Archive for month: July, 2020
SEBI extends deadline for June quarter results amid COVID-19
/0 Comments/in Corporate Laws, SEBI, SEBI and listing-related compliances - Covid-19 /by Vinod Kothari ConsultantsCompanies to manage the dual requirement of holding board meetings and submission of financial results
Shaifali Sharma
Vinod Kothari & Company
corplaw@vinodkothari.com
In the wake of the continuing impact of COVID-19 pandemic, SEBI vide circular[1] dated June 24, 2020, granted relaxation to listed entities and extended the timeline for submission of financial results for quarter / half year / financial year ended March 31, 2020 to July 31, 2020.
Since, now the first quarter of the FY 2020-21 has come to an end, companies are expected to finalize, approve and submit their financials to the respective stock exchange(s) within 45 days from the quarter ended June 30, 2020 as per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) i.e. on or before August 14, 2020.
Considering the shortened time gap of 14 days between the two due dates stated above i.e. July 31 and August 14, SEBI vide its circular[2] dated July 29, 2020, has extended the deadline to submit financial results for the first quarter from August 14 to September 15, 2020 thereby allowing additional 32 days to the listed companies which will in turn provide extra time to companies and its auditors working on reporting the quarterly financial results.
It is pertinent to note here that the board of directors, as per Regulation 17(2) of the Listing Regulations, must meet at least four times a year, with a maximum time gap of 120 days between any two meetings. In this regard, the SEBI vide circular[3] date June 26, 2020 had exempted the listed entities from observing the stipulated time gap between two board meetings for the meetings held/proposed to be held between the period December 01, 2019 and July 31, 2020.
Considering no further extension has been granted by SEBI yet, the board meeting for approving the financial results should be scheduled keeping in mind the maximum time gap of 120 days prescribed under the Listing Regulations. For example, if we take a case of a listed company which held its last board meeting on May 02, 2020, the next board meeting shall be scheduled on or before August 31, 2020 instead of the extended due date of September 14, 2020.
As regards for unlisted companies, the maximum time gap for conducting board meetings had been relaxed vide MCA circular[4] dated March 24, 2020 to 180 days from present 120 days for the first two quarters of FY 2020-2021.
[1] https://www.sebi.gov.in/legal/circulars/jun-2020/further-extension-of-time-for-submission-of-financial-results-for-the-quarter-half-year-financial-year-ending-31st-march-2020-due-to-the-continuing-impact-of-the-covid-19-pandemic_46924.html
[2] https://www.sebi.gov.in/legal/regulations/jun-2009/securities-and-exchange-board-of-india-delisting-of-equity-shares-regulations-2009-last-amended-on-april-17-2020-_34625.html
[3] https://www.sebi.gov.in/legal/circulars/jun-2020/relaxation-of-time-gap-between-two-board-audit-committee-meetings-of-listed-entities-owing-to-the-covid-19-pandemic_46945.html
[4] http://www.mca.gov.in/Ministry/pdf/Circular_25032020.pdf
Other reading materials on the similar topic:
- ‘COVID-19 – Incorporated Responses | Regulatory measures in view of COVID-19’ can be viewed here
- ‘Resources on virtual AGMs’ can be viewed here
- Our other articles on various topics can be read at: http://vinodkothari.com/
Email id for further queries: corplaw@vinodkotahri.com
Our website: www.vinodkothari.com
Our YouTube Channel: https://www.youtube.com/channel/UCgzB-ZviIMcuA_1uv6jATbg
RBI lessons ARCs on fairness
/0 Comments/in Credit and security interests, Financial Services, SARFAESI /by Vinod Kothari ConsultantsA discussion on the fair practice code issued for ARCs
-Sikha Bansal and Kanakprabha Jethani
Introduction
Asset Reconstruction Companies (ARCs) are companies specializing in the business on acquiring non-performing assets and stressed assets of the banks and financial institutions and reconstructing them.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) accords the status of ‘financial institutions’ and ‘secured creditor’ to ARCs, such that an ARC acquiring bad loans is also able to exercise same rights and powers as the originator of the loan would have. This is explicitly stated in section 5 of SARFAESI.
Now, as they say, with great power, comes great responsibility; since, the business of ARCs involves frequent dealing with borrowers of loans, they must be guided by principles of fairness in their dealings with borrowers. Earlier, there were no guidelines with respect to fair practices of ARCs. However, after a gap of almost 20 years from the time the law was enacted, the Reserve Bank of India (RBI) through a notification dated 16.07.2020[1], issued a Fair Practices Code (FPC) for ARCs. It is noteworthy that in this span of 20 years, around 28 ARCs have been registered in India[2] and have an AUM of USD 14,583 million[3]. Further, the role and involvement of ARCs have increased multifold with IBC proceedings.
The FPC seeks to ensure fairness as well as transparency in the operations of ARCs, and calls upon the ARCs to put in place board approved FPC, grievance redressal mechanisms, code of conduct for recovery agents, etc. However, what is more important is that the FPC sets out principles for ARCs for sale and purchase of assets, as discussed below.
Acquisition of assets: follow arm’s length principle
While acquiring any asset, an ARC should maintain transparency and follow arms’ length principle and shall ensure there is no discrimination between sellers in the process of acquisition.
Notably, RBI has already prohibited ARCs to have bilateral acquisitions (that is, one to one transactions) from certain connected entities, e.g. sponsor banks/FIs, and group entities[4], irrespective of the consideration involved. However, auction purchases are allowed provided the auction is transparent, is on arms’ length and price is determined by market forces. This essentially entails that the auctions should be widely publicised, be open to all interested parties and be transparent in terms of bids submitted.
Sale of assets: be transparent
ARC should enable the participation of as many prospective buyers they can, so that actual market value can be determined of any asset. For that, the invitation shall be made public. The extant guidelines for conduct of ARCs[5] also require sale of assets through public auction only. Thus, this is just a reiteration of the existing guidelines.
Further, while finalising the terms and condition for sale of underlying assets, the ARCs shall consult the investors of security receipts (SRs).
Besides, a crucial provision in the FPC is the reference to section 29A of the Insolvency and Bankruptcy Code, 2016 (IBC), as discussed below.
