20 - Legal & Regulation Updates - India

SEBI: Revision of formats and time period for submission of draft offer of letter ("DLOF")

SEBI has issued a Circular dated March 15, 2017, through which the time period and formats for submission of DLOF are revised. This Circular is in furtherance of the previous circulars dated November 22, 2011 and September 23, 2011 which dealt with the SAST Regulations, 2011 and consequential amendments to Clause 35 of the Equity Listing Agreement.

SEBI - Amendments to SEBI (Mutual Funds) Regulation, 1996 and related Circulars

SEBI via Circular dated March 15, 2017 has amended the following:     1.   Existing Circular to review the advertisement guidelines for Mutual Funds;     2.   Introduction of new Provisions called Celebrity endorsements in the existing Circular regarding Investor Education.

SEBI - Disclosures relating to regulatory orders and arbitration matters by Clearing Corporations

SEBI via Circular dated March 16, 2017 has made Provisions regarding disclosure of the regulatory orders and arbitration awards issued by Corporations to improve the transparency by making this information available to the investors. The key highlights of these Provisions are as follows:

SEBI: Interpretive Letter issued by SEBI concerning the rejection of Application by the Compliance Officer

SEBI has issued an Interpretive Letter as requested by KCPL and KBL under the SEBI (Informal Guidance) Scheme 2003 with regard to PIT Regulations. Accordingly, SEBI has informed that the Compliance Officer as specified under the PIT Regulations cannot reject an Application for pre-clearance of trading by the Promoter Group, as the same is cannot be denied under the SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011 (“SAST Regulations”), the PIT Regulation or Section 58 of the Companies Act, 2013, which allows free transferability of shares.

RBI launches a Mobile Application

The RBI has launched a mobile application (app) version of the RBI’s website. The app is available on Android as well as iOS platforms and can be downloaded from the Play Store or App Store, using the keyword “Reserve Bank of India”.

IRDAI: Exposure draft on Preparation of Financial Statement of Insurers, 2017

IRDAI has issued an Exposure Draft on Preparation of Financial Statement of Insurers. The following are the key proposals of the Draft Regulation: Applicability: These guidelines will be applicable to an insurer holding certificate of registration granted by the Authority.

IRDAI: Amendment in Guidelines on Pont of Sales Person - Non-Life and Health

The Guidelines on Pont of Sales Person - Non-Life and Health dated 26th October, 2015 were issued by IRDAI to regulate appointment and eligibility of Point of Sale Persons. The condition enumerated in the guideline for Point of Sale person with relation to training from and passing of NIELIT examination is being dispensed with.

IRDAI: Guidelines on Stewadship Code for Insurers in India

Object: As a result of significant increase in the funds received by insurance companies and increase in the number of investors in the securities markets who invest on behalf of the policyholders there was a need to regulate insurers by introducing principles of stewardship which in turn improve the confidence of the policyholders in the insurers on one hand and also ensure better corporate governance and decision making at investee companies on the other.

Fixed Provident Fund Administrative Charges w.e.f. April 1, 2017

The Ministry of Labour and Employment has issued notifications S.O. 827(E) and S.O. 828(E) fixing administrative charges under the Employee Provident Fund Scheme,1952. The notification will come into effect from April 1, 2017.The notifications makes the following changes:

Press Information Bureau, Government of India

The Central Goods and Services Tax Bill 2017, The Integrated Goods and Services Tax Bill 2017, The Union Territory Goods and Services Tax Bill 2017 and The Goods and Services Tax (Compensation to the States) Bill 2017. The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, has approved the following four GST related bills.

SEBI - Securities Contracts (Regulation) Amendment Rules, 2017

SEBI via Notification dated March 20, 2017, has amended the following: 1.     Proviso to Rule 8(4)(iii), which, on the recommendation of SEBI, allows the governing body of Stock Exchange to admit certain corporations, bodies corporate, Companies or institutions as members of recognized Stock Exchange has been omitted. Rule 8 pertains to qualifications for membership of a recognized Stock Exchange.

