Introduction of Digital Life Certificates for Pensioners

RBI/2014-15/343

DGBA.GAD.H- 2529/45.01.001/2014-15

December 9, 2014

The Chairman/Chief Executive Officer

All agency banks

Dear Sir

Introduction of Digital Life Certificates for Pensioners

As per the present scheme for payment of government pension, pensioners are required to furnish a life certificate in November every year to the bank concerned for continued receipt of pension without interruption. Even though this requirement has been liberalised to enable pensioners to submit their life certificate at any branch of the pension disbursing bank, several pensioners find it difficult to submit the certificates in time for various reasons.

2. In order to alleviate the hardship caused to pensioners, the Government of India has since launched “Jeevan Pramaan”, a digital life certificate based on Aadhaar Biometric Authentication, aimed at further simplifying the process of submission of life certificate and facilitating accuracy and timeliness in disbursal of pensions. In order to facilitate implementation of Jeevan Pramaan, a web portal (jeevanpramaan.gov.in) was launched by the Hon’ble Prime Minister on November 10, 2014. Copy of a brochure on Jeevan Pramaan brought out by the Ministry of Communications and Information Technology of the Government of India, explaining the details of the scheme and its benefits, is enclosed for your information.

3. To facilitate introduction of Jeevan Pramaan, the Central Pension Accounting Office, Ministry of Finance, Government of India (CPAO) has amended the Scheme of Payment of Pensions to Central Government Civil Pensioners. A copy of the relative Office Memorandum dated November 14, 2014, issued by the CPAO, enclosing Correction Slip no. 22 dated November 10, 2014, and the process for getting digital life certificates by the pensioners, is attached. Copies of the memorandum has already been sent by CPAO to all banks and to the governments of all States and Union Territories. Similar amendments to their respective pension regulations have also been made by different Central Government Ministries (e.g., Ministry of Railways and Department of Posts). The Indian Banks Association has also issued a circular dated November 22, 2014, in this regard to their member banks.

4. Once fully implemented, agency bank branches will be able to obtain information about the digital life certificate of their pensioner customers by logging on to the website of Jeevan Pramaan and searching for the certificate or by downloading through their Core Banking Systems. Pensioners will also be able to forward to their bank branches the relative link to their digital life certificate by email/sms.

5. All agency banks disbursing government pension may take necessary action to implement and benefit from the scheme and issue necessary instructions to all their branches concerned and dealing staff. Banks may, in addition, work towards creating awareness about this facility among their pensioner customers through their branches, websites and other means. Banks may also suitably amend the FAQs on pension payments posted on their websites, and provide a link to the website of Jeevan Pramaan.

Yours faithfully

(G. Sreekumar)

Chief General Manager

Non-maintenance of Minimum Balances in Savings Bank Accounts

RBI/2014-15/349

DCBR.BPD (PCB/RCB) Cir. No. 3/12.05.001/2014-15

December 12, 2014

The Chief Executive Officer

All Primary (Urban) Co-operative Banks /

State and Central Co-operative Banks (St CBs / CCBs)

Madam / Dear Sir,

Levy of Penal Charges on Non-maintenance of Minimum Balances in Savings Bank Accounts

Please refer to UBD circular UBD.PCB.Cir.No.15/12.05.001/2008-09 dated September 18, 2008 on ‘Display of information relating to interest rate and service charges’ and RPCDCircular RPCD.CO. RCB. BC. No. 36/07.51.010/2014-15 dated October 22, 2014 on ‘Customer Service in State /District Central Co-operative Banks’ advising Primary (Urban) Cooperative Banks and State and Central Co-operative Banks to display information relating to interest rates and service charges including minimum balance in savings bank account in a prescribed format in their premises as well as websites.

2. In this connection, a reference is invited to paragraph 30 of Part B of First Bi-monthly Monetary Policy Statement, 2014-15 announced on April 1, 2014, regarding ‘Developmental and Regulatory Policies’ proposing certain measures towards consumer protection. One of the proposals contained therein was that banks should not take undue advantage of customer difficulty or inattention. Instead of levying penal charges for non-maintenance of minimum balance in ordinary savings bank accounts, banks should limit services available on such accounts to those available to Basic Savings Bank Deposit Accounts and restore the services when the balances improve to the minimum required level. A reference is also invited to the recommendations of Damodaran Committee on customer service in banks which, inter-alia, recommended that ‘banks should inform the customer immediately on the balance in the account breaching minimum balance and the applicable penal charges for not maintaining the balance by SMS / Email / letter. Further, the penal charges levied should be in proportion to the shortfall observed’.

3. Taking into consideration the recommendations of Damodaran Committee and in the interest of customers, it has been decided that while levying charges for non-maintenance of minimum balance in savings bank account, Primary (Urban) Cooperative Banks and State and Central Co-operative Banks shall adhere to the additional guidelines given in theAnnex. The guidelines will come into effect from April 1, 2015.

4. These guidelines should be brought to the notice of all customers apart from being disclosed on the bank’s website.

5. In the meantime, all banks are advised to take immediate steps to update customer information so as to facilitate sending alerts through electronic modes (SMSs / emails etc) for effective implementation of the guidelines.

Yours faithfully,

(Suma Varma)

Principal Chief General Manager

Annex

Levy of charges for non-maintenance of minimum balance in savings bank account shall be subject to the following additional guidelines :

i) In the event of a default in maintenance of minimum balance / average minimum balance as agreed to between the bank and customer, the bank should notify the customer clearly by SMS / email / letter etc. that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable.

ii) In case the minimum balance is not restored within a reasonable period, which shall not be less than one month from the date of notice of shortfall, penal charges may be recovered under intimation to the account holder.

iii) The policy on penal charges to be so levied may be decided with the approval of the Board of the bank.

iv) The penal charges should be directly proportionate to the extent of shortfall observed. In other words, the charges should be a fixed percentage levied on the amount of difference between the actual balance maintained and the minimum balance as agreed upon at the time of opening of account. A suitable slab structure for recovery of charges may be finalized.

v) It should be ensured that such penal charges are reasonable and not out of line with the average cost of providing the services.

vi) It should be ensured that the balance in the savings account does not turn into negative balance solely on account of levy of charges for non-maintenance of minimum balance.

