– Qasim Saif | finserv@vinodkothari.com
Addressing risk faced by NBFCs and enhancing their capacity to absorb such risk has been a key point of consideration under the Scale Based Regulations (SBR) for NBFCs. SBR also intends to curb regulatory arbitrage available to very large NBFCs whose size of operations are more or less in line with that of banks.
Read more →In pursuance of the Scale Based Regulatory Framework
-Anita Baid | Vice- President and Aanchal Kaur Nagpal | Assistant Manager
The Scale Based Regulatory Framework, introduced by the Reserve Bank of India (‘RBI’), among several other things, proposed to regulate loans extended by NBFCs to their directors, senior officers and relatives thereof.
In this regard, the RBI has, vide its notification on Loans and Advances – Regulatory Restrictions – NBFCs dated April 19, 2022, issued two sets of regulatory provisions – one for NBFC-UL and NBFC-ML and the other for NBFC-BL (‘Guidelines’).
– Parth Ved, Executive | parth@vinodkothari.com
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Our resources on SBR: http://vinodkothari.com/sbr
| The article has also been published on IndiaCorpLaw – read here |
SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regs.’), although prohibit trading on the basis of unpublished price sensitive information (UPSI) by any “insider” (which includes even an accidental insider or an outsider having come to possess UPSI); however, from a surveillance and compliance system perspective, the PIT Regs. focus on certain specific insiders called designated persons (DPs). Trading in securities of the listed company by the DPs is sought to be “regulated, monitored and reported” by the Code of Conduct (reg. 9 read with Schedule B) which, inter alia, provides for (a) bar on trading while the trading window is closed; (b) prior clearance by the compliance officer while the trading window is open subject to certain declarations; (c) bar on short-term reversal trades; etc. Another article deals with a detailed discussion on the manner in which ‘insiders’, ‘connected persons’ and ‘designated persons’ are dealt with under PIT Regs.
Similar framework has been envisaged in case of intermediaries and fiduciaries who deal with listed companies. In such cases, the compliance officer of such intermediary/ fiduciary is required to maintain a ‘restricted list’ of securities, which is used as the basis for approving or rejecting the application for pre-clearance of trades by the DP. The DP may trade in the securities of a listed client company which is not in the restricted list subject to pre-clearance by the compliance officer.
Hence, there is no blanket prohibition of trading in the listed securities by the DPs; although, there are conditionalities involved. Very recently, there have also been concerns around investment by DPs in the units of pooled investment vehicles (as we discuss below).
Read more →– MCA’s move to standardise, streamline and digitize
– Payal Agarwal, Senior Executive | Vinod Kothari & Company (payal@vinodkothari.com)
The Report of the Company Law Committee – 2022 (“CLC Report”) has proposed various important amendments to the existing Companies Act, 2013 (“the Act”) and some in the Limited Liability Partnership Act, 2008 (“LLP Act”). The recommendations touch a wide array of elements under the Act – be it the association/ cooling period of directors, auditors, KMPs, etc. or corporate actions such as mergers, transfer of unclaimed monies to IEPF on account of buyback etc., de-clogging of NCLTs for restoration of company’s name after having been dissolved as defunct, setting up of specialized company law Benches of NCLT for dealing with matters of economic importance such as corporate restructuring, and specialized IBC cases or cases involving public interest. The recommendations also seek restoration of some meaningful provisions of the erstwhile CA 1956.While some suggestions pertain to ease of compliances and moving towards digitization with respect to certain compliances of a company, others pertain to building a robust corporate governance framework including alignment of the law with various provisions with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).
This is the 3rd CLC Report in the series of recommending changes to the 2013 Act, several reforms in the Act had been suggested in past by the CLC Report 2016, Committee to Review Offences Under Act of 2018 and CLC Report 2019. A brief summary of the issues under hand and the recommendations along with proposed amendments have been provided for as an Annexure to the CLC Report itself, and therefore, we find it useful to discuss only some of the recommendations which require analysis.
Applicability
The Committee report, if accepted by the Government, will potentially lead to an Amendment Bill, and therefore, there will be an enactment by a law of the Parliament. Once passed, it is expected that several of the amendments will require extensive rule-making, as there are references in several provisions to “class or classes of companies”. Thus, while we get a broader view of the direction into which the law will move, but as they say, the devil lies in the detail. We will get to know the details, hopefully divine and not devilish, only when the Bill is available for review.
– Team Corplaw | corplaw@vinodkothari.com
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