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IBBI: MANDATES ‘PERFORMANCE SECURITY’ FROM SUCCESSFUL RESOLUTION APPLICANT TO DISCOURAGE FRIVOLOUS RESOLUTION PLANS’ SUBMISSION

Sudheendra Kumar
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IBBI: MANDATES ‘PERFORMANCE SECURITY’ FROM SUCCESSFUL RESOLUTION APPLICANT TO DISCOURAGE FRIVOLOUS RESOLUTION PLANS’ SUBMISSION

IBBI: MANDATES ‘PERFORMANCE SECURITY’ FROM SUCCESSFUL RESOLUTION APPLICANT TO DISCOURAGE FRIVOLOUS RESOLUTION PLANS’ SUBMISSION

Insolvency & Bankruptcy Board of India (‘IBBI’) amends IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 so as to discourage persons, other than genuine, capable and credible resolution applicants, to submit resolution plans; Mandates that the request for resolution plans shall require the resolution applicant, in case its plan is approved by the committee of creditors, to provide a performance security within specified time; Specifies that such performance security shall be forfeited if the resolution applicant of such plan, after its approval by the Adjudicating Authority (‘AA’), fails to implement / contributes to the failure of the plan’s implementation, in accordance with the terms of the plan and its implementation schedule; Requires disclosure, if the resolution applicant / any of its related parties have failed to implement / contributed to the failure of implementation of any other resolution plan approved by the AA at any time in the past; Directs Resolution Professional to attach evidence of receipt of performance security, while submitting the resolution plan to the AA for approval, also empowers Creditor aggrieved by non-implementation of a resolution plan (which is approved by the AA) to apply for appropriate directions: IBBI

BANKRUPTCY: COMPANIES BUYING MORE AND MORE INSURANCE FOR DIRECTORS & OFFICERS AMID RISING BANKRUPTCY, FRAUD CASES – THE ECONOMIC TIME

Sudheendra Kumar
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BANKRUPTCY: COMPANIES BUYING MORE AND MORE INSURANCE FOR DIRECTORS & OFFICERS AMID RISING BANKRUPTCY, FRAUD CASES – THE ECONOMIC TIME

BANKRUPTCY: COMPANIES BUYING MORE AND MORE INSURANCE FOR DIRECTORS & OFFICERS AMID RISING BANKRUPTCY, FRAUD CASES – THE ECONOMIC TIME

Companies are buying increased insurance to cover liabilities of directors and officers – known as D&O – after the recent growth in the number of such claims in bankruptcy and financial fraud cases.

While action taken by the Central Bureau of Investigation per se does not trigger D&O cover, it is invoked when the matter goes to court. Such insurance policies pay legal claims arising due to breach of duty. They indemnify the corporation, its directors and officers against wrongful actions that cause financial harm to a third party and result in a lawsuit.

“With increased number of cases, companies are opting for increased coverage for legal expenses — to get adequate cover to defend,” said an insurance company executive. “We have seen companies double coverage in the aftermath of recent cases.”

It’s been a season of crackdowns by CBI on senior bankers. Last week, the agency named ICICI Bank’s former chief executive Chanda Kochhar as an “accused” in the Videocon loan case. Last year, Usha Ananthasubramanian, former chief executive of Punjab National BankNSE -0.65 %, was charged by CBI in connection with an alleged Rs 14,000-crore fraud through fake letters of undertaking. RP Marathe, former managing director of Bank of Maharashtra, was arrested by the Pune police last year.

“Coverage is a function of who wants to defend what, but increased number of instances have forced companies to buy higher cover,” said an insurance broker.

Company directors liable for their own and fellow-directors’ decisions can face financial loss through litigation from shareholders, creditors, competitors, suppliers or regulatory bodies. Under such circumstances, the D&O policy provides security to the directors.

There are two parts of the D&O policy covering breach of duty, neglect, misstatements or errors – one for the entity and its employees and the other for directors.