Review of FDI policy –Sector Specific Conditions

RBI/2014-15/339

A.P.(DIR Series) Circular No.45

December 8, 2014

To

All Category – I Authorised Dealer banks

Madam/Sir,

Foreign Direct Investment (FDI) in India – Review of FDI policy –Sector Specific conditions

Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to Annex B of Schedule 1 to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000(the Principal Regulations) notified by the Reserve Bank vide Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time whereby description of sectors/activities wherein the entry norms, sectoral cap and other conditions for sectors/activities in which FDI is permitted under Government route and Automatic route are specified. Attention of Authorised Dealer Category – I (AD Category-I) banks is also invited to Annex to A.P. (DIR Series) Circular No. 44 dated September 13, 2013.

2. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India has been updating/notifying the FDI policy through issue of Consolidated FDI Policy Circular. Accordingly, Government has notified the latest FDI policy changes vide Consolidated FDI Policy Circular of 2014 dated April 17, 2014 and the same is available at Government website www.dipp.gov.in. In order to bring uniformity in the sectoral classification/conditionalities for FDI/foreign investment as notified under the Consolidated FDI Policy Circular with the FEMA Regulations, the position on Annex B of Schedule 1 to Notification No. FEMA. 20/2000-RB dated 3rd May 2000, as amended from time to time, has been suitably revised by amending the notification.

3. Reserve Bank has since amended the Principal Regulations through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Tenth Amendment) Regulations, 2014 notified vide Notification No. FEMA. 312/2014-RB dated July 2, 2014, c.f. G.S.R. No. 798(E) dated November 13, 2014.

4. Authorised Dealer banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(B.P. Kanungo)

Principal Chief General Manager

Companies (Amendment) Bill, 2014 placed in the Parliament

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi approved the introduction of Companies (Amendment )Bill, 2014 in the Parliament to make certain amendments in the Companies Act, 2013.

The Companies Act, 2013(Act) was notified on 28.08.2013 and of the 470 sections in the Act, 283 sections and 22 set of rules corresponding to such sections have so far been brought into force. In order to address some issues raised by the stakeholders such as Chartered Accountants and professionals , following amendments in the Act have been proposed:

1. Omitting requirement for minimum paid up share capital, and consequential changes. (For ease of doing business)

2. Making common seal optional, and consequential changes for authorization for execution of doing business (For ease of doing business)

3. Prescribing specific punishment for deposits accepted under the new Act. This was left out in the Act inadvertently. (To remove an omission)

4. Prohibiting public inspection of Board Resolutions filed in the Registry. (to meet corporate demand)

5. Including provision for writing off past losses/depreciation before declaring dividend for the year. This was missed in the Act but included in the rules.

6. Rectifying the requirement of transferring equity shares for which unclaimed/unpaid dividend has been transferred to the IEPF even though subsequent dividend has been claimed.

7. Enabling provisions to prescribe thresholds beyond which fraud shall be reported to the Central Government (below the threshold it will be reported to the Audit Committee). Disclosures for the latter category also to be made in the Board’s Report.

8. Exemption u/s 185 (Loans to Directors) provided for loans to wholly owned subsidiaries and guarantees/securities on loans taken from banks bu subsidiaries.(This was provided under the Rules but being included in the Act as a matter of abundant caution)

9. Empowering the Audit Committee to give omnibus approvals for related party transactions on Annual Basis.(Align with SEBI Policy and increase ease of doing business)

10. Replacing ‘special resolution’ with ‘ordinary resolution’ for approval of related party transactions by non-related shareholders. (Meet problems faced by the large stakeholders who are related parties)

11. Exempt related party transactions between holding companies and wholly owned subsidiaries from the requirement of approval of non-related shareholders.

12. Bail restrictions to apply only for offence relating to fraud u/s 447. (Though earlier provision is mitigated, concession is made to Law Ministry &  Enforcement Directorate)

13. Winding up cases to be heard by 2-member bench instead of 3-member bench . (Removal of inadvertent error)

14. Special Courts to try only offences carrying imprisonment of two years or more.(To let magistrate try only minor violations)

RBI’s Final Guidelines on Bharat Bill Payment System

The Reserve Bank of India has today released the final Guidelines for implementation of Bharat Bill Payment System (BBPS).

In terms of the guidelines, the National Payments Corporation of India (NPCI) will function as the authorised Bharat Bill Payment Central Unit (BBPCU) to set the standards for BBPS processes which need to be adhered to by all operating units (Bharat Bill Payment Operating Units – BBPOUs) under the system. NPCI, as the BBPCU, will also undertake clearing and settlement activities related to the BBPS as outlined in the guidelines.

The prospective participants of the BBPS system are advised to interact with the NPCI to work out the modalities. The prospective BBPOUs may submit applications for authorisation under Payment & Settlement Systems Act, 2007 to the Reserve Bank of India from the first quarter of 2015. The exact date from which/format in which such applications for authorisation/approval can be submitted will be notified in due course.

Background

The Payment Systems Vision in India 2012-15 highlighted the existence of a huge bill payments market with a diverse and a complex biller market structure with varied national/regional players and private/state owned entities. In the Second Quarter Review of Monetary Policy 2012-13, the Reserve Bank of India announced the setting up of a Committee to finalise the modalities of implementing an electronic GIRO payment system in India. The Committee was set up under the chairmanship of Shri G. Padmanabhan, Executive Director, Reserve Bank of India to study the feasibility of implementation of an electronic GIRO payment system in the country. Subsequently, based on the recommendations of the Committee, a Giro Advisory Group was constituted under the Chairmanship of Prof. Umesh Bellur, IIT Bombay, with the objective of defining a framework that enables the creation of pan India touch points for bill payments by customers in the country, irrespective of the geographical location of the billers. The Group, which submitted its report on March 20, 2014, had recommended a tiered structure for bill payments system in the country – with a central unit setting the standards and various operating units working in accordance and adherence to the standards set for the BBPS. Accordingly, the draft guidelines for implementation of the Bharat Bill Payment System (BBPS) were placed on the Reserve Bank’s website on August 7, 2014 for public comments. The final guidelines for implementation of the Bharat Bill Payment System (BBPS) have been prepared based on public comments received on draft guidelines.

