AabidAabid & Co.& Co. Zayn Consulting Private Limited. Zayn Consulting Private Limited. 15/03/2021 15/03/2021
[TYPE THE COMPANY NAME]
20212021
AABID & CO.
CONTENTS
CORPORATE LAWS Pages.... 03 to 07
INSOLVENCY & BANKRUPTCY MATTER (IBC) UPDAT8S Pages....08 to 10
FOREX LAWS / BANKING LAW2 Pages.... 11 to 12
SECURITIES LAWS & CAPITAL MARKET UPDATES Pages .... 13 to 21
TAXATION - DIRECT AND INDIRECT Pages.... 22 to 26
DEAL CORNER Pages.... 27 to 38
INTERNATIONAL CORPORATE NEWS UPDATES Pages...39 to 40
COURT / TRIBUNALS CASE LAWS Pages...41 to 51
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A. CORPORATE LAWS:
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PARLIAMENT PASSES ARBITRATION AMENDMENT BILL TO PROTECT TAXPAYER MONEY – BUSINESS STANDARD
Section 36 of the (Arbitration) Act says the arbitration award be set aside if it is against public policy, said Law Minister Ravi Shankar Prasad in Rajya Sabha
Parliament approved a Bill to amend the arbitration law that would ensure all stakeholders get a chance to seek an unconditional stay on enforcement of arbitral awards where an agreement is “induced by fraud or corruption”.
The Arbitration and Conciliation (Amendment) Bill, 2021, was passed by voice vote in the Rajya Sabha. The Bill was passed in the Lok Sabha on February 12.
It will replace an Ordinance issued on November 4, 2020.
Replying to a discussion on the Bill in the Upper House, Law Minister Ravi Shankar Prasad said the changes in the Bill would avoid payment of tax payers’ money as an award in cases where the agreement or contract is “induced by fraud or corruption”.
He said, “Section 36 of the Act provides that the arbitration award would be set aside if it is against the public policy. The contracts or agreements induced with corruptions and frauds would be considered ‘against public policy’.”
“There was a provision under Sector 36 that there would not be direct stay as somebody has to challenge that to get the stay (on the award). Today we are saying that if an award is challenged and if prima facie the court finds that it is induced with fraud or corruption then the court would stay the award.”
The minister said, “I don't understand why they get agitated by the mention of corruption. Should such (arbitration) awards be given in India which are induced with corruption and where CBI inquiry is on? Such people by collusive agreement get the award through taxpayers’ money.”
“We only want that there should be fair arbitration in India. Our only intention is that people should not loot taxpayers’ money through arbitration awards.”
Immediately after the passage of the Bill, Deputy Chairman Harivansh adjourned the Rajya Sabha till Monday as Opposition parties continued raising slogans demanding discussion on the three Central farm laws.
ICAI ISSUES GUIDANCE NOTE ON ACCOUNTING BY E-COMMERCE ENTITIES - THE HINDU BUSINESSLINE
Clears the air on the accounting treatment of unique aspects of e-commerce biz model
E-commerce entities will now have better guidance on various aspects of revenue and expense recognition for transactions conducted online. The CA Institute has now come up with a 'guidance note' on accounting by e-commerce entities, sources said.
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E-commerce is the activity of electronically buying or selling products or other services over the internet. This business model lets the firms and individuals conduct business over electronic networks, such as the internet.
The new Guidance Note is the first comprehensive one guiding various accounting issues unique to e-commerce. A guidance note is mandatory for the members of the CA Institute.
Several years back, the Institute of Chartered Accountants of India (ICAI) had come up with a Guidance Note on dot com companies. This, however, did not cover the accounting issues around unique aspects of e-commerce, which has seen quantum growth only in the recent decade.
India’s e-commerce market is expected to grow to $ 200 billion by 2026 from $ 38.5 billion as of 2017, a recent report had projected.
E-commerce companies had reported sales worth $ 4.1 billion across platforms in the festive week of October 2020, driven by smartphones.
In India, 100 per cent FDI is allowed in B2B e-commerce. Also, 100 per cent FDI under the automatic route is permitted in the marketplace model of e-commerce.
The latest ICAI guidance note throws light on revenue recognition on either ‘gross’ or ‘net basis’. This is critical as e-commerce companies’ valuation are linked to the revenues accounted for in their books. Also, the Guidance Note has covered aspects like ‘Right of Return’ against goods or services or coupons, giving the right to the customers to exchange the goods or services sold against other goods/services. It also deals with revenue recognition aspects around advertising services, web hosting services etc.
Accounting aspects on financing extended by certain e-commerce entities to customers —for example, ‘buy now, pay later’ scheme or an extended EMI payment scheme have also been covered in the Guidance Note.
Since many e-tailers sell their products through resellers or consignment agents, the guidance note has elaborated on this front’s revenue recognition aspects. In consignment arrangements, the risk and rewards of ownership do not get transferred. In this, a buyer (a dealer or distributor) takes physical possession of the goods but does not assume all the risks and rewards.
MCA ENABLES AADHAR AUTHENTICATION FOR GSTIN ON COMPANY INCORPORATION
Companies (Incorporation) Third Amendment Rules, 2021. New Delhi, Dated: 05th March, 2021
G.S.R… (E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Incorporation) Rules, 2014, namely: –
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1. (1) These rules may be called the Companies (Incorporation) Third Amendment Rules, 2021.
(2) They shall come into force on the date of publication in the Official Gazette.
2. In the Companies (Incorporation) Rules, 2014,- in the Annexure, in Form INC 35 AGILE- PRO, part of SPICe+, in serial number 12, at the end of Table (A), the following shall be inserted, namely.-
“Do you wish to perform Aadhar authentication for GSTIN registration.
Yes No
[F. N . 1/13/2013 CL-V, Vol.IV] K.V.R. MURTY, Joint Secretary.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 250(E), dated the 31st March, 2014 and last amended vide number G.S.R.91(E), dated the 1st February, 2021.
GOVT. TWEAKS GUIDELINES FOR MSME REGISTRATION
Govt. notifies that for MSMEs, the exemption from the requirement of having GSTIN shall be as per the provisions of the CGST Act, 2017; Further states that in case of any proprietorship enterprise not registered under any Act or rules of the Central Government or the State Government, the proprietor may use his or her PAN for registration of the enterprise in the Udyam Registration portal and for all other types of enterprises PAN shall be mandatory: Ministry of MSMEs
MCA: OPCS, SMALL COMPANIES TO FILE ANNUAL RETURN IN FORM MGT- 7A FROM FY 2020-21
In line with the amendment to Sec. 92, MCA amends the Companies (Management and Administration) Rules, 2014 to inter alia state that from FY 2020-21, every OPC and Small Company, who shall file their annual return in Form No. MGT-7A (Abridged Annual Return for OPCs and Small Companies); Does away with the requirement of filing extract of Annual Return (Form MGT-9); Further, under the Rule 20 (Voting through electronic means), adds explanation for expressions like ‘agency’, ‘cyber security’, ‘electronic voting system’, ‘remote e-voting’ and ‘voting by electronic means’; Specifies that for Rule 20, ‘agency’ means the NSDL or any other entity approved by MCA subject to certain conditions, and ‘remote e- voting’ means the facility of casting votes by a member using an electronic voting system from a place other than the venue of general meeting: MCA
MCA NOTIFIES AMENDMENTS TO ANNUAL RETURN PROVISIONS W.E.F. MARCH 5
MCA notifies amendments to Sec. 92 (Annual Return) of Companies Act, 2013, introduced vide Companies (Amendment) Act, 2017, w.e.f. March 5, 2021; Consequent to the amendment,
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companies would not be required to provide particulars of their indebtedness in their Annual Returns; Further, the amendment also exempts companies from providing details pertaining to Foreign Institutional Investors’ names addresses, countries of incorporation, registration and percentage of shareholding held by them; The amendment also inserts a proviso to Sec. 92(1), which envisages that the Central Government may prescribe abridged form of annual return for One Person Company, small company and other class or classes of companies.
RULES NOTIFIED FOR CODE ON WAGES ADVISORY BODY – ET
The government has notified rules governing the constitution and functions of the central advisory board under the Code on Wages, paving the way for the government to initiate work on a national floor-level minimum wage.
The Code on Wages prescribes for a statutory floor-level minimum wage for the country. The government is keen to roll out the four labour codes from April 1, and hence the need for determining the minimum floor wage at the earliest.
No state can set their minimum wage below the national floor-level minimum wage. The current floor wage is only advisory, resulting in some states keeping minimum wages less than the floor wage, which is pegged at Rs 176 per day.
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B. INSOLVENCY & BANKPRUTCY MATTERS
(IBC) UPDATES
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IBBI: NOTIFIES GUIDELINES FOR APPOINTMENT OF IPS AS ADMINISTRATORS BY SEBI
IBBI in consultation with SEBI, issues Guidelines for appointment of Insolvency Professionals (IPs) as Administrators under the SEBI (Appointment of Administrator and Procedure for Refunding to the Investors) Regulations, 2018 for their effective implementation; States that IBBI will prepare a Panel of IPs, comprising a zone wise list to suit the requirements of SEBI, which shall be valid for 6 months, and lays down the eligibility criteria for an IP to be included in the Panel; Further, states that it shall invite expression of interest from IPs to act as an Administrator, whereafter the IPs who have expressed their interest will be included in the Panel based on specific criteria; Also mandates that an IP who is included in the Panel must neither withdraw his interest nor decline to act as Administrator, or surrender his registration, during the validity of the Panel; Explicitly states that an IP in the Panel will be appointed as Administrator, at the sole discretion of SEBI, and the submission of expression of interest is an unconditional consent by the IP to act as Administrator and an IP who declines to act as Administrator, on being appointed by SEBI, shall not be included in the Panel for the next five years.
NCLT HAS JURISDICTION TO ADJUDICATE DISPUTES SOLELY RELATING TO INSOLVENCY OF CORPORATE DEBTOR: SUPREME COURT
The Supreme Court held that the NCLT has jurisdiction to adjudicate disputes, which arises solely or relates to the insolvency of a corporate debtor. The top court, however, cautioned the National Company Law Tribunal (NCLT) and its appellate tribunal (NCLAT) to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and forum, when the dispute is not related to the insolvency of the Corporate Debtor.
A bench of Justices DY Chandrachud and M R Shah said, "Therefore, considering the text of Section 60(5)(c) (of IBC) and the interpretation of similar provisions in other insolvency related statutes, NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the Corporate Debtor".
The top court verdict came on an appeal filed by Gujarat Urja Vikas Nigam Ltd against a NCLAT order by which it had upheld the decision of NCLT staying the termination of Power Purchase Agreement (PPA) entered with a firm Astonfield Solar (Gujarat) Private Limited, which later went into insolvency.
Dismissing the appeal, the top court said that the institutional framework under the Insolvency and Bankruptcy Code (IBC) contemplated the establishment of a single forum to deal with matters of insolvency, which were distributed earlier across multiple fora.
"In the absence of a court exercising exclusive jurisdiction over matters relating to insolvency, the corporate debtor would have to file and/or defend multiple proceedings in different fora. These proceedings may cause undue delay in the insolvency resolution process due to multiple proceedings in trial courts and courts of appeal. A delay in completion of the insolvency proceedings would diminish the value of the debtor's assets and hamper the prospects of a successful reorganization or liquidation," it said.
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It said that for the success of an insolvency regime, it is necessary that insolvency proceedings are dealt with in a timely, effective and efficient manner.
In its 138-page verdict, Justice Chandrachud, writing the judgement on behalf of the bench, said that in the present case, the PPA was terminated solely on the ground of insolvency and in the absence of the insolvency of the corporate debtor, there would be no ground to terminate the PPA.