The policy does not pay for claims when a person is personally culpable. In case of Satyam Computer Services, the insurance policy did not pay the defence cost of B Ramalinga Raju and financial chief Vadlamani Srinivas because it was outright fraud.

Last month, nine former directors of Infrastructure Leasing and Financial Services (IL&FS) were named in a petition by the government as decision makers, “controlling will and mind” for most other group companies and responsible for the crisis that followed a loan default.

Under the new Companies Act, all listed companies are required to have a D&O policy. After the Satyam case, companies made a dash to cover their directors. Also, independent directors have started asking for appropriate cover to join as board members.

BSE listed company with the object of Housing Finance is available for sale .

Sudheendra Kumar
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BSE listed company with the object of Housing Finance is available for sale .

BSE listed company with the object of Housing Finance is available for sale .

The Promoters stake available for sale is about 73 percent on a Paid up Capital of about Rs.3.10 Crores. It is available on zero assets and liabilities basis without having any current running business. It is a clean company with all Statutory Compliances up-to-date.

Asking price is about. Rs.2.75 Crores.

The object clause of the company is providing long term Housing Finance for purchase or construction of house/flats to individuals, loans to Builders and Developers etc.

Intellex Consulting is advising the Company on this assignment.

Intellex is a ONE-STOP Consulting firm with offices/associates all over India, for consulting in Banking & Finance (both Debt and Equity,), Accounting & Taxation (Both Income Tax and GST) , Risk Management and Overseas Company Incorporation, Strategic & Management Consulting etc.

The promoters of our organizations come from diverse background such as from IIT & IIM as well as Chartered Accountants, Lawyers. We are based in Mumbai (India) and having offices across most of the cities in India.

For more information, you may either send us E-Mail to sudheendra@sudheendra.co.in or or talk to us at Mobile No. 98200 88394 (Mumbai, India)

Team – Intellex
Our websites: www.intellexconsulting.com and www.startupstreets.com , www.intellexfinance.com , www.economiclawpractice.com , www.corporatelawpractice.com

SME IPO and listing in Bombay Stock Exchange for Mid-sized Companies in India

Sudheendra Kumar
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SME IPO and listing in Bombay Stock Exchange for Mid-sized Companies in India

SME IPO and listing in Bombay Stock Exchange for Mid-sized Companies in India.

We can advise mid-size Companies to come out with Initial Public Offering (IPO) and get their shares listed in SME Segment of Bombay Stock Exchange.

SME IPO may be a good choice for small businesses. Small companies dream of getting themselves listed on the stock exchanges, but they generally fall short of meeting the eligibility criteria of the BSE and NSE.

Similar to big companies, small companies also dream of getting themselves listed on the stock exchanges, but they generally fall short of meeting the eligibility criteria of the BSE and the NSE.

Recognising this aperture and that SMEs fetch the major pie of any country’s industrial activity, the BSE and the NSE launched their platform for small and medium enterprises to list on the BSE and the NSE and later migrate to the main board of the BSE and NSE without the need to make an initial public offering . The BSE SME and NSE Emerge are a new source for SME IPOs and provide a listing opportunity to the SMEs with minimum compliances and cost compared to the main board. SMEs are spread across diverse sectors and are fast emerging as an alternate asset class for investors.

An SME exchange is a dedicated exchange or a trading platform for Small and Medium Enterprises. In India, an SME exchange functions within a recognized stock exchange or the main exchange such as the BSE Limited and the National Stock Exchange of India.

SME listing not only provides benefits to the companies but also benefits its investors, both existing and proposed, such as providing an exit route to private equity investors as well as liquidity to the ESOP holding employees. Listing pre-supposes good corporate governance, which results in sustainability and helps generate an independent valuation of the company.

Listing raises a company’s public profile with customers, suppliers, investors, financial institutions and the media and provides continuing liquidity to the shareholders.

We also do syndication of Debt and Equity for good companies at various stages of their growth.

Intellex is a ONE-STOP Consulting firm with offices/associates all over India, for consulting in Banking & Finance (both Debt and Equity,), Accounting & Taxation (Both Income Tax and GST) , Risk Management and Overseas Company Incorporation, Strategic & Management Consulting etc.

