incentives India programme are encouraged to for product diversification for the top participate in this programme. 40 apparel and home textile goods and top 10 technical textile goods • Last date to apply is 07th September which are traded globally. 2020 • It has also suggested reimbursement of 10 percent freight on board for 50 percent growth in turnover.
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STARTUP INDIA
THE MAKING OF BYJU’S–THE PAYTM KICK-STARTS THE WORLD’S MOST VALUABLE STOCKBROKING SERVICES EDTECH STARTUP
Key Highlights Key Highlights
• In a meteoric rise, Byju’s valuation • Paytm Money has entered jumped from USD 1 billion to USD 10.5 stockbroking, primarily targeting billion in mere two years. To date, it those who are new to the field, in a has raised about USD 1.5 billion from challenge to established rivals such as global investment firms like Sequoia Zerodha, and startups such as Groww Capital, Lightspeed Venture Partners, and Upstox. Qatar Investment Authority, Tiger • With a full-scale launch expected in Global, General Atlantic, Naspers, September, Paytm Money expects to Tencent, and Bond, among others. reach 100,000 daily trades within six • To achieve its grand vision, Byju’s has months and achieve 250,000 raised USD 400 million this year alone customers and is reportedly in talks with DST • Paytm Money claims to have more Global for an additional USD 400 than 6 million users. In its million. stockbroking service, cash delivery • While Byju’s has a long-term global trades are free and intraday trade expansion plan, it’s currently commissions are around ₹10 busy acquiring its peers in India to • For stock broking, Paytm Money expand its market share in the allows users to discover and set price crowded edtech space. alerts for as many as 50 stocks and get notified when the price is reached.
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RBI
SUBMISSION OF RETURNS UNDER SYSTEM-BASED ASSET SECTION 31 OF THE BANKING CLASSIFICATION – UCBS REGULATION ACT– EXTENSION
Key Highlights Key Highlights
• The primary (urban) co-operative • UCBs having total assets of ₹2000 banks (UCBs) and also as UCBs may crore or above as on March 31, 2020 be facing difficulties in submission of shall implement system-based asset the returns due to the ongoing classification with effect from June COVID-19 pandemic, it is considered 30, 2021. necessary to allow more time for submission of the aforesaid return • UCBs having total assets of ₹1000 for the financial year ended on crore or above but less than ₹2000 March 31, 2020. crore as on March 31, 2020 and having self-assessed themselves as • Reserve Bank hereby extends the being under Level III or Level IV in said period of three months for the terms of the circular furnishing of the returns under DoS.CO/CSITE/BC.4083/31.01.052/2 Section 31 of the Act for the financial 019-20 dated December 31, 2019 on year ended on March 31, 2020 by a Comprehensive Cyber Security further period of three months. Framework for UCBs shall implement Accordingly, all UCBs shall ensure system-based asset classification submission of the aforesaid returns with effect from September 30, to Reserve Bank on or before 2021. September 30, 2020.
