Ministry of Corporate Affairs
1. (a)Chartered Accountants
Procedures of Meetings of Quality Review Board, and Terms and Conditions of
Service and Allowances of the Chairperson and Members of the Board (Amendment)
Rules, 2016
MCA Notification – February 8, 2016
Amendment to the existing ‘Chartered Accountants Procedures of Meetings of Quality Review Board, and Terms and Conditions of Service and Allowances of the Chairperson and Members of the Board Rules, 2006’
Applicability:
Quality review board constituted by the Central Government
pursuant to subsection 1 of section 28 A of the Chartered Accountants Act 1949
Crux of the
Notification:
The
following rule shall be inserted after Rule 9, in sub-rule (2), after clause (i) (ia),which speaks about
Allowances, in the Chartered Accountants
Procedures of Meetings of Quality Review Board, and Terms and Conditions of
Service and Allowances of the Chairperson and Members of the Board Rules, 2006:
"(ib) The Chairperson and Members
nominated by the Central Government to the Board, shall not undertake any
foreign tour without the prior approval of the Central Government. Whenever
such a tour is proposed, the proposal should give full justification for the
tour, including its purpose, necessity and the expected outcome of the tour for
the consideration of the Central Government.
(2.)
Others MCA information:
The MCA has
given notice inviting comments on the following draft Rules:
- Companies
(Indian Accounting Standards) Amendment Rules 2016 - Dated February 16, 2016
- Companies
(Accounting Standards) Amendment Rules 2016 – Dated February 16, 2016
- Companies (Authorised
to Registered) Amendment Rules 20162016 – Dated February 17, 2016
- Companies (Incorporation) Second Amendment Rules 2016– Dated February 17, 2016
-
Companies
(Cost Records and Audit) Amendment Rules, 2016 - Dated February 23, 2016
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Reserve Bank of India and Foreign Exchange Management
Act
(1)Foreign Exchange
Management (Export and Import of Currency) Regulations, 2015
RBI Circular
Reference No:RBI/2015-16/310 A.P. (DIR Series) Circular No. 45/2015-16 [(1)/6(R)] dated February 4, 2016
We draw your attention to RBI Notification,bearing No. FEMA.6(R)/ 2015-RB dated December 29,
2015.
Applicability:
All
Authorised Persons
Crux of the Circular:
The RBI notification specified above on Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 replaces the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 and all the amendments thereto.
The major highlights of circular issued by the RBI in this regard are as follows:
A. Export and import of Indian currency and currency notes
a. Any person resident in India
Currency |
Coins |
May take currency lesser than Rs. 25,000/- (per person) outside India (other than Nepal and Bhutan) |
May take or send commemorative coins not exceeding two coins each outside India (other than to Nepal and Bhutan) |
b. Any person resident outside India, other than a citizen of Pakistan or Bangladesh, visiting India:
Currency |
Coins |
May take currency lesser than Rs. 25,000/- (per person) outside India (other than Nepal and Bhutan) |
May bring into India currency note not exceeding 25,000/- (per person) |
Currency here means: currency notes of Government of India and Reserve
Bank of India notes
B. Import of Foreign Exchange into India
A person
may send or bring currency into India in the following manner
Sending
currency into India
|
Bringing
currency into India
|
May
send foreign currency without any limit.
Foreign
currency in any form other than currency notes, bank notes and travelers
cheques
|
May
bring foreign currency from any place into India without any limit (other
than unissued notes) subject to fulfilling the following requirement:
-
Making a declaration to the Customs authorities
-
However, such declaration need not be made if the
aggregate value of the foreign exchange
o
in the form of currency notes, bank notes or
travelers cheques brought by one person at any one time does not exceed
US$10,000 or its equivalent
and/ or
o
the aggregate value of the foreign currency
brought in by a person does not exceed US$5,000 or its equivalent
|
C.
Export of Foreign Exchange and Currency Notes
1. The
authorised person is permitted to send the Indian currency acquired in the
normal course of business
2. Any person
may take or send currency out of India if
a. Cheques drawn on
foreign currency account maintained in accordance with Foreign Exchange
Management (Foreign Currency Accounts by a person resident in India)
Regulations, 2000;
b. foreign exchange
obtained by him by drawal from an authorized person is in accordance with the
provisions of the Act or the rules or regulations or directions made or issued
there under;
c. currency in the
safes of vessels or aircrafts which has been brought into India or which has
been taken on board a vessel or aircraft with the permission of the Reserve
Bank;
3. Any person may take
out of India ,
a. foreign exchange
possessed by him is in compliance with the Foreign Exchange Management
(Possession and Retention of Foreign Currency) Regulations, 2000 ;
b. any unspent foreign
exchange brought back by a person into India while returning from travel abroad
and is retained by him, in compliance with Foreign Exchange Management
(Possession and Retention of Foreign Currency) Regulations, 2000 ;
4. any person resident
outside India may take out of India unspent foreign exchange not exceeding the
amount brought in by him and declared in Currency Declaration Form (CDF).