The promoters of our organizations come from diverse background such as from IIT & IIM as well as Chartered Accountants, Lawyers. We are based in Mumbai (India) and having offices across most of the cities in India.

For more information, you may either send us E-Mail to sudheendra@sudheendra.co.in or or talk to us at Mobile No. 98200 88394 (Mumbai, India)

Team – Intellex
Our websites: www.intellexconsulting.com and www.startupstreets.com , www.intellexfinance.com , www.economiclawpractice.com

Now No Arrests for Admin.. WhatsApp admin not at risk – No arrests under Sec 66-A for social media posts, rules SC

Sudheendra Kumar
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Now No Arrests for Admin.. WhatsApp admin not at risk – No arrests under Sec 66-A for social media posts, rules SC

Now No Arrests for Admin.. WhatsApp admin not at risk – No arrests under Sec 66-A for social media posts, rules SC

http://www.tribuneindia.com/news/nation/no-arrests-under-sec-66-a-for-social-media-posts-rules-sc/57893.html

The Supreme Court struck down Section 66-A of the Information Technology Act, 2000, on Tuesday.

Pronouncing their verdict on a PIL filed against the section in a packed courtroom, which empowers the police to arrest a person for allegedly posting ‘offensive materials’ on social networking sites, a Bench of Justices J Chelameswar and RF Nariman said the section violated the fundamental right to freedom of speech and expression and was therefore was illegal.

Terming liberty of thought and expression as “cardinal”, the Bench said: “The public’s right to know is directly affected by Section 66-A of the Information Technology Act.”

“Section 66-A of the IT Act is struck down in its entirety,” said the apex court bench of Justice J. Chelameswar and Justice Rohinton Fali Nariman.

“Our Constitution provides for liberty of thought, expression and belief. In a democracy, these values have to be provided within constitutional scheme,” said Justice Nariman, pronouncing the verdict.

“There is no nexus between public order and discussion or causing annoyance by dissemination of information. Curbs under Section 66A of the IT Act infringes on the public right to know.”

Calling the written word of the provision, which comprises terms such as ‘”annoying”, “inconvenient” and “grossly offensive”, vague, the apex court said: “What may be offensive to a person, may not be offensive to others”.

The assurance given by one government was not binding on its successor, the Bench said. “Governments come and go but Section 66-A will remain forever,” the bench said.

The SC, however, refused to strike down two other provisions of the IT Act that provide blocking of websites.

GSTN proposes new return filing system

Sudheendra Kumar
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GSTN proposes new return filing system

GSTN proposes new return filing system
1. Proposes quarterly return filing till turnover of RS 5 crore in preceding financial year

  1. Periodicity of filing return will be deemed to be monthly for all taxpayers unless quarterly filing of the return is opted for.
  2. For newly registered taxpayers, turnover will be considered as zero and hence they will have the option to file monthly, Sahaj, Sugam or Quarterly (Normal) return.
  3. Change in periodicity of the return filing (from quarterly to monthly and vice versa) would be allowed only once at the time of filing the first return by a taxpayer.
  4. The periodicity of the return filing will remain unchanged during the next financial year unless changed before filing the first return of that year.
  5. The taxpayers opting to file quarterly return can choose to file any of the quarterly return namely – Sahaj, Sugam or Quarterly (Normal).
  6. Taxpayers filing return as Quarterly (Normal) can switch over to Sugam or Sahaj return and taxpayers filing return as Sugam can switch over to Sahaj return only once in a financial year at the beginning of any quarter.
  7. Taxpayers filing return as Sahaj can switch over to Sugam or Quarterly (Normal) return and taxpayers filing return as Sugam can switch over to Quarterly (Normal) return more than once in a financial year at the beginning of any quarter.
  8. Taxpayers opting to file quarterly return as ‘Sahaj’ shall be allowed to declare outward supply under B2C category and inward supplies attracting reverse charge only. Such taxpayers cannot make supplies through e-commerce operators on which tax is required to be collected under section 52. Such tax payers shall not take credit on missing invoices and shall not be allowed to make any other type of inward or outward supplies. However, such taxpayers may make Nil rated, exempted or Non-GST supplies which need not be declared in the said return.
  9. Taxpayers opting to file quarterly return as ‘Sugam’ shall be allowed to declare outward supply under B2C and B2B category and inward supplies attracting reverse charge only. Such taxpayers cannot make supplies through e-commerce operators on which tax is required to be collected under section 52. Such tax payers shall not take credit on missing invoices and shall not be allowed to make any other type of inward or outward supplies. However, such taxpayers may make

