I Ministry of Corporate Affair
a. Companies (Appointment and Qualification of Directors) Amendment Rules, 2022
Vide its notification no. G.S.R. 410(E) dated June 1, 2022, the Ministry of Corporate Affairs (“MCA”) has amended the Companies (Appointment and Qualification of Directors) Rules. With the said rules coming into effect, a national of a country that shares land border with India, if desirous of being appointed as a ‘director’ in an Indian Company, will have to apply for and obtain necessary security clearance from the Ministry of Home Affairs, the Government of India. Once such security clearance is obtained from the Ministry of Home Affairs (“MHA”), the applicant would be required to attach a copy thereof along with the consent in Form DIR-2. Further, vide the said notification, the format of DIR-2 has also been amended to include a declaration as to whether the applicant is a national of a country that shares a land border with India.
Now, as a general rule, no Director’s Identification Number (“DIN”) will be generated in case of an applicant is a national of a country that shares a land border with India, unless necessary security clearance from the MHA, as aforesaid, is obtained and attached along with the application for grant of DIN.
b. Relaxation in paying additional fee in case of delay in filing e-Form 11 (Annual Return) by Limited Liability Partnerships (“LLPs”)
By virtue of General Circular No. 04/2022 dated May 27, 2022, issued by the MCA, the LLPs can file e-Form 11 (Annual Return) for the F.Y. 2021-22, up to June 30, 2022, without payment of any additional fee.
The said extension had been granted to promote LLPs to comply with the provisions of the LLP Act and the difficulties faced by various stakeholders in filing of form LLP 11 due to the recent upgradation of MCA portal from Version 2 to Version 3.
c. Relaxation in paying additional fee in case of delay in filing of event based e-forms of LLPs which are due on and after February 25, 2022 to May 31, 2022
Vide General Circular No. 06/2022 dated May 31, 2022, the MCA has notified that eligible corporations can file their event based e-forms (such as Form 3, Form 4, Form 15 etc.) till June 30, 2022, without payment of any additional fee.
d. Micro Finance/ Micro Credit as an object in the Object Clause of Memorandum of Association of Section 8 Companies registered under the Companies Act, 2013
MCA has directed all the Registrar of Companies (“RoC”) to take immediate action against Section 8 Companies who are indulging in Micro Finance activities. Further, MCA has directed the office of Director General of Corporate Affairs to keep a watch on Section 8 Companies through concerned RoCs who shall be empowered to take strict action against defaulting Section 8 companies, including causing alteration in the objects of the said company.
MCA vide its direction letters no. 05/33/2017-CL.V dated February 10, 2020 & August 31, 2020, had already directed the RoC (Central Registration Centre) to not allow incorporation of a Section 8 Company proposing to engage in micro finance activities.
e. Extension of date for filing of Form CSR-2 (Report on Corporate Social Responsibility)
In order to stringent the compliances on the reporting of CSR activities done by a Company, the MCA had introduced filing of web-Form CSR-2 with the RoC from the F.Y. 2020-21, and onwards, as an addendum to Form AOC-4, AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be. The last date for filing of the said form for the F.Y. 2020-21 was March 31, 2022. However, vide its notification dated March 31, 2022, the MCA had extended the last date of filing of Form CSR-2, with the concerned RoC till May 31, 2022. By virtue of the notification dated May 31, 2022, the last date of filing of the said form had further extended till June 30, 2022.
Further, Form CSR-2 shall be filed separately for F.Y. 2021-22 on or before March 31, 2023 after filing of Form AOC-4 /AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.
II Insolvency & Bankruptcy Code, 2016 (“IBC”)
a. Repeal of Circulars
The Insolvency & Bankruptcy Board of India (“IBBI” or “Board”) vide its notification no. IBBI/CIRP/3/2022 dated May 23, 2022, repealed various circulars issued by the board. Details of such orders are as under:
Date of Issue
Confidentiality of Information relating to processes under the Insolvency and Bankruptcy Code, 2016.
IRP/RP/Liquidator shall keep every information related to confidential; and shall not disclose or provide access to any information to any unauthorised person.
July 13, 2018
Appointment of Authorised Representative for Classes of Creditors under section 21 (6A) (b) of the Insolvency and Bankruptcy Code, 2016.
Creditor in class must be represented by the AR and he shall proceed further in the manner as specified in regulation 16A of the Regulations.
August 10, 2018
Notice for Meetings of the Committee of Creditors.
Only competent and authorized person shall attend the CoC meeting so that the decision can be taken on the spot and without deferring decisions for want of any internal approval from the financial creditors.
September 14, 2018
Voting in the Committee of Creditors.