The ‘spirit’ of section 29A
FPC mentions that the “spirit” of section 29A of IBC may be followed while dealing with prospective buyers”.
The reference to section 29A, most predictably, comes in the wake of rising involvement of ARCs in insolvency proceedings, either as sole or joint resolution applicants. Section 29A provides a list of persons who shall not be eligible to be a resolution applicant or a buyer of assets in case of a liquidation sale. The intent here seems to bar persons such as undischarged insolvents, wilful defaulters, a person whose accounts are classified as NPA, etc. from buying the assets. One concern with regard to section 29A is possible use of ARCs as devices to camouflage ineligible persons. Therefore, it is a logical and a positive step to add this restriction as a component of FPC for ARCs.
It is relevant to note that courts have held that the disability under section 29A is to be considered even where the sales are made by a secured creditor outside liquidation[6]. Say, what if the secured creditor assigns his rights and interest to an ARC? Will an ARC be debarred from selling the assets to a person hit by section 29A?
The issue has to be examined under two circumstances – first, where the borrower has been under insolvency proceedings of IBC and in case of liquidation, the secured creditor stands out of liquidation proceedings to sell the asset, and second, where there are no preceding IBC proceedings.
Considering the extant precedents surrounding section 29A, it can be contended that the contagion of section 29A might also hamper the freehand of ARCs in selling the assets whether or not the assets have been through IBC proceedings or not. However, one may note that the extant guidelines, on the contrary, permit the defaulting promoters to buy-back the assets from ARCs, provided the settlement is considered beneficial in certain respects[7].
Hence, ARCs would be required to take a balanced view on determining whether the sale is to be made to a prospective buyer or not. Notably, FPC does not impose section 29A, per se, on sales by ARCs, but advises the ARCs to follow the spirit of section 29A. The intent of section 29A has been to ensure that among others, persons responsible for insolvency of the corporate debtor do not participate in the resolution process[8].
Therefore, it may be contended that in case the assets are in or have passed through IBC proceedings, the provisions of section 29A will apply strictly, and in other cases, the ARCs should endeavour to abide by the intent of section 29A. The stance of the regulator may become clearer in due course of time.
Action points for ARCs
The following are actionables on the part of ARCs. We are of the view that, since the notification does not provide for any specific date of applicability, the same shall be immediately applicable. Hence, the FPC, incorporating the following, shall be formulated within reasonable time and may be adopted in the next board meeting.
| Particulars | Actionables |
| Measures to prevent harassment by recovery agents | · Ensure that the staff and recovery agents are adequately trained to deal with customers and to handle their responsibilities with care and sensitivity, particularly in respect of aspects such as hours of calling, privacy of customer information
· Adoption of code of conduct (as discussed above) · Ensure that the recovery agents and the staff of ARCs observe strict customer confidentiality. · Ensure that recovery agents do not induce adoption of uncivilized, unlawful and questionable behaviour or recovery process. |
| Charging of fees | Put in place a board approved policy on management fee, expenses and incentives, if any, claimed from trusts under their management. |
| Outsourcing | Put in place an outsourcing policy, approved by the Board, which incorporates, criteria for selection of activities to be outsourced as well as service providers, delegation of authority depending on risks and materiality and systems to monitor and review the operations of these activities/ service providers. |
| Grievance Redressal | · Constitute a Grievance Redressal machinery which deals with the issue relating to services provided by the outsourced agency and recovery agents, if any.
· Mention the name and contact number of designated grievance redressal officer of the ARC in communications with the borrowers. |
Conclusion
As regards acquisition and realisation of assets, the extant directions provide for framing of acquisition policies and realisation plans. Further, as discussed, RBI from time to time, had been issuing directives regulating the sales by ARCs. The FPC, incorporating the provisions of section 29A, can be said to be an additional step in the same direction.
Insofar as conduct towards borrowers is concerned, before issue of the FPC for ARCs, there were no separate guidelines. However, this should not imply that ARCs were not required to act as such. As a matter of practice, the conduct of ARCs towards the borrowers should be guided by the behavioural principles and principles of fairness and equity.
The banks/financial institutions are anyway under the directions of RBI[9] to be fair in all respects in dealing with the borrowers. Therefore, it could not be said that an ARC which purchases loans from the banks/financial institutions could have all the powers of a secured lender but not the responsibilities. In the authors’ view, the responsibility to act fairly is tagged along with the right to enforce security. However, the FPC as issued now, concretises the concept of ‘fair practice’ for ARCs, and is a step in the right direction. With the FPC coming into force, practices of ARCs, which were earlier based on the market practice and varied largely, shall be unified.
[1] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11937&Mode=0
[2] List of ARCs on the website of the RBI (As in February 2020)
[3] https://www2.deloitte.com/content/dam/Deloitte/in/Documents/tax/in-tax-asset-reconstruction-companies-tax-regulatory-framework-noexp.pdf
[4] https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=11749&Mod e=0
[5] https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9901
[6] NCLAT ruling- https://nclat.nic.in/Useradmin/upload/20572042075dd3e35176572.pdf
[7] See para 5 of the ARC Guidelines
[8] Swiss Ribbons Pvt. Ltd. vs Union Of India (https://indiankanoon.org/doc/17372683/)
[9] Guidelines on Fair Practices for lenders- https://www.rbi.org.in/scripts/NotificationUser.aspx?Id=3315&Mode=0 and;
Fair Practice Code for NBFCs- https://rbidocs.rbi.org.in/rdocs/notification/PDFs/45MD01092016B52D6E12D49F411DB63F67F2344A4E09.PDF
Amendments in SEBI (PIT) Regulations, 2015: From April, 2019 to July, 2020
/0 Comments/in Corporate Laws, SEBI /by Vinod Kothari ConsultantsWatch our Youtube video for the subject: https://www.youtube.com/watch?v=Ly3KaQblJBE
CERSAI 2.0: A Preliminary Guide
/8 Comments/in Credit and security interests /by Vinod Kothari Consultants-Mahesh Jethani (finserv@vinodkothari.com)
All Scheduled Commercial Banks (including RRBs), Small Finance Banks, Local Area Banks, all Co-operative Banks, all NBFCs and All India Financial Institutions are required register creation of security interest over an asset with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).