Alpana Killawala

Principal Chief General Manager

Press Release : 2014-2015/1108

RBI Guidelines for Licensing of Small Finance Banks in the Private Sector

The Reserve Bank of India released on its website today, the Guidelines for Licensing of Small Finance Banks in the Private Sector.

Key features of the Small Finance Bank guidelines are:

i) Objectives:

The objectives of setting up of small finance banks will be to further financial inclusion by (a) provision of savings vehicles, and (ii) supply of credit to small business units; small and marginal farmers; micro and small industries; and other unorganised sector entities, through high technology-low cost operations.

ii) Eligible promoters: Resident individuals/professionals with 10 years of experience in banking and finance; and companies and societies owned and controlled by residents will be eligible to set up small finance banks. Existing Non-Banking Finance Companies (NBFCs), Micro Finance Institutions (MFIs), and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks. Promoter/promoter groups should be ‘fit and proper’ with a sound track record of professional experience or of running their businesses for at least a period of five years in order to be eligible to promote small finance banks.

iii) Scope of activities :

The small finance bank shall primarily undertake basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

There will not be any restriction in the area of operations of small finance banks.

iv) Capital requirement: The minimum paid-up equity capital for small finance banks shall be Rs. 100 crore.

v) Promoter’s contribution: The promoter’s minimum initial contribution to the paid-up equity capital of such small finance bank shall at least be 40 per cent and gradually brought down to 26 per cent within 12 years from the date of commencement of business of the bank.

vi) Foreign shareholding: The foreign shareholding in the small finance bank would be as per the Foreign Direct Investment (FDI) policy for private sector banks as amended from time to time.

vii) Prudential norms :

The small finance bank will be subject to all prudential norms and regulations of RBI as applicable to existing commercial banks including requirement of maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). No forbearance would be provided for complying with the statutory provisions.

The small finance banks will be required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank.

At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.

viii) Transition path: If the small finance bank aspires to transit into a universal bank, such transition will not be automatic, but would be subject to fulfilling minimum paid-up capital / net worth requirement as applicable to universal banks; its satisfactory track record of performance as a small finance bank and the outcome of the Reserve Bank’s due diligence exercise.

ix) Procedure for application: In terms of Rule 11 of the Banking Regulation (Companies) Rules, 1949, applications shall be submitted in the prescribed form (Form III) to the Chief General Manager, Department of Banking Regulation, Reserve Bank of India, 13th Floor, Central Office Building, Mumbai – 400 001. In addition, the applicants should furnish the business plan and other requisite information as indicated. Applications will be accepted till the close of business as on January 16, 2015. After experience gained in dealing with small finance banks, applications will be received on a continuous basis. However, these guidelines are subject to periodic review and revision.

x) Procedure for RBI decisions :

An External Advisory Committee (EAC) comprising eminent professionals like bankers, chartered accountants, finance professionals, etc., will evaluate the applications.

The decision to issue an in-principle approval for setting up of a bank will be taken by the Reserve Bank. The Reserve Bank’s decision in this regard will be final.

The validity of the in-principle approval issued by the Reserve Bank will be eighteen months.

The names of applicants for bank licences will be placed on the Reserve Bank’s website.

Background

It may be recalled that in the Union Budget 2014-2015 presented on July 10, 2014, the Hon’ble Finance Minister announced that:

“After making suitable changes to current framework, a structure will be put in place for continuous authorization of universal banks in the private sector in the current financial year. RBI will create a framework for licensing small banks and other differentiated banks. Differentiated banks serving niche interests, local area banks, payment banks etc. are contemplated to meet credit and remittance needs of small businesses, unorganized sector, low income households, farmers and migrant work force”.

Accordingly, the draft guidelines for licensing of small banks in the private sector were formulated and released for public comments by RBI on July 17, 2014.

Several comments and suggestions were received from interested parties and public on the draft guidelines. Considering the feedback received, the guidelines have been finalised.

Alpana Killawala

Principal Chief General Manager

Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions

RBI/2014-15/53

DNBS (PD) CC No 379/03.02.001/2014-15

July 1, 2014

To

All Non-Banking Financial Companies (except Residuary Non-Banking Companies

and Miscellaneous Non-Banking Companies)

Dear Sirs,

Master Circular – “Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998”

As you are aware, in order to have all current instructions on the subject at one place, the Reserve Bank of India issues updated circulars / notifications. The instructions contained in the Notification No.DFC.118/DG (SPT)-98 dated January 31, 1998 updated as on June 30, 2014 are reproduced below.

Yours faithfully,

(K. K. Vohra)

Principal Chief General Manager

Exemptions for Private Companies under Companies Act, 2013

The Ministry of Corporate Affairs has issued a draft notification which is being placed before both the Houses of Parliament to provide privileges and exemptions to Private Companies and to receive public comments till 1st July, 2014 in exercise of the powers conferred by subsection (2) of section 462 of the Companies Act, 2013, namely:

1. Chapter IV : Section 43 and 47 dealing with kinds of share capital and voting rights respectively.

2. Chapter IV : Clause (a) of sub-section (1) of Section 62 which deals with the time period for the Rights Issue and sub-section (2) of Section 62 which deals with the Employee Stock Options.

Words ‘not being less than fifteen days and not exceeding thirty days’ shall be substituted with ‘not being less than seven days and not exceeding fifteen days’

3. Chapter IV, clause (b) of sub-section (1) of section 62 Shall apply except that instead of special resolution, ordinary resolution would be required, which means that for Rights issue now ordinary resolution will suffice.