The termination is not on a ground independent of the insolvency and the present dispute solely arises out of and relates to the insolvency of the corporate debtor, it noted.
LIQUIDATORS TO FILE LIST OF STAKEHOLDERS SUBMITTED TO ADJUDICATING AUTHORITY, WITH IBBI
IBBI notifies amendments to Liquidation Process Regulations, inter alia requiring Liquidators to file the list of stakeholders with the Adjudicating Authority within 45 days from the last date of receipt of the claims, does away with the requirement of announcing the filing of such list to the public; Instead, states that the list of stakeholders shall be filed on the electronic platform of the IBBI for dissemination on its website; Specifies that this requirement shall be applicable to every liquidation process ongoing and commencing on or after the date of commencement of the IBBI (Liquidation Process) (Amendment) Regulations, 2021: IBBI
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C. FOREX LAWS / BANKING LAWS:
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RBI ASKS BANKS, NBFCS TO REPORT ACCOUNTS RESTRUCTURED DUE TO COVID-19 SEPARATELY – MINT
The Reserve Bank of India asked the banks and other lenders to report the accounts restructured due to coronavirus separately to credit bureaus. Lenders should make necessary modification to their system and report it to credit bureaus within two months, the banking regulator said.
All commercial banks including small finance banks, local area banks and regional rural banks, primary (urban) co-operative banks/state co-operative banks/district central co-operative banks, India Financial Institutions (Exim Bank, NABARD, NHB and SIDBI) and non-banking financial companies (including housing finance companies) were asked to inform the credit bureaus about restructuring the accounts.
The regulator modified the format to incorporate the restructuring of accounts due to COVID- 19.
For consumer bureau, the label of the field ‘written off and settled status’ is modified as ‘Credit Facility Status’ and it will also have a new catalogue value, viz., ‘restructured due to COVID- 19’, RBI said.
For commercial bureau, the existing field ‘Major reasons for restructuring’ will have a new catalogue value, viz., ‘restructured due to COVID-19’, it added.
The existing field ‘account status’ will have a new catalogue value, viz., ‘restructured due to COVID-19' for MFI bureaue.
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D. SECURITIES LAWS AND CAPITAL MARKET UPDATES:
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SEBI LIMITS MF INVESTMENTS IN DEBT INSTRUMENTS WITH SPECIAL FEATURES – BUSINESS STANDARD
IGX is India’s first gas exchange that has secured authorization from Petroleum and Natural Gas Regulatory Board (PNGRB) on December 2, 2020.
“The Government of India is committed to build a sustainable energy economy wherein clean energy sources such as gas have a key role to play,” said Tarun Kapoor, Secretary, Ministry of Petroleum and Natural Gas.
“Both NSE and ONGC bring their unique value proposition and leadership edge in markets and hydrocarbon sector respectively to the table,” said S N Goel, Chairman and Managing Director, IEX and Director, IGX.
IGX offers trade in five contracts at Hazira and Dahej in Gujarat and KG Basin in Andhra Pradesh. The exchange has with over 500 registered clients and 15 members and has cumulatively traded 100,000 MMBTU volume of gas till now, an IGX statement said.
SEBI EXTENDS CENTRAL KYC REGISTRY TO LEGAL ENTITIES | BUSINESS STANDARD
Markets regulator Sebi asked regulated entities to upload 'Know Your Customer' data pertaining to accounts of legal entities (LEs) opened on or after April 1, onto the Central KYC Registry (CKYCR).
Regulated entities (REs) have already been uploading the KYC data pertaining to all individual accounts opened on or after August 1, 2016, onto CKYCR.
"Since CKYCR is fully operational for individual clients, it has been decided to extend CKYCR to legal entities as well," the Securities and Exchange Board of India (Sebi) said in a circular.
"Accordingly, RIs (registered intermediaries) shall upload the KYC records of LE accounts opened on or after April 1, 2021, on to CKYCR in terms ...of the Prevention of Money
Laundering (Maintenance of Records) Rules, 2005," it added.
The regulator has also comes out with a template for legal entity in this regard.
IFSCA PROPOSES ALL-ENCOMPASSING FRAMEWORK FOR SPACS, STARTUPS TO LIST IN IFSCS
International Financial Services Centres Authority ('IFSCA') floats a consultation paper proposing to enact an all-encompassing framework to facilitate issuers access to Global capital, invites public comments by March 31, 2021; To meet this objective, IFSCA proposes a unified regulatory framework for issuance and listing of securities by Start-ups, Small and Medium Enterprises (SMEs) and Special Purpose Acquisition Company (SPAC), to ensure that capital markets in IFSCs support the financing of innovative business models in these areas; Further, in line with the Union Budget 2021-22 which envisages setting up of a ‘word-class’ fintech
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hub at the GIFT city in a bid to bolster innovation in the fintech industry, the framework is expected to provide an ecosystem for capital raising and listing by Fintech and other start-up companies; To keep pace with the evolving market environment where globally, SPACs have become an important structure to raise capital through IPO for acquiring companies or assets, the Framework recommends suitable norms for capital raising and listing of SPAC on recognised stock exchanges in IFSCs; The proposed Framework also seeks to make IFSC at GIFT City a prominent international centre for sustainable finance, as also to facilitate issuers from across the jurisdictions to raise capital for variety of needs and list their securities at the international stock exchanges in IFSCs: Ministry of Finance
SEBI MAKES VOTING ON CORPORATE RESOLUTIONS MANDATORY FOR MFS - MINT
The Securities and Exchange Board of India (Sebi) made voting on corporate resolutions compulsory for mutual funds (MFs).
Previously, MFs were required to disclose voting patterns, but were allowed to abstain from votes. Mutual funds will now be required to vote on a range of corporate resolutions, such as governance matters, changes to capital structures, stock option plans, appointment and removal of directors, and any other issue that may affect the interests of shareholders or unit holders.
These votes will have to be disclosed to unit holders under existing regulations.
Voting will be at the mutual fund level (rather than scheme level). Fund managers of individual schemes can vote differently from other schemes in the fund house, but must record a detailed rationale for the same.
Index funds and ETFs (exchange traded funds), which are passive in nature, will also be required to vote. The circular lists certain important matters such as related party transactions or corporate governance matters on which voting will be required from 1 April. For other matters, voting will be compulsory from 1 April 2022.
“This is a good move by Sebi. I don’t see a challenge even for index funds or ETFs. Even if a mutual fund owns one share of a company, it should vote on its resolutions. Otherwise, it has no business owning those shares," said Shriram Subramanian, founder and managing director, InGovern Research.
“MFs have to vote objectively even when the AMCs have stake in associate companies," he added.
SEBI: FRAMES ADDITIONAL GUIDELINES FOR VOTES CASTE BY MUTUAL FUNDS, TO FURTHER IMPROVE TRANSPARENCY
SEBI frames additional guidelines for votes cast by Mutual Funds, in order to further improve transparency as well as encourage MFs/AMCs to diligently exercise their voting rights in the best interest of unitholders, w.e.f. April 1, 2021; States that MFs, including their passive investment schemes like Index Funds, Exchange Traded Funds etc. shall be required to cast votes compulsorily in respect of resolutions including - (i) corporate governance matters,
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including changes in the state of incorporation, merger and other corporate restructuring provisions and anti-takeover provisions, (ii) changes to capital structure, and (iii) social and corporate social responsibility issues; Also requires MFs to vote mandatorily on appointment and removal of Directors, stock option plans and other management compensation issues, as well as any other issue that may affect the interest of the shareholders in general and of the unit holders in particular; Specifies that “Further, for all remaining resolutions which are not covered at Para 1 of this circular, Mutual Funds shall also compulsorily be required to cast their votes with effect from April 1, 2022.”, and exempts those MFs having no economic interest on the day of voting, from compulsorily casting votes; Adds that the vote shall be cast as Mutual Fund Level, however, in case Fund Managers of any specific scheme have a strong view against the other schemes’ Fund Manager(s), the voting at scheme level shall be allowed, subject to recording of detailed rationale for the same; Lastly, states that Fund Managers/Decision makers shall submit a declaration on quarterly basis to the Trustees that the votes cast by them have not been influenced by any factor other than the best interest of the unit holders.
SEBI TWEAKS FRAMEWORK ON UNIQUE CLIENT CODE, PAN – THE ECONOMIC TIMES
Market regulator Sebi rationalised the compliance requirement of collecting and maintaining copies of PAN of clients by members of the exchanges having commodity derivatives segment and enhanced the use of e-PAN. In the Union budget 2020, launch of instant PAN facility was announced and subsequently, Income Tax (IT) Department launched the facility of e-PAN which is generated instantly through Aadhaar-based e-KYC.
In a circular, Sebi has tweaked provisions related to Unique Client Code (UCC) and mandatory requirement of Permanent Account Number (PAN).
The regulator said it would be mandatory for the members of the exchanges, having commodity derivatives segment, to use UCC for all clients transacting on the commodity derivative segment.
The exchanges with commodity derivatives segment would not allow execution of trades without uploading of the UCC details by the members of the exchange.
For this purpose, members need to collect after verifying the authenticity and maintain in their back office the copies of Permanent Account Number (PAN) issued by the Income Tax (IT) Department, for all their clients.
However, in case of e-PAN, members need to verify the authenticity of e-PAN with the details on the website of IT Department and maintain the soft copy of PAN in their records.
The exchanges, having commodity derivatives segment, need to ensure that their members collect copies of PAN cards issued to their existing as well as new clients after verifying with the original, cross-check such details collected from their clients with the details on the website of the Income Tax (IT) Department.
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However, in case of e-PAN, they need to verify the authenticity of e-PAN with the details on the website of IT department and maintain the soft copy of PAN in their records, it added.
Also, such members need to upload details of PAN or e-PAN so collected to the exchanges as part of Unique Client code, verify the documents with respect to the unique code and retain a copy of the document.
The provisions of this circular would come into effect from April 1, 2021.
SEBI PUTS IN PLACE PROCEDURE FOR CHANGE IN CONTROL OF MUTUAL FUNDS – THE ECONOMIC TIMES
Markets regulator Sebi has put in place a procedure for change in controlling interest of asset management companies and issued guidelines for new sponsors of mutual funds.
This comes after Sebi, in February, relaxed profitability criteria for becoming a mutual fund sponsor with a view to facilitating innovation and expansion in the mutual funds sector.
Apart from procedure for change in control of AMCs (Asset Management Companies), the regulator has come out with additional benchmarks for standardisation of mutual fund schemes. Also, comments from the regulator are required for change in fundamental attribute of a scheme.
In a circular, Sebi said no change in the control of an AMC, directly or indirectly, can be made unless prior approval of the trustees and the regulator is obtained, among other requirements.
In addition, a written communication about the proposed change need to be sent to each unitholder and an advertisement need to be given in one English daily newspaper having nationwide circulation, and in a newspaper published in the language of the region where the head office of the mutual fund is situated.
Besides, unitholders need to be given an option to exit on the prevailing Net Asset Value (NAV) without any exit load within a time period of not less than 30 calendar days from the date of communication, Sebi said.
In case the applicant proposing to take the control of an AMC is not an existing sponsor of a mutual fund registered with Sebi, it would have to apply to the regulator for approval of taking over control of an existing AMC.
Sebi said the new sponsor will have to give an undertaking to the regulator as well as unitholders taking full responsibility of the management and the administration of the schemes, including matters relating to the reconciliation of accounts.
Also, the new sponsor will have to assume the trusteeship of the assets and liabilities of the schemes, including outstanding borrowings, unclaimed dividends and unclaimed redemptions, if any, as well as take all responsibilities and obligations relating to investor grievances.