Nil rated, exempted or Non-GST supplies which need not be declared in said return.
Taxpayers opting to file monthly return or Quarterly (Normal) return shall be able to declare all types of outward supplies, inward supplies and take credit on missing invoices.

MALLYA’S DEFIANCE PROMPTS SEBI TO SEEK AMENDMENT IN COMPANIES ACT – BUSINESS STANDARD

Sudheendra Kumar
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MALLYA’S DEFIANCE PROMPTS SEBI TO SEEK AMENDMENT IN COMPANIES ACT – BUSINESS STANDARD

MALLYA’S DEFIANCE PROMPTS SEBI TO SEEK AMENDMENT IN COMPANIES ACT – BUSINESS STANDARD

Sebi has now proposed that the Companies Act should also clearly mention that a person should vacate the office of a director if it orders his or her disqualification.

Capital markets regulator Sebi has asked the government to amend the Companies Act to ensure that a director declared by it as a disqualified person should immediately vacate the position, a plea triggered by defaulter businessman Vijay Mallya’s reluctance to do so.

Under the Companies Act, the office of a director becomes vacant in case of he or she being disqualified by an order of a court or a tribunal, among other reasons, but there is no explicit mention of an order by the Securities and Exchange Board of India (Sebi), which is mandated with regulation of thousands of listed firms in India.

In a proposal, Sebi has now proposed that the Companies Act should also clearly mention that a person should vacate the office of a director if it orders his or her disqualification.

Officials said the Finance Ministry is in agreement with Sebi on the proposed amendment and has asked the regulator to get it approved by its board and subsequently forward it to the Corporate Affairs Ministry, which is the nodal ministry for the Companies Act.

In its proposal, Sebi has referred to its interim order dated January 25, 2017, through which the regulator had barred Mallya and six others from holding directorship in any listed company till further directions.

The Sebi order followed a probe into alleged illegal fund diversions at United Spirits Ltd, an erstwhile firm of business group headed by Mallya which he had later sold to global liquor giant Diageo. Mallya and others were also barred from the securities markets in the same order.

However, Mallya did not comply with the order by not stepping down as a director of United Breweries Ltd, another listed company of his group, for months.

Soon after the Sebi order, Mallya had also criticised Sebi in a series of tweets and had said the allegations of fund diversion were baseless and had alleged that he was a target of “witch hunt”.

After refusing to quit the United Breweries Board for months, Mallya finally ceased to be its director in August 2017, presumably after pressure from other directors. In case of United Spirits, he was asked by the new owner Diageo in April 2015 itself to quit the board for alleged fund diversion.

Mallya is facing a number of cases against him, including of loan default, and a court in the UK has already ordered his extradition back to India and the same was also approved by the British government last month.

Subsequently, 63-year-old Mallya, who had left India in March 2016 for the UK, has also filed an application for permission to appeal against the extradition order.

Explaining its rationale for seeking changes in the Companies Act, Sebi has said the fact that Mallya failed to comply with its direction has brought forward a “legal conundrum” in respect of whether Sebi has the power to enforce its direction when a director refuses to comply with the same.

At present, Sebi’s direction restraining a person from acting as a director is not a ground for vacation of his or her directorship under the existing provisions of Section 167 of the Companies Act, 2013.

Further, Sections 164, 167 and 169 of the Companies Act, dealing with appointment, vacancy and removal of directors, are administered only by the central government through the Corporate Affairs Ministry.