4. Chapter V, sub-section (2) of section 73 which deals with Prohibition on acceptance of Deposits shall not apply to private companies having 50 or less number of members if they accept monies from their members not exceeding twenty five per cent of aggregate of the paid up capital and free reserves or one hundred per cent of the paid up capital, whichever is more, and which inform the details of such monies to the Registrar in the prescribed manner.

5. Chapter VII, sections 101 to 107 dealing with the provision with respect to the General meetings and section 109, demand for poll shall apply unless

- otherwise specified in respective sections or

- unless articles of the private

company otherwise provide.

6. Chapter X, Clause (g) of sub-section (3) of section 141 Shall not apply in respect of

appointment of auditors by private companies.

7. Chapter XI, section 160 dealing with the rights of persons other than directors to satnd for directorships shall not apply.

8. Chapter XI, section 162 which deals with the Appointment of Directors to be voted individually shall not apply.

9. Chapter XII, Section 180 dealing with the restrictions on the powers of Board shall not apply to private companies having 50 or less number of members.

10. Chapter XII, section 185 dealing with the Loans to Directors shall not apply to Private

companies -

(a) which have borrowings from banks or financial institutions or any bodies corporate not more than twice of their paid up share capital or Rs. 50 crore,

whichever is lower; and

(b) in whose share capital no other body corporate has

invested any money”.

11. Chapter XII, section 188 dealing with Related Party Transactions shall not apply.

12. Chapter XIII, section 196, sub-section (4) and sub- section (5) which requires that the appointment of Managing Director, Whole time director or manager shall be subject to the approval of the members in the General Meeting shall not apply.

13. Chapter XIII, sub-section (3), section 203 which says that a Whole time Key Managerial Personnel shall not hold office in more than one company except in its subsidiary shall not apply.

The notification containing the above details can be accessed at the link given below.

Download

Official Liquidator at Hyderabad to act for Telangana

The Ministry of Corporate Affairs has issued a notification dated 13th June, 2014 No. S.O. 1524(E) which declares and establish the office of the Official Liquidator at Hyderabad to have territorial jurisdiction for the purposes of discharging the functions of Official Liquidator in the whole State of Telengana.

The notification containing the above details can be accessed below:

New Delhi, the 13th June, 2014

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii)]

Government of India

Ministry of Corporate Affairs

Notification

S.O. 1524(E).- In exercise of powers conferred by section 448 of the Companies Act, 1956 (1 of 1956), the Central Government hereby establish the office of the Official Liquidator at Hyderabad having territorial jurisdiction for the purposes of the said Act for discharging the functions of the Official Liquidator in the whole State of Telengana and appoints the Official Liquidator at Hyderabad as Official Liquidator for the liquidation of companies under the said Act in the State of Telengana.

2. This notification shall come into force from the date of its publication in the Official Gazette

[F. No. 7/4/2014-CL.I(A)]

Amardeep Singh Bhatia

Joint Secretary to the Government of India

Himachal Pradesh Minimum Wages Notification 03/06/2014

No. Shram (A)4-8/2006-Partfile.—Whereas the Governor, Himachal Pradesh is of the opinion that the minimum rates of wages in respect of unskilled category of workers in the Scheduled employment of “Agriculture” may be revised with effect from 1st April,2014.

Himachal Pradesh Minimum Wages Notification 03/06/2014

Extension of Validity Period for Names Reserved as on 31st March, 2014.

General Circular no. 13 /2014

F. No: MCA21/28/2014-e.Gov.
Government of India
Ministry of Corporate Affairs

`A’ Wing, 5^th Floor, Shastri Bhawan Dr. Rajendra Prasad Road, New Delhi-110001

Date: 23.05.2014

To

All Regional Directors,

All Registrars of Companies, All Stakeholders.

Subject: Extension of validity period for names reserved as on 31^st March, 2014.

Sir,

In continuation of the General Circular No.11/2014 dated 12.05.2014, approval of the Competent Authority is hereby conveyed to extend continuity of all reserved names as on 31^st March, 2014 for another fifteen days period from the date of issue of this circular.

This issues with approval of Competent Authority.

 Yours faithfully,

KMS Narayanan, Asst. Director

 23387263

Circular for Applicability of PAN requirement for Foreign Nationals

General Circular No. 12 / 2014

F.No.1/12/2013 CL-V

Government of India

Ministry of Corporate Affairs

‘A’ Wing, 5th Floor, Shastri Bhawan,

Dr. Rajendra Prasad Road, New Delhi-110001

Dated: 22nd May, 2014

To

AlI Regional Directors,

All Registrar of Companies, All Stakeholders.

Sub: Applicability of PAN requirement for Foreign Nationals.

Sir,

Attention of Ministry has been drawn to difficulties being faced by Foreign Nationals while filing Incorporation form (INC-7) due to mandatory requirement of submission of PAN details of intending Directors at the time of filing the application for incorporation.

1. It is hereby clarified that PAN details are mandatory only for those foreign nationals who are required to possess “PAN” in terms of provisions of the Income Tax Act, 1961 on the date of application for incorporation. Where the intending Director who is a Foreign National is not required to compulsorily possess PAN, it will be sufficient for such a person to furnish his/her passport number, alongwith undertaking stating that provisions of mandatory applicability of PAN are not applicable to the person concerned. The form of Declaration is required to be made in the proforma enclosed.

2. This issues with the approval of Competent Authority.

Yours faithfully,

(KMS Narayanan)

Assistant Director Tel: 23387263

Encl. As Above

Copy to:

PSO to Secretary

PPS to Additional Secretary

PS to JS(M)/JS(B)/JS(SP)

DIR(AK)/DIR(AB)/DIR(NC)/DIR(PS)

Undertaking

I           (name) ________ , son of ______ (father’s name)                    citizen of

(nationality)_____ having passport No.____ (passport Number)                     declare as

under:

(i)                That I am not required under the provisions of Income Tax Act, 1961 to

obtain Income Tax Permanent Account Number (PAN);

(ii)             That in view of the above I have not been issued any PAN; and

(iii)           That I undertake to furnish to the Registrar of Companies (mention jurisdiction) details of my PAN as soon as a Permanent Account Number is issued to me.

