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PARTICULARS
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BRIEF OF CHANGES
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Notification and EFFECTIVE
DATE
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LINK OF REGULATION
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Guidelines on Anti-Money
Laundering (AML) Standards and Combating the Financing of
Terrorism (CFT)
/Obligations of Securities
Market Intermediaries under
the Prevention of Money Laundering Act, 2002 and Rules framed there
under
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The Prevention of Money Laundering
Act, 2002 (“PMLA”) was first introduced on 1st July, 2015.
According to the provisions of this act, all the specified companies registered
under Section 12 of the Securities and Exchange Board of India Act, 1992
(SEBI Act)) shall have
to adhere to
client account opening
procedures and maintain records
of such transactions as prescribed by the PMLA and rules notified there
under.
Now with the recommendations of Financial
Action Task force (FATF) on anti-money laundering standards updated
guidelines have been introduced to PMLA.
These guidelines have been divided
into two parts; the
first part is
an overview on
the background and
essential principles that concern combating Money Laundering
(ML) and Terrorist Financing (TF). The second part provides a detailed
account of the
procedures and obligations to be followed by all
registered intermediaries to
ensure compliance with
AML/CFT directives
These guidelines shall also apply to
registered intermediaries’ branches and subsidiaries located abroad,
especially, in countries which do not or insufficiently apply the FATF
Recommendations, to the extent local laws and regulations permit.
The directives states that each
registered intermediary shall adopt written procedures to implement the anti-
money laundering provisions as envisaged under the PMLA. It has been
specifically emphasized that following three parameters which are related to
the overall ‘Client Due Diligence Process’ shall form part of written
procedure i.e.
a)
Policy
for acceptance of clients
b)
Procedure
for identifying clients
c)
Transaction
monitoring and reporting especially Suspicious Transactions Reporting
·
The
intermediary has to obtain sufficient information in order to identify
persons who beneficially own or control the securities account under the
Client Due Diligence measures.
·
They
have to verify the client’s identity using reliable, independent source
documents, data or information.
·
Separate
provisions for clients other than individuals or trusts / and For Clients
which are trust have also been prescribed.
·
Where
the client or the owner of the controlling interest is a company listed on a
stock exchange, or is a majority-owned subsidiary of such a company, they
have been exempted to identify and verify the identity of any shareholder or
beneficial owner of such companies.
·
The
obligation to monitor the compliance of the provision on identification of
beneficial ownership through half-yearly internal audits has been casted on the
Stock Exchanges and Depositories.
·
These
Directives also includes guidelines on Policy for acceptance of clients,
Risk-based Approach, Risk Assessment, Clients of special category (CSC), Client
identification procedure, Reliance on third party for carrying out Client Due
Diligence, Record Keeping and Retention, Maintenance of Records, Suspicious
Transaction Monitoring and Reporting.
·
In
terms of the PML Rules, intermediaries are required to report information
relating to cash and suspicious transactions to the Director, Financial
Intelligence Unit-India (FIU-IND)
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Circular No SEBI/HO/MIRSD/DOP/CIR/P/2019/113
dated 15th October, 2019
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The Companies (Meetings of Board and
its Powers) Amendment Rules, 2019
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Govt of India
introduced the Companies (Meetings of Board and its Powers) Amendment Rules,
2019 wherein under Rule 11 “Loan and investment by a company under section
186 of the Act” (sub rule 2) words "business of financing of
companies" have been substituted by words “business of financing
industrial enterprises” and now the rule reads as
“For the purposes of clause (a) of
sub-section (11) of section 186, the expression business of financing
industrial enterprises shall include, with regard to a Non-Banking Financial
Company registered with Reserve Bank of India, "business of giving of
any loan to a person or providing any guaranty or security for due repayment
of any loan availed by any person in the ordinary course of its
business"
With this section 11 now reads as
follows
“ Nothing contained in Section 186
(Except Sub Section 1 of Section 186) shall apply
(a) to any loan made, any guarantee
given or any security provided or any investment made by a banking company,
or an insurance company, or a housing finance company in the ordinary course
of its business, or a company established with the object of and engaged in
the business of financing industrial enterprises, or of
providing infrastructural facilities;
(b) to any investment—
(i) made by an investment company;
(ii) made in shares allotted in
pursuance of clause (a) of sub-section (1) of section 62 or in shares
allotted in pursuance of rights issues made by a body corporate;
(iii) made, in respect of investment
or lending activities, by a non-banking financial company registered under
Chapter III-B of the Reserve Bank of India Act, 1934 and whose principal
business is acquisition of securities”
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Notification dated 11th
October, 2019
This shall come into force on the
date of publication in official gazette
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In Schedule VII, for
item (ix) i.e. “ix. contributions or
funds provided to technology incubators located within academic institutions
which are approved by the central govt.”
the following item and entries
shall be substituted, namely
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Contribution to incubators funded by
Central Government or State Government or any agency or Public Sector
Undertaking of Central Government or State Government, and contributions to
public funded Universities, Indian Institute of Technology (IITs), National
Laboratories and Autonomous Bodies (established under the auspices of Indian
Council of Agricultural Research (ICAR), Indian Council of Medical Research
(ICMR), Council of Scientific and Industrial Research (CSIR), Department of
Atomic Energy (DAE), Defence Research and Development Organisation (DRDO),
Department of Science and Technology (DST), Ministry of Electronics and
Information Technology) engaged in conducting research in science,
technology, engineering and medicine aimed at promoting Sustainable
Development Goals (SDGs).
