REGULATORY REFERENCER

DIRECT TAX

Banks are
advised to immediately refund the charges collected, if any, on or after 1^st
January, 2020 on transactions carried out using the electronic modes prescribed
u/s 269SU of the IT Act and not to impose charges on any future transactions
carried out through the said prescribed modes. [Circular No. 16/2020 dated
30^th August, 2020.]

COMPANY LAW

I.
COMPANIES ACT, 2013

(I)   Amendments made in Corporate Social
Responsibility Rules – The MCA has issued the
Companies (Corporate Social Responsibility Policy) Amendment Rules, 2020 in
order to amend the Companies (Corporate Social Responsibility Policy) Rules,
2014. Following this Notification, any company engaged in research and
development activity of a new vaccine, drugs and medical devices in their
normal course of business, may undertake research and development activity of
new vaccine, drugs and medical devices related to Covid-19 for the financial
years 2020-21, 2021-22 and 2022-23 subject to the conditions mentioned in the
said Notification. [Notification dated 24^th August, 2020.]

(II)  MCA dispenses with the requirement to annex
extract of Annual Return in Form MGT-9 in Board’s Report if web link for Annual
Return is disclosed in the Board’s Report – The MCA
has clarified an amendment in section 92 which now requires companies to place
a copy of the Annual Return on its website and the web-link of the same to be
provided in the Board’s Report. In such cases, companies are not required to
attach Form MGT-9 (Extract of Annual Return) in the Board’s Report. [Notification
dated 28^th August, 2020.]

(III) MCA amends definition of deposits with respect
to convertible notes issued by Startups – In order
to bring the definition of deposit in line with the revised definition of
Startup by the Department for Promotion of Industry and Internal Trade, the MCA
has notified revision to the Companies (Acceptance of Deposits) Rules, 2014.
Now, convertible notes issued by Startups which are convertible into equity
shares or repayable within a period not exceeding ten years (as against the
original tenure of ‘five years’) from the date of issue, shall not be
considered as deposits. Further, the maximum limit in respect of deposits to
be accepted from members shall not apply to a private company which is a
Startup for ten years (as against the original tenure of ‘five years’) from
the date of its incorporation. [Notification dated 7^th September,
2020.]

(IV) MCA
extends due date of filing of Cost Audit Report till 30^th November,
2020 – In view of the
extraordinary disruption caused due to the pandemic, it has been decided that
if cost audit report for the financial year 2019-20 is submitted by 30^th
November, 2020, then the same would not be viewed as violation of Rule 6(5)
of the Companies (Cost Records and Audit) Rules, 2014. Consequently, the cost
audit report for the financial year ended on 31^st March, 2020 shall
be filed in e-form CRA-4 within 30 days from the date of receipt of the copy of
the cost audit report by the company. However, in case a company has availed
extension of time for holding Annual General Meeting, then e-form CRA-4 may be
filed within the timeline provided under the proviso to rule 6(6) of the
Companies (Cost Records and Audit) Rules, 2014. [General Circular No.
29/2020 dated 10^th September, 2020.]

(V)  Lok Sabha passes Companies (Amendment) Bill,
2020 on 19^th September, 2020 – The Lok
Sabha has passed the Companies (Amendment) Bill, 2020 to decriminalise several
non-compoundable offences as also to promote ease of doing business. The Bill
will permit direct listing of securities of Indian companies in overseas stock
exchanges without listing them on domestic stock exchanges. The Bill also
stipulates that specified classes of unlisted companies will have to prepare
and file their periodic financial results. The said Bill was introduced in the
Lok Sabha in March this year.

II. SEBI

(VI) SEBI notifies cut-off date for re-lodgement of
transfer deeds to 31^st March, 2021 – As
per SEBI’s Circular No. 12/2019 dated 27^th March, 2019 the Board had
clarified that transfer of securities held in physical mode lodged before the
deadline (1^st April, 2019) but rejected and returned due to
deficiency in the documents, may be re-lodged with requisite documents. SEBI
has now fixed the cut-off date for such re-lodgement as 31^st March,
2021 and shares that are re-lodged for transfer shall be issued only in
DEMAT mode. [Circular SEBI/HO/MIRSD/RTAMB/CIR/P/2020/166 dated 7^th
September, 2020.]

(VII) SEBI extends time to share information towards
Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition
of Insider Trading) Regulations, 2015 to 30^th September, 2020 – SEBI has extended the deadline for submission of required
information as prescribed vide its circular dated 9^th
September, 2020 with the designated depository by the listed companies to 30^th
September, 2020 (as against the previous deadline of 18^th September,
2020).

ACCOUNTS AND AUDIT

(A) Conceptual Framework for Financial Reporting
under Indian Accounting Standards (Ind AS) – The
revised Ind AS Framework, corresponding to IASB’s Conceptual Framework 2018,
is applicable for Standard-setting activity from accounting periods beginning
from 1^st April, 2020 and for the preparers of financial statements
from a future date. [ICAI Announcement dated 28^th August, 2020.]

(B) Revised Long Form Audit Report (LFAR) – The formats of LFAR for (i) Statutory central auditors, (ii)
Branch auditors, and (iii) Large / irregular / critical accounts for Branch
Auditors have been revised and are required to be put into operation for the
period covering F.Y. 2020-21 and onwards. [RBI Notification No.
RBI/2020-21/33 dated 5^th September, 2020.]

FEMA

The
Government had announced a hike in the limit for investment in the Defence
Sector from 49% to 74% in May, 2020. The DPIIT has now issued a press
release for the same. The changes are:

(a) An industry under the Defence Sector requiring
Industrial and Arms Act Licences can now receive FDI under automatic route up
to 74%, increased from the earlier limit of 49%. However, this relief is
available only to companies seeking new industrial licenses.

(b) FDI beyond 74% can be received under Government
Route, and as at present, where it is likely to result in access to modern
technology or for other reasons to be recorded.

(c) Companies not seeking industrial licence, or
those that have already obtained Government approval, will require Government
approval for raising their FDI beyond 49%. Further, such companies will now
also need to mandatorily submit declaration with the Ministry of Defence (MoD)
in case of change in equity or shareholding pattern or for transfer of stake to
a new foreign investor.

(d) Government has now reserved the right to review
any foreign investment in the Defence Sector as also subject foreign
investments to scrutiny on grounds of national security.

(e) Other conditions related to security clearance
and self-sufficiency remain applicable as at present.

It should be noted that these changes will become
effective only from the date that necessary amendments are made in the FEMA
(NDI) Rules, which have not yet taken place. [Press Note 4 of 2020 dated 17^th
September, 2020.]

ICAI MATERIAL

1.  New Compendium of Indian Accounting Standards
(Ind AS) as on 1^st April, 2020 –
Compendium containing updated Ind AS’s applicable for the accounting period
beginning 1^st April, 2020. [25^th August, 2020.]

2.  Handbook on Potential for ‘NEO Import
Substituting Industrialisation in India’ – ISI (Covid-19) – Research publication providing guidance in respect of potential
for import substitution industries in India. [3^rd September,
2020.]

3.  Relief Measures Introduced
in Insolvency Resolution Process in the Country due to outbreak of Covid-19
Pandemic – Booklet enumerating judicial, legislative and economic measures
initiated on account of the pandemic. [8^th September, 2020.]

Problems are not stop signs, they are
guidelines

— 
Robert H. Schuller