Date:                                                                                                                                                     (Signature)

Rules under Companies Act 2013 Notified for 10 Chapters

The Rules under Companies Act 2013 have been notified and are available for quick download at the links below:

The list of notified rules is given below:

Chapter I-Companies (Specification of definition details) Rules 2014

Chapter II- Companies (Incorporation) Rules 2014

Chapter III- Companies (Prospectus and allotment of securities) Rules 2014

Chapter IV- Companies (Share Capital and Debentures) Rules 2014

Chapter VI -Companies (Registration of Charges) Rules 2014

Chapter VII- Companies (Management and Administration) Rules 2014

Chapter VIII- Companies (Declaration and Payment of Dividend) Rules 2014

Chapter IX- Companies (Accounts) Rules 2014

Chapter XI-Companies (Appointment and Qualification of Directors) Rules 2014

Chapter XII- Companies (Meetings of Board and its Powers) Rules 2014

Download

One time opportunity for extension of Period of Reservation of Name

General Circular No. 11/2014

MCA21/ 72/2014-e-gov.Cell

Government of India

Ministry of Corporate Affairs

“A” Wing, 5th Floor, Shastri Bhawan

Dr. R.P Road, New Delhi-110001

Date 12th May, 2014

To

All Regional Directors,

All Registrar of Companies, All Stakeholders.

Sub: – One time opportunity for extension of Period of Reservation of Name.

Sir,

Services for incorporation of companies were not available on the MCA21 portal to stakeholders from 1st April, 2014 to 28th April, 2014 because of the deployment requirements for new E-forms. Many stakeholders had reserved names for the purpose of Company incorporation with 60 days prescribed validity expiring during the above mentioned period. They could not avail of the 60 days prescribed period for using the name to complete the corresponding incorporation requirements due to the non-availability of services.

2. In view of this, the validity of reservation of all such names with due date of expiry

between 1st April, 2014 to 28th April, 2014 is hereby extended upto 31st May, 2014. All applicants whose cases fall in the above mentioned category may be advised to file relevant E-forms for incorporating companies under the Companies Act, 2013 well before the extended validity period. Yours faithfully,

(K S Narayanan)

Assistant Director Te1-23387263

1. PPS to Secretary

2. PPS to Additional Secretary

3. PPS to JS(R) I JS(B)/JS(M)/ DII(UCN)/D11(BNH)

4. PS to DIR(AB) & PS to DIR(NC) & DIR(PS).

Revised Exposure Drafts of Secretarial Standards With Respect To General and Board Meetings

REVISED EXPOSURE DRAFTS OF SECRETARIAL STANDARDS WITH RESPECT TO GENERAL AND BOARD MEETINGS FOR PUBLIC COMMENTS

(Last Date for comments: May 21, 2014)

Section 118(10) of the Companies Act, 2013 provides that every company shall observe Secretarial Standards with respect to General and Board Meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved, as such by the Central Government. In the light of this, existing Secretarial Standards with respect to General and Board Meetings issued by the Council of the Institute are being revised as per the applicable laws.

Accordingly, the Secretarial Standards Board (SSB) of the Institute of Company Secretaries of India had revised its Secretarial Standard on Meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) as per the new Act and Rules thereunder and hosted the Exposure Drafts thereon for public comments in the second week of April 2014.

Based on the public comments received and suggestions received from various quarters, SSB has now brought out Revised Exposure Drafts of the two Secretarial Standards namely Secretarial Standard on Meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2), comprehensively covering all aspects of the respective meetings viz. Physical Meetings of the Board of Directors, Meetings through Electronic Mode, Passing of Resolutions by Circulation, Conduct of Meetings, E-Voting, Passing of Resolutions by Postal Ballot and Minutes.

Based on the public comments received, these two Standards would be finalised and sent to the Central Government for their consideration and subsequent notification u/s 118(10).

The principal objective of the Secretarial Standards is integration, harmonisation and standardisation of diverse secretarial practices prevalent in the corporate sector. Further, Secretarial Standards seek to create template of highest order for corporates to follow, which addresses multiple grey areas in the law and incorporates Best Practices being followed by the corporates in the country, while simultaneously facilitating the professionals and benefitting the industry. Secretarial Standards do not substitute or supplant any existing laws or the rules and regulations framed thereunder but, in fact, supplement such laws, rules and regulations. In addition to the Secretarial Standards, requirements laid down under any other applicable law and rules and regulations needs to be complied with. In case of variations in any provision of the applicable laws and these Secretarial Standards, the stricter provisions need to be complied with.

In the light of the above, your specific comments or suggestions on the Exposure Drafts of on Secretarial Standard on Meetings of the Board of Directors (SS-1) and Secretarial Standard Secretarial Standards on General Meetings (SS-2) are solicited under following categories:

1. Drafting Errors or Improvements

Under this, we are concerned with deviations from the standard use of English as understood by a company. If you feel that the communication at any place is not effective or the standard is not clear and concise and can be improved kindly suggest the manner in which it should be expressed.

2. Areas not covered in law suggested to be covered in the Standard

Under this, we are concerned with situations where neither the Act nor the rules make provision to cover a given situation or the rules have not provided to make an exception where it is otherwise warranted.

3. Contradictions with the Act, Rules or Forms

Under this, you may point out any aspect of the standard which is not consistent with or contradicts any of the provisions of the Companies Act or Rules or Forms thereunder.

4. Contradictions with any other law

Under this, you may point out any aspect of the standard which is not consistent with or contradicts any of the provisions of any other Act or Regulations or Rules.

