Indian Corporate Laws

17May

SEBI Relaxation from Minimum Public Shareholding requirements

During the continuance of Covid-19 pandemic, the regulatory authorities are providing relaxation in the various compliances under different laws to ease the corporates. On the same lines, Securities and Exchange Board of India (SEBI) has issued a circular dated May 14, 2020 ¹ vide which it has granted relaxation to the effect that no penal action be taken by Stock Exchange against the listed entities who could not meet the requirements of Minimum Public Shareholding (MPS) during the period March 1, 2020 to August 31, 2020.

Regulation 38 of the Listing regulations requires a listed entity to comply with the minimum public shareholding requirements as specified in rule 19(2) and rule 19A of the Securities Contracts (Regulation) Rules, 1957. However, this provision does not apply to entities listed on institutional trading platform without making a public issue.

NCLT orders to file default record from Information Utility

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National Company Law Tribunal (NCLT) vide its order dated 12 May 2020 has directed to Financial Creditors to file record from Information Utility mandatorily alongwith the new petitions being filed under section 7 of Insolvency and Bankruptcy Code, 2016 (IBC). No new petition shall be entertained without record of default u/s 7 of IBC.

Here, it is pertinent to mention that National E-Governance Services Ltd (NeSL), is India’s first and only Information Utility which is registered with the Insolvency and Bankruptcy Board of India (IBBI) under the aegis of the Insolvency and Bankruptcy Code, 2016 (IBC). The primary role of NeSL is to serve as a repository of legal evidence holding the information pertaining to any debt/claim, as submitted by the financial or operational creditor and verified and authenticated by the other parties to the debt.

Henceforth, default record from National E-Governance Services Ltd (NeSL) is mandatorily required to be annexed with all the petitions being filed u/s 7 of IBC.

In the case of petitions already filed u/s 7 of IBC which are pending for admission, NCLT has also directed to the Authorised Representatives/parties in the case to file default record from Information Utility i.e NeSL before next date of hearing.

Reference:
NCLT Order-File No.25/02/2020-NCLT dated 12^th May 2020

9May

Compliance Relaxations by SEBI amidst COVID-19

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Amidst unprecedented outbreak of pandemic coronavirus (Covid-19), the Securities and Exchange Board of India (SEBI) has granted temporary relaxation to Equity listed entities in relation to compliance with certain deadlines under various provisions of the SEBI regulations. SEBI has granted the said relaxations vide its circulars dated March 19, 2020, March 23, 2020, March 26, 2020, March 27, 2020, and April 13, 2020.

In this article, an effort has been made to consolidate all the above relaxations and present a brief summary stating the due dates and revised due dates in respect of compliances to be done by the Listed Companies whose equity shares are listed on Stock Exchange(s).

MCA relaxations under the Companies Act, 2013: COVID-19 Impact

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Due to outbreak of unprecedented novel coronavirus (COVID – 19) throughout the world including India, lockdowns and unexpected restrictions have been imposed on the public as well on the corporate sector. Companies are likely to face many problems in the timely compliances of various applicable laws. Taking into account the hardships being faced by the companies, Government of India has temporarily relaxed a number of compliances by the companies. Some of the major relaxations given by the Ministry of Corporate Affairs (MCA) under the Companies Act, 2013 are outlined below.

MCA vide its notification dated 19^th March, 2020 has dispensed with the need to conduct physical board meetings till 30^th June, 2020 in relation to matters which are otherwise matters not permitted to be dealt with through video conferencing or other audio visual means under the Companies Act, 2013 and the rules thereunder, including the approval of the annual financial statements, Board’s report, Prospectus, Audit Committee Meetings for consideration of Financial Statement and approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover. Consequently, such meetings may be held through video conferencing or other audio-visual means from 19^th March, 2020 until 30^th June, 2020.

IBC Threshold increased: Implications

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Vexatious initiation of insolvency process as arm-twisting tool, merely for recovery of dues has been a cause of concern since long due to low threshold of default of Rs.1 Lakh prescribed under the Insolvency and Bankruptcy Code, 2016 (IBC). While there was long outstanding demand for raising the threshold limit for initiating insolvency process, the notification has come in the wake of recent outbreak of the Coronavirus disease (COVID –19). The minimum default requirement under IBC now stands increased hundred times; from Rs.1 Lakh to Rs. 1 Crore.

Ministry of Corporate Affairs vide notification no. S.O. 1205(E) dated 24 March 2020 ¹ has amended Section 4 of the Insolvency and Bankruptcy Code, 2016 (IBC) vide which it has raised the threshold of default for filing of an insolvency petition under the Insolvency and Bankruptcy Code, 2016 (IBC) from Rs.1 Lakh to Rs. 1 Crore.