D. Export and Import of currency to or from Nepal and
Bhutan
-
A
person may take or send currency notes of Government of India and Reserve Bank
of India notes (other than notes of denominations of above Rs.100 in either
case) out of India to Nepal or Bhutan
-
An
individual travelling from India to Nepal or Bhutan can carry Reserve Bank of
India currency notes of denomination Rs.500/- and/or Rs.1000/- up to a limit of
Rs.25,000/- ;
Currency
of Nepal or Bhutan
|
Indian
Currency
|
The currency of
Nepal or Bhutan can be taken or brought by a person out of India to Nepal or
Bhutan or into India from Nepal or Bhutan
|
currency notes of Government of India and
Reserve Bank of India notes (other than notes of denominations of above
Rs.100 in either case) can be brought into India from Nepal or Bhutan
|
E. Prohibition on Export of Indian Coins
No person shall take or send out of India
the Indian coins which are covered by the Antique and Art Treasure Act, 1972.
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(2.)Foreign
Exchange Management (Transfer or Issue of Security by a Person Resident outside
India) (Amendment) Regulations, 2016
FEMA Notification:
Notification No.FEMA.361/2016-RB
Dated February 15, 2016
Applicability:
To a Non Resident of India
Crux
of the notification:
-
Through
this notification the RBI makes the following amendments to the Foreign
Exchange Management (Transfer or issue of Security by a Person Resident outside
India) Regulations, 2000
Reference to Rule
|
Existing
|
Replaced with
|
|||||||||
2 (vii) (a)
|
Non-resident Indian (NRI) shall have the meaning
assigned to it in clause (iv) of Regulation 2 of the Foreign Exchange
Management (Investment in Firm or Proprietary Concern in India) Regulations,
2000.
|
Non-Resident
Indian (NRI) means an individual resident outside India who is citizen of
India or is an ‘Overseas Citizen of India’ cardholder within the meaning of
section 7 (A) of the Citizenship Act, 1955.”
|
|||||||||
5 (3)
|
|
(i)
A Non- Resident Indian (NRI) may acquire securities or units on a Stock
Exchange in India on repatriation basis under the Portfolio Investment
Scheme, subject to the terms and conditions specified in Schedule 3.
(ii)
A Non- Resident Indian (NRI) may acquire securities or units on a
non-repatriation basis, subject to the terms and conditions specified in
Schedule 4.
|
|||||||||
-
Also,
Schedules 3 and 4 have been replaced completely.
-
The
other rules and schedules remain the same.
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(3.)Foreign Exchange
Management (Transfer or Issue of Security by a Person Resident outside India)
(Second Amendment) Regulations, 2016
FEMA Notification:
Notification
No.FEMA.362/2016-RB Dated February 15, 2016
Applicability:
To
a Non Resident of India
Crux of the
notification:
-
Insertion
of additional definition/ meanings like, manufacture, ownership and control,
largest Indian shareholder, Indian company and so on.
-
Requirement
of government approval while making a foreign investment in certain sectors/
activities
-
The
notification provides foreign investments caps and entry route in various
sectors
-
A
person resident outside India shall invest in an Investment vehicle subject to
certain conditions laid down in this schedule.
-
The
Investment Vehicle receiving foreign investment shall be required to make such
report and in such format to the RBI or to SEBI as may be prescribed by them
from time to time.
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(4.) Undertaking
of Point of Presence (PoP) Services under Pension Fund Regulatory and
Development Authority for National Pension System (NPS)
RBI Circular:
Circular
No: RBI/2015-16/324, DNBR (PD) CC.No. 073/03.10.001/2015-16 dated February 18,
2016
Applicability:
All Non-Banking Financial Companies
Crux of the
Circular:
-
The
bank on carefully examining the proposals, received from Non – Banking
Financial Companies seeking approval for undertaking of Point of Presence (PoP)
Services under Pension Fund Regulatory and Development Authority for National
Pension System, has decided in the public interest to restrict the NBFC from
undertaking PoP services for National Pension System.
Who and
what is the role of Points of Presence (PoP):
-
PoPs are
the first points of interaction of the NPS subscriber with the NPS
architecture.
-
The
authorized branches of a POP, called Point of Presence Service Providers
(POP-SPs), will act as collection points and extend a number of customer services
to NPS subscribers including requests for withdrawal from NPS.