The creditors who is not a member of the CoC, does not have voting right in the CoC. A person, who is not a member of the CoC, cannot be regarded as one who has voted against a resolution plan or abstained from voting.
December 6, 2019
Clarification-Voting on behalf of creditors in a class in the CIRP of Jaypee Infratech Limited.
The RP/AR is duty bound to conduct the process, including voting, strictly in compliance with the Code, Regulations.
January 6, 2021
Circular – Retention of records relating to Corporate Insolvency Resolution Process.
An IP shall preserve an electronic copy of all records for a minimum period of eight years, and a physical copy of physical records for minimum
period of three years.
April 16, 2021
Clarification – Consideration of matters/issues by the committee of creditors on request by members of the committee.
RP to convene a CoC meeting on receipt of the request from the CoC having 33% voting rights and such request shall include a note proposing the matters to be discussed or issues to be voted upon.
As per the said circular, the above circulars were repealed as already provided in IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 or IBBI (Insolvency Professionals) Regulations, 2016 as the case may be.
III Securities Exchange Board of India
a. Extension of facility for conducting annual meeting and other meetings of unitholders of Real Estate Investment Trusts (“REITs”) and Infrastructure Investment Trusts (“InvITs”) through Video Conferencing (“VC”) or through Other Audio-Visual means (“OAVM”)
Securities Exchange Board of India (“SEBI”) vide its circular dated June 3, 2022, has extended the facility to conduct annual meetings of unitholders in terms of Regulation 22(3) of SEBI (REIT) Regulations, 2014 and Regulation 22(3)(a) of SEBI (InvIT) Regulations, 2014 and any other meetings other than the annual meeting, through VC or OAVM till December 31, 2022.
The said extension has been granted based on the MCA circular dated May 05, 2022, whereby it had been decided to extended the facility of holding Annual General Meetings and Extraordinary General Meetings through VC/OAVM till December 31, 2022.
IV IBC Case Laws
a. Vallal Rick vs. M/s Siva Industries and Holdings Limited and others, Civil Appeal Nos. 1811-1812 of 2022, dated June 3, 2022
In the present matter, an Application under Section 12A of the Insolvency & Bankruptcy Code, 2016 read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 was filed by the Resolution Professional (“RP”) with the Hon’ble National Company Law Tribunal (“NCLT”) seeking withdrawal of the Corporate Insolvency Resolution Process against the Corporate Debtor, initiated vide order dated July 4, 2019 passed by the Hon’ble NCLT.
The said application was filed by the RP when the Resolution Plan submitted before the Committee of Creditor (“CoC”) was not approved and then one of the promoters of the Company presented a Resolution Plan before the CoC and was approved by a voting majority of 94.23%. The application filed by the RP was rejected by the Hon’ble NCLT and thereafter, the RP approached the Hon’ble National Company Law Appellate Tribunal (“NCLAT“) and the appeal filed by the RP against the order of the Hon’ble NCLT was also rejected by the Hon’ble NCLAT vide its judgement dated January 28, 2022.
Question of fact
Whether the NCLT or the NCLAT can sit in an appeal over the commercial wisdom of the CoC or not?
The Hon’ble Supreme Court of India vide its judgement had allowed the appeal by setting aside the orders passed by the Hon’ble NCLT & NCLAT. The Apex court has further allowed the application filed by a RP under Section 12A read with Regulation 30A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
V Corporate Case Laws
a. Subh Laxmi Colonizers Pvt. Ltd. vs. Registrar of Companies, Delhi (RoC), National Company Law Appellate Tribunal, Principal Bench, New Delhi, Company Appeal (AT) No. 14 of 2021, dated May 25, 2022
A notice was issued by the RoC in Form STK-1 on May 25, 2018 to M/s Subh Laxmi Colonizers Pvt. Ltd., Appellant Company and its directors for removal of the name of the Appellant Company from the register maintained by the Registrar of Companies and was strike off by the RoC on account of non-filing of the financial statements and annual returns for the F.Y. 2015-16 & 2016-17.
The Appellant filed a petition under Section 248 of the Companies before the Hon’ble NCLT, New Delhi, Special Bench for restoration of the name of the Company and the same was rejected by the Hon’ble Tribunal vide its impugned order dated December 21, 2020. Aggrieved by the said order passed by the Hon’ble Tribunal, the present appeal was filed by the Appellant before the Hon’ble NCLAT.
The Hon’ble Appellate Tribunal, set aside the order dated December 21, 2020 passed by the Hon’ble Tribunal and after taking the lenient view directed the Registrar to restore the name of the Appellant Company after fulfilling certain compliances.
Dhruv Gandhi, Partner and Anshul Chhabra, Sr. Associate
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