This has specified the areas in
brief under item ix. where CSR can be done.
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Notification dated 11th
October, 2019
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Amendment to NFRA (National
Financial Reporting Authority) Rules vide
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1.
Banking
Company now to include “Corresponding New Bank” and “Subsidiary bank”
2.
Further
to this now every auditor is now to required to file a return with authority
on or before 30th November, every year in Form NFRA 2.
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Notification dated 5th September,
2019
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Extension Granted to file form BEN-2
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eForm BEN-2 i.e. Return in respect
of declaration of Significant Beneficial Owner now can be filed upto 31st
December, 2019
The MCA also notified that
consequent to extension of date of filing BEN-2 , the date of filing Form
BEN-1 may be construed accordingly.
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General Circular No 10/2019
Dated 24th September,
2019
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Requirement of Valuation mandated
under the provisions of Companies Act, 2013 and Insolvency and Bankruptcy
Code, 2016
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Section 247 of the Companies
Act,2013 read with Rule 10 of the Companies (Registered Valuers and
Valuation) Rules, 2017 states that a valuation should be undertaken by a
registered valuer and Circular
No. IBBI/RV/019/2018 dated
17th October, 2018 of
IBBI mandates that
the valuations required under
the Code or
any of the
regulations made thereunder shall be conducted by a registered valuer
IBBI has for the
convenience of stakeholders vide its circular no IBBI/RVO/026/2019 dated 16th
September, 2019 provided list of provisions of the Act and the Code under
which valuations are required to be conducted by a registered valuer
Valuation required under the
Companies Act, 2013
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Sl. No.
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Section / Rules
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Particulars
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1
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Section 62(1)(c) of
the Companies Act, 2013 read with Rule 13(1) of the Companies (Share
Capital and Debentures) Rules, 2014
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Further issue of share capital
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2
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Section 177(4)(vi) of the
Companies Act, 2013
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Terms of reference of Audit Committee
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3
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Section 192(1) and
192(2) of the Companies Act, 2013
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Restriction on non-cash transactions involving
directors
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4
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Section 230(2)(c)(v)
and Section 230(3) of Companies Act, 2013
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Power to compromise or make arrangements with
creditors and members
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5
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Section 232 (2)(d) and Section 232
(3)(h)(B)
of the Companies Act, 2013
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Merger and amalgamation of companies
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6
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Section 236(2) of the Companies
Act, 2013
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Purchase of minority shareholding
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7
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Section 247(1) of the Companies
Act, 2013
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Valuation by Registered Valuers
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8
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Section 281(1)(a) of
the Companies Act, 2013
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Submission of report by Company Liquidator
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9
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Rule 2(c)(ix) of the
Companies (Acceptance of Deposit) Rules, 2014
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Exclusions from deposits.
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10
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Rule 6(1) of the Companies
(Acceptance of
Deposit) Rules, 2014
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Creation of security
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11
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Rule 8(6), (7), (9)
and (12) of the Companies (Share Capital and Debentures) Rules, 2014
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Issue of sweat equity shares
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12
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Rule 16(1)(c) of the
Companies (Share Capital and Debentures) Rules, 2014
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Provision of money by company for purchase of its own
shares by employees or by trustees, for the benefit of employees
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13
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Rule 12(5) of the Companies
(Prospectus and
Allotment of Securities) Rules,
2014
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Return of allotment
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Provisions under the
Insolvency and Bankruptcy Code, 2016 and the Regulations
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Sl. No.
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Section/Regulation/
Rules
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Particulars
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1
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Section 59(3)(b)(ii)
of the Insolvency and Bankruptcy Code, 2016
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Voluntary liquidation of corporate persons
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2
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Section 46(2) of the
Insolvency and Bankruptcy Code, 2016
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Relevant
period for avoidable transactions
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3
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Regulation 27 read
with regulation 35 of the
IBBI(Insolvency
Resolution Process for Corporate Persons) Regulations, 2016
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1)
Appointment
of registered valuers;
2)
Fair
value and liquidation value
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4
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Regulation 35 of the
IBBI(Liquidation Process) Regulations, 2016
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Valuation of assets intended to be sold
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5
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Regulation
3(1)(b)(ii) of the IBBI (Voluntary Liquidation Process) Regulations, 2017
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Initiation
of liquidation
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6
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Regulation 26 of the
IBBI(Fast Track Insolvency
Resolution Process
for Corporate Persons) Regulations, 2017
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Appointment
of registered valuer
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7
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Regulation 34 of the
IBBI (Fast Track Insolvency Resolution Process for Corporate Persons)
Regulations, 2017
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Fair value
and liquidation value
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Circular No. IBBI/RVO/026/2019 dated
16th September, 2019
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Intro to framework for Migration of
Start Ups listed on IGP to the main board
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The
Start Up companies which were originally listed on IGP i.e. Innovators Growth
Platform have been guided via simplified procedure to Migrate on main board
by SEBI vide its notification dated 23rd September, 2019.