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(5.)
NBFC – Factors
(Reserve Bank) Directions, 2012 – Review
RBI Circular:
Circular
No: RBI/2015-16/326,
DNBR.CC.PD.No.074/03.10.01/2015-16 dated February 18, 2016
Applicability:
All Non-Banking Financial Companies
(NBFCs) – Factors.
Crux of the Circular:
-
The RBI on reviewing the guidelines and provisions
on factoring services by banks has brought in the following instructions/
clarifications for ensuring meticulous compliance against regulatory gaps/ arbitrage if any, arising from
differential regulations as between NBFC-Factors and banks.
-
Prudential
Norms – Identification as Non – Performing Assets (NPA)
o Any
receivables acquired by an NBFC – Factor is due for payment but has not been
paid as per the applicable norms then such receivables to be treated as NPA
irrespective of the receivables being acquired by the NBFC – Factor or not, or
whether the factoring was carried out on “with recourse” basis or “non
–recourse” basis.
-
Exposure Norms – Single and Group Borrower Limits
o Inorder
to ensure compliance of credit norms the exposure shall be reckoned as follows:
Factoring on with recourse basis
|
Factoring on without recourse basis
|
Exposure would be reckoned on the assignor
|
Exposure would be reckoned on the debtor,
irrespective of credit risk cover/ protection provided.
Exemptions:
Except,
in case of international factoring where the entire credit risk is assumed by
the import factor
|
-
Risk
Management
o Before
initiating/ undertaking such business proper and adequate controls and
reporting mechanisms should be put in place:
§
NBFC – Factors:
·
Shall prior to entering into any factoring
arrangement or prior to establishing lines of credit with the export factor to
carry on thorough credit appraisal of the debtors
·
to
extend factoring services in respect of invoices which deal with / represent
genuine trade transactions
·
to
underwrite the credit risk on the debtor then there should be a clearly laid down board approved limit
for all such underwriting commitments.
-
Exchange
of Information
o Under
this, the assignor shall be considered as the borrower.
o The
factors and banks to share the information about the common borrowers.
o While
sanctioning limits to the common borrower, the factors to intimate the banks
accordingly to avoid double financing.
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(6.)
Frauds - Future
approach towards monitoring of frauds in NBFCs
RBI Circular:
Circular
No: RBI/2015-16/327,
DNBR (PD) CC.No.075/03.10.001/2015-16 dated February 18, 2016
Applicability:
All Deposit taking Non-Banking
Financial Companies (NBFCs) (including RNBCs) and NBFCs – ND – SI
Crux of the Circular:
-
With reference to the earlier circulars issued by
the RBI on “Frauds -
Future approach towards monitoring of frauds in NBFCs” on August 14, 2008, March 2, 2012 and on
December 13, 2012
o the RBI has revised the threshold
for reporting of frauds and submission of quarterly progress reports on frauds
to the Central Fraud Monitoring Cell, Reserve Bank of India, Department of Banking
Supervision
o the threshold has been revised from
Rs. 25 lakhs to Rs 1 crore with immediate effect.
o However, the NBFCs shall report
frauds and submit quarterly progress reports on fraud below the threshold
limit, to the Regional Office of Reserve Bank of India, Department of
Non-Banking Supervision under whose jurisdiction the Registered Office of the
NBFC falls.
-
All
other instructions contained in the above mentioned circulars continue to
remain in effect
Securities Exchange Board of India
(1.) Circular on
Mutual Funds
SEBI Circular:
Circular No: SEBI/HO/IMD/DF2/CIR/P/2016/35 dated
February 15, 2016
Applicability:
-
All
Mutual Funds/Asset Management Companies (AMCs)/Trustee Companies/Boards of
Trustees of Mutual Funds
Scheme
-
This
scheme shall be applicable to all new schemes and fresh investments by existing
schemes
- Existing
mutual fund schemes to comply with the revised investment restrictions within a period of 1 year from the date
of issue of this circular
-
Existing
close ended scheme:
o Need not comply
o If the existing close ended schemes
sell their investments then their fresh investments shall be subject to the
restrictions.
Crux of the Circular
A. Amendments
to SEBI (Mutual Funds) Regulations, 1996
-
Reference
is drawn to the gazette notification no. SEBI/LAD-NRO/GN/2015-16/034 dated
February 12, 2016 which deals with SEBI (Mutual Funds) (Amendment) Regulations,
2016.
-
This
circular makes amendments to SEBI (Mutual Funds) Regulations, 1996
-
As
per this amendment the restrictions on investments in debt instruments issued
by a single issuer:
o is reduced to 10% NAV.
o may be extended to 12% NAV with the
prior approval of the Board of Trustees and the Board of Asset Management
Company.