“These provisions have not been delegated to Sebi for administering them in respect of the listed companies,” the official said, citing the regulator’s proposal for the amendment in the law.

While Sebi is empowered to initiate adjudication proceedings under the Sebi Act for non-compliance of its directions in such cases, it can only be a penal proceeding for non-compliance and not for enforcement of the direction.

In view of these concerns, Sebi has proposed that the issue can be resolved by amending the Section 167 of the Companies Act to include “order of Sebi” as one of the grounds for vacation of office of a director.


RBI BUNDLES NBFCS INTO 1 TYPE, OFFERING OPERATIONAL FLEXIBILITY – THE ECONOMIC TIMES

Sudheendra Kumar
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RBI BUNDLES NBFCS INTO 1 TYPE, OFFERING OPERATIONAL FLEXIBILITY – THE ECONOMIC TIMES

RBI BUNDLES NBFCS INTO 1 TYPE, OFFERING OPERATIONAL FLEXIBILITY – THE ECONOMIC TIMES

RBI also decided that exposures to all NBFCs, excluding core investment companies, will be risk weighted as per credit ratings.

To provide greater operational flexibility to non-banking lenders, the Reserve Bank Friday created a single category for them by bundling their present three-tier structure.

The central bank also decided that exposures to all NBFCs, excluding core investment companies, will be risk weighted as per credit ratings.

Both the decisions were first announced at the last bi-monthly review of the monetary policy in the statement on developmental and regulatory policies.

“It has been decided that to provide NBFCs with greater operational flexibility, harmonisation of different categories of NBFCs into fewer ones shall be carried out based on the principle of regulation by activity rather than regulation by entity,” the RBInotification said.

Asset finance companies, loan companies and investment companies have been merged into a new category called NBFC- investment and credit companies (NBFC-ICCs), it said.

A deposit taking NBFC-ICC shall invest in unquoted shares of another company which is not a subsidiary company or a company in the same group of the NBFC, an amount not exceeding twenty per cent of its owned fund, it said.

The risk weight model will work in a manner similar to corporates, the RBI said, adding this has been done to facilitate flow of credit to well-rated NBFCs.

“Exposures to CICs will continue to be fully risk- weighted,” it said, adding detailed guidelines will come in by the end of the month.


RBI MUST CHALLENGE NCLAT ATTEMPT TO CUT ITS POWERS – THE FINANCIAL EXPRESS

Sudheendra Kumar
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RBI MUST CHALLENGE NCLAT ATTEMPT TO CUT ITS POWERS – THE FINANCIAL EXPRESS

RBI MUST CHALLENGE NCLAT ATTEMPT TO CUT ITS POWERS – THE FINANCIAL EXPRESS

If NCLAT rules that classifying IL&FS loans as NPAs needs its explicit approval, this can be extended to other loans as well.
If it wasn’t bad enough that the Essar Steel resolution continues to drag in the country’s courts—for close to 550 days now—thanks to the Ruias making a last-ditch effort to retain control of the company, the National Company Law Appellate Tribunal (NCLAT) has added another twist to the NPA saga by saying IL&FS’s loans can’t be declared as NPAs without its explicit approval. If it wasn’t bad enough that NCLAT is trying to muscle in on the central bank’s territory—it is RBI that lays down guidelines on how NPAs are to be classified—the country’s Supreme Court (SC) is also examining the legal validity of RBI’s February 12 circular that makes reporting on NPAs more stringent as well as automatic; under the circular, banks have to classify all loans as stressed if there is even one day of delay in repayment and any defaulting loan where a settlement has not been reached for 180 days has to automatically be referred to the NCLT for resolution. If the country’s courts, from the NCLAT to SC, are going to overrule RBI, and in effect prevent genuine recognition of dodgy loans, it will never be possible to know if the country’s banking system is safe or not.