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While seeking the regulator's approval for change in the control of the AMC, Sebi said the mutual fund handing over the control to another person should also file the draft letter to be sent to the unitholders along with draft advertisement to be published in the newspaper.
The draft letter to the unitholders should include information about activities of the new sponsor and its financial track record and performance.
In case of taking over of the schemes by an existing mutual fund registered with Sebi, the draft letter should also include the condensed financial information of all the schemes in prescribed format and the amount of unclaimed redemption and dividend and also the procedure for claiming such amount by the unitholders.
"In case of any other situation like indirect change in control of the AMC or indirect change in the promoters of the sponsor(s), which was beyond the control of the sponsor(s), etc., the mutual fund should provide the full details of the information to the board for further course of action," Sebi said.
SEBI: RELEASES MASTER CIRCULAR ON SURVEILLANCE OF SECURITIES MARKET
SEBI issues Master Circular compiling all the relevant Circulars issued by it from time to time for effective surveillance of the securities market, with a view to enable users to have access to all the applicable circulars at one place; Mentions that the Master Circular is a compilation of Circulars issued by the Integrated Surveillance Department which are operational as on date and ; States that the list of applicable circulars has been appended and in case of any inconsistency between the Master Circular and the applicable Circulars, the content of the relevant circular shall prevail.
SEBI: LAYS DOWN PROCEDURE TO CHANGE CONTROLLING INTEREST OF AMCS
SEBI implements the procedure for change in controlling interest of Asset Management Companies (AMCs) and issues guidelines for new sponsors of Mutual Funds; States that no change in the control of the AMC can be made unless prior approval of the trustees and the Board is obtained, and unless a written communication about the proposed change is sent to each unitholder; Further states that in case the applicant proposing to take control of an AMC is not an existing sponsor of the mutual fund registered with SEBI, it shall apply to the Board for approval of taking over control of an existing AMC under the MF Regulations; Also requires new sponsor(s) or in case of taking over of the schemes by an existing MF, certain undertakings to be submitted to the Board and the unitholders; Adds that while seeking approval for change in control of the AMC, the MF handing over the control to another person, should also file the draft letter/email to be sent to the unit holders along with draft advertisement to be published in the newspaper; Lastly, states that in order to bring uniformity, wherever exit option is required to be given to unitholders, they shall be given a time period of at least 30 calendar days for the purpose of exercising the exit option.
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SEBI PITCHES FOR GIVING MORE SAY TO MINORITY SHAREHOLDERS – BUSINESS LINE
Market regulator SEBI favours giving more say to minority shareholders in the appointment of independent directors. , the market regulator put out a discussion paper for reviewing the norms of appointments on listed company boards.
Independent directors are mainly the guardians of minority and public shareholder rights. Their main job is to see that the company improves its corporate credibility and governance standards.
SEBI has now proposed that approval of independent directorsshould be done by a ‘simple majority of minority’ shareholders. That is, 75 per cent or more minority shareholder votes among those present in the meeting. Minority shareholders would mean shareholders, other than the promoter and promoter group.
SEBI said some jurisdictions, like Israel, have provisions for appointment of independent directors by minority shareholders. In the UK, for premium listed companies that have a controlling shareholder, a dual voting structure has been adopted whereby the appointment of independent directors must be approved both by the shareholders as a whole and by the independent shareholders. If either of the resolutions fails, and the company still wants to propose the person as an independent director, it can put the matter to a second vote of all shareholders including the controlling shareholder.
SEBI now wants appointment and re-appointment of independent directorssubject to “dual approval” — of shareholders and the majority of minority shareholders — taken through a single voting process.
SEBI said that if the approval thresholds are not met then a second vote for that person can be done after a cooling-off period of 90 days but within 120 days. Such approval for appointment/re-appointment shall be through a special resolution and the notice to shareholders will include reasons for proposing the same person despite not getting approval of the shareholders in the first vote.
Removal of IDS
For removal of independent directors, too, SEBI wants approval of minority shareholders by a simple majority. Currently, they can be removed by a simple majority in the first term and through a special resolution in the second, after giving him a reasonable opportunity to be heard. This process gives promoter(s) significant influence and SEBI wants to give minority shareholders a say in the removal process, too.
SEBI PLANS CHANGE IN NORMS TO TRIM PROMOTERS' SWAY ON INDEPENDENT DIRECTORS | BUSINESS STANDARD
The Securities and Exchange Board of India (Sebi) proposed to overhaul norms pertaining to the appointment, removal and remuneration of independent directors, considered to be the flag- bearers of minority shareholders.
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The market regulator suggested a “dual approval” process for the appointment and removal of independent directors. At present, an independent director can be appointed or removed by way of an ordinary resolution, where all shareholders, including promoters, are allowed to cast their vote. Going ahead, majority of the minority shareholders would also need to give approval. If either of the two approvals fails, the resolution to appoint or remove the independent director would get defeated.
In such an event, the company will either have to propose a new candidate or the same person after a cooling-off period of 90 days, giving reasons. In the case of removal, a second vote of all shareholders can be called after a cooling-off period of 90 days.
According to Sebi, the current system gives undue advantage to promoters as they can have significant influence on the appointment and removal by virtue of their shareholding.
SEBI: RELEASES CONSULTATION PAPER ON REVIEW OF REGULATORY PROVISIONS RELATED TO INDEPENDENT DIRECTORS
SEBI issues Consultation Paper on review of regulatory provisions related to independent directors (IDs), inter alia recommends a cooling off period of 3 years before appointing KMPs or employees of promoter group companies as IDs in the company, invites public comments by April 01, 2021.
SEBI: EXTENDS APPLICABILITY OF INSTITUTIONAL MECHANISM FOR FRAUD PREVENTION, MARKET ABUSE TO MIIS
SEBI mandates applicability of the Code of Conduct and Institutional Mechanism for prevention of fraud or market abuse to Stock Exchanges, Clearing Corporations and Depositories, on the lines of Regulation 9(1) to 9(4) of PIT Regulations, pursuant to the Report of Committee on Fair Market Conduct; Accordingly, directs that (i) these Market Infrastructure Institutions shall formulate a Code of Conduct to regulate, monitor and report trading by their designated persons and their immediate relatives towards achieving compliance with PIT Regulations, by adopting the stipulated minimum standards set out thereunder, (ii) MD / CEO of MII shall be obligated to frame the referred code of conduct, (iii) MII shall identify and designate a compliance officer to administer the said code of conduct; Further, requires MIIs to put in place an Institutional mechanism for prevention of fraud or market abuse, wherein the MD/CEO of the MII shall enforce an adequate and effective system of internal controls to ensure compliance, and states that MIIs shall formulate written policies and procedures for inquiry in case of suspected fraud or market abuse by its designated persons; Also requires MIIs to have an effective whistle-blower policy, and ensure that the policy provides for suitable protection against any discharge, termination, demotion, suspension, threats, etc. against any employee who reports instances of fraud or market abuse or any suspicion thereof.
BROKERS' BODY ASKS SEBI FOR STATUS QUO ON PEAK MARGIN NORMS | BUSINESS STANDARD NEWS
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Brokers' body Association of National Exchanges Members of India (Anmi) has requested the Securities and Exchange Board of India to maintain status quo on the peak margin rules as there had been no reported instances of defaults under the current system.
Sebi has effectively capped the leverage possible in derivatives to four times the margin in phase 1 (from December 1). A penalty is levied if margin blocked is less than 25 per cent of the minimum 20 per cent of the trade value (VAR+ELM) for stocks or SPAN+Exposure for F&O. From March 1, penalty will be levied if margin blocked is less than 50 per cent of the minimum margin required.
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E. TAXATION UPDATES:
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FIRMS WITH TURNOVER OF RS 50 CRORE & ABOVE TO ISSUE E-INVOICES FROM APRIL 1: CBIC
The Central Board of Indirect Taxes and Customs (CBIC) Monday notified that e-invoicing will be mandatory for business to business (B2B) transactions for taxpayers having turnover of over Rs 50 crore from April 1, 2021.
At present, issuing electronic invoices is mandatory for businesses with turnover of Rs 100 crore and more, which has been put into effect from January 1, 2021, while for companies having turnover of Rs 500 crore plus was made effective from October 1, 2020.
The government was supposed to put the threshold at Rs 5 crore from April 1, 2021 but has kept a milder threshold.
LINK AADHAAR AND PAN BY MARCH 31 OR FACE STIFF PENALTY - THE HINDU BUSINESSLINE
If you do not link your Permanent Account Number (PAN) with the Aadhaar number by this month end, you can end up paying a huge penalty.
After deciding to link the two by bringing in a provision in the Finance Act, 2017, the government has extended the deadline a number of times, with latest ending on March 31. According to Income Tax officials, there is little possibility of another extension.
Section 139AA of the I-T Act states, “failure to intimate the Aadhaar number, the Permanent Account Number allotted to the person shall be made inoperative after the date so notified.” Use of an inoperative PAN can cost dearly.
Penalty
“You may have to pay penalty up to ₹10,000 under Section 272B of the Income Tax Act for not holding a valid PAN.”
NRIS, FOREIGN NATIONALS STRANDED IN INDIA TO SUBMIT DETAILS OF DOUBLE TAXATION BY MARCH 31 – THE ECONOMIC TIMES
The Central Board of Direct Taxes (CBDT) has asked non-resident individuals facing double taxation on income for FY 020-21 because of forced overstay in India due to Covid-19 related travel restrictions to furnish the specific information by March 31, 2021.
The Board will consider providing either a general relaxation or specific relaxation in individual cases depending on the information it gets from people, it said in a circular issued Wednesday.
Details including the nature of income, the amount that becomes taxable and the reasons of double taxation, have been sought from the affected taxpayers through a form which can be submitted electronically.
The Board stated that Indian income tax laws along with the double taxation avoidance agreements (DTAAs) should remove the occurrence of double taxation.
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“The possibility of double taxation does not exist as per the provisions of the Income-tax Act, 1961 read with the DTAAs. However, in order to understand the possible situations in which a particular taxpayer is facing double taxation due to the forced stay in India, it would be in the fitness of things to obtain relevant information from such individuals,” it said.
The CBDT has received representations for relaxation in determination of residential status for 2020-21 by individuals who had come on a visit to India during 2019-20 and intended to leave India but could not do so due to suspension of international flights.
For FY 2019-2020, the Board had said in May last year that it would discount the days from March 22, 2020 when international flights were suspended, till March 31 where an individual had not been able to leave India.
The circular issued Wednesday stated that a short stay will not result in Indian residency since a person will become resident in India for the PY 2020-21 only if he stayed in India for 182 days or more.
Besides, the Board added that most countries have the condition of stay for 182 days or more for determining residency, thus a person will be resident in only one country since there are 365 days in a year.
CROSS-BORDER PAYMENTS FOR USE OF SOFTWARE NOT TAXABLE AS ROYALTY: SC - THE HINDU BUSINESSLINE
Buyer only gets the right of use, not the intellectual property of the software
The Supreme Court today held that Indian companies need not deduct tax for the amount they pay foreign manufacturers and suppliers for use or re-sale of computer software through end-user licence agreements (EULA).
FOREIGN INVESTORS FORUM FOR RATIONALISATION OF TAX NORMS FOR FOREIGN NATIONALS LIVING IN INDIA – THE ECONOMIC TIMES
The Foreign Investors India Forum has urged the government to relax tax provisions for foreign nationals working in India and align them with similar provisions in countries like Singapore and China, in a bid to attract investment and encourage high-flying corporate executives and fund managers having overseas incomes to stay in the country.