An upgraded version of Security Interest portal i.e. CERSAI 2.0, is going to be released on August 3, 2020, which shall introduce some novel changes such as the offline functionality for adding security interest transactions and no maker-checker concept. In the following writeup we intend to explore the legal requirements for registering on CERSAI 2.0 and the process of registration along with scenario before and after the portal goes live.
The registration process is based on the limited study of the user manual for registration provided on the website of CERSAI.
Legal Requirement for Registration on CERSAI
The objective behind setting up of CERSAI is to have a centralised database for security interests provided in favour of financial institutions. For this purpose, various regulations require the financial/lending institutions to register creation of security interest, which are as follows:
RBI Guidelines and Notifications
Para 108 of Master Directions for NBFC-SIs[1] and para 94 of Master Direction for NSIs[2] makes it mandatory for applicable NBFCs to file records of equitable mortgages with the CERSAI.
Further, a notification[3] issued by the RBI, requires NBFCs to register the following, in addition to the security interest (mortgage) created through deposit of title deeds –
- Security interest in immovable property by mortgage other than mortgage by deposit of title deeds;
- Security interest created by way of hypothecation of plant and machinery, stocks, debts including book debts or receivables, whether existing or future;
- Security interest in intangible assets, being know how, patent, copyright, trademark, licence, franchise or any other business or commercial right of similar nature;
- Security interest in any ‘under construction’ residential or commercial or a part thereof by an agreement or instrument other than mortgage.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act)
The SARFAESI Act regulates securitisation, reconstruction of financial assets and deals with enforcement of security interest. Section 23 of the Act reads as under:
“The particulars of every transaction of securitisation, asset reconstruction or creation of security interest shall be filed, with the Central Registrar in the manner and on payment of such fee as may be prescribed“
Accordingly, all transactions of securitisation and asset reconstruction and creation of security interest are required to be registered.
CERSAI 2.0- Entity Registration Process
The Entity Registration functionality shall be accessible on the CERSAI 2.0 portal. In order to register details of security interest and access various functionalities available on the portal, entities must be registered. Post implementation of chapter IV-A of SARFAESI Act entities are broadly classified into three main categories –
- Secured Creditors
- Other Creditors
- Revenue Authorities
Secured Creditors
The secured creditors can be any of the following entities- Public Sector Banks, Private Sector Banks, NBFCs, Security Trustees, RRBs, Cooperative Banks, ARCs, Factoring Companies, etc. Following shall be the registration process for secured creditors:
- On the portal Open Entity Registration Form using path Entity Registration -> Entity Registration
- User will get the following two modes of Entity Registration
- via CKYC
- via Digital signature
In case digital signature option is selected, it shall be ensured that the user has a valid Class III digital signature while registering the entity in the CERSAI 2.0 portal.
It is to be noted that users which are already using Digital Signature in CERSAI 1.0 can continue to use the same in CERSAI 2.0 also (irrespective of the class of Digital Signature) and once their Digital Signature expires they will have to procure a new Digital Signature of Class – III.
- The CERSAI 2.0 system will not enforce digital signature for the users with following roles: – Asset based Search – Debtor based Search – AOR search – Online Reports – MIS Reports – RMS Reports – Batch Reports. Except the above-mentioned roles, Digital Signature is mandatory for all other roles to login in CERSAI 2.0 system.
- Once the entity fills in the details such as employee Id, username, email ID, mobile number, date of birth, it can submit the form.
- Upon submission, an Entity Registration Form will open. The Form is divided into 3 tabs.
- First Tab is Entity User Details, which captures information related to the Entity which is being registered in CERSAI 2.0 portal.
- Second tab is Primary User Admin (PUA) 1 which captures information related to PUA1 of the Entity.
- Tab 3 captures the details of PUA2 of the entity.
- In the first tab, there is dropdown menu for Entity Category, which provides the following options to choose from:
- Secured Creditor
- ARC
- Factoring Company
- Revenue Authority
- Other Creditors
The applicant shall select the appropriate category based on its nature of business.
- After selecting the entity category, the applicant shall choose from the drop down menu for Type of Entity, which has the following options:
- NBFC Accepting Public Deposit
- NBFC Not Accepting Public Deposit
- Public Sector Bank
- Private Bank
- Foreign Bank
- Intermediary
- Housing Finance Company
- Regional Rural Bank
- Co-operative Bank
- Security Trustee
- Financial Institution
- Local Area Bank
- After selecting the relevant category and entity type, and filling the mandatory details such as name, PAN, GSTIN, registration number, entity registration date, address and mail id, the applicant shall select the relevant role for which the registration is being done- such as Assignment of Receivable, Asset Reconstruction, Asset Search, AOR Search
- In second and third tab, the details of primary users are captured. The following mandatory details are required to be given: username, father/mother name, employee ID, email id, mobile number, date of birth, department and residential address. After filling the required details, form shall be submitted.
- Upon Submission, system will save the entity registration request in pending state and give a reference number to the user for tracking the entity registration request. The user shall then download the entity registration filled-up form, attach supporting documents and send to CERSAI office offline.
- Upon receiving the physical documents, CERSAI admin users will fetch the transaction from their Entity Registration queue and approve the request upon verifying the request against the physical documents sent by the user. If CERSAI admin user’s approval, the entity will be registered successfully, and system will send notification to the PAUs. However, if the CERSAI admin user rejects the request, the entity representative user will have to apply afresh.
- On successful registration of the entity, Entity Code will be generated, and system will automatically create two notional accounts for the entity in the Central Registry portal – Usable account and TDS Account.
Other creditors
In the other entities section, the following kinds of creditors may register themselves:
- Individuals
- BOI
- HUFs
- Sole Proprietorship.
The initial process shall be the same as that of registration of secured creditors (as explained above). However, the primary user tab shall not be there.
After filling all the mandatory fields and upon submission of the form, a link shall be generated for creation of password which shall be sent to the user email id provided while filling form.
After clicking on the said link, the user will enter User ID for which password need to be set. A Set Password Form will open and after filling all the mandatory fields and clicking on Reset button the password will be reset successfully.
User registered in CERSAI 2.0 portal, using Entity Registration – OC can now access the CERSAI 2.0 application using newly created User Id and Password.
