Making public a list of 193 unlisted companies fraudulently raising money from the public, securities market regulator SEBI warned such firms and other directors of ‘stringent actions’ and asked investors not to be lured by their schemes.

Alternative Investment Funds (AIFs), having foreign entities as “Associates”, are to follow the latest Securities and Exchange Board of India directive to disclose the entire disciplinary history of sponsors, managers, directors, partners, promoters and associates in their placement memorandum.

What are AIFs?

AIFs are funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per the investment norms prescribed in the AIF Regulations.

A suspended company, its holding/subsidiary, its promoters and directors shall not issue prospectus
or advertisement soliciting money from public for issue of securities directly or indirectly till
suspension is revoked by concerned stock exchange or securities of such company are delisted, Securities and Exchange Board of India said in a circular. The strict conditions would be in place till the suspension is revoked or till these securities get delisted, whichever is earlier.In addition, SEBI said the suspended company and the depositories would not be allowed to transfer, by way of sale, pledge, of scrips of a suspended firm held by promoter entities and directors. In case the suspended entities remain listed, then such activities can be done only after three months from the date of revocation of suspension.

The appetite for Securitisation in India has been on the lower side; it is used largely to meet priority
sector lending targets by banks as investors, NBFCs being the originators. This low appetite can be ascribed to several factors, including legal, taxation and stamp duty issues.
SEBI is working on a new platform for securitization market transactions .Besides, insurance and pension regulators, IRDAI and PFRDA have also been asked to facilitate long- term investments by insurance and pension funds in securitization products.

Market regulator SEBI received a shot in the arm after the Supreme Court on Monday upheld its jurisdiction to regulate the creation and issuance of Global Depository Receipts (GDRs) by companies in the offshore markets

The government of India has reviewed the extant FDI policy on various sectors and made the following amendments in the consolidated FDI Policy Circular of 2015, effective from May 12, 2015:

• Minimum Capitalisation: Wherever there is a requirement of minimum capitalisation, it shall include share premium received along with the face value of the share, only when it is received by the company upon issue of the shares to the non- resident investor. Amount paid by the transferee during post issue transfer of shares beyond the issue price of the share, cannot be taken into account while calculating minimum capitalisation requirement.
•  Composite Limit: Sectoral Cap that is the minimum amount which can be invested by the foreign investors in an entity, unless provided otherwise, is composite and includes all types of foreign investments, direct and indirect, regardless of whether the said investments have been made under schedule I (FDI), 2 (FII), 2A (FPI), 3 (NRI), 6 (FVCI), 8(QFI), 8(LLP), 10 (DR) of FEMA (Transfer or Issue of Securities by persons resident outside India) Regulations.
• FCCBs and DRs: Foreign Currency Convertible Bonds (FCCBs) and Depository Reciepts (DRs) having underlying of instruments which can be issued under Schedule 5, being in the nature of debt, shall not be treated as foreign investment. However, any equity holding by a person resident. outside India resulting from conversion of any debt instrument under any arrangement shall be reckoned as foreign investment under the composite cap.

• Portfolio Investment upto 49% :Portfolio Investment, up to aggregate foreign investment level f 49% or sectoral/ statutory cap, whichever is lower, will not be subject to either government approval or compliance of sectoral conditions as the case may be, if such investment does not result in transfer of ownership and/or control of Indian equities form resident Indian citizens to non- resident entities.
• Sectoral Cap – Overall Limit :Total foreign investment, direct and indirect, in an entity will not exceed the sectoral/ statutory cap.
• Onus of FEMA compliance: The onus of compliance of above provisions will be on the investee company.

         Defence sector: In defence sector, portfolio investment by FPIs, FIIs, NRIs, QFIs and investments by FVCIs, together will not exceed 24% of the total equity of the investee/joint venture company. Portfolio investment will be under automatic route.

It is clarified that the restriction on investments with less than 3 years residual maturity shall not be applicable to investments by FPIs in Security Receipts issued by ARCs.