5. Multiple or diverse Interpretations of any part of the standard

The attempt of the standard is to have only one interpretation ie. the endeavour is to make the standard unambiguous. Kindly point out in this section, if you find any part of the standard which is capable of multiple or diverse interpretations or ambiguity.

6. Conflict with Judicial Pronouncements

Under this, you may point out if any part of the standard differs from or contradicts or is conflicting with any judgement of either the Supreme Court or High Court or any clarification by a regulatory authority like MCA, SEBI, stock exchange, etc.

7. Best Secretarial/ Industry Practices

Under this, you can share any good practices being followed by your organisation or industry, in respect of any of the areas which the standard seeks to cover, which removes the barriers that might have been hindering industry from complying with any of the provisions of the Act or Rules and/or facilitates better corporate governance.

8. Typical Situations/Scenarios not addressed in the Standard

Under this, you can list any critical issues or special circumstances encountered by you, which you consider are not addressed in the standard and which could be added.

9. Any other Suggestions not covered above

If you have any other suggestions or if you feel that the standard is not accurate or complete, you may respond under this. Otherwise, please confine your suggestions under the points enumerated above.

External Commercial Borrowings (ECB) from Foreign Equity Holder – Simplification of Procedure

RBI/2013-14/594

A.P. (DIR Series) Circular No.130

May 16, 2014

To

All Category – I Authorised Dealer Banks

Madam/Sir,

External Commercial Borrowings (ECB) from Foreign Equity Holder – Simplification of Procedure

Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the A.P. (DIR Series) Circular No. 05 dated August 01, 2005 as amended from time to time relating to the External Commercial Borrowings (ECB). Attention is also invited toA. P. (DIR Series) Circular No. 11 dated September 07, 2011, A.P. (DIR Series) Circular No. 29 dated September 26, 2011, andA.P. (DIR Series) Circular No. 31 dated September 04, 2013.

2. As per the extant ECB policy, ECBs from direct foreign equity holders (FEHs) are considered both under the automatic and the approval routes, as the case may be. ECBs from indirect equity holders and group companies and ECBs from direct FEH for general corporate purpose are, however, considered under the approval route. Further, any request for change of the ECB lender in case of FEH requires RBI’s approval.

3. As a measure of simplification of the existing procedure, it has been decided to delegate powers to AD banks to approve the following cases under the automatic route:

Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies.

Proposals for raising ECB for companies in miscellaneous services from direct / indirect equity holders and group companies. Miscellaneous services mean companies engaged in training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector. Companies doing trading business, companies providing logistics services, financial services and consultancy services are, however, not covered under the facility.

Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors for general corporate purpose.ECB for general corporate purpose (which includes working capital financing) is, however, permitted only from direct equity holder.

Proposals involving change of lender when the ECB is from FEH – direct / indirect equity holders and group company.

4. All other terms and conditions stipulated in the relative circulars shall continue to be applicable.

5. Other aspects of the ECB policy such as eligible borrower, recognised lender, permitted end-use, amount of ECB, all-in-cost, average maturity period, pre-payment, ECB liability:equity ratio, refinance of existing ECB, reporting arrangements, etc. shall remain unchanged.

6. These changes will come into force with immediate effect.

7. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers.

8. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)

Chief General Manager-in-Charge

CBDT has Revised PAN Application form49A and 49AA wef from 16.05.2014

Revised Form 49A and 49AA provides option to get printed Mothers Name on PAN card. So those applying for New PAN card or for revised PAN card have the option to get printed on their PAN card printed the name of his/her mother. 

But applicant can select only one option, he /she cannot have the name of both mother and father printed on PAN card. 

In case Applicant do not exercise his/her option than by default Father’s name will get printed on PAN card.

The relevant notification can be Download Here. : DOWNLOAD

FDI in India – Reporting Mechanism for Transfer of Equity Shares

RBI/2013-14/577

A.P. (DIR Series) Circular No.127

May 2, 2014

To

All Category – I Authorised Dealer Banks

Madam/ Sir,

Foreign Direct Investment (FDI) in India –

Reporting mechanism for transfer of equity shares/ fully and mandatorily

convertible preference shares/ fully and mandatorily convertible debentures

Attention of Authorised Dealer Category – I (AD Category – I) banks is invited to the following extant instructions:

in terms of A.P. (DIR Series) Circular No. 38 dated September 6, 2013, a non-resident (NR) [including a Non Resident Indian (NRI)], who has acquired and continues to hold control in an Indian company in accordance with SEBI (Substantial Acquisition of shares and Takeover) Regulations, has been permitted, under the FDI scheme, to acquire shares of that company on a stock exchange in India through a registered broker; and in terms of paragraph 4 of A.P. (DIR Series) Circular No. 63 dated April 22, 2009 the form FC-TRS should be submitted to the AD Category – I bank within 60 days from the date of receipt of the amount of consideration. The onus of submission of the form FC-TRS within the given timeframe is cast upon the transferor / transferee, whoever is resident in India. Further, as per extant practice, the AD Category – I bank seeks approval from the Reserve Bank of India, Central Office before certifying the form FC-TRS received by them beyond the prescribed period of 60 days;

in terms of paragraph 6.4 of annex to A.P. (DIR Series) Circular No. 16 dated October 4, 2004, the IBD/FED or the nodal office of the bank has to submit a consolidated monthly statement in respect of all the transactions reported by the branches together with copies of the FC-TRS forms received from the branches to Foreign Exchange Department, Reserve Bank of India, Foreign Investment Division, Central Office, Mumbai in a soft copy (in MS- Excel)

2. On a review, it has now been decided:

to rationalise the existing procedure, in cases where the NR investor including an NRI acquires shares on the stock exchanges in terms of the aforesaid A.P. (DIR Series) Circular No. 38 dated September 6, 2013, the investee company would have to file form FC-TRS with the AD Category-I bank.