Conclusion:
The new portal has come up with the solutions to technical flaws in the existing portal. However, it is yet to be seen if the CERSAI 2.0 brings some revolutionary change or is it just limited to technical upgradations. The CERSAI has also stopped taking registration requests till the new portal goes live. The registration process may have other knick knacks which shall come out once the process is operative.
[1]https://rbidocs.rbi.org.in/rdocs/notification/PDFs/45MD01092016B52D6E12D49F411DB63F67F2344A4E09.PDF
[2] https://rbidocs.rbi.org.in/rdocs/notification/PDFs/MD44NSIND2E910DD1FBBB471D8CB2E6F4F424F8FF.PDF
[3] https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11439&Mode=0
Shareholder scrutiny for payout under Listing Regulations to directors
/0 Comments/in Corporate Laws, SEBI /by Vinod Kothari Consultants– Understanding the capping rationale
Pammy Jaiswal | Partner
Shaifali Sharma | Assistant Manager
Vinod Kothari and Company; corplaw@vinodkothari.com
Background
The remuneration payable to the directors of a public company is regulated by the provisions of Section 197 read with Schedule V of the Companies Act, 2013 (Act). It provides a ceiling on the maximum remuneration that can be paid to the directors both in aggregate as well categorically, including Whole-time Director, Managing Director and the Manager.
Any payment to such directors within the said limits has to be approved by the shareholders by way of an ordinary resolution. Payment of remuneration in excess of the limits requires approval of the shareholders by way of a special resolution.
There were no specific provisions prescribed under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’) on maximum remuneration payable to directors of listed entities until SEBI, on the basis of recommendation of Kotak Committee on Corporate Governance, amended the Listing Regulations to put a ceiling on remuneration payable to executive promoter directors and non-executive directors.
This article tries to critically analyze the intent and deduce the interpretation of the aforesaid capping under the Listing Regulations.
Absolute versus relative limits- reading between the lines
Regulation 17 (6) (e) of the Listing Regulations reads as under:
“The fees or compensation payable to executive directors who are promoters or members of the promoter group, shall be subject to the approval of the shareholders by special resolution in general meeting, if-
(i) the annual remuneration payable to such executive director exceeds rupees 5 crore or 2.5 per cent of the net profits of the listed entity, whichever is higher; or
(ii) where there is more than one such director, the aggregate annual remuneration to such directors exceeds 5 per cent of the net profits of the listed entity:
Provided that the approval of the shareholders under this provision shall be valid only till the expiry of the term of such director.
Explanation: For the purposes of this clause, net profits shall be calculated as per section 198 of the Companies Act, 2013.
On the very first reading of Regulation 17 (6) (e), we understand that in case the listed company has one executive promoter director, it can pay upto 2.5% of the net profits or INR 5 crore, whichever is higher, without passing a special resolution.
In case of more than one such director in the company, the relative limit of 2.5% is doubled to 5% of the net profits, however, the absolute limit of INR 5 crore has not been mentioned under sub-clause (ii) of the said sub-regulation.
This makes it all the more important for us to read between the lines and interpret the meaning as intended by the law-makers. As mentioned, the first sub-clause provides both a relative and an absolute limit for the purpose of securing shareholder scrutiny. In fact, the said clause clearly mentions that higher of the relative or absolute limit has to be considered while determining the need to approach the shareholders.
Accordingly, it may seem to be an incorrect reading if companies consider only the relative limit for the second sub-clause. In such a scenario, companies may end up considering a far lower limit than INR 5 crores which the law makers have already fixed for one promoter executive director in the first sub clause.
Approval requirements under the Act viz-a-viz requirements under Listing Regulations
A. Payment of remuneration to executive promoter directors of a listed public company
As per the Report[1] of the Kotak Committee constituted by SEBI, several cases of disproportionate payments made to executive promoter directors as compared to other executive directors were noted and therefore, the Committee with the view to improve the standards on Corporate Governance, suggested that this issue should be subjected to greater shareholder scrutiny. Accordingly, the amendment carved a parallel way for obtaining shareholder’s approval if the total remuneration paid to executive promoter director exceeds the prescribed limits.
The above recommendation has already come into effect from April 01, 2019 and therefore the listed entities, in addition to the threshold limits prescribed u/s 197 of the Act, have to adhere to the ceiling laid down u/r 17(6)(e) of the Listing Regulations.
Below is the comparison of the threshold limits prescribed under Act and Listing Regulations for payment of remuneration to executive promoter director, in excess of which shareholders’ approval by special resolution shall be required:
| Special Resolution required if: | Under the Companies Act, 2013 | Under SEBI Listing Regulations |
| Remuneration payable to a single executive director* | Exceeds 5% of the net profits of the company | Exceeds Rs. 5 crore (absolute limit) or 2.5% of the net profit (relative limit), whichever is higher |
| Remuneration payable to all executive director* | Exceeds 10% of the net profits of the company | Exceeds 5% of the net profits of the company |
* Listing Regulations caps the limit for executive directors who are promoters or members of promoter group
From above, it is evident that the Act allows public listed companies to pay remuneration to its executive directors upto 5% or 10% of its net profits, as the case may be, (without passing special resolution) which is double the relative thresholds prescribed under Listing Regulations i.e. 2.5% or 5% of the net profits.
Illustrations:
Illustration 1 –Payment within the limits laid down under the Act and also Listing Regulations
Type of shareholder approval required – Ordinary resolution under the Act
Illustration 2-Payment exceeds Listing Regulations limits but is within limits of the Act
Let us take a numerical example for this case:
| Situation | Permissible remuneration to a single executive promoter director | Permissible aggregate remuneration to more than 1 executive promoter directors | ||
| Act | LISTING REGULATIONS | Act | LISTING REGULATIONS | |
| Company has profits of 10 crore
|
· 5% of NP
0.5 crore |
Higher of
· 2.5% of NP; or · 5 crore
5 crores |
· 10% of NP
1 crore |
· 5% of NP
0.5 crore
|
| Remarks:
In case of single executive promoter director:
In case of more than 1 executive promoter director:
|
||||
Illustration 3 – Payment exceeds the limits under the Act and automatically exceeds the limits under Listing Regulations (not considering the absolute limit)
Here the case is simple, SR is required to be passed.