Ironically, till a few years ago, RBI itself was way behind the curve in identifying NPAs. In even its December 2015 Financial Stability Report (FSR), RBI was projecting a 4.9% NPA level for March 2016 and a 5.2% level for September 2017 in the baseline scenario; the actual NPA levels, it turns out, was 7.6% in March 2016 and 10.2% in September 2017. It was only in June 2016 that the FSR started projecting somewhat more realistic numbers after the Asset Quality Review (AQR); as a result of the AQR, gross NPAs rose sharply to 7.6% of gross advances in March 2016, from 5.1% in September 2015. While RBI believes the worst of the NPA crisis is behind us—the latest FSR projects NPAs falling from 10.8% in September 2018 to 10.2% in September 2019—this assumes that several deeply indebted sectors today like telecom, steel, real estate or electricity won’t have a problem with debt repayments.

This may be quite optimistic. Even now, Credit Suisse data shows that the share of total debt that is held by companies that have an interest cover of less than one is still a high 42%, though this is lower than 43% in the previous quarter. Within this, while real estate debt is as high as 5 lakh crore, this has been growing at over 20% per year over the last five years. In the case of telecom, where debt levels are around3.25 lakh crore, Credit Suisse points out that all this debt is owed by companies with an interest cover of less than one. And, in the case of steel, 35% of all debt is owed by firms that have an interest cover of less than one despite all the government protection. Around 45% of power sector debt —of over `2 lakh crore—has an interest cover of less than one; these are assets that don’t have gas supplies (10,600MW), or PPAs (20,000MW) due to SEBs being cash-strapped, or huge overdues (12,000MW) for the same reason.

In other words, the banking sector continues to be one where, despite recent successes in lowering NPA levels, including solutions emanating from the recently-introduced Insolvency and Bankruptcy Code (IBC)—the government estimates recoveries of around `2.5-3 lakh crore have been made so far due to IBC—the levels of stress can once again rise quite quickly. In such a situation, it is vital RBI is able to ensure banks classify their dodgy loans correctly; in any case, any loan that is classified as an NPA and for which provisioning needs to be done can be written back as a profit when the loan is no longer dodgy. If the NCLAT and other courts interfere, however, RBI will no longer be able to ensure the banking system is truly safe.

SEBI TO EASE NORMS FOR INVESTORS WILLING TO INVEST IN STARTUPS –THE ECONOMIC TIMES

admin
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SEBI TO EASE NORMS FOR INVESTORS WILLING TO INVEST IN STARTUPS –THE ECONOMIC TIMES

SEBI TO EASE NORMS FOR INVESTORS WILLING TO INVEST IN STARTUPS –THE ECONOMIC TIMES

The investor having a demat account will make an application to the stock exchanges or depositories to be recognised as an ‘accredited investor (AI)’.

To provide a boost for startups seeking to get listed, capital markets regulator Sebi’s board on Friday approved easing of norms for accreditation of investors willing to invest in such new-age entities.

At a meeting here, the Sebi board approved a framework for the process of accreditation of investors for Innovators Growth Platform, which will be the name of the stock exchange platform where new-age startups would be listed.

Under this framework, the investor having a demat account will make an application to the stock exchanges or depositories to be recognised as an ‘accredited investor (AI)’.

The exchanges and depositories will grant accreditation to these investors for a period of three years, after ascertaining their eligibility.

Earlier in December 2018, the Sebi’s board had approved a number of other measures to make it easier for startups to get listed on the Innovators Growth Platform (IGP).

The relaxation in the norms came after tepid market interest to the existing platform and demands from various stakeholders to make the norms easier and the platform more accessible in the wake of expanding activities in the Indian startup space.

While detailed eligibility and other norms for AIs would be notified by Sebi later, sources said it is being proposed that an individual with total annual gross income of Rs 50 lakh and a minimum liquid net worth of Rs 5 crore will be considered.

In the case of body corporate, the net worth requirement would be Rs 25 crore.

In case, the financial status changes during the eligibility period, the AI will have to inform stock exchanges and depositories about the same.

At the time of application for listing by a company on the IGP, the merchant bankers will have to carry out due diligence regarding the eligibility of AIs.

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