Regulatory Updates_The PULSE_May 2024

                  MCA Updates Regulatory Updates 

Extension of last date for filing Form No. LLP BEN-2 and LLP Form No. 4D: Ministry of Corporate Affairs Regulatory Updates

Considering the transition of MCA-21 from version-2 to version-3 and to promote compliance, it has been decided by the MCA that LLPs may file Form LLP BEN-2 (Return to Registrar in respect of declaration under section 90 of Companies Act, 2013) and LLP Form No. 4D (Return to Registrar in respect of declaration of beneficial interest in contribution received by the LLP), without payment of any further additional fees, up to 01 July 2024. Regulatory Updates

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SEBI Updates

Industry Standards on verification of market rumours:

In order to facilitate ease of doing business, the Industry Standards Forum has formulated industry standards, in consultation with SEBI, for effective implementation of the requirement to verify market rumours under Regulation 30(11) of LODR Regulations. This requirement shall be applicable to top 100 listed entities with effect from June 01, 2024 and to top 250 listed entities (i.e., the next top 150) with effect from 01 December 2024.

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Audiovisual (AV) presentation of disclosures made in Public Issue Offer Documents: Regulatory Updates

In order to create awareness among investors to not rely on unauthorized/unsolicited information about public issues, it has been decided that salient disclosures made in the Draft Red Herring Prospectus (DRHP), Red Herring Prospects (RHP) and Price Band Advertisement for public issues shall also be made available in Audio Visual format (AV) for ease in understanding. Such AV shall be prepared and placed in the public domain for all main board public issues. The contents of the AV shall be as per the guidelines laid down in the circular. Further, the AV shall be in compliance with the provisions regarding “Public communications and publicity materials” prescribed under Schedule IX of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.

The provisions of this circular shall be made applicable to all DRHP filed with SEBI-

1. On or after July 01, 2024 on a Voluntary basis;
2. October 01, 2024 onwards on a Mandatory basis;

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Norms for sharing of real-time price data with third parties:

To curb misuse or unauthorized use of real-time share prices by certain online gaming platforms, apps, websites, etc., SEBI issued a circular on 24 May 2024 which inter-alia provides for the following:

1. Market Infrastructure Institutions and registered market intermediaries shall ensure that no real-time price data is shared with any third party except when required for the orderly functioning of the securities market or for fulfilling regulatory requirements.
2. MIIs or market intermediaries shall enter into appropriate agreements with entities with whom they intend to share real-time price data and ensure due diligence while sharing such data. The agreement shall provide for activities for which the real-time price data would be used by the entity including the justification for the same. The list of entities and activities for which the real-time data is being shared with shall be reviewed by the Board of the MIIs or market intermediaries at least once in a financial year.

The provisions of this circular shall take effect from the 30^th day of the issuance of the circular.

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Timelines for disclosures by Social Enterprises on the Social Stock Exchange (SSE) for FY 2023-24

1. Not for Profit Organizations (NPOs) registered on SSE including NPOs whose designated securities are listed on SSE, shall be required to make annual disclosures to the SSE on matters specified under the SEBI Circular dated 19 September 2022 by 31 October 2024 for the Financial Year 2023-24.
2. Social Enterprises that have registered or raised funds through SSE shall be required to submit an Annual Impact Report to SSE by 31 October 2024 for the Financial Year 2023-24. Regulatory Updates

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Definition of “generally available information” amended by way of SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2024 Regulatory Updates

SEBI vide its notification dated 17 May 2024 amended the definition of “generally available information” as prescribed under regulation 2(1)(e) of the SEBI (Prohibition of Insider Trading) Regulations, 2015, and provides that generally available information means information that is accessible to the public on a non-discriminatory basis and shall not include an unverified event or information reported in print or electronic media. 

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Key amendments notified by way of SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2024

SEBI has notified amendments in the provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2024 vide its notification dated 17 May 2024, which shall come into force on the 60^th day from the date of publication. A few key amendments are listed below:

1. The requirement of a one percent security deposit in public/rights issue of equity shares stands omitted.
2. Regulation 14 pertaining to minimum promoter contribution has been revised.
3. In the event of force majeure, the bid/offer closing date can be extended by a minimum of one day instead of the present requirement of a minimum of three days.

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Key amendments notified by way of SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2024

SEBI has introduced significant amendments to the SEBI (LODR) Regulations, 2015, through the SEBI (LODR) (Amendment) Regulations, 2024, notified on 17 May 2024 which inter-alia provides for amendments with respect to market capitalization calculations [Regulation 3(2)], extended timelines for filling key vacancies [Regulation 26(A)], verification process for market rumours [Regulation 30(11)], and streamlining of compliance procedures. Ministry of Corporate Affairs Regulatory Updates

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Amendments with regard to calculation of offer price under SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2024 Regulatory Updates

SEBI has notified amendments in Regulation 8 and Regulation 9 of SEBI (SAST) Regulations vide its notification dated 17 May 2024. It provides that the effect on the price of the equity shares of the target company due to material price movement and confirmation of reported event or information may be excluded as per the framework specified under regulation 30(11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 while determining offer Price under Regulation 8 and price of equity share under Regulation 9.

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Amendment to Regulation 19 and 22B by way of SEBI (Buy-Back of Securities) (Amendment) Regulations, 2024

SEBI has made amendments to Regulation 19  and Regulation 22B of SEBI (Buy-Back of Securities) Regulations, 2018, which provides that effect on the price of the equity shares of the company due to material price movement and confirmation of reported event or information may be excluded as per the framework specified under sub-regulation (11) of regulation 30 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations, 2015 for determination of the volume weighted average market price and lower end of the price range respectively.