Illustration 4 – Company has inadequate profits for the purpose of section 197 read with Schedule V of the Act
In case the minimum remuneration approved falls within the limits provided against the effective capital – OR is sufficient, however, for the purpose of Listing Regulations, SR will be required. In this case, Listing Regulations are stricter as it does not envisage inadequacy of profits and amounts that can be paid in case inadequacy.
However, if the minimum remuneration approved exceeds the limits provided against the effective capital, SR is required under the Act and such payment can be made only for three financial years with certain other disclosure requirements.
Having said that, it is important to note that once SR under the Act has been passed for payment of remuneration either in cases of adequate or inadequateprofits, there does not seem to be any need to pass another SR under Listing Regulations for breach of the limits set therein.
B. Payment of remuneration to non-executive directors of a listed public company
The Kotak Committee on corporate governance further observed that certain non-executive directors (NEDs) (generally promoter directors) are receiving disproportionate remuneration from the total pool available for all other NEDs and recommended that if remuneration of a single NED exceeds 50% of the pool being distributed to the NEDs as a whole, shareholder approval should be required.
SEBI, in line with the above proposal and the requirement for special resolution for executive promoter directors, amended Listing Regulations and inserted following clause (ca) to Regulation 17(6):
“The approval of shareholders by special resolution shall be obtained every year, in which the annual remuneration payable to a single non-executive director exceeds fifty per cent of the total annual remuneration payable to all non-executive directors, giving details of the remuneration thereof”
The above amendment has also come into effect from April 01, 2019 and therefore, requires an action on the part of the listed entities to pass SR for such disproportionate payment to any one of its NED.
Some companies have already passed an SR in the AGM held for the financial year 2018-19 while other companies are preparing to pass the same in this year. The reason behind such two school of thoughts is based on the following reasons:
- Remuneration to a single NED for the FY 2018-19, which is basically profit linked commission, has been paid after 1st April, 2019. Some companies which have already taken the SR in the AGM held for the FY 2018-2019 have done so considering the payment being done post the advent of the aforesaid amendment.
- Remuneration to a single NED for the FY 2019- 2020 will be taken to the shareholders if it exceeds the limits. Here the companies which did not approach its shareholders in the AGM held for the FY 2018-2019 is based on the understanding that this amendment has come into force from 1st April, 2019 which means the same is to be complied with for the remuneration payable for FY 2019-2020. Therefore, according to the second school of thought, no SR is required for the disproportionate payment made in FY 2019-2020 for the FY 2018-2019[2].
Concluding Remarks
While the amendment of capping the limits for payout to executive promoter directors does not seem to meet the intent of the law makers, the amendment for passing SR for disproportionate payout to a single NED seems to be much more justified.
It was rightly mentioned in the Kotak Committee report that in future SEBI could review the status of the amendment relating to payout to executive promoter directors based on experience gained. As per the discussions above, it is imperative to draw attention firstly to the absence of the absolute limits in the second sub-clause of this sub-Regulation and even though the same is read with by inserting the same, it may seem to be futile for sole reason of SRs already passed by the companies under the Act. Further, clarity is needed for requirement to seek approval for payment of minimum remuneration in case of inadequacy of profits.
Since, MCA had already prescribed the limits and procedures under the Act for managerial remuneration, SEBI may relook at the capping scrutinylaid down for executive promoter directors and possible could align the same with the provisions of the Act. The intent is not to simply seek special resolution for every item of managerial remuneration as abundant caution.
Other reading materials on the similar topic:
- ‘FAQs on SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018’ can be viewed here
- Presentation on ‘Appointment & Remuneration of Managerial Personnel & KMPs’ can be viewed here
- ‘Managerial Remuneration: A five decades old control cedes’ can be viewed here
- ‘Remunerating NEDs and IDs in low-profit or no-profit years’ can be viewed here
- Our other articles on various topics can be read at: http://vinodkothari.com/
Email id for further queries: corplaw@vinodkotahri.com
Our website: www.vinodkothari.com
Our Youtube Channel: https://www.youtube.com/channel/UCgzB-ZviIMcuA_1uv6jATbg
[1]https://www.sebi.gov.in/reports/reports/oct-2017/report-of-the-committee-on-corporate-governance_36177.html
Impleadment of company necessary element under section 138/141 of NI Act
/0 Comments/in Corporate Laws /by Vinod Kothari ConsultantsCS Megha Saraf and Qasim Saif, Vinod Kothari and Company
A company is an artificial person acting through its management, specifically its board of directors. Also, a company is a separate legal entity that is to say, that a company has a separate legal standing and owns its assets and is liable for its debts. Though both these principles are well settled in corporate laws across the globe, from time to time there arises conflict on the matter that whether director should be held liable for the acts that he did as an office-holder in company or the company should be held solely liable. This conflict has been addressed in various cases and also under the Companies Act, 2013 (“Act, 2013).
In a recent ruling, Bhupendra Suryawanshi v/s Sai Traders[1], the Madhya Pradesh High Court held the company “vicariously liable” for the dishonour of cheque issued on behalf of company by its chairman as the foremost criteria for impleading a person signing on behalf of that company.
The article discusses the said judgment in light of the relevant provisions and other judicial precedents.
Brief facts of the case
In the instant case, the Petitioner (Chairman of Company X) had borrowed a particular sum from the Respondent. In order to make payment, the Petitioner had issued a cheque for the amount. Later, when the cheque was presented in the bank for clearance, the said cheque was dishonoured by the bank on account of “Stop Payment”.
The Respondent had filed a case in court of Judicial Magistrate of First Class, impleading only the Petitioner but not the Company, which was later on appealed in the High Court. The Petitioner had contended that as the Company is not impleaded, the case is liable to be quashed. Whereas, the Respondent was of the view that since, the Petitioner has borrowed the money from the Respondent for his own business purpose, there was no need to implead the Company as an accused.
Observations by the MP HC and other judicial pronouncements
On the perusal of facts, legal text and representation made by the parties, the HC observed as follows-
- On reading of the provisions, it is apparent that Section 141 of NI Act deals with the offences committed by the companies and says that if an offence is committed by a company under Section 138 of the Act, every person, at the time, the offence was committed, was in-charge and responsible to the company in the conduct of the business of the company, is liable along with the company to be proceeded against and punished accordingly.
