The weekly messenger | Edition 04.23

Regulatory news

NFRA to introduce Annual Transparency Report by the Audit Firms – 16 January 2023

The National Financial Reporting Authority (NFRA) has published the draft requirements regarding the preparation and publication of the Annual Transparency Report (ATR) by auditors/audit firms as a step toward improving the transparency about management and governance of audit firms and their internal policy framework to ensure high quality audits and prevent conflict of interest by maintaining independence.

The requirement of ATR will be implemented in a gradual manner across the audit profession engaged in the audit of Public Interest Entities (PIEs) falling within the purview of NFRA, starting with the auditors/audit firms performing audit of top 1000 listed companies (by market capitalisation) from the financial year ending 31 March 2023.

NFRA has also requested for views/comments of the stakeholders on the draft requirements of the ATR by 16 February 2023.

For more information, click here.

Companies (Accounts) Amendment Rules, 2023 – 21 January 2023

The Ministry of Corporate Affairs (MCA) has issued the Companies (Accounts) Amendment Rules,2023,

wherein the erstwhile Form No. AOC-5 ‘Notice of address at which books of account are maintained’ has been substituted with a new form. 

These Rules shall come into force w.e.f. 23 January 2023

For more information, click here.

Companies (Registration of Foreign Companies) Amendment Rules, 2023 – 24 January 2023

The MCA has issued the Companies (Registration of Foreign Companies) Amendment Rules, 2023, wherein the following changes have been made in the Principal Rules:

• In Rule 3(2)(c), earlier there was a requirement that the list of the directors and secretary of the Foreign Company to be furnished to the Registrar by the Foreign Companies shall contain the details of ‘father’s name or mother’s name and spouse’s name’ of each such director and secretary. Now in the said requirement the word ‘and’ has been substituted with the word ‘or’.

• FORM FC-1, FORM FC-2, FORM FC-3 and FORM FC-4 have been substituted with new forms.

These Rules shall come into force w.e.f. 23 January 2023

For more information, click here.

Companies (Prospectus and Allotment of Securities) Amendment Rules, 2023 – 24 January 2023

The MCA has issued the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2023, wherein the following modifications have been made:

• Sub-rule (6) of Rule 12 ‘Return of Allotment’ which states that in the case of issue of bonus shares, a copy of the resolution passed in the general meeting authorizing the issue of such shares shall be attached to the Form PAS-3 has been omitted.

• Form-PAS-2, Form-PAS-3 and Form-PAS-6 have been substituted with new forms.

These Rules shall come into force w.e.f. 23 January 2023

For more information, click here.

Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2023 – 24 January 2023

The MCA has issued the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2023, wherein Form No. MR.1 and Form No. MR.2 have been substituted with new forms.

These Rules shall come into force w.e.f. 23 January 2023

For more information, click here.

Companies (Management and Administration) Amendment Rules, 2023 – 24 January 2023

The MCA has issued the Companies (Management and Administration) Amendment Rules, 2023, wherein Form No.MGT-3 has been substituted with a new form.

These Rules shall come into force w.e.f. 23 January 2023

For more information, click here.

Companies (Incorporation) Amendment Rules 2023 – 25 January 2023

The MCA has issued the Companies (Incorporation) Amendment Rules, 2023, wherein the following key amendments have been made:

• Certain procedural changes have been made in the following rules:
  • Rule 4 ‘Nomination by the Subscriber or Member of One Person Company’;
  • Rule 6 ‘Conversion of One Person Company into a Public Company or a Private Company’;
  • Rule 7 ‘Conversion of Private Company into One Person Company’;
  • Rule 19 ‘License under Section 8 of New Companies with Charitable Objects etc.’;
  • Rule 20 ‘License for Existing Companies’;
  • Rule 28 ‘Shifting of registered office within the same State’;
  • Rule 30 ‘Shifting of registered office from one State or Union Territory to another State’;
  • Rule 33 ‘Alteration of Articles’;
  • Rule 39 ‘Conversion of a company limited by guarantee into a company limited by shares’;
  • Rule 40 ‘Application under sub-section (41) of section 2 for change in financial year’;
  • Rule 41 ‘Application under section 14 for conversion of public company into private company’.
• Forms INC-3, INC-14, INC-15, RD-GNL-5 have been omitted.

• Forms RUN, INC-4, INC-6, INC- 9, INC-12, INC-13, INC-18, INC-20, INC-20A, INC-22, INC-23, INC-24, INC-27, INC-28, INC-31, SPICE+ (INC-32), INC-33, INC-34, INC-35 and RD-1 have been substituted with the new forms.

These Rules shall come into force w.e.f. 23 January 2023.

For more information, click here.

Companies (Appointment and Qualification of Directors) Amendment Rules, 2023 – 27 January 2023

The MCA has issued the Companies (Appointment and Qualification of Directors) Amendment Rules, 2023, wherein the following amendments have been prescribed:

• In Rule 14 ‘Disqualification of Directors Sub-section (2) of Section 164’ :
  • A new sub-rule (1A) has been inserted which states that “Whenever a company receives the information in Form DIR-8, company shall, within thirty days of such receipt, file Form DIR-9 with the Registrar.”
  • In sub-rule (5), after the words, letters and figure ‘Form DIR-10’, the words ‘and filed before the Regional Director’ have been inserted.

