August 2022 – Vinod Kothari Consultants

New avatar of DPT-3 requires aging details for exempted deposits

August 31, 2022/8 Comments/in Amendments to the Companies Act 2013, Companies Act 2013, Corporate Laws /by Payal Agarwal

– Also burdened with irrelevant deposit related details

– Payal Agarwal, Senior Executive (payal@vinodkothari.com)

The format of the “return on deposits” and on “exempted deposits”, that is, form DPT-3 has been amended pursuant to the notification of the Companies (Acceptance of Deposit) Amendment Rules, 2022 (“Amendment Rules”) on 29th August, 2022. While the same has been made applicable immediately, the revised format will be actually relevant for the filing of form DPT-3 for FY 2022-23, since the due date for filing DPT-3 for FY 2021-22 has already expired on 30th June, 2022. It is interesting to note that while most of the changes pertain to the “return of deposits”, the same does not have any practical significance in India. However, there is specifically one addition w.r.t. the money received by a company, but not considered as deposit, i.e., exempted deposits.

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Emission law amendments: Laying the framework for Carbon trading market in India

August 31, 2022/0 Comments/in Accounting and Taxation, Corporate Laws, Direct Taxes, Good & Service Tax (GST), Sustainability /by Payal Agarwal

– Payal Agarwal, Vinod Kothari & Company (payal@vinodkothari.com)

This version: 23rd December, 2022

The Energy Conservation (Amendment) Bill, 2022 (“Bill”) seeks to provide a regulatory framework for carbon markets in India. The Bill was passed in the Lok Sabha on 8th August, 2022, and has been passed in the Rajya Sabha on 12th December, 2022. The President’s asset is all that is required to bring the carbon markets within the statutory framework of India. However, there is still a long way to go before carbon markets are implemented in India, which will require notification of the procedures and rules governing the same. Further, the carbon markets in other countries are still developing in a phased manner, identifying the gaps in the existing system and modifying accordingly. India cannot be an exception to the same. However, the concept of “carbon credits” is not unknown to India since there are several entities in the country which are already generating tons of carbon credits. This article seeks to delve upon the legal aspects of carbon credits markets around the world, the consequences of not exporting the same, and the tax implications upon sale of the generated credits. As we study the existing carbon markets around the world, some learnings from these markets may be taken into consideration for the developing carbon market in India.

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Discussion on the new regime on Overseas Investment

August 31, 2022/0 Comments/in Corporate Laws, ODI /by Staff

Register here: https://docs.google.com/forms/d/1VNc1b6tnD1tG5Rkc5L7Xwfu8VuLGyPu17er3-23mkug/edit

Our write up on the topic can be read here:

Lost in Layers: lower threshold for subsidiaries under ODI norms raises concern

August 29, 2022/0 Comments/in Corporate Laws, FEMA, ODI /by Vinita Nair Dedhia

Vinita Nair, Senior Partner | Vinod Kothari & Company | corplaw@vinodkothari.com

It is quite common for entities to have subsidiaries in India and outside India in order to undertake business activities. The norms for incorporating a subsidiary in India is mainly governed by provisions of Companies Act, 2013 (‘CA, 2013’) and also the FDI norms for investment in the non-debt instruments, where the investment is being made by a person resident outside India. Similarly, the norms for incorporating a subsidiary outside India is mainly governed by provisions of CA, 2013 and also ODI norms for investment in the non-debt instruments. Additionally, there is a concept of restriction on layers of subsidiaries, prescribed under CA, 2013 and also under the new regime, which has raised cause of concern as well as confusion among India Inc., which is intended to be addressed by the author in this article.

RBI, effective from August 22, 2022 notified norms on Overseas Investment (‘OI’) in the form of OI Rules, OI Regulations and OI Directions. Read our article on the overview of the OI norms here. Our presentation can be accessed here.

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Key Takeaways – Conference on Secondary Markets in Distressed Loans | August 24, 2022

August 25, 2022/0 Comments/in Financial Services /by Team Finserv

Conference Homepage: https://vinodkothari.com/conference-on-secondary-markets-in-distressed-loans/

Presentation on Securitisation of NPL used during the Conference: https://vinodkothari.com/2022/04/securitisation-of-non-performing-loans/

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Revised ODI Norms: A step towards greater clarity & liberalization?

August 24, 2022/4 Comments/in Corporate Laws, FEMA, ODI /by Vinita Nair Dedhia

FCS Vinita Nair | Senior Partner, Vinod Kothari & Company | corplaw@vinodkothari.com

Investments by Indian entities outside India is a very common phenomenon and several companies have presence outside India by virtue of forming a Joint Venture (‘JV’) and Wholly Owned Subsidiaries (‘WOS’). While the intent is to permit investment overseas, however, with reasonable fetters to ensure that money is not siphoned outside India. Hence, the prescribed limits along with approval and reporting requirements.

With the enforcement of amendment proposed in Finance Act, 2015 in October, 2019^[1] powers vested with Central Government (CG) and Reserve Bank of India (RBI) with respect to permissible Capital Account Transaction were revisited. Power to frame rules relating to Non-Debt instruments (‘NDI’) were vested with CG and to frame regulations relating to debt instruments were vested with RBI. The scope of NDI inter alia covers all investment in equity instruments in incorporated entities: public, private, listed and unlisted; acquisition, sale or dealing directly in immoveable property.

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Structured Digital Database: some emerging concerns

August 22, 2022/6 Comments/in Corporate Laws, PIT /by Team Corplaw

– Corplaw Division, Vinod Kothari & Company (corplaw@vinodkothari.com)

Maintenance of Structured Digital Database (“SDD”) has been mandatory since April 1, 2019 in view of the relevant provisions under the SEBI (Prohibition of Insider Trading) Regulations, 2015 (‘PIT Regulations’) reproduced below. The provisions inter-alia stipulates the responsibility, the details to be captured in the SDD, manner of maintenance and the preservation period. The entities have been maintaining for the last 3 years, however, since quarter ending June 30, 2022 the entities are additionally required to submit a compliance certificate, based on the email received from the stock exchanges where its securities are listed, duly certified by the Compliance Officer. We have been given to understand that this submission will be mandated on a quarterly basis and the same will henceforth required to be submitted duly certified by a practising company secretary. As on date, no SEBI circular or Exchange circular has been issued in this regard.

The last date for submission for the immediately preceding quarter was August 9, 2022. Based on the client queries received in this regard, format of the compliance certificate provided by the stock exchange and the views from the representatives of SEBI and stock exchanges as expressed in seminars from time to time, we intend to highlight certain points of concerns for your kind consideration.

Relevant provisions of Law:

Reg. 3 (5) and (6) of PIT Regulations:-

(5) The board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that a structured digital database is maintained containing the nature of unpublished price sensitive information and the names of such persons who have shared the information and also the names of such persons with whom information is shared under this regulation along with the Permanent Account Number or any other identifier authorized by law where Permanent Account Number is not available. Such database shall not be outsourced and shall be maintained internally with adequate internal controls and checks such as time stamping and audit trails to ensure non-tampering of the database.

(6) The board of directors or head(s) of the organisation of every person required to handle unpublished price sensitive information shall ensure that the structured digital database is preserved for a period of not less than eight years after completion of the relevant transactions and in the event of receipt of any information from the Board regarding any investigation or enforcement proceedings, the relevant information in the structured digital database shall be preserved till the completion of such proceedings.

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