- In the case of Aneeta Hada v. Godfather Travels & Tours (P) Ltd.[2] the Supreme Court has held that there cannot be any vicarious liability unless there is prosecution against the company.
- In the case of M.S. Pharmaceuticals Corporation Ltd v/s Neeta Bhalla & Anr[3], National Small Industries Corporation Ltd v/s Harmeed Singh Paintal & Anr[4], and K.K. Ahuja v/s V.K. Vora & Anr[5], the Supreme Court had explained the necessity of specific averment in the complaint regarding the company and that director/ managing director/ joint managing director/ other employees of the company cannot be prosecuted under Section 138 of the NI Act unless the company is impleaded as an accused.
Therefore, in the instant case, since the demand notice was served only on the petitioner/accused and there was no demand notice against the company, it held that without arraying the company as an accused in the complaint case, the petitioner cannot be prosecuted for an offence and subsequently allowed the case.
Our Comments
Section 138 read with Section 141 of the Negotiable Instruments Act, 1881 (“NI Act”) provides that where any cheque is drawn by any person on an account maintained by him with a banker and if it is returned back by the banker due to:
- Insufficient balance to honour the cheque;
- The cheque value exceeds the amount arranged for payment from the account;
such person is deemed to have committed an offence and is punishable with an imprisonment or fine or with both.
However, before charging a person with such offence, it is required that the following three conditions are fulfilled:
- the cheque is presented to the bank within 6 months from the date on which it is drawn or within the period of its validity, whichever is earlier;
- the payee or the holder in due course of the cheque, as the case may be, makes a demand for the payment of the said amount of money by giving a notice; in writing, to the drawer of the cheque, within 30 days of the receipt of information by him from the bank regarding the return of the cheque as unpaid; and
- the drawer of such cheque fails to make the payment of the said amount of money to the payee or, as the case may be, to the holder in due course of the cheque, within 15 days of the receipt of the said notice.
It is only if the abovementioned conditions are present, the person drawing such cheque can be held liable.
While the aforesaid provides for the reason for charging such person to such offence, it is also pertinent to note the applicability of Section 141 to such case. Section 141 of the NI Act provides for “offences by companies”. Several judicial pronouncements had already quashed cases due to no averment against the company before alleging a person who was acting on behalf of such company, thereby clearly providing the extension of Section 141, to the company first before moving ahead and charging the person-in-charge and holding good the concept of “vicarious liability”.
The MP High Court Order thus relied on Aneeta Hada Vs. Godfather Travels and Tours Private Ltd., and S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another and is in sync with the observations of SC.
Decriminalisation of offence committed u/s 141 of the NI Act– is it desirable?
Aside, it may be pertinent to note that the Department of Financial Services had recently issued a Suggestion Paper[6] and had laid down certain provisions of 19 Acts for de-criminalisation of offences which were open for public comments. One of the provisions include Section 138 of the NI Act. Several Supreme Court judgements such as M/s. Dalmia Cement (Bharat) Ltd. v. M/s. Galaxy Traders and Agencies Ltd[7] and Indian Bank Association and others v. Union of India[8], have already recognised the essence and intent of the section and deliberated on the nature of default involved in the matter. It is pertinent to note that as per the 213th report of the Law Commission[9]; almost 20 percent of the pending litigation relates to cheque dishonour disputes.
In India, contractual relationships are a common way of doing business. The whole purpose of issuing a cheque is to make payment ultimately, and if the person knows that even if he is unable to make the payment, no strict legal action can be taken against him, a cheque will lose its value as a negotiable instrument as there is no promise of getting the payment. Hence, it might not be a feasible idea to decriminalise the section.
Our other Articles on this subject may be viewed at:
- Dishonour of PDCs may not be an offence u/s 138 of NI Act- click here
- Bounced cheque: SC ruling makes prosecution easier- click here
To read our articles, on other subjects, click here
To subscribe to our YouTube channel, click here
[1] https://mphc.gov.in/upload/jabalpur/MPHCJB/2020/MCRC/735/MCRC_735_2020_FinalOrder_09-Jun-2020.pdf
[2] http://www.supremecourtcases.com/index2.php?option=com_content&itemid=99999999&do_pdf=1&id=24430
[3] https://indiankanoon.org/doc/775638/
[4] https://indiankanoon.org/doc/832836/
[5] https://indiankanoon.org/doc/1957018/
[6] https://financialservices.gov.in/sites/default/files/Decriminalization%20-%20Public%20Comments.pdf
[7] https://indiankanoon.org/doc/60864/
[8] https://indiankanoon.org/doc/105912122/
[9] http://lawcommissionofindia.nic.in/reports/report213.pdf
SEBI prescribes norms for structured digital database, system driven disclosures & CoC violations
/0 Comments/in Corporate Laws, SEBI /by Vinod Kothari ConsultantsCS Vinita Nair, Senior Partner | Vinod Kothari & Company
July 23, 2020
Link to gazette notification: http://egazette.nic.in/WriteReadData/2020/220574.pdf
Effective date: July 17, 2020
Background
SEBI in the Board meeting held on June 25, 2020 (‘SEBI BM’) discussed amendments in PIT Regulations on Structured Digital Database, continual disclosures and amendments in the Code of Conduct (CoC).
This article discusses the position prior to amendment, relevant discussion at SEBI BM and actionable post amendment.
Structured Digital Database (SDD-1)
Prior to the amendment
Reg 3(5) of the regulations provided maintenance of SDD-1 with names of persons with whom UPSI was shared and PAN/ any other identifier of the person (where PAN was not available). SDD was required to be maintained with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database.
The regulation indicated that just the listed entity is required to maintain the same. However, SEBI clarified in the guidance note, pursuant to an insertion made on July 5, 2019, that the requirement to maintain SDD-1 was applicable to listed companies, and intermediaries and fiduciaries who handle UPSI of a listed company in the course of business operations.
Discussion in SEBI BM
As per the agenda of the SEBI BM It was proposed to specify following in relation to SDD:
- Nature of UPSI;
- Details of persons or entities who have shared;
- Period of preservation of SDD-1;
- Prohibiting entities from outsourcing the same.
Post amendment
- SDD-1 is required to be maintained by the Board of directors or heads of organization of every person required to handle UPSI;
- SDD-1 shall additionally contain the name of the person sharing the UPSI.
