29 October, 2019
INTRODUCTION
This newsletter covers key updates about the developments in corporate and labour law during the month of September 2019. In relation to corporate law, we have covered key regulatory developments including (a) notification issued by the Ministry of Corporate Affairs (MCA) on extension of the due date for submitting e-Form DIR-3 KYC and web Form DIR-3 KYC-WEB; and (b) circular issued by MCA on extension of the due date for submitting Form e-Form BEN-2.
In relation to labour law we have covered the draft code on social security, 2019.
Please see below the summary of the abovementioned regulatory developments.
CORPORATE LAW
MCA EXTENDS THE DUE DATE TO SUBMIT E-FORM DIR-3 KYC AND WEB FORM DIR- 3 KYC-WEB
Any individual who acquires for the first time a director identification number (DIN) as on 31 March of any financial year is required to submit e-Form DIR-3 KYC for the said financial year to the central government on or before the 30 September of the subsequent financial year. For all subsequent years, such individual is only required to submit only web-Form DIR-3 KYC-WEB on or before 30 September of the subsequent financial year. However, if there are any subsequent changes in personal details of such director, then e-Form DIR-3KYC will have to be filed afresh.
For financial year 2018-19, MCA has extended the due date for submitting the e-Form DIR-3 KYC as well as web Form DIR-3 KYC-WEB, as the case may be, to 14 October 2019 from 30 September 2019.
MCA EXTENDS THE DUE DATE FOR FILING E-FORM BEN-2
Where a beneficial owner who holds or acquires significant beneficial ownership in shares of the reporting company, he is required to make a declaration in Form BEN-1 to the reporting company. Such declaration has to be made by the beneficial owner to the reporting company within 30 days of acquiring such significant beneficial ownership or any change therein. Subsequently, the reporting company is required to file a return in e-Form BEN-2 with the registrar in respect of such declaration, within a period of 30 days from the date of receipt of declaration in Form BEN-1 from the beneficial owner.
In light of the several representations received by MCA with respect to filing of e-Form BEN-2, MCA has extended the due date for filing e-Form BEN-2 to 31 December 2019 from 30 September 2019 without payment of additional fees. Further, MCA has stated that consequent to the extension in the date of filing e-Form BEN-2, the date of filing Form BEN-1 be construed accordingly. Accordingly, we construe that the declaration in Form BEN-1 should be received by the reporting company before 31 December 2019 in order to take the benefit of this relaxation.
LABOUR LAW
DRAFT CODE ON SOCIAL SECURITY, 2019
The Second National Labour Law Commission (Commission) submitted its report in the year 2002 to the Government of India recommending that existing labour laws pertaining to industrial relations, wages, social security, occupational safety, welfare and working conditions should be consolidated. Based on the recommendation of the Commission, the Government has planned to consolidate 44 existing labour laws into four codes namely;
(i) Wage Code, 2019,
(ii), draft Social Security Code (Social Security Code),
(iii) Occupational Safety, Health, and Working Condition Code; and
(iv) Code on Industrial Relations.
On 17 September 2019, the Ministry of Labour & Employment has circulated a preliminary draft of the Social Security Code for public comments. The Social Security Code seeks to consolidate and simplify existing eight social security laws in India which deal with
(i) employees’ provident fund,
(ii) employees state insurance corporation,
(iii) gratuity, (iv) maternity benefit, employee compensation,
(vi) unorganized workers’ social security,
(vii) cine workers welfare fund, and
(viii) building and other construction workers welfare cess.
The key highlights of the Social Security Code are discussed below:
1. Social Security Organization
The Social Security Code proposes to set up a Social Security Organization (SSO) as an administrative body for implementation of the provisions of the Social Security Code. The SSO will include central board of trustees for Employees Provident Fund, Employees State Insurance Corporation, National Unorganized Workers Social Security Board, State Unorganized Workers Social Security Board and State Building Workers Welfare Board.
2. Gig Workers and Platform Workers
The Social Security Code introduces the concept of ‘Gig Workers’ and ‘Platform Workers’ and proposes to bring such workers within the scope of social security as a part of unorganised work force. The Social Security Code defines ‘Gig Worker’ as a person who performs work or participates in a work arrangement and earns from such activities outside the traditional employer-employee relationship. Whereas, a ‘Platform Worker’ has been defined as a person engaged in an employment form in which the organisation or individual uses an online platform to access other organisation or individuals to solve specific problems or to provide specific services in exchange of payment. For instance, persons working for taxi aggregators such as Ola and Uber will
be considered ‘Platform Workers’ and freelancers, temporary hires will be considered as ‘Gig Workers’. Both ‘Gig Workers’ and ‘Platform Workers’ are eligible for social security benefits under the Social Security Code. These social security benefits include life and medical insurance, health and maternity benefit, old age protection etc. Therefore, extension of social security benefits to ‘Gig Workers’ and ‘Platform Workers’ will provide a much-needed impetus to the gig economy since ‘Gig Workers’ and Platform ‘Workers’ are currently at disadvantage in terms of social security or any other statutory protection when compared to the permanent employees.
3. Extension of social security benefits to the unorganised sector
Under the Social Security Code, the Central Government will frame social security schemes such as life and medical insurance, health and maternity benefit, old age protection etc. for unorganised workers.
4. Common platform for Registration
The Social Security Code proposes a common platform for registration of organised and unorganised workforce in India. Every establishment to which the Social Security Code is applicable is required to be registered in a manner prescribed by the Central Government. The Social Security Code proposes for universal social security coverage to unorganised sector and unorganised workers. Every unorganized worker is eligible for registration under the Social Security Code, upon registration every registered unorganized worker shall be entitled to avail benefit of social security schemes framed under the Social Security Code. This will unify the existing multiple registrations under existing social security legislations.
5. National Pension System
Employees contributing to the fund established under Employees’ Provident Fund Scheme will have the option to become a member of National Pension System (NPS). The NPS is a pension cum investment scheme to provide retirement benefit. Returns under NPS are market linked whereas benefit under Employees’ Provident Fund Scheme is meagre as the contribution amount is capped. Further, under the Social Security Code, an employee working in an establishment to which the Social Security Code applies and who is a member of NPS shall have the option to join back the Employees’ Provident Fund Scheme. The manner and method by which an employee can exercise such options will pe prescribed by the Central Government.
For further information, please contact:
Souvik Ganguly, Partner, Acuity Law
al@acuitylaw.co.in