In order to facilitate operational convenience, it has been decided that the AD Category-I bank may approach Regional Office concerned of Reserve Bank of India, Foreign Exchange Department to regularize the delay in submission of form FC-TRS, beyond the prescribed period of 60 days and in all other cases, form FC-TRS shall continue to be scrutinised at AD bank level as per extant practice.

The AD banks shall continue to comply with the consolidated reporting requirement as stipulated in terms of Para 6.4 of A. P. (DIR Series) Circular No. 16 dated October 4, 2004.

3. These directions will become operative from the date of this circular.

4. All the other terms and conditions of the A.P. (DIR Series) Circular No. 16 dated October 4, 2004, A.P. (DIR Series) Circular No. 63 dated April 22, 2009 and A.P. (DIR Series) Circular No. 38 dated September 6, 2013 shall remain unchanged.

5. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

6. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rudra Narayan Kar)

Chief General Manager-in-Charge

How to Issue of Bonus Shares as per Companies Act ?

There was no specific section under the Companies Act, 1956 dealing with Bonus Shares. Companies were following the norms prescribed by the Controller of Capital issues. Once SEBI came into existence and controller of Capital issues were abolished, unlisted Private Limited Companies and Public Limited Companies were free to issue Bonus Shares if there were sufficient reserves to match the issue of Bonus Shares. To bring in sanctity to the Issue of Bonus Shares, The Companies Act, 2013 has introduced Section 63 to deal exclusively with Bonus Shares . Unlike Issue of Sweat equity Shares, MCA has not specified any rules to comply with. Section 63 deals with five aspects.

i.       The source out which a Company could issue Bonus Shares,

ii.      The source out of which a Company cannot utilize for such issue,

iii.      The Secretarial formalities to be complied with and

iv.      The Companies who are not eligible to issue Bonus Shares

v.      Bonus Issue once issued cannot be withdrawn

i. THE SOURCE OUT OF WHICH BONUS SHARES SHALL BE ISSUED

The Company shall issue fully paid Bonus Shares out of any one of the following source:

a.   Free Reserves of the Company

b.   The Securities Premium Account

c.   The Capital redemption reserve Account

ii. SOURCE OUT OF WHICH THE COMPANY SHALL NOT UTILISE FOR THE PURPOSE OF ISSUE OF BONUS SHARES

a.    The Company shall not issue Bonus Shares by capitalizing reserve created out revaluation of Assets

b.    The Company shall not issue shares in lieu of Dividend.

iii. SECRETARIAL FORMALITIES TO BE COMPLIED WITH

In order to capitalize its profits or reserves for the purpose of issue of Bonus Shares the Company has to comply with the following :

a.    The Articles of Association of the Company should authorize such issue.

b.   The Board has to recommend the issue of Bonus Shares

c.    The Company in a general Meeting should authorize the issue of Bonus Shares

iv. COMPANY NOT ELIGIBILE IN ISSUING BONUS SHARES

A Company shall not be in a position to issue Bonus Shares if

a.   It has defaulted in repayment of deposit.

b.   It has defaulted deposit interest.

c.   It has defaulted in debt securities.

d.   It has defaulted in respect of payment of statutory dues of the employees viz., contribution to Provident fund, Bonus, gratuity.

e.   Any outstanding partly paid shares remains unpaid

v. BONUS ISSUE ONCE ANNOUNCED CANNOT BE WITHDRAWN

Under Section 63(2)(f) empowers the Central Government to stipulate fresh conditions to comply with as and when required for the issue of Bonus Shares.

One such condition presently notified is that the Bonus Issue once recommended by the Board and announced by the Company, it cannot be withdrawn subsequently.

COMPLIANCE CHECK LIST AND GENERATION OF VARIOUS DOCUMENTS AND REGISTERS DURING PRE AND POST ISSUE

Once the professional understands the requirements of Section 63 as stated above, he should then have the following ‘Compliance Check List’ which will enable him to prepare the required Documents/ registers during Pre and Post Issue of Bonus Shares

Compliance Check List

1. Source out of which the bonus issue is to be made

a. Current Profit ……..Value :

b. Current Reserves……Value:

c. Current Securities Premium Account….Value:

2. Quantum of Issue:

a. No of Shares

b. Nominal Value per share:

c. Total:

3. Intended Date of Board Meeting:

a. For alteration of Articles subject to the approval of the shareholders (if required)

b. For recommending the Issue

c. Convening of EGM

4. Intended Date of EGM for considering the alteration of Article if required and/or approval of the Bonus Issue:

5. Intended Date of Board meeting for the allotment of Bonus Shares:

PRE ISSUE WORK FOR THE ISSUE OF BONUS SHARES

Once the professional prepares the compliance checklist, he could then proceed to generate the following documents during the pre issue of Bonus Shares

a.  Draft Notice and the draft minutes of the Board Meeting for considering the following :

i. alteration of Articles (only when required)

ii. recommending the Bonus Issue

iii. convening of EGM

1. For alteration of Articles which do not provide for capitalization of reserves (only when required)

2. approving the Bonus Issue recommended by the Board.

b. Draft EGM Notice, explanatory Statement and the Minutes for considering the following special business

i. For alteration of Articles (which do not provide for capitalization of reserves)

ii. approving the Bonus Issue recommended by the Board.

c. Draft Notice and the Minutes of the Board Meeting for

i. Allotment of Bonus Shares

d. Filing of Form No 7.14 with the Registrar of Companies for registering the Special resolution (only when the Articles of Association is amended for making provision for capitalization of profits)