Under the current Income Tax provisions, the global income of foreigners is taxed if they stay in India for more than 182 days in a year, thus increasing their personal tax liability in the country. This provision acts as disincentive for foreign nationals, having global income, to stay in India for longer periods.
A letter in this regard was written by Foreign Investors India Forum's Global Chairman B K Modi to Prime Minister Narendra Modi who has referred the matter to the Commerce Ministry for further consideration. The Ministry is reported to have taken up the issue with the Finance Ministry.
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India, according to the Forum, needs ingenious global partnerships and heavy investments from new partners of growth which can only happen when the government creates a more enabling tax regime and a progressive personal taxation structure.
Although foreign domiciled individuals residing in India can avail treaty relief in double taxation on non-Indian incomes, challenges like paying higher taxes, availing tax credit benefits, subjectivity in tax assessments and risk arising due to reporting requirements may arise.
The pace of economic growth can be accelerated by increasing the rate of FDI in India and for this, foreigners need to be incentivised to live and invest in India, it said.
Foreign citizens must be allowed to tend to their investments and stay in India for long periods. It is recommended that the personal taxation policy for such people must be reviewed and they should be taxed only on any income that is generated domestically in India, the Forum said.
This can increase the tax liability and compliance burden of an individual depending on the effective tax that has to be paid on income not sourced from India. Therefore, foreign individuals do not have enough incentives to invest in India as they cannot come and stay in India to manage their investments, said industry experts.
CBDT EXTENDS DATES FOR PENALTIES, ASSESSMENTS UNDER TAX LAWS – MINT
Through a notification in the official gazette on 27th February, the Central Board of Direct Taxes (CBDT) extended the due date for penalties under the Income Tax Act, 1961 to 30th June 2021. The CBDT also extended time limits for assessments under the Income Tax Act and notices under the Benami Property Transaction Act, 1988.
CHARTERED ACCOUNTANT FIRMS, HOSPITALS UNDER TAXMAN’S LENS – THE ECONOMIC TIMES
Chartered accountant firms and hospitals are under scrutiny after the revenue department found mismatches between their income tax and indirect tax filings.
Tax authorities have also decided to slot consultant doctors as ‘intermediaries’ for taxation purposes even as medical services are outside the purview of goods and services tax (GST), people aware of the development said.
The tax department has issued notices to several hospitals, they said.
With the revenue department getting data from various government departments, its data analytics team can parse through large amounts of data and throw up the inconsistencies quickly.
“With the increasing sharing of data amongst the tax authorities, it is expected that several cases of data mismatches will emerge,” said MS Mani, partner at Deloitte India. “While it is essential for all businesses to respond with the relevant clarifications and reconciliations, it is also essential for the tax authorities to appreciate the fact that there could be various genuine reasons for such mismatches and consider the views put forth by businesses, before embarking on litigation,” he said.
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I-T is mainly paid on an individual’s, company’s or a hospital’s revenues, while indirect taxes such as GST are paid on certain transactions.
Some experts feel that most of the tax notices issued to CA firms and hospitals are routine enquiries.
“These notices based on I-T return or indirect tax data have been issued just to meet the deadline,” said Shailesh Sheth, advocate at SPS Legal. “The notices, in majority cases, are issued mechanically and are baseless.”
Take hospitals, for instance.
Medical services provided by doctors and hospitals are exempt from GST. However, the tax department is claiming that when a visiting or consultant doctor advises a patient in a hospital, it’s more like an “intermediary” service as primary service (that’s exempt from GST) is provided by the hospital already.
Some legal experts are questioning this rationale.
“While hospitals render exempt services to patients, the tax authorities seem to have taken an interpretation that visiting or consulting doctors are intermediaries. “As a corollary, the moot point of taxability arises when doctors work on behalf of hospital for offering such medical services within a hospital.”
Legal experts say this in a way also means that the same doctor providing service to the same patient may have different tax implications.
As per the rationale, a transaction will attract GST if the doctor is sitting within a hospital and won’t if the doctor isn’t, they said.
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F. DEAL CORNER
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SWISS PHARMA GIANT ROCHE TO BUY AMERICAN FIRM GENMARK DIAGNOSTICS FOR $1.8 BILLION – THE ECONOMIC TIMES
Swiss pharma giant Roche said Monday it is buying US firm GenMark Diagnostics for $1.8 billion (1.5 billion euros).
GenMark, based in California, makes molecular tests which can establish the presence of several different pathogens from just one sample, it said.
Roche said it is offering $24.05 a share for GenMark, a premium of some 43 percent to its last quoted share price on February 10.
"Acquiring GenMark Diagnostics will increase our portfolio of molecular diagnostic (tests)," the company said in a statement.
INDIFI SECURES $5 MILLION FROM INDUSIND BANK – THE ECONOMIC TIMES
Indifi Technologies announced Rs 35 crore debt financing from IndusInd Bank Ltd, with a guaranty from US International Development Finance Corporation (DFC). These funds are deployed through Rs 35 crore of term loan from IndusInd Bank’s impact investing group to Riviera Investors Private Limited which is Indifi’s in-house NBFC arm. These funds will be used for onward lending to small businesses (MSMEs) to accelerate post-Covid economic recovery.
Equipped with its objective of addressing the SME financing gap in India, Indifi has disbursed 30,000 loans across 12 industries since its inception, actively leveraging its extensive network of 20 lenders, including its in-house NFBC – Riviera, and 80 partners. Through this, the firm is not only helping bridge the need-gap but is also playing an instrumental role in driving financial inclusion in India.
RATAN TATA INVESTS IN PRITISH NANDY COMMUNICATIONS – THE ECONOMIC TIMES
Pritish Nandy Communications NSE 9.79 % said veteran industrialist Ratan Tata has invested in the company. Details about investment and stake were not disclosed.
"Ratan Tata, Chairman Emeritus of Tata Sons and Chairman of Tata Trusts, has, in his personal capacity, acquired a stake in Pritish Nandy Communications Ltd through market purchases last week," Pritish Nandy Communications said in a regulatory filing.
Tata invests in start-ups and technology companies, the company added.
ANKUR CAPITAL RAISES RS 330 CRORE AHEAD OF INTERIM CLOSE OF SECOND FUND – THE ECONOMIC TIMES
Technology-focused venture capital firm Ankur Capital has raised Rs 330 crore ahead of an interim close of its second fund. The total target size of the fund is around Rs 350 crore, with
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an option to retain another Rs 50 crore depending on investor interest, its co-founders said.“We have received commitments worth Rs 330 crore from our existing as well as new investors,” said Ritu Verma, one of the co-founders.
Investors such as the CDC Group, Dutch Good Growth Fund, Small Industries Development Bank of India, BIRAC, MacArthur Foundation and Nabard have backed the new fund.
TECH MAHINDRA ACQUIRES MAJORITY STAKE IN PERIGORD ASSET HOLDINGS – MINT
Tech Mahindra Ltd said it has acquired 70% stake in Perigord Asset Holdings Ltd, a digital workflow and artwork labelling and BPO services firm. The acquisition will help Tech Mahindra boost expertise in the global pharmaceutical, healthcare and life science (HLS) sectors.
The strategic partnership is expected to strengthen Tech Mahindra’s position as a leading digital transformation enabler in the artwork and packaging services space with an integrated platform and services portfolio.
EDTECH PLATFORM IXAMBEE RAISES FUNDS FROM MUMBAI ANGELS NETWORK - THE FINANCIAL EXPRESS
The edtech platform for government jobs, ixamBee, has raised funding for an undisclosed amount led by Mumbai Angles. Narendra Shyamsukha from JITO Angel Network and existing investor Keyur Joshi (co-founder MakeMyTrip) and few noted alumni of the ISB, Hyderabad, also participated in the current round.
More than 5 million students have been benefited by ixamBee, the edtech platform said. “More than 5 crore students are preparing for government job exams and most of them come from small towns and villages. Popularity of government jobs has immensely increased due to job losses and uncertainty in the private sector post-Covid-19. Recruitment exams have started again after a pause during the lockdown period,” the platform said in a statement.
AXIS BANK TO ACQUIRE 9.9% STAKE IN MAX BUPA HEALTH'S PROMOTER ENTITY | BUSINESS STANDARD
Axis Bank will pick up a 9.9 per cent stake in Fettle Tone LLP, a promoter of Max Bupa Health Insurance Company, for Rs 90.8 crore to strengthen is insurance business.
Axis, which is privately owned, said in a BSE filing it has signed agreements with Fettle Tone LLP and its partners (on March 13).
Max Bupa Health Insurance (MBHI) is as a joint venture between private equity group True North and Bupa, a global health insurance and healthcare company. Fettle Tone LLP is a special purpose vehicle (SPV) set up by True North Fund; it holds a 5.6 per cent stake in health insurance company.
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ADAR POONAWALLA-BACKED SVASTI MICROFINANCE TO RAISE RS 150 CRORE – BUSINESS STANDARD
This is likely to conclude by the third quarter of FY22, said Arunkumar Padmanabhan, co- founder of Svasti Microfinance
Svasti Microfinance, a start-up backed by Serum Institute of India Chief Executive Adar Poonawalla, is in talks to raise Rs 150 crore in the next financial year, said a company executive.
This is likely to conclude by the third quarter of FY22, said Arunkumar Padmanabhan, co- founder of Svasti Microfinance. The company, which supports women micro entrepreneurs thorough collateral-free loans, is in talks with both India and foreign investors to raise this round, Padmanabhan said.
AERCAP TO BUY GE'S AIRCRAFT LEASING UNIT IN $30 BILLION DEAL | BUSINESS STANDARD NEWS
(Reuters) - The world's two largest aircraft leasing companies are combining to create a new financing giant after Ireland's AerCap finalised a deal worth more than $30 billion to buy the leasing business of General Electric.
The two companies, which tied the knot after days of speculation surrounding a takeover of GE's leasing arm GECAS, together control more than 2,000 jets, dwarfing rivals.
The tie-up creates easily the largest buyer of jetliners built by planemakers Airbus and Boeing and will reshape a global air finance industry that has attracted a flood of capital in recent years as investors look for higher returns.
Shares in both New York-listed companies fell about 6% as AerCap prepared to issue new stock to help finance the transaction and GE disappointed expectations of some investors that it would raise its cash outlook.
NSE BECOMES CO-PROMOTER IN IGX, BUYS 26% STAKE IN GAS TRADING HUB – BUSINESS STANDARD
RIs would have to ensure that in the case of LE accounts opened prior to April 1, 2021, the KYC records are uploaded on to CKYCR when the updated KYC information is obtained/received from the client, Sebi said.
Also, registered entities would have to ensure that during such receipt of updated information, the clients' KYC details are migrated to current client due diligence standards.
Further, to ensure that all existing KYC records of individual clients are incrementally uploaded on to CKYCR, Sebi said registered entities would have to upload the KYC records pertaining to accounts of individuals opened prior to August 1, 2016, as and when updated KYC information is obtained/received from the client.
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AQUA SECURITY RAISES $135 MN TO HIT $1 BN-VALUATION, TO FOCUS ON INDIA R&D | BUSINESS STANDARD
US- and Israel-based Aqua Security, which has an R&D centre in Hyderabad, has raised $135 million in Series E funding led by ION Crossover Partners, raising the startup’s valuation at more than $1 billion. The cloud computing security company has raised $265 million in total.
Aqua’s existing investors--M12 (Microsoft’s venture fund), Lightspeed Venture Partners, Insight Partners, TLV Partners, Greenspring Associates, and Acrew Capital--participated in the round.