SEBI: Exclusively listed companies of De-recognized/Non-operational/exited Stock Exchanges placed in the Dissemination Board (DB)

SEBI via Circular dated March 27, 2017 has extended the period for ELCs for submission of plan of action with respect to listing on a Nationwide Stock Exchange or to provide exit options to shareholders. The extension has been provided till June 30, 2017. All the other conditions as mentioned in the original Circular dated October 10, 2016 will be the same. ELCs have been granted additional 3 months to submit their action plan to list on the Nationwide Stock Exchange or to provide exit offer to the investors.

MCA: Exemptions given from the purview of "Combination" under Section 5, Competition Act, 2002

Section 4 of the Competition Act, 2002 defines what constitutes a “Combination” under the Act and further, Section 6 of the Act regulates parties entering into such combinations. The term ''combination'' for the purposes of the Competition Act,2002 is defined to include any acquisition of shares, voting rights, control or assets or merger or amalgamation of enterprises, where the parties to the acquisition, merger or amalgamation satisfy the prescribed monetary thresholds in relation to the size of the acquired enterprise and the combined size of the acquiring and acquired enterprises. Such is calculated in relation with assets and turnover of such enterprises.

Pre-Legislation Alert: Lok Sabha approves four GST Bills

The Central Goods and Services Tax Bill 2017, The Integrated Goods and Services Tax Bill 2017, The Union Territory Goods and Services Tax Bill 2017 and The Goods and Services Tax (Compensation to the States) Bill 2017.

Maternity Benefit (Amendment) Act, 2017

This Maternity Benefit (Amendment) Act, 2017 has been notified on March 28, 2017. The Act brings significant changes such as enhancing maternity leave, providing crèche facilities in organizations with 50 or more employees and other such provisions empowering working women.

CBDT: Clarifications on Income Computation and Disclosure Standards (ICDS)

As per the authority given under Rule 145 of the Income Tax Rules, CBDT had set 10 standards for computation of Income under Income Computation and Disclosure Standards (“ICDS”). ICDS is to be followed while computing Income chargeable under the head "Profits and gains of business or profession" or "Income from other sources." The ICDS norms were initially notified with effect from financial year 2015-16 but its implementation was deferred by a year to 2016-17 after taxpayers expressed concern over some of the provisions. The CBDT has issued a clarification in the form of Frequently Asked Questions (“FAQs”) on ICDS to address queries raised by companies over its implementation.

Instructions to facilitate payment of Provident Fund for International Workers

The Ministry of Labour and Employment has issued a circular providing instructions facilitating payment of Provident Fund (“PF”) and Withdrawal benefit under Employees Pension Scheme, 1995 for International workers . These instructions have been issued to make sure that International workers get their PF amount promptly before leaving India. The instructions are as follows :

Central Ground Water Authority: Submission of application for using ground water

The Hon’ble National Green Tribunal vide its Order dated 9th July 2015 and Judgment (Asim Sarode & Others Vs District Collector Nanded & Others) dated 11th January 2016 has issued directions to ensure that all existing, new and expansion of Industries/projects extracting ground water are mandated obtain permission from Central Ground Water Authority.

IRDAI: Modification in premium rates under Payment of commission or remuneration or reward to insurance agents and insurance intermediaries Regulations, 2016

The abovementioned regulations were introduced for revising the payment/commission/remuneration or reward given to insurance agents and insurance intermediaries. Considering the above modifications, the insurers may feel the need to change the pricing of their products. IRDAI has vide a circular stating that those general insurers who wish to revise the pricing of their products may do so without filing a modification to the product under product filing guidelines which is otherwise mandated. However, the above exemption is given subject to the following conditions:

IRDAI: Calculation of Solvency Margin under IRDAI (Assets, Liabilities, and Solvency Margin of General Insurance business) Regulations, 2016

IRDAI (Assets, Liabilities, and Solvency Margin of General Insurance business) Regulations, 2016 lays down various provisions which are to be adhered to by General Life Insurers for the calculation of Solvency Margin. The Solvency Margin is the excess of an insurer''s assets over its liabilities and the modes for calculation of the same is set by regulator. The regulations further lay down guidelines for admissible assets as well as admissible liabilities for the calculation of Solvency Margin.

IRDAI: Insurance Regulatory and Development Authority of India (Insurance Brokers) Regulations, 2017

As a result of the Insurance Laws (Amendment) Act, 2015 and given the nature of the changes that have taken place in the Insurance Market, IRDAI has issued draft regulations to replace the existing Broker Regulations.