- So the names of person sharing and the one with whom the same is shared will be recorded along with PAN/ any other identifier of the person (where PAN was not available).
- SDD-1 shall be maintained internally and not be outsourced.
- SDD-1 to be preserved for a period of 8 years after completion of relevant transactions or even longer in case of pending proceedings.
System Driven Disclosures (SDD-2)
Prior to the amendment
Continual disclosures under Reg 7 (2) (b) was required to be made by the promoters, member of promoter group and designated persons to the stock exchanges within two trading days of receipt of the disclosure or becoming aware of such information. System driven disclosure was implemented vide SEBI Circular dated May 28, 2018 only for The CEO and upto two levels below CEO of a company and all directors. The database was submitted to the depositories along with PAN of the individuals.
Discussion in SEBI BM
Investigation of delay or non-compliance due to manual submissions takes up considerable time and effort and clogs the system. In order to eliminate it was proposed to automate the process of filing such disclosures by way of SDD-2 thereby enabling timely and fair disclosure without intervention of entities involved. SEBI will be issued detailed circular on the same to the market participants.
Post amendment
Reg 7 (2) (c) inserted to provide enabling power for issue of format and manner of submitting SDD-2.
Exemption from trading window restrictions
Prior to the amendment
Trading window restriction was not applicable on transactions specified in proviso to Reg 4 (1), in respect of pledge for a bonafide purpose and transactions undertaken in accordance with respective SEBI Regulations such as acquisition by conversion of warrants or debentures, subscribing to rights issue, further public issue, preferential allotment or tendering of shares in a buy-back offer, open offer, delisting offer.
Discussion in SEBI BM
Offer for sale was not included in the said list despite SEBI having laid detailed procedure for the same.
Post amendment
Enabling clause inserted to include the transactions which are undertaken through such other mechanism as may be specified by the Board from time to time. SEBI vide Circular dated July 23, 2020 provided that trading window restriction shall not apply in case of rights entitlement and Offer for Sale.
Crediting the amount for CoC non-compliance to IPEF
Prior to the amendment
Only profits from contra trade were disgorged and credited to Investor Protection and Education Fund (IPEF) administered by SEBI. The listed entity had the option to take disciplinary action including by way of recovery, clawback.
Discussion in SEBI BM
The listed entity could take action against person violating the CoC by way of disciplinary actions viz. wage cut, collecting of certain amount etc. There was no uniform approach w.r.t. utilization of amounts levied by the listed entities/ intermediaries/ fiduciaries for other violations of CoC viz. trades during window closure, trade without pre-clearance etc.
Also, a clawback is generally a contractual agreement between the employee and the employer in which the employee agrees to return previously paid or vested remuneration to the employer under certain circumstances. However, every employment agreement may not have a “clawback” clause or provision. Whereas, disgorgement as an equitable remedy, aimed at depriving the wrongdoer of his ill-gotten gains. It was suggested to substitute ‘clawback’ with ‘disgorgement’.
Post amendment
Any amount collected for violation of CoC shall also be remitted to SEBI for credit to the IPEF. The word ‘clawback’ has been deleted in Schedule B and Schedule C. SEBI vide Circular dated July 23, 2020 has provided that such amounts shall be credited to the IPEF through the online mode or by way of a demand draft (DD) in favour of the Board (i.e. SEBI – IPEF) payable at Mumbai. The bank account details of SEBI – IPEF for online transfer is given below:
Informing violation of PIT Regulations to Stock Exchange
Prior to the amendment
Violation of PIT Regulations was required to be informed to SEBI. SEBI vide Circular dated July 19, 2019 prescribed format for standardized reporting of violations under CoC.
Discussion in SEBI BM
The intimations received from listed companies/ intermediaries/fiduciaries were maintained in non IT based environment. To ensure that such intimations were captured electronically in an IT based environment to create a data repository, which could be used for conducting examination of cases or for any other data analysis, in future, it was recommended to file intimations with the stock exchanges.
Post amendment
The violations will be required to be reported to the stock exchanges in the form and manner as may be prescribed by SEBI. SEBI vide Circular dated July 23, 2020 prescribed the format in supersession of July, 2019 circular.
Whether the intimations filed with the stock exchanges will be publicly available, is not clear.
Comparison of formats
The format is broadly similar to that prescribed in July, 2019, however, has following modifications:
|
Particulars |
July, 2020 Circular | July, 2019 Circular |
Remarks |
| Details of DP | Whether the DP is promoter or belongs to promoter group | Whether the DP is promoter /promoter group/ holding CXO level position (e.g. CEO, CFO, CTO etc). | The details highlighted is anyways provided under Designation of DP and Functional role of DP. This seemed repetition. |
| Details of transaction | No of shares traded and value (Rs.) (Date- wise) | No of shares traded (which includes pledge) and value (Rs.) (Date- wise). | The legislative note under definition of ‘trading’ in the Regulations clarify that trade includes pledge. |
| Details of violations | Details of violations observed under Code of Conduct. | Details of violations observed under SEBI (PIT) Regulations, 2015. | Reference aligned with Para 12 of Schedule B of the Regulations. |
| Amount collected for CoC violation | · Mode of transfer to IPEF (Online/ DD)
· Details of the transfer. |
No such field. | It seems that the amount is to be first transferred and thereafter, reporting is to be done as payment details is required to be furnished. |
Actionables for the listed entities/ intermediaries/fiduciaries
SDD-1
Maintenance of SDD-1 to be ensured with details of persons sharing the UPSI. SDD to be preserved for minimum 8 years from completion of relevant transactions. Internal control manual/ SOP, if any, will be required to be updated to capture the amendment.
SDD-1 may be maintained by Compliance Officer or may be maintained by various functional heads who are in possession of UPSI and share the same for legitimate purpose. The Compliance Officer should have access to the same as that is required for deciding of pre-clearance for the trades by DPs.
SDD-2
Reporting continual disclosure in SDD-2 after the format is prescribed by SEBI. In case SEBI decides to implement SDD-2 in the manner it implemented in 2018, the listed entity will be required to furnish name and PAN details of promoter, member of promoter group and all designated persons to the depository.
