DIRECT TAX
1. Substitution of Form 52A – Income-tax (32nd Amendment) Rules, 2021: CBDT has notified revised Form No. 52A which is a statement to be submitted u/s 285B in respect of production of a cinematograph film. [Notification No. 132 of 2021 dated 23rd November, 2021.]
2. Protocol amending the DTAA between India and Kyrgyz Republic signed: The Central Government notified that all the provisions of the said amending Protocol shall have effect in India. [Notification No. 135 of 2021 dated 8th December, 2021.]
3. Insertion of Rule 21AK – Income-tax (33rd Amendment) Rules, 2021: The Finance Act, 2021 has inserted sub-section (4E) u/s 10 to exempt any income received by a non-resident due to the transfer of non-deliverable forward contracts entered into with an offshore banking unit of IFSC. CBDT has notified Rule 21AK prescribing conditions to be fulfilled to claim an exemption u/s 10(4E). [Notification No. 136 of 2021 dated 10th December, 2021.]
4. CBDT notifies e-Verification Scheme, 2021: The Scheme aims at faceless information collection from assessees and their verification. [Notification No. 137 of 2021 dated 13th December, 2021.]
5. Guidelines under 194O(4), section 194Q(3) and section 206C(1-I): In continuation of Circular No. 17 of 2020 dated 29th September, 2020 and Circular No. 13 of 2021 dated 30th June, 2021, CBDT has issued further guidelines to remove the difficulties in implementation of sections 194O, 194Q and 206C. [Circular No. 20 of 2021 dated 25th November, 2021.]
COMPANY LAW
I. Companies Act, 2013
1. MCA allows companies to conduct EGMs via video conference / other audio-visual means (VC / OAVM) up to 30th June, 2022: The MCA has permitted companies to convene and conduct EGMs through VC / OAVM or transact through postal ballot in accordance with the framework up to 30th June, 2022. Earlier, vide General Circular No. 10/2021 dated 23rd June, 2021, the MCA had allowed companies to conduct the same up to 31st December, 2021. [General Circular No. 20/2021 dated 8th December, 2021.]
2. MCA issues clarification on holding of AGM through VC / OAVM: The MCA has allowed companies to organise the AGMs in 2022 for the financial year ending before / on 31st March, 2022 through VC / OAVM as per respective due dates by 30th June, 2022. It has further clarified that this Circular should not be construed as conferring any extension of time for holding AGMs. In September, 2021, MCA had allowed a two-month extension to the deadline for companies to hold their AGM for the financial year ending 31st March, 2021. [Circular No. 21/2021 dated 14th December, 2021.]
II. SEBI
3. SEBI directs Debenture Trustees (DTs) to publish Investor Charter and disclose data on complaints on their websites: With a view to provide investors with relevant information about various activities where an investor must deal with DTs for availing of various services, SEBI has prepared an Investor Charter for DTs. The Investor Charter details the services provided to investors, timelines for various DT services provided and the Rights and Obligations of Investors. SEBI has also directed all DTs to disclose on their website details of the complaints received latest by the 7th of the succeeding month. [Circular No. SEBI/HO/MIRSD/MIRSD_CRADT/P/CIR/2021/675 dated 30th November, 2021.]
4. SEBI issues new delisting norms through an open offer under takeover regulations: As per amended norms, the option to delist through an open offer is restricted to only new acquirers acquiring fresh control. SEBI has also notified a scale-down option for the acquirer who is expected to cross 75% threshold pursuant to an open offer. [Notification No. SEBI/LAD-NRO/GN/2021/60 dated 6th December, 2021.]
5. SEBI clarifies on framework for processing investors’ service request by RTAs: SEBI, on representations received from the Registrars’ Association of India, has clarified on certain provisions of its Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2021/ 655 dated 3rd November, 2021 whereby it had simplified the norms for processing investors’ service request by RTAs and norms for furnishing PAN, KYC details and nominations. SEBI has clarified with respect to processing of the service request in case of any minor / major mismatch in name or signature of security holder / investor. [Circular No. SEBI/HO/MIRSD/MIRSD_RTAMB/P/CIR/2021/687 dated 14th December, 2021.]
6. SEBI replies on query relating to approval of material related party transactions under informal guidance scheme: SEBI has clarified that entities that are not able to take shareholders’ approval in material related party transactions due to the embargo that a related party cannot vote to approve such transactions, shall follow the provisions laid down in Explanation 3 to Regulation 16(1A) of LODR Regulation, which states ‘comply or explain reasons for such non-compliance and the steps initiated to achieve full compliance in its quarterly compliance report filed with Stock Exchanges’ [Letter No. SEBI/HO/DDHS/P/OW/2021/37583/1 dated 16th December, 2021.]
FEMA
1. Changes to External Commercial Borrowings (ECBs) & Trade Credits (TCs): In view of the imminent discontinuance of LIBOR as a benchmark rate, RBI has decided to make the following changes to the all-in-cost benchmark and ceiling for Foreign Currency ECBs & TCs:
* The benchmark rate shall now refer to any widely accepted interbank rate or alternative reference rate (ARR) of six-month tenor, applicable to the currency of borrowing, instead of the erstwhile LIBOR.
* The all-in-cost ceiling for new Foreign Currency ECBs and TCs has been increased by 50 bps to 500 bps and 300 bps, respectively, over the benchmark rates to take into account differences in credit risk and term premia between LIBOR and the ARRs.
* One-time adjustment in all-in-cost ceiling for existing ECBs / TCs to enable smooth transition. The all-in cost ceiling for such ECBs / TCs has been revised upwards by 100 basis points to 550 bps and 350 bps, respectively, over the ARR. [A.P. (DIR Series 2021-22) Circular No. 19 dated 8th December, 2021.]
2. Banks can infuse capital in overseas branches without RBI’s prior approval: As per extant practice, banks incorporated in India seek prior RBI approval for (a) infusion of capital in their overseas branches and subsidiaries, and (b) retention of profits in, and transfer or repatriation of profits from, these overseas centres.
RBI has stated now that prior approval for above capital infusion / transfers (including retention / repatriation of profits) shall not be required by banks which meet the regulatory capital requirements (including capital buffers). Instead, the banks shall seek approval of their Boards and report to RBI within 30 days as mandated in the Circular. Only Scheduled Commercial Banks other than foreign banks, Small Finance Banks, Payment Banks and Regional Rural Banks are provided this relaxation. [Circular No. Dor.Cap.Rec.No.72/21-6-201/2021-22 dated 8th December, 2021.]
3. Legal Entity Identifier (LEI) mandatory for cross-border capital account transactions: LEI is a 20-digit number used to uniquely identify parties to financial transactions worldwide to improve the quality and accuracy of financial data systems. RBI has decided that, with effect from 1st October, 2022, AD banks shall obtain the LEI number from resident entities (non-individuals) undertaking capital or current account transactions of Rs. 50 crores and above (per transaction) under FEMA. It has allowed AD banks to process transactions by non-resident counterparts / overseas entities, in case of non-availability of LEI, to avoid disruptions. It has also asked AD banks to encourage the entities concerned to voluntarily furnish LEI while undertaking transactions even before 1st October, 2022. Once an entity has obtained an LEI number, it must be reported in all transactions of that entity, irrespective of transaction size. [A.P. (Dir. Series 2021-22) Circular No. 20 dated 10th December, 2021.]