With about 50 employees in the country, India is Aqua’s strategic centre and it is going to double its investment here in 2021, making the India centre becoming the fastest growing R&D centre for Aqua in 2021, said the company. Aqua is looking to expand its R&D Team by 100 per cent this year in 2021 to become at least 20 per of the overall global workforce and add additional functions to the site as well.
MONROW RAISES FUNDING FROM 9UNICORNS, TO EXPAND TO TIER 2,3 CITIES – MINT
Women's direct-to-consumer footwear brand Monrow has raised an undisclosed amount of funding from venture capital fund 9Unicorns.
In November, the startup had raised a pre-Series A investment from early-stage investors such as Venture Catalysts, Blume Ventures, LetsVenture, and other super angels - Aprameya Radhakrishna (Founder of Taxiforsure and Koo app), Sweta Rau, Archana Priyadarshini, and Ravi Soni.
PUBG'S SOUTH KOREAN PARENT INVESTS $22.4 MILLION IN INDIAN ESPORTS COMPANY NODWIN GAMING | BUSINESS INSIDER INDIA
PUBG Mobile developer Krafton has invested $22.4 million in the homegrown esports company Nodwin Gaming, the media reported .
According to TechCrunch, the aim is to "maintain some presence in what was once its key overseas market" after the ban on PUBG along with several other Chinese apps last year (although Krafton is a South Korea-based firm).
"With Krafton coming on board, we have an endorsement from the mecca of gaming and esports -- South Korea -- on what we are building from India for the world based on our competence in mobile first markets," Akshat Rathee, co-founder and managing director of Nodwin Gaming, said in a statement.
PANASONIC TO BUY U.S. SOFTWARE FIRM BLUE YONDER FOR $6.5 BILLION: NIKKEI – THE ECONOMIC TIMES
Panasonic Corp will buy U.S. software firm Blue Yonder for 700 billion yen ($6.45 billion), the Nikkei reported , saying it was the Japanese electronics firm's biggest acquisition since 2011.
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While Panasonic bought 20% stakes of Blue Yonder in 2020, it is now in the final stage to acquire the rest from shareholders including Blackstone Group Inc, the Nikkei said, citing unnamed sources.
The move comes as the Japanese company aims to expand hardware that combines software, sensors and other devices to help companies improve operational efficiencies, Nikkei said.
WARBURG PINCUS TO INVEST RS 800 CRORE FOR A 0.49% STAKE IN ADANI PORTS AND SEZ - THE HINDU BUSINESSLINE
More investment in the offing in APSEZ or its units by the marquee investor
Global private equity giant Warburg Pincus LLC will invest ₹800 crore for a 0.49 per cent stake in Adani Ports and Special Economic Zone Ltd (APSEZ), joining the list of marquee investors in India’s biggest private port operating company.
The US-based PE firm is expected to invest more into APSEZ or its units, sources said.
APSEZ will issue up to 1,00,00,000 equity shares at ₹800 a share to Windy Lakeside Investment Ltd, a unit of Warburg Pincus, for a total consideration of up to ₹800 crore, APSEZ said in a statement.
WINDY LAKESIDE INVESTMENT PICKS STAKE WORTH RS 800 CR IN ADANI PORTS | BUSINESS STANDARD
The Board of Directors of Gautam Adani-led Adani Ports and SEZ Limited has approved the issuance, offer and allotment of up to 10,000,000 equity shares of face value of Rs 2 each to global private equity form Windy Lakeside Investment Ltd, not belonging to the promoter or promoter group of the company,
The shares will be issued on a preferential basis in accordance with Chapter V of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended, and other applicable laws, at a price of Rs 800 per equity share (at a premium of Rs 798 per equity share) aggregating to Rs 800 crore.
The stake pick is subject to the approval of regulatory/ statutory authorities and the shareholders of the company.
JUNGLE VENTURES LEADS $46 MILLION ROUND IN TURTLEMINT – MINT
InsurTech platform Turtlemint said it has raised funding from Singapore-based Jungle Ventures, its first investment in the category, bringing the startup’s Series D fundraising to a close at $46 million. The funds will be used to boost insurance distribution and innovation in India, the company said in a statement.
“This is our first investment in the Insurance tech space in India and we are very excited to partner with the team at Turtlemint. Micro entrepreneurs are the backbone of the Indian economy and we see Turtlemint playing a huge role in making them more digitally inclusive. India lags behind in improving the depth and breadth of insurance coverage and the recent
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initiatives by the government are in the right direction," said Amit Anand, Founding Partner, Jungle Ventures.
DUPONT TO BUY LAIRD PERFORMANCE FOR $2.3 BN IN ELECTRONICS MATERIALS PUSH | BUSINESS STANDARD
DuPont said it would buy Laird Performance Materials for $2.3 billion from private equity firm Advent International, as it looks to expand its portfolio of advanced electronic materials that is used in areas such as smart and autonomous vehicles and fifth generation telecommunications.
Rapidly increasing demand for these materials also used in high-performance computing, artificial intelligence, and internet of things has led to electronics becoming a key growth area for DuPont.
The company last month forecast full-year profit and revenue above Wall Street expectations on the back of robust demand from chip companies and smartphone makers launching 5G handsets.
WEBSCALE RAISES $26 MILLION TO ACCELERATE E-COMMERCE CLOUD – MINT
E-commerce cloud company Webscale said it has raised $26 million from investors and Silicon Valley Bank. The Series C round was led by BGV, STCAP Ventures and Mohr Davidow Ventures, with participation from Grotech Ventures, the company said in a statement.
“Webscale is designed around the needs of our customers, delivering the best of cloud computing, commerce technologies and scalable automated infrastructure," said Sonal Puri, CEO, Webscale.
TRIFECTA CAPITAL RAISES $140 MILLION TO CLOSE ITS SECOND FUND – THE ECONOMIC TIMES
Venture debt fund Trifecta Capital has raised $140 million (Rs 1,025 crore) towards the final close of its second fund, higher than targeted on sustained interest from domestic institutional investors, family offices and large fund of funds such as Small Industries Development Bank of India (Sidbi).
“We had announced our first close at Rs 750 crore in March last year and have made a final close now at Rs 1,025 crore,” said co-founder and managing partner Rahul Khanna.
Trifecta Capital, launched in 2015 with a Rs 500-crore fund, is one of the first venture debt funds from India.
SQUARE TO PAY $297 MN FOR MAJORITY STAKE IN RAPPER JAY Z'S TIDAL | BUSINESS STANDARD
Payments firm Square Inc agreed to buy a majority ownership stake in Tidal, a music streaming service owned by rapper Jay Z, for $297 million in cash and stock.
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Square, co-founded by Twitter Inc Chief Executive Officer Jack Dorsey, said Jay Z, whose real name is Shawn Carter, would become a member of Square's board of directors.
"Why would a music streaming company and a financial services company join forces?!... It comes down to a simple idea: finding new ways for artists to support their work," Dorsey said on Twitter.
WIPRO TO ACQUIRE UK-BASED IT CONSULTANCY CAPCO FOR $1.45 BILLION – THE ECONOMIC TIMES
Wipro NSE -3.71 % Ltd. is paying $1.45 billion to acquire Capco, a British IT consultancy, in its boldest bet yet as the fourth largest Indian software exporter seeks to keep pace with its fast- growing peers in the country’s $147 billion IT outsourcing industry.
Announcing the all-cash deal, which ranks among the largest acquisitions by an Indian IT services company, the Bengaluru-headquartered IT firm said that Capco will continue to operate as an independent entity. The Wipro-Capco deal is expected to close in June following regulatory approvals, Wipro executives told analysts .
“I had shared (in November) that you will see a bolder, more ambitious Wipro, one that will be more risk-taking and not be afraid to shake up the applecart,” said Wipro chairman Rishad Premji. “This acquisition fits well into that strategy and will pave the path of building a bold tomorrow for Wipro."
INSURTECH STARTUP SYMBO PLATFORM RAISES $9.4 MILLION TO SCALE IN INDIA – LIVEMINT
Symbo Platform Holdings, Singapore-based InsurTech platform said that it has raised $9.4 million led by CreditEase Fintech Investment Fund and San Francisco based investment firm Think Investments, with participation from existing investors Integra Partners, Insignia Ventures and AJ Capital.
A large proportion of the funds will be used for investment into Symbo’s Indian affiliate, Symbo India Insurance Broking Pvt Ltd. (SIIB). SIIB has been working towards simplifying insurance for customers, helping them to buy covers based on their personalized needs.
CHEVRON TO BUY OUT NOBLE MIDSTREAM PARTNERS IN $1.32-BILLION DEAL | BUSINESS STANDARD
Chevron Corp said it would buy the shares of Noble Midstream Partners LP it does not already own in an all-stock deal that values the pipeline operator at $1.32 billion, a month after making a slightly smaller offer.
Noble Midstream’s unitholders will get 0.1393 Chevron shares for each unit held under the new agreement, Chevron said.
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As of Chevron’s closing price, the offer translates to $14.55 per Noble Midstream share. The oil major’s original offer, announced in February, envisioned Noble Midstream shareholders getting about $12.47 per share.
The final value under the new deal, however, will depend on the price Chevron’s shares are trading at when the deal closes, expected in the second quarter.
EDTECH STARTUP QUESTT RAISES ₹9.6 CRORE LED BY CHIRATAE, AET FUND
Questt, a school homework app, said it has raised ₹9.6 crores ($1.35 million) in a seed round funding led by Chiratae Ventures, AET Fund and entrepreneurs, including Kunal Bahl, Rohit Bansal, Pranay Gupta (Founder of 91 Springboard), Ramakant Sahrama (LivSpace), First Cheque, and Razorpay Founders.
Founded by Akhil Singh, Mohsin M and Rohit Pande in December 2020, Questt is an assessment/homework platform that automates homework assessment for teachers, saving 90% of their time and gamifies assignments for students.
DEALSHARE RAISES ₹25 CRORE DEBT FUNDING FROM INNOVEN CAPITAL – MINT
E-commerce startup DealShare said it has raised ₹25 crore in a debt funding from Innoven Capital. This is the second round of fund raising for DealShare in the last six months, taking the total amount raised by the startup to ₹267 crore.
In December 2020, DealShare had raised Series C funding of ₹153 crore from WestBridge Capital and Alpha Wave Incubation, a venture fund managed by Falcon Edge Capital, Z3Partners, Matrix Partners India and Omidyar Network India.
LAS VEGAS SANDS SELLS VEGAS PROPERTIES FOR ABOUT $6.25 BILLION | BUSINESS STANDARD NEWS
Las Vegas Sands Corp , founded by late casino mogul Sheldon Adelson, will sell its Vegas properties for $6.25 billion, exiting the U.S. gambling hot spot after three decades to focus on Asia, home to the world's largest gambling hub, Macau.
The sale comes nearly two months after the death of Adelson - widely credited with helping transform the Chinese territory of Macau from a den of hard core gambling parlors into a center of luxury resorts and convention centers with revenue that now dwarfs Las Vegas.
Las Vegas Sands said the deal underscores its strategy of reinvesting in its Asian operations, with a focus on Macau and Singapore. Macau and Singapore accounted for 48% and 35% of the company's total revenue in 2020, respectively, according to Refinitiv Eikon data.
LIGHTSPEED VENTURES, WIPRO VENTURES, OTHERS INVEST $48 MN IN YUGABYTE | BUSINESS STANDARD
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US-based SQL database developer Yugabyte has raised a $48 million funding led by Lightspeed Venture Partners with additional participation by Greenspring Associates, Dell Technologies Capital, Wipro Ventures and 8VC. So far the company has raised $103 million, including a $30 million capital fund announced in June last year.
