26 June, 2018
MCA revises forms DIR-3 and DIR-6
On June 12, 2018, the MCA issued a circular revising form DIR-3 (form for application of the director identification number prior to being appointed as a director/designated partner in a company or LLP) and form DIR-6 (form for filing intimation of change in particulars of a director/designated partner to be given to the Central Government). There forms have been revised to be included as part of Rule 10 of the Limited Liability Partnership Rules, 2009. These forms will be uploaded on MCA21 Company Forms Download page with effect from June 15, 2018. In relation to this, MCA has issued a notification dated June 12, 2018 regarding the Companies (Appointment and Qualification of Directors) Third Amendment Rules, 2018 which incorporates the aforementioned change and substitutes forms DIR-3 and DIR-6. Accordingly, the Limited Liability Partnership Rules, 2009 have also been amended vide the Limited Liability Partnership (Amendment) Rules, 2018 to incorporate the change in Rule 10 (that the designated partner shall apply in form DIR-3 for a designated partner identification number (DPIN) and form DIR-6 for filing an intimation of change in particulars of a designated partner to the Central Government).
Review of the Institutional Trading Platform (ITP) framework to facilitate listing of startups
On June 12, 2018, SEBI issued a press release constituting a group to look into the existing Institutional Trading Platform (ITP) framework and suggest measures to facilitate listing of startups. SEBI had put in place the ITP framework in 2015 with a view to facilitating listing of new age companies in sectors like e-commerce, data analytics, bio-technology and other startups. However, this framework failed to gain any traction. SEBI has now discussed the issue with various stakeholders and formed a group primarily with the following objectives: (a) to review the need for present ITP framework in the current context; (b) to revisit the current ITP framework and identify the areas, if any, which require further changes; and (iii) any other issue relevant to ITP which the group may like to assess. The group shall endeavour to submit the report to SEBI within a period of one month.
Foreign Investment in India – Reporting in Single Master Form
On June 7, 2018, the Reserve Bank of India (“RBI”) issued a notification in relation to the manner of reporting of foreign investment by Indian entities (including subsidiaries of foreign entities) wherein RBI will introduce a Single Master Form (“SMF”) which would be filed online by all Indian entities for reporting investments in India.
However, prior to the implementation of the SMF, RBI would provide an interface to all Indian entities which have received foreign direct investment to input data on total foreign investment received in a specified format. This interface will be available on the RBI website from June 28, 2018 to July 12, 2018. Indian entities not complying with the aforesaid pre-requisite will not be able to receive further foreign investment (including indirect foreign investment) and will be non-compliant with Foreign Exchange Management Act, 1999 and regulations made thereunder.
Guidelines for preferential issue of units by Infrastructure Investment Trusts (InvITs)
On June 5, 2018, SEBI issued the detailed guidelines for preferential issue of units by Infrastructure Investment Trusts (InvITs). The SEBI (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) defines a preferential issue.
The guidelines provide for the following:
a) the conditions for preferential use – a listed InvIT may make preferential issue of units to an institutional investor as defined in the InvIT regulations, on satisfaction of the conditions given in the circular;
b) the placement document which shall contain certain disclosures as given in the Annexure to the circular;
c) pricing – preferential issue shall be made at a price not less than the average of the weekly high and low of the closing prices of the units quoted on the stock exchange during the two weeks preceding the relevant date;
d) restriction on allotment – no allotment shall be made, either directly or indirectly, to any party to the InvIT or their related parties except to the sponsor only to the extent that is required to ensure compliance with regulation 12(3) of the InvIT Regulations; and
e) transferability of units – the units allotted under preferential issue shall not be sold by the allottee for a period of one year from the date of allotment, except on a recognised stock exchange.
Clarification with regard to provisions of Corporate Social Responsibility in the Companies Act, 2013
On May 28, 2018, the MCA issued a clarification circular with respect to Section 135(5) of the Companies Act, 2013 (Act) related to corporate social responsibility (CSR). Section 135(5) of the Act specifies that a company must ensure spending, in every financial year, at least two (2) per cent of the average net profits of the company made during the three (3) immediately preceding financial years, in pursuance of its CSR Policy. The MCA has now clarified that the provision in the first proviso to Section 135(5) of the Act which lays down that the company shall give preference to the local area and areas around where it operates, for spending the amount earmarked for CSR activities has to be followed in letter and spirit.
For further information, please contact:
Vineet Aneja, Partner, Clasis Law
vineet.aneja@clasislaw.com