• Forms DIR-3, DIR-3C, DIR-5, DIR-6, DIR-8, DIR-9, DIR-10, DIR-11 and DIR-12 have been substituted with the new forms.

These Rules shall come into force w.e.f. 23 January 2023.

For more information, click here.

Companies (Miscellaneous) Amendment Rules, 2023 – 27 January 2023

The MCA has issued the Companies (Miscellaneous) Amendment Rules, 2023, wherein majorly Form No. MSC-1, MSC-3, and MSC-4 have been substituted with the new forms.

These Rules shall come into force w.e.f. 23 January 2023

For more information, click here.

Companies (Share Capital and Debentures) Amendment Rules, 2023 – 30 January 2023

The MCA has issued the Companies (Share Capital and Debentures) Amendment Rules, 2023, wherein the following key modifications have been made:

• In Sub-rule (14) of Rule 17, earlier there was a requirement that Form SHL-11 ‘Return in respect of buy-back of securities’ shall be accompanied with a certificate in Form No. SH-15, signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and the rules made thereunder. Now, the aforesaid requirement of annexing a certificate along with the return in Form SH-11 has been substituted with a new requirement of submitting a declaration, which should also be signed by two directors of the company including the managing director, if any, certifying that the buy-back of securities has been made in compliance with the provisions of the Act and the rules made thereunder.

• Forms SH-7, Form No. SH-8, and Form No. SH-9 have also been substituted with new forms.

These Rules shall come into force w.e.f. 23 January 2023.

For more information, click here.

SEBI (LODR) (Amendment) Regulations, 2023 – 18 January 2023

The Securities and Exchange Board of India (SEBI) has issued the SEBI (Listing Obligations and Disclosure Requirements (LODR)) (Amendment) Regulations, 2023, wherein the following key changes have been made:

• The definition of Senior Management given under Regulation 16 of the aforesaid Regulations has been widened by including the functional heads under the ambit of the said definition;

• In Regulation 17(1C), it has been further clarified that the approval of the shareholders will also be required in case of reappointment of directors either at the next general meeting or within a time period of 3 months from the date of appointment, whichever is earlier.

Further a proviso has also been inserted in the said sub-Regulation stating that in case of a public sector company, the approval of the shareholders for appointment or re-appointment of a person on the Board of Directors or as a Manager is to be taken at the next general meeting only.

• Following additional disclosure is to be made in the Annual Report under the Corporate Governance Report: “(n) Details of material subsidiaries of the listed entity; including the date and place of incorporation and the name and date of appointment of the statutory auditors of such subsidiaries.”

These Rules shall come into force w.e.f. 18 January 2023 except for certain requirements.

For more information, click here.

RBI releases Discussion Paper on Expected Loss-based Approach for loan loss provisioning by banks – 16 January 2023

The Reserve Bank of India (RBI) has released the ‘Discussion Paper on Expected Loss – based Approach for loan loss provisioning by banks’ that comprehensively examines various issues and proposes a framework for adoption of an expected loss-based approach for provisioning by banks in India. The proposed approach is to formulate principle-based guidelines supplemented by regulatory backstops wherever necessary. Further, regional rural banks and smaller cooperative banks (based on a threshold to be decided based on comments) are proposed to be kept out of the framework.

For more information, click here.

Clarification on Classification of Shares issued by virtue of demerger to Insurance Companies – 19 January 2023

The Insurance Regulatory and Development Authority of India (IRDAI) has issued a clarification on classification of shares issued by virtue of demerger to Insurance Companies, wherein it has been clarified that the dividend criteria as stipulated under Regulation 3(a)(4) and 3(a)(5) of the IRDAI (Investment) Regulations 2016 read with Clause 1.11 of IRDAI Investment Master Circular dated 27 October 2022 applicable to the Demerged Company shall be reckoned for the purpose of classification of investment in equity shares and preference shares in Resulting Investee Company as ‘Approved investment’ or ‘Other Investment’ for initial two financial years.

For more information, click here.

Filing of announcements in XBRL format on BSE listing centre – 27 January 2023

The Bombay Stock Exchange (BSE) has issued a Circular stating that the facility for filings of following announcements filed under SEBI (LODR) Regulations, 2015 will be available in XBRL format w.e.f. 28 January 2023:

• Disclosure under Regulation 29 of SEBI (LODR) Regulations:
  • Prior Intimation of the Board Meeting

• Disclosure under Regulation 30 of SEBI (LODR) Regulations:
  • Change in directors, key managerial personnel (Managing Director, Chief Executive Officer, Chief Financial Officer, Company Secretary etc.), Auditor, Compliance Officer and Share transfer agent.
  • Outcome of Board Meeting for Dividend, Buyback, Bonus Issue and decision on voluntary delisting by the listed entity.
  • Acquisition(s) (including agreement to acquire), Scheme of Arrangement (amalgamation/ merger/ demerger/restructuring), or sale or disposal of any unit(s), division(s) or subsidiary of the listed entity or any other restructuring.

For more information, click here.