CoC
The CoC will be required to be amended to capture the amendments by removing reference of clawback provision and specifying to deposit amounts collected for violation to IPEF.
Violation of the regulations and of CoC to be reported to the stock exchange instead of SEBI by listed entity/ intermediary/ fiduciary in the format provided by SEBI vide circulated dated July 23, 2020.
Evolution of securitisation – Genesis of MBS
/0 Comments/in Financial Services, Securitisation /by Vinod Kothari ConsultantsSecuritisation as a concept, has a history of over 50 years. In this write up, the author traces the events leading up to the evolution of securitisation in 1970 with the issuance of the first MBS program by Ginnie Mae.
Amendments in the Stamp Act: Highlighting the issues and need for further clarification
/0 Comments/in Stamp Act and related issues /by Vinod Kothari Consultants-Richa Saraf (richa@vinodkothari.com)
The Government had been intending to facilitate ease of doing business and bring in uniformity in the rates of the stamp duty on securities across States and thereby build a pan-India securities market. In this regard, the Central Government, after due deliberations and consultations with the States, through requisite amendments in the Indian Stamp Act, 1899 and Rules made thereunder, has created the legal and institutional mechanism to enable States to collect stamp duty on securities market instruments at one place by one agency (through Stock Exchange or Clearing Corporation authorized by it or by the Depository) on one instrument.
While the relevant provisions of the Finance Act, 2019 amending the Indian Stamp Act, 1899 and the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 were notified simultaneously on 10th December, 2019 and these were to come into force from 9th January, 2020, due to lockdown, the effective date was later extended to 1st July, 2020 vide notification dated 30th March, 2020 .
In this article, the author tries to highlight two major areas in which there is need for clarity.
Stamp duty in case of issuance of shares:
Article 246 of the Indian Constitution stipulates that Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (“Union List”), and the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (“State List”).
Entry 91 of the Union List provides the Central Government with the power to prescribe the rate of stamp duty on issue and transfer of debentures, transfer of shares and bill of exchange. Further, as per Entry 63 of the State List, the State Government has power to prescribe rate of stamp duty in respect of documents other than those specified in the provisions of List I. Therefore, the power to levy stamp duty on issuance of shares vests with the respective State Governments.
The amended stamp duty rate prescribed by the Finance Act, 2019 stipulates that for issue of security other than debenture, a stamp duty of 0.005% shall be payable . As per Section 2(23A) of Indian Stamp Act, the term “securities” shall include securities as per Section 2(h) of Securities Contracts (Regulation) Act, 1956 , i.e. the following:
(i) Shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;
(ii) Derivative;
(iii) Units or any other instrument issued by any collective investment scheme to the investors in such schemes;
(iv) Security receipt as defined under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(v) Units or any other such instrument issued to the investors under any mutual fund scheme;
(vi) Government securities;
(vii) Instruments as may be declared by the Central Government;
(viii) Rights or interest in securities.
In accordance with the provisions of the Constitution of India, the Central Government does not have the power to levy stamp duty on issue of shares. However, considering the aforesaid definition, it can be said that the Central Government has prescribed stamp duty rates for the “issue of security other than debenture”, including for “issue of shares”, which shall be chargeable with stamp duty of 0.005%.
This is susceptible to constitutional challenge and may be declared as ultra vires the Constitution.
Stamp Duty on Secured Debentures:
Prior to the Finance Act, 2019, as per erstwhile Article 27 of the Indian Stamp Act, only debentures which qualified as “marketable securities” were liable to be stamped under Article 27 of the Indian Stamp Act. Now, pursuant to the Finance Act, 2019, Article 27 provides an ad-valorem rate of duty of 0.005% on issue of “debentures”, and the term has been defined as follows:
Section 2(10A) “debenture” includes-
(i) debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not;
(ii) bonds in the nature of debenture issued by any incorporated company or body corporate;
(iii) certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity upto one year as the Reserve Bank of India may specify from time to time;
(iv) securitised debt instruments; and
(v) any other debt instruments specified by the Securities and Exchange Board of India from time to time.
Accordingly, it can be inferred that irrespective of the fact that the debentures are marketable or not, stamp duty shall be payable on issuance as well as transfer of debentures.
Another important change to be noted is that earlier w.r.t. mortgage debentures there was a specific exemption that provided that if the mortgage-deed was stamped and registered appropriately (which mortgage would be subject to relevant State stamp legislations), the debentures were exempt from stamp duty. However, pursuant to the Finance Act, 2019, the said exemption has been omitted, which brings us to another major question with respect to payment of stamp duty on issue of secured debentures- whether the security documents viz. deed of hypothecation or mortgage deed will be required to be additionally stamped or not.
In terms of the Finance Act, 2019, Section 4(3) has been inserted in the Indian Stamp Act, which stipulates that in case of any issue, sale or transfer of securities (which again includes debentures), where the duty has been paid on the principal instrument chargeable under Section 9A i.e. instrument chargeable with duty for transactions in stock exchanges and depositories, no stamp duty shall be required to be charged on any other instrument relating to such transaction.
Further, as per Section 9A(3), the State Government cannot charge or collect stamp duty on any note or memorandum or any other document, electronic or otherwise, associated with transactions mentioned in Section 9A(1). This implies that in case secured debentures are being issued in dematerialised form, or are traded over the stock exchange, then the security documents are not required to be separately stamped. In this regard, it is also relevant to cite the case of the Chief Controlling Revenue vs. the Madras Refineries Ltd. AIR 1975 Mad 362 wherein the issue of exemption on payment of stamp duty on incidental documents in case the principal document has already been stamped was discussed at length.
However, there is lack of clarity in case of transactions that do not involve stock exchanges and depositories, such as physical issuances. The question remains whether there will be double incidence of stamp duty- i.e. (i) on issue of debentures; as well as (ii) on mortgage deed or other relevant security documents. While this does not seem to be the intent of the Legislature, a clarification, in this regard, is definitely required.
Our write- up on the Amendments in the Stamp Act can be accessed from the link below:
http://vinodkothari.com/2019/03/single-point-collection-of-stamp-duty/
Our FAQs on the Amendments in the Stamp Act can be accessed from the link below:
http://vinodkothari.com/2019/12/faqs-on-recent-amendments-in-indian-stamp-act-1899/