The fresh funding will be used to expand Yugabyte’s R&D, sales and customer functions in the EMEA and APAC markets. The company is also planning to double its headcount this year. It is currently building out its engineering, development operations and support staff in India, Russia and Canada. To accelerate its development and recruiting efforts in the APAC region, it has also acquired India-based Falarica.io.
FLYING TAXIS STARTUP THE EPLANE COMPANY RAISES $1 MILLION - TIMES OF INDIA
IIT Madras- incubated ‘flying taxis’ builder The ePlane Company has raised around $1 million in seed funding in a round led by VC firm Speciale Invest and Silicon Valley-based entrepreneur and investor Naval Ravikant. The round also saw participation from JavaCapital, FirstCheque.vc, and IIM Ahmedabad-housed incubator CIIE.CO.
The startup, which is building compact electric planes for short-range intra city commutes, said it will utilise the funding to grow its engineering team to help them achieve early product demonstrations by 2021. Currently a 16-member team, the startup plans to expand to around 25 people. Further the company also targets to globally launch the human-rated 200 kg taxi for deployment by 2024. Launched in 2019,The ePlane Company is the brainchild of aerospace engineering professor Satya Chakravarthy and his student Pranjal Mehta. ePlane operates out of IIT-M's National Centre for Combustion Research and Development, which has given rise to other deep tech startups such as Agnikul Cosmos.
AVIVA SELLS FRENCH BUSINESS TO AÉMA GROUPE FOR $3.9 BILLION – THE ECONOMIC TIMES
Aviva Aviva Ind 11.18-0.22 (-1.93%) has agreed to the sale of its operations in France for 3.2 billion euros ($3.89 billion) to newly created French insurer Aéma Groupe, it said .
The London-based insurer, led by boss Amanda Blanc, said that the sale would increase excess capital by 2.1 billion pounds ($2.95 billion) and centre cash of around 2.8 billion pounds.
Aéma Groupe was formed in January through the merger of Aésio mutuelle and Macif Group, and has 8 million customers.
"The transaction will increase Aviva's financial strength, remove significant volatility and bring real focus to the Group," said Chief Executive Officer Amanda Blanc.
DRONE STARTUP IDEAFORGE RAISES ₹15 CRORE FROM BLACKSOIL – MINT
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New Delhi: ideaForge, a homegrown unmanned aerial vehicles (UAVs) manufacturer backed by US-based WRVI Capital and leading companies like Qualcomm and Infosys, has raised ₹15 crore from venture debt firm BlackSoil.
The funds will be used to meet the working capital requirements of the company to service its large order book, it said in a statement. ideaForge serves a number of homeland and security agencies in the country and its product portfolio of drones has been developed keeping in mind the use cases relevant to India.
"The funds, along with recent fundraise from Infosys and other investors will support ideaForge in the execution of our burgeoning order book, and we hope to build on this relationship and catapult the company into the next phase of growth," said Ankit Mehta, Co-Founder, and CEO of ideaForge.
APNA.CO RAISES $12.5 MILLION LED BY SEQUOIA, GREENOAKS CAPITAL – MINT
Apna.co, a vertical professional networking platform said that it has raised $12.5 million led by Sequoia Capital India and Greenoaks Capital. Existing investors, Lightspeed India and Rocketship.vc also participated in the round.
The funds raised will be used to strengthen the platform’s presence in existing cities, expand into new geographies, invest in exceptional talent, as well as build sophisticated engineering and product capabilities, the company said.
Founded in 2019, Apna.co helps expanding grey and blue-collar workers unlock professional, networking and skilling opportunities. The app comprises of vertical communities for skilled professionals like carpenters, painters, field sales agents and many others. Users in the app get access to local job opportunities, can network with peers, practice interviews together, share their accomplishments, and gain new skills.
NEOBANKING PLATFORM OPEN ACQUIRES TAX FILING PLATFORM OPTOBIZZ FOR $5M – YOURSTORY
Open caters to over 10 lakh SMEs and claims to process $24 billion in transactions annually. The acquisition is expected to add 800,000 SMEs to its user base.
Open, a neo-banking platform for SMEs, announced the acquisition of Optobizz — a goods and services tax and financial automation startup for $5 million.
Open caters to over 10,00,000 SMEs and processes $24 billion in transactions annually. The acquisition will add 800,000 SMEs to its user base. Open will be setting up a development centre in Hyderabad, the company stated.
Founded in late 2017 by Satya Prakash Buddhavarapu, Adi Sesha Gaddam, Kalyan Alla, Ravi Somayaji and Sachin Tyagi, Optobizz is a taxation platform that caters to over 30,000 tax practitioners across the country.
IMAGINXP RAISES $1.5 MILLION LED BY VENTURE CATALYSTS – MINT
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ImaginXP, an edu-tech enterprise, said it has raised $1.5 million, led by Venture Catalysts along with co-investors Shashank Deshpande, Krish Kupathil, Samyakth Capital, among others.
Pune-based ImaginXP helps universities provide future skills degree programmes and for- credit certification courses with corporate-led curriculum, well-trained faculty and a coaching platform that brings 1,250+ corporate coaches led mentorship and live projects for students. The focus is on student outcomes by enabling universities to provide world class education in India.
RELIANCE IND ARM UPS STAKE IN US-BASED SKYTRAN FOR $27 M - THE HINDU BUSINESSLINE
Mukesh Ambani says committed to high-speed mobility solutions
Reliance Strategic Business Ventures Ltd (RSBVL), a wholly-owned subsidiary of Reliance Industries Ltd (RIL), has acquired an additional 28.16 per cent stake in US-based technology company skyTran Inc for $26.76 million.
Following the deal, RSBVL’s stake in Delaware-based skyTran, which is backed by global venture capital investors such as Innovation Endeavors, has increased to 54.46 per cent. skyTran has developed technologies for smart mobility solutions, including passive magnetic levitation and propulsion technology for personal transportation systems, aimed at reducing traffic congestion globally, RIL said in a statement.
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G. INTERNATIONAL CORPORATE NEWS UPDATES :
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US DROPS DEMAND FOR 'SAFE HARBOUR' IN GLOBAL TAX TALKS – THE ECONOMIC TIMES
US treasury secretary Janet Yellen told G20 officials that Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, US and European officials said , raising hopes for an agreement by summer.
“Secretary Yellen announced that we will engage robustly to address both Pillars of the OECD project, and that the United States is no longer advocating for ‘safe harbour’ implementation of Pillar 1,” a US Treasury official said.
Already challenging multilateral talks to reform global taxation under the Organization for Economic Cooperation and Development stalled after former treasury secretary Steven Mnuchin insisted on the contentious measure in late 2019.
Tax experts and finance officials around the world had warned that the US proposal could have allowed big US companies like Amazon, Alphabet’s Google and Facebook to opt out of whatever was agreed internationally.
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G. COURT / TRIBUNALS CASE LAWS:
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A. NATIONAL COMPANY LAW TRIBUNAL (NCLT) AND NATIONAL COMPANY LAW APPELATTE TRIBUNAL (NCLAT)
SC : NCLAT CANNOT INTERFERE WITH COC’S COMMERCIAL WISDOM; CITES BID APPROVAL BY “THUMPING MAJORITY”
SC quashes NCLAT ruling in Ricoh India insolvency case, wherein the Appellate Tribunal had set aside NCLT order approving a resolution plan belatedly accepted by the Resolution Professional under the pretext of value maximization; Speaking through Justice B.R. Gawai, the three-Judge Bench observes that “…in view of the paramount importance given to the decision of CoC, which is to be taken on the basis of ‘Commercial Wisdom’, NCLAT was not correct in law in interfering with the commercial decision taken by CoC by a thumping majority of 84.36%.”; Relying on a plethora of precedents in this regard, Court sermons that “The commercial wisdom of CoC is not to be interfered with, excepting the limited scope as provided under Sections 30 and 31 of the I&B Code.”, and concludes that thus, the decision of CoC duly approved by NCLT would prevail:SC
The judgment was delivered by Justice A.M. Khanwilkar, Justice B.R. Gavai and Justice Krishna Murari.
HC: ALLOWS MCA TO PROCEED AGAINST COS. FOR NON-APPOINTMENT OF WHOLE-TIME CS
Kerala HC grants liberty to the Govt. to proceed against Petitioner Companies for violating Sec. 203 of Companies Act, which inter alia mandates appointment of a whole-time Company Secretary where a company’s paid-up capital exceeds Rs. 5 Cr. (as per provisions existing at the time of filing instant petition); Petitioners sought for directions to be issued to the Respondents to permit them to file e-form ACTIVE, INC-22A without insisting on appointment of a whole-time CS, and that the restriction imposed in filing e-form ACTIVE, INC-22A w.r.t. non-compliance of Sec. 203 or Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 be declared arbitrary and illegal; Petitioners submitted that - (i) MCA website was not accepting their e-form ACTIVE, since their paid-up capital was more than Rs. 5 Cr., and still they had not appointed a whole-time CS as per Rule 8A, (ii) but the Petitioners had part-time CS and Auditor to properly look after its affairs, and for the last so many years, they have been functioning well within the provisions of Companies Act without giving any room for initiation of any penalty proceedings; However, Respondents submitted that as per the existing rules, the Petitioners were bound to appoint whole-time Company Secretaries, as their paid up capital was more than Rs. 5 Cr., and they ought not to be granted any exemption, and argued that non-appointment of CS is an offence, and if a company fails to comply with the provision, the company and every officer in default shall be punishable; Perusing Sec. 203 of the Companies Act, 2013, HC remarks that “It is evident that the petitioner-Companies have not adhered to the provisions of the Companies Act, especially Sec. 203 thereof. In such circumstances, the respondents are empowered to proceed against the petitioner-Companies, in accordance with law.”:Kerala HC
The order was passed by Justice N. Nagaresh.
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SC: UPHOLDS NCLT JURISDICTION OVER CONTRACTUAL DISPUTES ARISING SOLELY FROM CORPORATE DEBTOR’S INSOLVENCY
SC in an expansive judgement, speaking through Justice D.Y. Chandrachud, holds that the NCLT/NCLAT correctly stayed the termination of the Power Purchase Agreement (‘PPA’) by the Appellant, since allowing it to terminate the PPA would certainly result in the “corporate death” of the Corporate Debtor inasmuch as the PPA was its sole contract; Dismissing Appellant’s argument that Section 238 does not apply to a bilateral commercial contract between a Corporate Debtor and a third party and only applies to statutory contracts or instruments entered into by operation of law, SC opines that the said section “…stipulates that IBC would override other laws, including an instrument having effect by virtue of any such law…Section 238 does not state that the “instrument” must be entered into by operation of law; rather it states that the instrument has effect by virtue of any such law.”; Further, concurring with Respondents’ submission, SC reiterates that merely because a duty has been imposed on the IRP or the RP, it does not mean that the jurisdiction of the NCLT was circumscribed under section 60(5)(c) of the IBC and that the RP could approach the NCLT for adjudication of disputes that were related to the insolvency resolution process; Adds that “Therefore…the RP can approach the NCLT for adjudication of disputes that are related to the insolvency resolution process. However, for adjudication of disputes that arise dehors the insolvency of the Corporate Debtor, the RP must approach the relevant competent authority.”:SC
The judgment was delivered by a Division Bench of Justice Dr. D.Y. Chandrachud and Justice M.R. Shah.