POST ISSUE OF BONUS SHARES

a. Preparation and Issue of Share Certificates in Format No.4.1

b. Making entries in the Register of Members in Format No.7.1

c. Making entries in the Register of Directors and Key Management Personnel and their Shareholdings asper Section 170

d. Filing Form No.3.3. with regard to Allotment of Bonus Shares

Conclusion

TWO ISSUES THAT NEED CLARIFICATION

The Following are the two contentious issues in Section 63 which needs attention of the Central Government

i. A Company cannot issue Bonus Shares if it has defaulted in repayment of deposits, interest on deposits, debt securities, and statutory dues like, PF, gratuity and Bonus. There is no definition for the word ‘default’ in the Companies Act, 2013. For instance, if a Company fails to pay PF in a particular month and subsequently pays in the next month, a default is committed. Whether such a Company can or cannot issue Bonus Shares? The words such as ‘defaulting’ or ‘Continuing Default’ are not used in the Section. What does the MCA want to convey? I do not think that there is a possibility of any 100% Non defaulting Companies to be in existence since Incorporation till its dissolution. Even a single day delay in payment of the above dues is a default. What mechanism we have to monitor such an event of default?

ii. Once the Board recommends, the Bonus issue cannot be withdrawn even if the members decide so. That means no revocation of the recommendations made by the Board of Directors is possible. In other words you are forcing the shareholders to accept the recommendation of the Board. So it is only a formality to seek approval of the Shareholders. Let us assume that the Bonus Issue is recommended by the Board and is rejected or not passed by the members in the EGM, the company still has to go ahead with the Issue of Bonus Shares by virtue of Section 63(2)(f).

Uniform Accounting Standards at ARCs

RBI/2013-14/571

DNBS (PD) CC. No. 38/SCRC/26.03.001/2013-14

April 23, 2014

The Chairman/Managing Director/Chief Executive Officer

All registered Securitisation Companies/Reconstruction Companies

Dear Sir,

Uniform Accounting Standards at ARCs

Please refer to “The Securitisation Companies and Reconstruction Companies (Reserve Bank) Guidelines and Directions, 2003” dated April 23, 2003 (herein after called Guidelines).

2. Pursuant to the recommendations of the Key Advisory Group (KAG) constituted by the Government of India on the Asset Reconstruction Companies (ARCs), Reserve Bank of India advises the guidelines on uniform accounting standard for ARCs as under:

a. Acquisition cost (Pre and post acquisition)

Expenses incurred at pre acquisition stage for performing due diligence etc. for acquiring financial assets from banks/ Fls should be expensed immediately by recognizing the same in the statement of profit and loss for the period in which such costs are incurred.

Expenses incurred after acquisition of assets on the formation of the trusts, stamp duty, registration, etc. which are recoverable from the trusts, should be reversed, if these expenses are not realised within 180 days from the planning period [In terms of RBI Notification No.DNBS.2/CGM(CSM)-2003, dated April 23, 2003 planning period means a period not exceeding twelve months allowed for formulating a plan for realization of non­performing assets (in the books of originator) acquired for the purpose of reconstruction] or downgrading of Security receipts (SRs) (i.e. Net Asset Value(NAV) is less than 50% of the face value of SRs ) whichever is earlier.

b. Revenue Recognition-

(i) Yield should be recognised only after the full redemption of the entire principal amount of Security Receipts.

(ii) Upside income should be recognized only after full redemption of Security Receipts.

(iii) Management fees may be recognized on accrual basis. Management fees recognized duringthe planning period must be realized within 180 days from the date of expiry of the planning period. Management fees recognized after the planning period should be realized within 180 days from the date of recognition. Unrealised Management fees should be reversed thereafter. Further any unrealized Management fees will be reversed if before the prescribed time for realisation, NAV of the SRs fall below 50% of face value. [In terms of RBI Notification No.DNBS.2/CGM(CSM)-2003, dated April 23, 2003 planning period means a period not exceeding twelve months allowed for formulating a plan for realization of non-performing assets (in the books of originator) acquired for the purpose of reconstruction.]

c. Valuation of Security Receipts (SRs)

Considering nature of investment in SRs where underlying cash flows are dependent on realization from non performing assets, it can be classified as available for sale. Hence investments in SRs may be aggregated for the purpose of arriving at net depreciation/ appreciation of investments under the category. Net depreciation, if any shall be provided for. Net Appreciation, if any should be ignored. Net depreciation required to be provided for should not be reduced on account of net appreciation.

d. Applicability of ‘Operating Cycle Concept’ under Schedule VI

SC/ RCs are advised in their balance sheet to classify all the liabilities due within one year as “current liabilities” and assets maturing within one year along with cash and bank balances as “current assets”. Capital and Reserves will be treated as liabilities on liability side while investment in SRs and Long term deposits with banks will be treated as fixed assets on the assets side.

3. The accounting guidelines will be effective from the accounting year 2014-15.

Yours sincerely,

(N. S. Vishwanathan)

Principal Chief General Manager

Foreign Direct Investment in Pharmaceuticals sector – clarification

RBI/2013-14/567

A.P. (DIR Series) Circular No.124

April 21, 2014

To

All Category – I Authorised Dealer Banks

Madam / Sir,

Foreign Direct Investment in Pharmaceuticals sector – clarification

Attention of Authorised Dealers Category – I (AD Category – I) banks is invited to A.P. (DIR Series) Circular No.56 dated December 9, 2011 and the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time. In terms of Schedule 1 to the Notification ibid, Foreign Direct Investment (FDI) up to 100 per cent is permitted under automatic route for greenfield investments and FDI up to 100 per cent is permitted under Government approval route for brownfield investments (i.e. investments in existing companies) in pharmaceuticals sector.

2. The extant FDI policy for pharmaceutical sector has since been reviewed and it has now been decided with immediate effect that the existing policy would continue with the condition that ‘non-compete’ clause would not be allowed except in special circumstances with the approval of the Foreign Investment Promotion Board (FIPB) of the Government of India.

3. A copy of Press Note No.1 (2014 Series) dated January 8, 2014 issued in this regard by Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India is enclosed.

4. AD Category – I banks may bring the contents of the circular to the notice of their customers/constituents concerned.

5. Reserve Bank has since amended the subject Regulations accordingly through the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Amendment) Regulations, 2014 which have been notified vide Notification No. FEMA.296/2014-RB dated March 3, 2014, vide G.S.R. No. 270(E) dated April 7, 2014.

6. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(C.D.Srinivasan)

Chief General Manager