The difference of amount in invoices raised and payments received isn't a ground to deny refund on export of service Export incentive, viz, refund of accumulated cenvat credit cannot be denied merely due to difference in value of export invoice and proceeds received during a half year, when assessee explained that said differences was in account of time gap in realization and discount allowed.

The High Court of Madras held that where goods were cleared with superscription ‘Manufactured and packed by SVS & Sons’ on packaging, said use of assessee’s own name on goods does not make those goods ‘Branded’; said goods can be regarded as cleared without any brand name and eligible for exemption accordingly.

Refund of credit cannot be denied on ground that export proceeds have not been realized.

CESTAT, Mumbai Bench held that leasing of factory with machinery amounts to ‘Renting of Immovable property’ and not ‘Business Support Services’.

The CESTAT, New Delhi Bench held that loading, unloading and shifting of sugar bags within sugar factories would not amount to Cargo Handling Services and would, therefore, not be liable to service tax.

The Supreme Court of India held that since fertilizer cannot be marketed without packaging, packaging of fertilizer is an integral part of manufacture and not taxable under Packaging Services.

The Supreme Court of India held that preparing Ready Mix Concrete (RMC) and delivering RMC at site and also performing other incidental activities of pouring, pumping and laying of RMC, etc. amounts to ‘sale’ and therefore, no part of it is liable to service tax.

The High court held that where assessee has challenged validity of show-cause notice on ground that it was vague and time-barred, Tribunal cannot make an open remand for re-adjudication virtually allowing department to fill up lacunae in notices; Tribunal must adjudicate upon said issues as per Show Cause Notice itself.

The High Court of Bombay has held that Section 196(3) does not operate as an aberration in the appointment of any Director made prior to the coming into force of the 2013 Act, even in a case where the Managing Director crosses the age of 70 years during the term of his appointment. The law also does not interrupt the appointment of a Managing Director appointed after 1st April 2014 where at the date of such appointment or re- appointment the Managing Director was below the age of 70 years but crossed that age during his tenure.

High Court of Andhra Pradesh and Telangana held that legality and validity of sale of mortgaged property under SARFAESI Act has to be brought for scrutiny before Debts recovery Tribunal; jurisdiction of Company Court is ousted.

It is clarified that a company holding a general meeting after giving a shorter notice as provided under section 101 of the Companies Act, 2013 may also circulate financial statements (to be laid/considered in the same general meeting) at such shorter notice

According to RBI notification no. RBI/2015-16/ 122 dt. July 09, 2015, Non-Banking Finance Companies (NBFCs) will have to give public notice of at least 30 days before effecting the sale or transfer of ownership through sale of shares, or transfer of control with or without sale of shares. Such notice will be given by the NBFC and also by the other party or parties concerned after obtaining permission of Reserve Bank of India (RBI).

• Prior written permission will be required for any takeover or acquisition of control of an NBFC,which may or may not result in change of management;
• RBI’s permission will be required in case of a change in the shareholding of an NBFC, including progressive increases over time, which will result in acquisition/ transfer of shareholding of 26 per cent or more of the paid-up equity capital of the NBFC.
• Nod not required if shareholding exceeds 26% due to buyback or capital reduction.

High Court Andhra Pradesh and Telangana held that where company had in categorical terms admitted that it was liable to pay debt, a petition for winding up would be maintainable even in absence of precise quantification.

The High Court Of Punjab and Haryana held that where in e-mail respondent-company had acknowledged to pay outstanding dues to petitioner-company but had failed to pay same, respondent was unable to discharge admitted liability and, thus, winding up petition against it was to be admitted.

The Ministry of Corporate Affairs has steadily diluted its stance on Related Party transactions since mid-2014: It lowered the threshold to pass resolutions to 50 per cent plus from 75 per cent, and prevented only interested parties from voting, while allowing related parties to vote. SEBI has not aligned itself to the new regulations — and rightfully so, in the interest of minority shareholders. Companies act, 2013 needs to align itself to SEBI’s Clause 49 requirements for listed companies, and not the other way around.