CALCUTTA HC TO DECIDE ON RETROSPECTIVITY, INTERPRETATION OF DIRECTOR DISQUALIFICATION PROVISIONS
Calcutta HC lists a batch of petitions on the issue of retrospective effect and interpretation of Sec. 164 and 167 of the Companies Act, 2013, for final hearing on April 13, 2021; States that “Since there are conflicting views of different High Courts on the retrospective effect and the interpretation of Sections 164 and 167…as argued by petitioners, an arguable prima facie case has been made out which requires final hearing of the writ petitions on merits.”; Thus, in the interim, stays the operation of disqualification/deactivation of the DIN numbers of petitioners till April 30, 2021 or until further orders, whichever is earlier.
The order was passed by Justice Sabyasachi Bhattacharyya.
HC : NCLAT, NCLAT ENTITLED TO REGULATE OWN PROCEDURE, PROVIDED RULES NOT ARBITRARY
Delhi HC while disposing a petition seeking provision for open virtual links for attending hearings at the NCLT and NCLAT, opines that “…forums like the NCLT and NCLAT, which have a high quantum of work, ought to be permitted to regulate their own procedure so long as the same is not arbitrary. In virtual hearings, there is a possibility of enormous disturbance if there is no regulated entry.”:Delhi HC
The order was passed by Justice Pratibha M. Singh.
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The Advocate-Petitioner appeared in person, whereas the Respondents were represented by ASG Chetan Sharma and CGSC Dev P. Bhardwaj along with Advocates Amit Gupta, Vinay Yadav, Sahaj Garg, Akshay Gadeock and R.V. Prabhat.
NCLAT: ALLOWS CREDITOR TO INVOKE BANK GUARANTEE AGAINST CORPORATE DEBTOR EVEN DURING MORATORIUM
NCLAT allows Appellant to invoke Bank Guarantee against Corporate Debtor, holding that the said guarantee can be invoked/encashed even during the moratorium period u/s 14 of the IBC, sets aside NCLT’s order as it was passed without considering the amended provision u/s 14(3)(b); Notes that (i) the Appellant had entered into an agreement for sale and purchase of aluminium products with the Corporate Debtor and for ensuring the payments the Bank issued a Bank Guarantee in favour of the Appellant, (ii) due to default in payment by the Corporate Debtor, Appellant requested the Bank for invocation of the guarantee which was refused; Observes that the provisions of Section 14(3)(b) have been substituted with retrospective effect from June 06, 2018 according to which, Sec. 14(1) shall not be applicable to a surety in a contract of guarantee to a corporate debtor and that the NCLT’s order was passed without considering this amended provision; NCLAT further explains that the amendment has been made on the recommendation of Report of Insolvency Law Committee March, 2018, which concludes that Section 14 of the IBC does not intend to bar actions against assets of guarantors to the debts of the Corporate Debtor and recommended that explanation to clarify this may be inserted in the said section, thus, to restrict the scope of moratorium to the assets of the Corporate Debtor only; Elucidating that the bank guarantee is irrevocable and unconditional and payable on demand without demur, NCLAT reiterates that the assets of the surety are separate from those of the corporate debtor, and proceedings against the corporate debtor may not be seriously impacted by the actions against assets of third party like surety, relies on SC decision in SBI Vs. V. Rama Krishnan in this regard:New Delhi NCLAT
The order was passed by Justice Jarat Kumar Jain (Member-Judicial) and Shri. Kanthi Narhari (Member-Technical).
NCLAT: DISMISSES “FRIVOLOUS APPEAL” BY SUCCESSFUL RESOLUTION APPLICANT ACTING AT INVISIBLE CHARACTERS’ BEHEST
NCLAT rejects a “frivolous appeal” challenging certain observations made by NCLT in its order approving the Appellant’s resolution plan which was duly approved by the Corporate Debtor’s CoC; Observes that apparently, the Appellant was acting at the behest of some “invisible characters”, who in the wake of NCLT’s observations, are not difficult to identify; Appellant claimed that while approving the resolution plan, NCLT made adverse observations w.r.t. wrongly perceived poor coverage of security against the loan advanced by the Financial Creditors of the Corporate Debtor and directed Reserve Bank of India besides Chairman and Managing Directors of the Financial Creditors to inspect the loan account and determine the responsibilities for such poor security coverage; Notes that the total debt advanced was of Rs. 550 Cr., while the resolution plan value was merely Rs. 24 Cr. i.e. less than 5% of the total debt, thereby raising eyebrows as there was a huge gap between the debt advanced and the value of securities taken by these Banks coupled with the fact that the bank officials could not
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satisfactorily explain the same; Appellant submitted that with the Damocles sword hanging on the Banks heads, the Banks would not be providing financial facilities to the Appellant for implementation of the Resolution Plan; Remarking that “This argument is sound neither in technique nor in substance and deserves to be outrightly rejected.”, NCLAT remarks in exasperation, “It is astonishing as to how the Appellant can claim to be aggrieved of the impugned order when its Resolution Plan stands approved by the Adjudicating Authority and no adverse observations have been made against it.”:New Delhi NCLAT
NCLAT: REJECTS APPEAL FOR “RE-OPENING” CIRP, CITES CLAIMS FILED AT “HUGELY BELATED” STAGE
NCLAT dismisses appeal assailing the NCLT order approving a resolution plan which was unanimously approved by the corporate Debtor’s CoC, and holds that since the CIRP has crossed the culminating point, the Appellants can’t be allowed to reopen the same and direct de novo exercise; Appellants submitted that the CIRP period was extended by NCLT and the Appellants had requested the IRP to consider their claims before the approval of resolution plan, but the same was not considered; However, NCLAT observes that the Appellants had failed to adhere to the timelines prescribed under the IBC as regards filing claims and remarks, “…the fact that the CIRP period was extended…would not clothe the Appellants with a right to claim consideration of their claims which stage admittedly was over.”; Also holds that the subsequent rejection of I.A.s declining to allow proof to be adduced in support of claims at a hugely belated stage, leaves no room for contending that opportunity of submitting the claims and adducing proof in support thereof was not provided to the Appellants:New Delhi NCLAT
NCLT: DIRECTOR-CREDITOR WHO RESIGNED BEFORE CIRP COMMENCEMENT OUTSIDE ‘RELATED PARTY’ PURVIEW
NCLT holds that a Director of the Corporate Debtor who resigned from Directorship before CIRP commencement, and his relatives, will not come under the purview of ‘related party’, and holds that there is no illegality in the constitution of CoC; States that the matrix to decide whether R-2 (the ex-Director) is a related party of the Corporate Debtor or not, is what his position or status was as on the date when it stepped into the shoes of the creditor or when he was made a part of CoC; Explains that as on the date of R-2 becoming a part of CoC, R-2 was purely a Financial Creditor of the Corporate Debtor and hence, it cannot be said that because he was a related party of the Corporate Debtor prior to becoming a CoC member, he is still a related party and can’t be a part of CoC; NCLT observes that R-2 had resigned from Directorship after CIRP application was filed, but “at that moment it cannot be said that the application will be admitted or rejected”, and hence, rejects the argument regarding eligibility as on CIRP commencement date; Further, noting that R-2 is a financial creditor who’s exercising its rights after stepping into the shoes of the creditors, NCLAT holds that a creditor can’t be included in the CoC, merely because the creditor was a related party of the Corporate Debtor before the commencement of CIRP, would be impractical and will prejudice the rights of the Financial Creditor:Kochi NCLT
The order was passed by Shri. Ashok Kumar Borah (Member - Judicial).
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NCLT: FORWARD PURCHASE AGREEMENTS LACKING COMMERCIAL EFFECT OF BORROWING, NOT ‘FINANCIAL DEBT’
NCLT sets aside IRP’s decision to admit Respondents’ claims as financial creditors, on finding that the transactions between the Corporate Debtor and Respondents were essentially simple agreements of sale and purchase and did not have the commercial effect of borrowing, holds that “The same would not come within the definition of ‘financial debt’ under section 5(8)(f) of the Code.”; Notes that – (i) Corporate Debtor’s WOS entered into Forward Purchase Agreements (‘FPA’) with the Respondents whereby the Corporate Debtor executed a deed of guarantee as a guarantor, (ii) pursuant to initiation of CIRP against the Corporate Debtor, the Respondents filed their claim as financial creditors which was admitted by IRP, however, (iii) one of Corporate Debtor’s financial creditor (‘Applicant’) challenged such admission and claimed that Respondents can only be classified as operational creditors; Observes that the amount raised under a FPA would not come within the definition of a financial debt unless it bears the dual attributes of having been disbursed against the consideration for time value of money and has the commercial effect of a borrowing, and that once the amount raised under such an agreement is classified as a financial debt, any liability in respect of the guarantee, would thereupon be a financial debt; Finds that the recitals of agreements and the deeds of guarantee do not envisage raising of any debt by the buyers/purchasers from Respondents, also notes that both the FPAs indicate that they were essentially forward contracts for supply of specified goods, accordingly holds that “Such transactions…may at best amount to an operational debt in terms of section 5(21) of the Code for provision of goods and services and payment in respect thereto.”; Further remarking that the guarantee given pursuant to the said FPA was for payment against default in the sale consideration of the products agreed to be purchased from Respondents, NCLT holds that “The guarantees being not a liability arising out of the transaction in terms of section 5(8)(f) of the Code, would not come within the purview of the financial debt.”, thus rules that Respondents cannot find a place in the CoC:Mumbai NCLT
The order was passed by Janab Mohammed Ajmal (Member – Judicial) and Mr. Ravikumar Duraisamy (Member – Technical).
HC: SLAMS PETITIONER FOR USING “SLANG” IN PETITION IMPUGNING NCLT/NCLAT PROCEDURES UNDER IBC
Delhi HC dismisses petition alleging that the NCLT and NCLAT are adopting wrong procedures vis-a-vis IBC proceedings, slams the petitioner for using “slang” in the petition; HC remarks that “The Petitioner appears to have drafted the petition on his own”, further asserts that such language is not permissible in pleadings before the Court; Thus holds that the petition is liable to be dismissed and directs that “If the Petitioner is aggrieved by any order of the NCLT or NCLAT, he may draft a proper petition and only then, file the same.”; Refrains from imposing costs since the Petitioner appeared in person:Delhi HC
The order was passed by Justice Pratibha M. Singh
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HC: CONDEMNS BORROWER CO. FOR “STALLING PUBLIC MONEY RECOVERY”, BY MERELY PROCRASTINATING THROUGH OTS-PROPOSALS
HC dismisses a Director’s petition seeking direction to Bank of Maharashtra, to consider his OTS offer for a borrower company which failed to repay, holding, “…though petitioner has sought to distance himself by stating…that he has ceased to be a Director on the Board of the Company….the tone and tenor of the letters and emails noted herein unambiguously establish that he is actively involved in the affairs of the Company ...This conduct, without anything more, should entail dismissal of this writ petition in limine”; Court remarks that, “It is rather strange that Banks lend money without proper tangible security and offer to receive a portion of it under the OTS Scheme. Logically, this is preposterous because, Banks deal with money belonging to the depositors. Waiver of portion of money lent by whatever name it is called, directly results in inflation and shall have adverse impact on the economic health of the Nation.”; Further, noting that in the OTS Scheme under consideration, the borrower is liable to pay 70% on the secured portion and 35% on the unsecured portion, and questions as to why a borrower is permitted to pay only 70% on the secured portion and the remaining 30% is waived, and urges those concerned in the Ministry of Finance and RBI to have a re-look into the Scheme; Rejects Petitioner’s submission that a right is created in a borrower based on RBI guidelines, and therefore, is entitled for grant of OTS, and states, as and when a new OTS Scheme is announced, the borrower - Company and the Petitioner have only given an impression that the account would be settled by availing OTS, but, in fact, the Petitioner has only procrastinated by indulging in correspondence and approaching the Courts; Further, dismissing Petitioner’s argument that OTS will have to be considered only on the ledger balance as on the date of NPA, HC remarks, “If this contention is to be accepted, any borrower/guarantor may choose to repay at their sweet leisure several years after declaration of NPA. This is anti-thesis of economic progress. In financial market, money has to grow by the day.”; On perusing the documents and having heard the parties, Court condemns the Petitioner for stalling recovery of public money till date, thereby disentitling the Petitioner from equitable relief under Art. 226 of the Indian Constitution, imposes Rs. 2 lakh costs:Karnataka HC
The order was passed by Justice P.S. Dinesh Kumar.