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MINISTRY OF CORPORATE AFFAIRS
CLARIFICATION ON EXTENSION OF COMPANIES (CORPORATE SOCIAL AGM FOR FINANCIAL YEAR AS AT RESPONSIBILITY POLICY) RULES, 31.03.2020 2014 - AMENDMENT
Key Highlights Key Highlights • The companies which are unable to • In the Companies (Corporate Social hold their AGM for the financial year Responsibility Policy) Rules, 2014 the ended on 31.03.2020, despite following proviso shall be inserted,: availing the relaxations provided in the G.C. 20/2020 ought to file their • “Provided that any company applications in form No. GNL-1 for engaged in research and seeking extension of time in holding development activity of new vaccine, of AGM for the financial year ended drugs and medical devices in their on 31.03.2020 with the concerned normal course of business may Registrar of Companies on or before undertake research and 29.09.2020. development activity of new vaccine, drugs and medical devices related to • The Registrars of Companies are COVID-19 for financial years 2020- hereby advised to consider all such 21, 2021-22 and 2022-23 subject to applications (filed in Form No. GNL- the conditions that- 1) liberally in view of the hardships faced by the stakeholders and to (i) such research and development grant extension for the period as activities shall be carried out in applied for (upto three months) in collaboration with any of the such applications. institutes or organisations mentioned in item (ix) of Schedule VII to the Act. (ii) details of such activity shall be disclosed separately in the Annual Report” (Click here for more details) (Click here for more details) 9 KREOKREO CAPITAL CAPITAL NEWSLETTER NEWSLETTER - -NINETEENTHTWENTY-FIFTH EDITION EDITION
MINISTRY OF CORPORATE AFFAIRS
COMPANY INCORPORATIONS HIT DOT CHALLENGES NCLT NOD TO 7-YEAR HIGH OF 16,487 IN JULY: AIRCEL RESOLUTION PLAN MINISTRY OF CORPORATE AFFAIRS
Key Highlights Key Highlights
• In one of the clearest signs of a pick- • The telecom department has moved up in business sentiment, company the National Company Law Appellate incorporations touched a seven-year Tribunal, challenging the bankruptcy high of 16,487 in July, or 530 a day, court’s approval of Aircel's resolution according to data from the ministry plan. of corporate affairs. The figure was a 50% increase from a year earlier. • The Department of Officials said filings for new company Telecommunications alleged that registrations continue to rise in Aircel’s resolution blueprint is a August. “liquidation plan” not aimed at reviving the bankrupt telco and • This clearly shows signs of a pick-up includes the transfer of spectrum, in business activity since the which the government has yet to lockdown imposed to curb the approve. A decision on spectrum will spread of Covid-19. New company likely affect Reliance registrations dropped to a low of Communications (RCom), another 3,209 in April. Company incorporations more than doubled to bankrupt telco. 10,954 in June from 4,835 in May. • “It is submitted that the resolution The increase was also due to plan in respect of Aircel Group, initiatives such as the SPICe+ form which was approved by NCLT. for online name reservation and company registration introduced in February via MCA platform.
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INCOME TAX DEPARTMENT
IT DEPARTMENT TO INTIMATE CBDT ASKS BANKS TO REFUND TAXPAYERS UNDER SCRUTINY ANY FEES LEVIED ON UPI ABOUT FACELESS ASSESSMENT TRANSACTIONS IN 2020
Key Highlights Key Highlights • The income tax department will soon • The Central Board of Direct Taxes start sending out intimation to (CBDT) asked banks to return to assessees undergoing scrutiny that customers and merchants any fees such cases would now be handled levied for making Unified Payment under faceless assessment. Interface (UPI) transactions in 2020, adding that such charges violate the • So all the 148 cases that were going law. on, they have been transferred to the faceless assessment scheme and NeAC • Private banks such as ICICI Bank, Axis will be sending out intimation in all Bank, Kotak Mahindra Bank and HDFC such cases which would now be Bank recently began charging assessed under the faceless customers for UPI transactions beyond assessment scheme. So by September a prescribed limit. Any cap on free UPI 15 or before that, you can expect an transactions is a breach of the PSS and intimation from NeAC (National e- IT Act, the board said Assessment Centre. • The private banks cited above had • Under faceless scrutiny assessment, a introduced UPI fees over the lockdown central computer picks up tax returns months. The banks said on their for scrutiny based on risk parameters websites that customers could only and mismatch and then allots them make up to 20 free UPI peer-to-peer randomly to a team of officers. (P2P) transactions, beyond which they would be charged Rs 2.5 to Rs 5 per transaction depending on the ticket size.