The Ministry of Corporate Affairs (MCA) has relaxed the norms requiring Indian companies with overseas subsidiaries to file ‘audited’ financial statements of such foreign subsidiaries with the Registrar of Companies (RoC) in India.

After consulting with the Institute of Chartered Accountants of India (ICAI), the Ministry has now clarified that even ‘un audited’ financial statements of foreign subsidiaries can be filed with the RoC and will be treated as due compliance of Indian company law.

This dispensation will be allowed in case of a foreign subsidiary which is not required to get its financial statements audited as per legal requirements prevalent in the country of its incorporation, and which does not get its financial statements audited.

The High Court of Bombay has held that where there is some dispute with regard to the amount of tax deducted and amount of tax deposited and/ or delay in deposit and/or the interest payable thereon then the passing of an order under section 201 of the Act before initiating penalty proceedings may be necessary. AO may pass combined order under sections 201 & 221 if the fact and quantum of delayed deposit of TDS is not disputed by the deductor-assessee.

The High Court of Karnataka has held that where assessee had invested net sale consideration on transfer of long-term asset in construction of a residential house property, deduction of section 54F could not be denied merely because the construction of house was not complete in all respects within 3 years of transfer.

The Kolkata Bench of ITAT has held that Proviso to Section 68 casting onus on closely held company to explain source of share capital is applicable with retrospective effect.

The Supreme Courtof India has held that Landing and parking charges payable by Airlines in respect
of aircrafts are not for the ‘use of land’ per se but the charges are in respect of number of facilities provided by the Airport Authority of India. Thus, landing and parking charges payable by Airlines would attract TDS under Section 194C and not under Section 194-I.

India and the United States, signed an agreement to implement Foreign Account Tax Compliance
Act (FATCA) from October 1 of this year. The FATCA will enable and facilitate smoother exchange of tax-related information between the two countries, and help both fight evasion.

India and the United States, signed an agreement to implement Foreign Account Tax Compliance
Act (FATCA) from October 1 of this year. The FATCA will enable and facilitate smoother exchange of tax-related information between the two countries, and help both fight evasion.

Public sector banks (PSBs) will get `70,000 crore as capital over a period of four years. The first
installment of `25,000 crore has been marked for this fiscal.

• About 40% to be given this fiscal year to banks that requires support to raise their capital adequacy to 7.5%.
• 40% capital will be allocated to the top six banks: SBI, Bank of Baroda, Bank of India, PNB, canara Bank and IDBI;
•  20% to be allocated to the banks based on their performance during the reminder of the next fiscal year. This will incentivise them to improve their performance. (A Finance Ministry release)

Primary UCBs will now be permitted to offer services via ATM machine like Bill Payment,
Account Transfer etc. at their on site/ off site/ mobile ATMs as listed.

The Reserve Bank of India permitted banks to carry out the business of factoring departmentally,
without obtaining its prior approval, subject to conditions.

What is Factoring ?
When a bank undertakes factoring, an enterprise sells its accounts receivable (invoices) to the bank
at a discount. Later, the bank recovers money from the buyer on the maturity date of the invoices.

Comprehensive Policy
The RBI said banks may formulate a comprehensive factoring services policy with the approval of their Boards and offer the services to their customers in accordance with this policy. Factoring services may be provided either with recourse or without recourse or on limited recourse basis. These services should be extended in respect of invoices which represent genuine trade transactions.
The pre-payment amount offered by banks for the receivables acquired under factoring should
not exceed 80 per cent of the invoice value.

Upper Cap
Investment of a bank in the shares of factoring companies inclusive of its subsidiary carrying on factoring business will not, in the aggregate, exceed 10 per cent of the paid up capital and
reserves of the bank.