Apparently the startups have to
fulfill the conditions prescribed under newly inserted Part V to SEBI ICDR
regulations 2018
1.
The
securities should be listed for a minimum period of 1 Year on IGP
2.
There
must be a minimum of 200 shareholders
3.
The
consolidated net tangible assets should be more than or equal to Rs. 3 Crores
in each of the preceding 3 full years and Consolidated Average operating
profit should be more than or equal to Rs. 15 Crores in preceding 3 full
years with positive operating profit in each year
4.
The
consolidated net worth of the company should be Rs. 1 Crore in each of the
preceding 3 full years.
5.
The
Minimum promoters contribution should be atleast 20% of the total capital
6.
Minimum
promoter’s contribution should be locked in for a period of 3 years from the
date of obtaining trading approval on main board and if there is any excess
over 20% of promoters shareholding it shall be locked in for a period of 1
year
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Notification dated 23rd
September, 2019
To be effective from the date of
publication in official gazette
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SEBI (Prohibition of Insider
Trading)Third Amendment regulation 2019
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SEBI
has notified SEBI (Prohibition of Insider Trading) (Third Amendment)
Regulation 2019 on September 17, 2019 which will come to effect on the 100th
Day from the date of Notification i.e. 26th December,
2019.
This amendment will detect and
initiate action against Insider Traders and further gather evidence against
them and for this a new chapter i.e. Chapter IIIA has been inserted which
deals with Informant mechanism which is duly covered by Regulation 7A to 7M
1.
Regulation
7A deals with the key terms used under this chapter
2.
Regulation
7B cast an obligation on Informant to submit Original Information by
furnishing the Voluntary Information Disclosure Form to the Office of
Informant Protection of the Board in the format and manner set as specified
in Schedule D
3.
Regulation
7C deals with the receipt of original information by the board and for that
the Board may designate a division to function as the independent Office of
Informant Protection
4.
Regulation
7D talks about the “Informant Reward” it states that Upon collection or
substantial recovery of the monetary sanctions amounting to at least twice
the Reward, the Board may at its sole discretion, declare an Informant
eligible for Reward and intimate the Informant or his or her legal
representative to file an application in the format provided in Schedule- E
for claiming such Reward subject to conditions
5.
Regulation
7E helps in determining the amount of reward and factors to be considered by
the board in determining the reward
6.
Regulation
7F guides the Informants with the manner of applying for reward on their own
through Informant Reward Claim Form set out in Schedule E.
7.
The
grounds of rejection of claim of rewards are stated in Regulation 7G. Also
the board may if deemed fit, at its sole discretion, exempt a person from any
of these disqualifications.
8.
Regulation
7H deals with the confidentiality that is required to be adhered to by the
Board and the authorities to whom the original information can be made
available on the discretion of Board
9.
Regulation
7I deals with “Protection against retaliation and victimization” it states
that “Every person required to have a Code of Conduct under these regulations
shall ensure that such a Code of Conduct provides for suitable protection
against any discharge, termination, demotion, suspension, threats,
harassment, directly or indirectly or discrimination against any employee who
files a Voluntary Information Disclosure Form, irrespective of whether the
information is considered or rejected by the Board or he or she is eligible
for a Reward under these regulations”
10. Void Agreement i.e. Any term in an
agreement (oral or written) or Code of Conduct, is void in so far as it
purports to preclude any person, other than an advocate, from submitting to
the Board information relating to the violation of the securities laws that
has occurred, is occurring or has a reasonable belief that it would occur are
dealt by Regulation 7J.
11. Regulation 7K states that nothing in
these regulations shall be deemed to provide any forgiveness or immunity to
an Informant for violation of securities law.
12. Regulation 7L states the Functions
of Informant Incentive Committee and also deals with the areas of giving
recommendation to the board
13. Regulation 7M deals with “Public
dissemination and incentivisation of Informant”. It states the information
that the board is required to maintain on its website the following;
(1) Annual report of the Office of
Informant Protection;
(2) Press release informing the public
that an intimation to the Informant has been issued under Regulation 7D;
(3) Press release informing the public
that a Reward has been paid under these regulations and the amount of
Monetary Sanctions recovered pursuant to the information provided by the Informant;
(4)
The
Order issuing the Reward;
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Notification dated 17th
September, 2019
To be effective from the date of
publication in official gazette
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