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Master Circulars

In order to enable the stakeholders to have access to all the applicable circulars/ directions in one place, SEBI has issued a series of Master Circulars. The list of master circulars issued recently by SEBI is tabulated below: Regulatory Updates

RBI Updates

Issuance of partly paid units to persons resident outside India by investment vehicles under Foreign Exchange Management (Non-debt Instruments) Rules, 2019 Re Ministry of Corporate Affairs Regulatory Updatesgulatory Updates

Foreign Exchange Management (Non-debt Instruments) Rules, 2019 have been amended by way of Foreign Exchange Management (Non-debt Instruments) (Second Amendment) Rules, 2024 on 14 March 2024. The amendment enables the investment vehicles to issue partly paid units to persons resident outside India. Regulatory Updates

Further, it has now been decided to regularise such issuances that were made before the said amendment through compounding under the Foreign Exchange Management Act, of 1999. AD Category-I banks are advised to ensure that the necessary administrative action, including the reporting of such issuances by Alternative Investment Funds to the Reserve Bank, through the FIRMS Portal and issuance of conditional acknowledgments for such reporting, is completed before approaching the RBI for Compounding. Regulatory Updates

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A person resident outside India may maintain an Interest-bearing account in INR/foreign currency under Foreign Exchange Management (Deposit) (Fourth Amendment) Regulations, 2024 Regulatory Updates

RBI vide its notification dated 06 May 2024 amended Foreign Exchange Management (Deposit) Regulations, 2016 by way of Foreign Exchange Management (Deposit) (Fourth Amendment) Regulations, 2024. Regulatory Updates

Regulation 7A was inserted which provides that an authorized dealer in India may allow a person resident outside India to open, hold and maintain an interest-bearing account in Indian Rupees and/or foreign currency for the purpose of posting and collecting margin in India, for a permitted derivative contract entered into by such person in terms of Foreign Exchange Management (Margin for Derivative Contracts) Regulations, 2020. Ministry of Corporate Affairs Regulatory Updates

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Income Tax Updates

CBDT notifies Cost Inflation Index for FY 2024-25 Regulatory Updates

The Central Board of Direct Taxes (CBDT) has notified the Cost Inflation Index for FY 2024-25 at 363, which shall be considered for computing Long Term Capital Gain arising from the sale of long-term capital assets. Ministry of Corporate Affairs Regulatory Updates

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CBDT excludes RBI from the definition of specified persons u/s 206AB and 206CCA Regulatory Updates

The Central Board of Direct Taxes issues notification excluding RBI from the definition of specified persons /s 206AB and u/s 206CCA, which provides for higher deduction/collection of taxes in the absence of PAN or non-filing of return of income. Regulatory Updates

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CBDT issues guidelines for the compulsory selection of cases for complete scrutiny for FY 2024-25

The guidelines outline cases for compulsory scrutiny, including survey, search and seizure, notices under Sections 142(1) and 148, registration or approval under various sections (e.g., 12A, 12AB), recurring assessment issues, and specific tax-evasion information. Returns filed in response to Section 142(1) notices due to information from NMS Cycle/AIS/SFT/CPC-TDS are exempt from compulsory scrutiny, with selection via CASS (Computer-Assisted Scrutiny Selection). Compulsory scrutiny cases in International Taxation and Central Circle require Pr.CIT/Pr.DIT approval and are not transferred to NaFAC (National Faceless Assessment Centre). Information found during search and seizure related to individuals with limited transactions to the main assessee is passed to the jurisdictional AO for assessment under Section 148, without transfer to Central Charges unless specified by prior guidelines. Ministry of Corporate Affairs Regulatory Updates

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CBDT releases new functionality in the Annual Information System (AIS)

AIS provides details of a large number of financial transactions undertaken by the taxpayer which may have tax implications. AIS is populated based on the financial data received from multiple information sources. The Income Tax Department has now rolled out a new functionality in AIS to display the status of the information confirmation process. This will display, whether the feedback of the taxpayer has been acted upon by the Source, by either, partially or fully accepting or rejecting the same. For partial or full acceptance, the information is required to be corrected by filing a correction statement by the Source. Ministry of Corporate Affairs Regulatory Updates Regulatory Updates

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GST Updates

CBIC notifies amendments in the Jurisdiction of the Principal Commissioner/Commissioner of Central Tax

The Central Board of Indirect Taxes and Customs (CBIC), under the Ministry of Finance, introduces amendments to the Territorial Jurisdiction of Principal Commissioner/Commissioner of Central Tax under the Central Goods and Services Tax (CGST) Act, 2017, and the Integrated Goods and Services Tax (IGST) Act, 2017. These amendments are particularly significant for various districts in the state of Rajasthan and will take effect from August 5, 2023. Ministry of Corporate Affairs Regulatory UpdatesRegulatory Updates

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CBIC issuance of guidelines for initiating recovery proceedings before 3 months from the date of service of Demand Order

The CBIC has observed that some field formations are initiating recovery proceedings prematurely, before the three-month period, and without explicit instructions from the proper officer. To ensure uniform implementation, the Board issues instructions under Section 168 of the CGST Act, reiterating that recovery under Section 79 should be handled by the jurisdictional Deputy or Assistant Commissioner of Central Tax. If early recovery is needed, it must be referred to the jurisdictional Principal Commissioner or Commissioner of Central Tax for approval along with reasons. Ministry of Corporate Affairs Regulatory UpdatesRegulatory Updates

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