SC : IBC MORATORIUM APPLICABLE TO CHEQUE DISHONOUR PROCEEDINGS AGAINST CORPORATE DEBTOR
SC while disposing a batch petitions, wherein cases were filed against Corporate Debtors for dishonour of cheques u/s 138 of the Negotiable Instruments Act, rules that “…a Section 138/141 proceeding against a corporate debtor is covered by Section 14(1)(a) of the IBC.”; Clarifies that however, such a bar would apply only to the Corporate Debtor, and elucidates that “…the moratorium provision contained in Section 14 of the IBC would apply only to the corporate debtor, the natural persons mentioned in Section 141 continuing to be statutorily liable under Chapter XVII of the Negotiable Instruments Act.”:SC
The judgment was delivered by a three-judge bench comprising Justice R.F. Nariman, Justice Navin Sinha and Justice K.M. Joseph
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NCLAT : EXTENDS “REVERSE CIRP” TIMELINE FOR REAL ESTATE FIRM, GIVEN COVID-19 PANDEMIC
NCLAT allows application filed by a real estate firm’s Promoter seeking extension in timeline for completion of the project in context of the timelines provided by it earlier while prescribing reverse CIRP for the firm taking cue from its judgment in Umang Realtech case, owing to COVID-19 pandemic; States that, “When the judgment was delivered on 5th of February, 2020, the timelines given therein were achievable. However, with the present pandemic situation it is impossible to work with a larger manpower with restrictions and mandatory guidelines in place to be followed for safety of workers.”; Observing that given the disastrous effects of the pandemic of disrupting all economic activities with probably the worst adverse impact on Infrastructure Projects/ Real Estate Projects compounded by migration of labour, etc., NCLAT holds that it would be in the interest of all stake holders to mitigate the hardship created by the unprecedented situation aggravated by the nationwide lockdown and the halting/slowing down of economic/construction activities; Given this context, asserts that this warrants a magnanimous approach as the Reverse Corporate Insolvency Resolution Process showing encouraging results and safeguarding the interests of all stake holders must be given one more chance of proving result oriented; With this noble object which has in essence been subscribed to by the stake holders interested in completion of the project by the real estate firm, NCLAT extends the timelines envisaged in its earlier ruling without altering, substituting or modifying its structural terms; Lastly, spares the Promoter from action for delay in infusing funds as directed earlier within specified time, but clarifies that “…this is not with a view to condone the default but only to promote the ends of justice as giving further lease of life to the visionary step taken in pursuance of an experiment in the form of Reverse Corporate Insolvency Resolution Process must not give way to a single instance of default which happened just on the eve of imposition of lockdown due to outbreak of COVID-19 pandemic.":New Delhi NCLAT
The order was passed by Justice Bansi Lal Bhat (Acting Chairperson), Justice Jarat Kumar Jain (Member – Judicial) and Dr. Alok Srivastava (Member – Technical).
SAT: SEBI PENALTY NOT ‘DEBT’ UNDER PRESIDENCY-TOWNS INSOLVENCY ACT; ALLOWS RECOVERY FROM DISCHARGED INSOLVENT
SAT holds that SEBI’s penalty order issued upon the Appellant (declared insolvent under the Presidency-Towns Insolvency Act, 1909 - ‘Insolvency Act’) for indulging in synchronised and self- trades in violation of SEBI PFUTP Regulations, is not a debt provable u/s 17 r.w.s. Sec. 46 of the Insolvency Act; Rejects Appellant’s contention that this Court’s leave was not taken before initiating the proceedings under the PFUTP Regulations and therefore, the order is void, and elucidates that as the SEBI order is not a “debt” provable u/s 17, r.w.s 46(3) of the Insolvency Act leave of the Court is not required u/s 17; Moreover, opines that the impugned order had attained finality earlier, when the appeal filed against the said order was dismissed as withdrawn and no liberty was taken to challenge the said order afresh; Thus dismisses the appeal on the ground that question regarding the proceedings initiated under the Insolvency Act ought to have been taken in the appeal and could not be raised as a ground in the recovery proceedings; Lastly, specifies that since the Appellant has ceased to be an insolvent and has been discharged from
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January 21, 2020, there is no embargo upon the Recovery Officer to recover the amount from the Appellant:SAT
The order was passed by Justice Tarun Agarwala (Presiding Officer) and Justice M. T. Joshi (Judicial Member).
B. COMPETITION COMMISSION OF INDIA AND COMPETITION APPELLATE TRIBUNAL
CCI: NO DOMINANCE ABUSE BY MCGM IN IMPOSING PRE-QUALIFICATION CRITERIA UNDER WORK TENDER
CCI dismisses complaint alleging violation of competition norms by Municipal Corporation of Greater Mumbai (‘MCGM’) & Ors. (‘OPs’) on the ground that it imposed an arbitrary pre- qualification criteria to submit bid under e-tender for award of public work to contractors, and on finding that the tender condition has been met by other bidders, holds that “...the allegation of the Informant that criteria laid down by the procurer has limited the ability of the bidders to participate, is not borne out…”; Notes that – (i) Informant is an employee of one of the bidders whose bid was rejected on ground of non-fulfilment of tender condition requiring submission of MOU for Pulse Plasma Technology, (ii) the Informant alleged that the said pre-qualification criteria is itself arbitrary, discriminatory and anti-competitive and also in violation of CVC Guidelines which prohibits framing of tender prequalification criteria which are too stringent; Observes that Informant has neither alleged dominance of MCGM nor delineated any relevant market for the purpose, but has merely alleged that the tender condition that requires contractor to have an MOU for Pulse Plasma Technology, which purportedly can be obtained only from one entity in India, is unfair; Takes note that is not the case of the Informant that MCGM is a dominant procurer or has otherwise abused its dominant position in any relevant market, and on finding that at least 4 bidders participated in the bidding process out of which 3 were able to meet the criteria of the procurer, remarks that it is not evident as to why the Informant could not obtain the said MOU; Lastly, remarking that “...mere contravention of the CVC Guidelines, in the absence of any material showing contravention of the provisions of the Act, does not ipso facto imply violation of the provisions of the Act.”, the Commission opines that there exists no prima facie case and orders the information to be closed:CCI
The order was passed by Mr. Ashok Kumar Gupta (Chairperson), Ms. Sangeeta Verma and Mr. Bhagwant Singh Bishnoi (Members).
C. TAXATION UPDATES
ITAT DIRECTS CBDT TO TAKE STEPS TO AVOID UNNECESSARY LITIGATION
ITO Vs Shri Partap Singh Solanki (ITAT Delhi)
When all the documents were placed before the AO who has not taken note thereof for the reasons best known to him particularly when AO has not raised any objection to the documents sent to him for comment, the ld. CIT (A) was well within his right to decide the controversy by examining all the documents himself. When the assessee has been found to be eligible u/s
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54 qua his capital gains which have been duly explained by virtue of the sale deed qua the property in question, bank statements and sale deed of the new residential property purchased with the capitals gains received, the ld. CIT (A) has rightly and legally deleted the additions by accepting the appeal. Finding no illegality or perversity in the impugned order passed by the ld. CIT (A), present appeal filed by the Revenue is hereby dismissed.
AO CANNOT REJECT SHARE VALUATION METHOD ADOPTED BY TAXPAYER ARBITRARILY
Bharat Elevators & Engineers Private Limited Vs ITO (ITAT Kolkata)
There are two limbs in Section 56(2)(viib) of the Act. As per explanation to Section 56(2)(viib) of the Act, the first limb is valuation to be made as per the prescribed method. In fact, the method for valuation of shares is prescribed under Rule 11UA of the Income-tax Rules, 1962. The second limb is the valuation of the company based on value on the date of issue including its assets. Assets include intangible assets such as goodwill, knowhow, patents, copyrights, trademarks, licences, franchises, etc. The Assessing Officer has not taken into consideration the second limb in explanation to Section 56(2)(viib) of the Act.
TATA STEEL: ITAT REFUSES TO STAY ADJUSTMENT OF DEMAND AGAINST REFUND
Tata Steel Limited Vs DCIT (ITAT Mumbai)
1. By way of these stay applications, the assessee applicant has sought a stay on collection/ recovery of tax and interest demands aggregating to Rs 1,223.83 crores, in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2009- 10 to 2014-15, and also a stay on adjustment of these demands against refund of Rs 442.22 crores due to the assessee.
2. Heard the parties, perused the records.
NO SECTION 68 ADDITION MERELY FOR COMMON ADDRESS & DIRECTORS
Society For Institute For Professional Studies Vs JCIT (ITAT Delhi)
It is well settled Law that assessee need not to prove source of the source. We rely upon the Judgment of the Hon’ble Delhi High Court in the case of Dwarkadhish Investment P. Ltd., [2011] 330 ITR 298 (Del.) (HC), Judgment of Hon’ble Gujarat High Court in the case of Rohini Builders 256 ITR 360 (Guj) and Judgment of Hon’ble Allahabad High Court in the case of Zafar Ahmed & Co. 30 taxman.com 269 (All.).
PROFIT ON SALE OF PENNY STOCK/SHARES- ITAT DELETES ADDITION
DCIT Vs Jainam Investments (ITAT MUMBAI)
Under this issue the revenue has challenged the deletion of disallowance of Rs.4,71,19,785/- on of sale shares of M/s. Mahavir Advanced Remedies. The Ld. Representative of the revenue
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has argued that the CIT(A) has wrongly deleted the disallowance of Rs.4,71,19,785/-, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside.
D. OTHERS
SC : NON-SIGNATORY OF DISHONOURED CHEQUE NOT LIABLE FOR PROSECUTION; QUASHES CRIMINAL COMPLAINT
SC allows an appeal challenging Delhi HC order rejecting the Appellant’s plea for quashing a criminal complaint for cheque dishonour u/s 138 of the Negotiable Instruments Act, inter alia observing that she was not liable to be convicted for the offence, as the dishonoured cheque was signed by her husband and drawn on his bank account; Notes that the Appellant was neither the signatory to the cheque, nor was the cheque drawn from her bank account, and the account in question wasn’t a joint account; Pertinently, highlights that Sec. 138 of the NI Act doesn’t speak about joint liability, and observes, “…in fact even in case of a joint liability…a person other than a person who has drawn the cheque on an account maintained by him, cannot be prosecuted for the offence under Section 138….”; Clarifies that a person might be jointly liable to pay the debt, but such person cannot be prosecuted unless the bank account is jointly maintained and he was a signatory to the cheque; Court remarks, “…the High Court has committed a grave error in not quashing the complaint against the appellant for the offence…”, sets aside the criminal complaint against Appellant, terming it as “abuse of process of law”:SC
The order was passed by Justice Dr. Dhananjaya Y. Chandrachud and Justice M.R. Shah.
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SERVICES PORTOLIO
CORPORATE LAWS SECRETARIAL COMPLIANCE MANAGEMENT CONSULTING
Compliance Management under Companies Act 2013, Rules Drafting and Documentation for Board and General and Regulations thereunder Meetings
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Striving to serve you more and in a better way AABID & CO - COMPANY SECRETARIES ZAYN CONSULTING PVT. LTD.
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