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INCOME TAX DEPARTMENT
HIGHER TDS ON DIVIDEND AMENDMENT OF INCOME TAX DECLARED AFTER APRIL 1, 2020 IF RULES AND GUIDELINES FOR YOU DON'T SUBMIT PAN PENSION FUND
Key Highlights Key Highlights • No TDS (tax deducted at source) for • For the purposes of clause (23FE) of resident shareholders receiving section 10, the pension fund shall be dividend up to Rs 5,000. required to satisfy the following other conditions, namely: - • No TDS for resident shareholders where Form 15G/Form 15H along with • It is regulated under the law of a self-attested copy of the PAN card is foreign country including the laws submitted. made by any of its political constituents being a province, state or • TDS at 7.5% for resident shareholders local body, by whatever name called, where a copy of PAN card is under which it is created or provided/available. established, as the case may be;
• TDS at 20% for resident shareholders if • It is responsible for administering or copy of PAN card is not provided/not investing the assets for meeting the available. statutory obligations and defined • For NRI investors, 20% plus surcharge contributions of one or more funds or and cess is withheld. However, tax will plans established for providing be assessed on the basis of documents retirement, social security, submitted to avail tax treaty benefit employment, disability, death benefits under DTAA or any similar compensation to the participants or beneficiaries of such funds or plans, as the case may be.
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GST COUNCIL
PROVISION FOR AADHAR BUSINESSES WITH ANNUAL AUTHENTICATION IN GST TURNOVER OF UP TO RS 40 REGISTRATION LAKHS ARE GST EXEMPT
Key Highlights Key Highlights • Aadhaar Authentication process has • Businesses with an annual turnover of been introduced, for the persons up to Rs 40 lakhs are Goods and applying for GST registration as Services Tax (GST) exempt and those Normal Taxpayer/ Composition/ with a turnover up to Rs 1.5 crore can Casual Taxable Person/ Input Service opt for the Composition Scheme and Distributor (ISD)/ SEZ Developer/ SEZ pay only one per cent tax. Unit etc, in Form GST REG 01. • According to the ministry, the GST • Under this, Individuals, Authorised exemption limit earlier was Rs 20 signatory of all types of businesses, lakhs. Managing and Authorised partners of a partnership firm and Karta of an • "Significant relief has been extended Hindu undivided family, applying for to the construction sector, particularly new registration, can opt to undergo the housing sector. It has now been e-KYC authentication of their placed at the 5% rate. GST on Aadhaar number. affordable housing has been reduced to 1% • Applicants, who, either do not • "Once GST was implemented, the tax provide Aadhaar, while applying for new registration would be subjected rate on a large number of items was to site verification by the tax brought down. The 28% rate is almost department. However, Tax authority solely restricted to sin and luxury based on the documents produced items. Out of a total of about 230 can grant registration. items in the 28% slab, about 200 items have been shifted to lower slabs
(Click here for more details) (Click here for more details) 13 KREO CAPITAL PRIVATE LIMITED MERCHANT BANKING | CORPORATE ADVISORY | WEALTH MANAGEMENT | LENDING SOLUTIONS CA Varun Parakh Managing Director M:+91-9890920892 ABOUT OUR CORPORATE ADVISORY SERVICES E: [email protected] Our corporate advisory division works with a wide range of clients including young, cutting-edge start-ups and established market leaders. We advise our clients on mergers and HEAD OFFICE: acquisitions, private equity funding, divestments, corporate 6th floor, B-Wing, restructuring, valuation of shares as per SEBI guidelines, Shriram Towers, company law and secretarial advisory. Civil Lines, Our advice is built from a rigorous and up-to-date Nagpur – 440001. understanding of the market, coupled with clients financial T: +91-0712-6652070 vision. This means we only offer solutions that work best for our clients. MUMBAI OFFICE: Unit 202, Tower-A, ABOUT KREO CAPITAL Peninsula Business Park, Kreo Capital is a boutique financial service company with Mid Senapati Bapat Marg, Market focus, offering integrated financial advice and Lower Parel, services. Promoted by professionals with rich experience Mumbai – 400013 in financial and capital markets, Kreo Capital is a financial expert T:+91-22-41731000 for all growth oriented companies.
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