B Prudential limits in
sector exposure and group exposure in debt-oriented mutual fund schemes:
-
Inorder
to provide enhanced diversification benefit to the investor and to put the
mutual funds in a better position to handle adverse credit event, the
prudential limits for sectoral exposure has been revised and the prudential
limits for group level exposure has been introduced.
Sectoral
exposure in debt oriented mutual fund schemes:
-
The
exposure has been reduced to a single sector from the current 30% to 25%
-
Reduction
of additional exposure limits provided for HFCs in finance sector from 10% to
5% (over and above the limit of current 25%)
Group
exposure
-
Mutual
Funds/ AMCs to ensure that:
o the total exposure of the debt schemes of mutual
funds in a group shall not exceed 20% of the net assets of the scheme
o the investment limit may be extended to 25% of the
net assets of the scheme with the prior approval of the Board of Trustees.
A. Half
yearly report by Trustees:
-
trustees
to review and satisfy themselves on the level of exposure of a mutual fund and
to confirm the same to SEBI in a Half
yearly trustee report starting from Half Year ending March 31, 2016
(2.) Circular on
Mutual Funds
SEBI Circular:
Circular No: SEBI/HO/IMD/DF2/CIR/P/2016/37 dated
February 25, 2016
Applicability:
All Mutual Funds/Asset Management
Companies (AMCs)/Trustee Companies/Boards of Trustees of Mutual
Funds/Association of Mutual Funds in India (AMFI)
Effect of the
circular:
Part A of the Circular shall come
into effect from April 1, 2016, while Part B of the Circular shall be applicable
with immediate effect
Crux of the Circular
B. Treatment
of unclaimed redemption and dividend amounts
This circular makes the following partial
modifications to the SEBI circular dated November 24, 2000 on treatment of
unclaimed redemption and dividend amount.
-
The
unclaimed redemption and dividend amounts which are currently permitted to be
deployed only in the call money market or money market instruments shall be
allowed to be investments in a separate plan of Liquid scheme/ Money Market
Mutual Fund scheme floated by Mutual Funds exclusively for deployment of
unclaimed amounts.
-
AMCs
shall not be permitted to charge any exit load in this plan.
-
TER
(Total Expense Ratio) of such plan shall be capped at 50 bps
-
Mutual
funds to play a very pro-active role in tracing the rightful owner of the
unclaimed amounts:
b.
Mutual
funds to provide the list of names and addresses of the investors of the
unclaimed amounts, on their website.
c. AMFI to provide on their website the
consolidated list of the investors’ folios with unclaimed amounts across the
Mutual Fund Industry
d. Adequate security control measures
to be put in place by the Mutual Fund/ AMFI for collecting the proper
credentials of the investors
e. The website of the Mutual Funds and
AMFI to provide complete information on the process of claiming the unclaimed
amount
f. The unclaimed amount along with its
prevailing value (based on income earned on deployment of such unclaimed
amount), shall be disclosed separately to the investors through the periodic
statement of accounts/ consolidated account statement sent to the investors.
-
An
investor who claims the unclaimed amount
g. During
the period of 3 years from the due date: shall be paid initial unclaimed amount along with the
income earned on its deployment.
h. After
3 years from the due date:
shall be paid initial unclaimed amount along with the income earned on its
deployment till the end of third year.
i.
Investor education:the income earned on unclaimed
amounts shall be used for the purpose of investor education after 3 years from
the due date of claiming the amount.
C. Distribution
of Mutual Fund products
In partial modification of the above
said circular, the simple and performing Mutual Fund schemes shall also contain
Retirement benefit schemes having tax benefits and Liquid schemes/ Money Market
Mutual Fund schemes.
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Ministry of Labour and Employment
Interim Stay on retrospective amendment of Payment of
Bonus Act, 1965
This act was
notified on January 1, 2016 with retrospective from 01st April 2014 and is
applicable to all Businesses covered under Payment of Bonus Act 1965.
The Karnataka Employers’ Association
and the United Planters' Association of Southern India
(UPASI) has filed a petition before the High Court of Karnataka and High Court
of Kerala, respectively,on the retrospective operation of the Payment of Bonus (Amendment)
Act 2015.
High court of Karnataka:
The court has passed an interim
order on the petition filed by the petitioner, Karnataka Employers’ Association. However, the court allowed implementation of the new
Act from 2015-16 subject to final outcome of the petition.
High court
of Kerala:
The court
has passed an interim order on the petition filed by the petitioner United
Planters' Association of Southern India (UPASI),stating the amendment to
the extent it gives retrospective effect from April 1, 2014 is hereby stayed,
pending disposal of the writ petition.
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