KEY RELAXATIONS AND AMENDMENTS APPROVED BY MINISTRY OF CORPORATE AFFAIRS AND SEBI IN 2022
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Notifications by the Ministry of Corporate Affairs
A. The Ministry of Corporate Affairs (“MCA”) on February 11, 2022, published certain notifications in relation to the Companies (Accounts) Amendment Rules, 2022, the Limited Liability Partnership Act, 2008, the Limited Liability Partnership (Amendment) Act, 2021 and the Companies Act, 2013. The key details of the notifications are stated below:
- Notification no. G.S.R. 107(E)1 inserted sub-rule 1(B) under rule 12 of the Companies (Accounts) Rules, 2014 which states that every company covered under the provisions of sub-section (1) to section 135 (Corporate Social Responsibility) of the Companies Act, 2013 shall furnish a report on Corporate Social Responsibility in Form CSR-2 to the Registrar for the preceding financial year (2020-2021) and onwards as an addendum to Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.
For the preceding financial year (2020-2021), Form CSR-2 shall be filed separately on or before 31st March 2022, after filing Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS), as the case may be.
- Under notification no. S.O. 621(E)2, the Central Government declared April 1, 2022 as the date on which the provisions of sections 1 to 29 of the Limited Liability Partnership (Amendment) Act, 2021 shall come into force.
- Under notification no. G.S.R. 110(E)3, the Central Government directed that the provisions of sections 90 (Register of significant beneficial owners in a company), 164 (Disqualifications for Appointment of Director), 165 (Number of Directorships), 167(Vacation of Office of Director), sub-section (5) of section 206 (Power to Call for Information, Inspect Books and Conduct Inquiries), sub-section (3) of section 207 (Conduct of inspection and inquiry), 252 (Appeal to Tribunal) and section 439 (Offences to be non-cognizable) of the Companies Act, 2013 shall apply to limited liability partnerships, except where the context otherwise requires, with the modifications specified in Column (3) of the table detailed under the notification.
- Under notification no. S.O. 622(E)4, the Central Government appointed the Registrar of Companies as adjudicating officers for the purpose of the Limited Liability Partnership Act, 2008 in respect of the jurisdiction indicated against each Registrar (as stipulated in the table under the notification).
- Under notification no. S.O. 623(E)5, the Central Government delegates to the Regional Directors at Mumbai, Kolkata, Chennai, New Delhi, Ahmedabad, Hyderabad and Guwahati, the powers and functions vested in it under section 17 (Change of name of limited liability partnership) of the Limited Liability Partnership Act, 2008, subject to the condition that the Central Government may revoke such delegation of powers or may itself exercise the powers under the said section, if in its opinion such a course of action is necessary in the public interest. This notification shall come into force with effect from April 1, 2022.
B. The MCA on February 14, 2022 published General Circular No. 01/20226 in relation to the relaxation of the levy of additional fees in filing of e-Forms AOC-4, AOC-4 (CFS), AOC-4 XBRL, AOC-4 Non-XBRL till March 15, 2022 and e-Form MGT-7 and MGT-7A till March 31, 2022. During the stipulated period, only the normal fees shall be payable for the filing of the aforementioned e-Forms.
Notifications by the Securities and Exchange Board of India
The Securities and Exchange Board of India on February 15, 2022 conducted its board meeting and the decisions of the board (“Board”) vide PR No. 5/2022 7,inter alia, include:
- Separation of role of Chairperson and MD/CEO: Earlier in May 2018, SEBI had mandated that top 500 listed entities would need to ensure that the Chairperson of the board of directors shall (i) be a non- executive director; (ii) not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013 with effect from April 1, 2020. This deadline for compliance for separation of the role of Chairperson and MD/CEO of listed companies was extended by two years in January 2020 and the provision would have become applicable from April 1, 2022, for the top 500 Companies. However, considering the rather unsatisfactory level of compliance achieved so far, with respect to this corporate governance reform, various representations received, constraints posed by the prevailing pandemic situation and with a view to enabling the companies to plan for a smoother transition, the Board decided that this provision may not be retained as a mandatory requirement and instead be made applicable to the listed entities on a “voluntary basis”.
- Amendment to SEBI (Alternative Investment Funds) Regulations, 2012: The Board approved amendment to the SEBI (Alternative Investment Funds) Regulations, 2012, providing flexibility to Category III Alternative Investment Funds (AIFs) to calculate the investment concentration norm based either on investable funds or net asset value of the fund while investing in listed equity of investee company, subject to the conditions as may be specified by the Board.
- Alignment of regulatory framework for ‘security cover’, disclosure of credit ratings and due diligence certificate: The Board approved the following amendments to SEBI (Debenture Trustee) Regulations, 1993, SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 and SEBI (Listing Obligations and Disclosure Requirements), 2015:
- to align the framework and terminology with respect to ‘security cover’, the term ‘asset cover’ has been substituted with term ‘security cover’ in SEBI (Debenture Trustee) Regulations, 1993, and SEBI (Listing Obligations and Disclosure Requirements), 2015; and
- to prescribe the maintenance of security cover sufficient to discharge both principal and interest thereon in SEBI (Listing Obligations and Disclosure Requirements), 2015.
Further, references with respect to disclosure of credit ratings have been rationalized and due diligence certificate for unsecured debt securities has been prescribed in SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021.