It has been decided that, ‘Past Due’ status of a credit card account for the purpose of asset classification would be reckoned from the payment due date mentioned in the monthly credit
card statement, the central bank said in notification no. RBI/2015-16/126 dt. July 16, 2015.

The government has extended the Capital Subsidy Scheme for electronics manufacturing firms by
another five years to help the nascent industry to scale up domestic manufacturing to reduce
dependence on imports. The scheme, implemented in July 2012 for a period of three
years, provides capital subsidy of 20% in Special Economic Zones (SEZ) and 25% in non-SEZ units
engaged in electronics manufacturing. The cabinet also expanded the scope of the scheme to benefit 15 new product categories.

The monsoon session of parliament was over without transacting any meaningful business.In this
process, the government could not get the constitutional amendment passed by Rajya Sabha (Lok Sabha has already passed the bill) to bring Goods and Service Tax (GST) to replace Excise, VAT and few other indirect taxes. Even the Land Acquisition Bill to facilitate Industrial Development and other public purposes was deffered on the recommendation of the joint parliamentary committees.

Need for consensus: The Modi government needs to pursue pending legislations after considering opposition views with an open mind to enable consensus on major economic reforms. Patience, persuasion, reconciliation and moving further on discussion informally as well as formally with all political levels will be very important. The ruling party needs to give adequate respect to opposition in the real spirit and approach the issues with statesmanship, on the lines of Sh. Atal Bihari Vajpayee.
This political diplomacy with genuine efforts can bring very good results in medium term.

Economic Issues: The government has taken significant positive policy measures very effectively and these will surely bring positive results in long run. The government is required to address several important issues on the agenda diplomatically, efficiently and effectively. There are large number of areas where subordinate legislation (Rule making), administrative guidelines and procedures and policy level changes can bring comprehensive growth and movement in the Indian Economy. Some of the suggested important areas include:-

Company Law: The government needs to exempt all private limited companies below ` 100 Crore net worth or ` 1,000 crores turnover from most of the procedural and compliance sections.A detailed review need to be done by various committees. The overburdened compliances and its costs with the fear of prosecution on a simple non-compliance is not making it easy for the entrepreneurs to contribute to the growth of the nation. The governments tag ‘Ease of doing business’ is non-
starter due to such over compliance.

Taxation: The Income Tax officials need to work upon non-tax payers instead of having a pre-notioned mind- set that ‘higher the tax payer, higher is the evasion’. Officials have now created fear of prosecutions in minds of the assesses who have deposited TDS late. Prosecutions is not the only way to force assesses to comply, a friendly approach need to be developed. The entire approach of rule making, procedures, assessment, appeals and imposition of tax needs to be people friendly. The assessees need to be treated with faith and respect with a positive approach. Tax terrorism has to give way to tax friendly approach. The survey, searches and raids are to be highly restricted. The exemplary powers and discretion of the tax officials needs to be curtailed. Scrutiny cases need to be resolved without any personal contact but on an electronic platform.

Black Money: The government needs to bring down the tax rates and seek voluntary compliance by education. The restrictive and deeming provision including Section 50C, 56, 14A, 43CA, 269SS/T and many such sections need to be relooked into. Immediate amendment in rules can give the major
relief. The various legislative attempts by the government has not been able to bring back black
money but has only closed the channel of circulation and productive use of the money thereby negatively impacting economic activity, capital creation and growth of real estate, trading, manufacturing and service sector. The government need not question each transation and provide leeway and flexibility to genuine business transactions. It is imperative that Black Money generation must be stopped and all that, which has been created in the past must come out and put to productive use.

Sector Specific Issues: The sector specific issues need to be directly addressed by providing:-

• Fiscal Adjustment- Custom Duty, Excise and Duty Drawback within WTO Framework
• Vat and Service tax rates reduction
• Interest Subvention
• Infrastructure Support
• Policy Support
• Reschedulement of loans
• Infusion of Risk Capital