MCA issues clarification with regard to section 180 of the Companies Act, 2013.
MCA vide circular no 04/2014 dated 25th March 2014 has clarified that the resolution passed under section 293 (Restrictions on powers of Board ) of the Companies Act, 1956 prior to 12.09.2013 with reference to borrowings (subject to the limits prescribed) and / or creation of security on assets of the company will be regarded as sufficient compliance of the requirements of section 180 (Restrictions on powers of Board) of the Companies Act, 2013 for a period of one year from the date of notification of section 180 of the Act.
The clarification has been issued since Ministry has received many representations regarding various difficulties arising out of implementation of section 180 of the Companies Act, 2013 with reference to borrowings and/or creation of security, based on the basis of ordinary resolution.
Source Business standard
| Measures to check tax disputes in next Budget |
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New Delhi, 25 March The finance ministry plans to allay investor fear on tax uncertainty in India. The idea is to introduce in the next Budget a number of safeguards for preventing disputes with taxpayers. A panel headed by Parthasarathi Shome, advisor to the minister, will recommend such measures as part of reforms in tax administration. His Tax Administrative Reforms Commission ( TARC) has prepared basic guidelines for changes needed in the system to raise compliance and mitigate risks for taxpayers. Its final report, first in a series of five, will be given to the government in May. It will recommend measures for assessing compliance cost and administrative measures on taxpayers. "The draft report is talking about an approach towards preventing tax disputes and reducing risks for taxpayers by improving the administration. The recommendations will form part of the Budget announcements in June or July," said a ministry official, who did not wish to be identified. The seven- member TARC has held meetings in Delhi, Mumbai, Bangalore, Chennai and Kolkata to seek views from industry and other stakeholders. Experts say more than the legislation, it is the problems in implementation of tax laws which need to be addressed. "Some specific suggestions for checks and balances have been made to the Tax Administrative Reforms Commission to prevent the possibility of high- pitched assessments happening, as opposed to trying to deal with these after the bullet has been shot," said Ketan Dalal, joint tax director, PwC India. He said the Tax Administrative Reforms Commission could look at ways to prevent disputes by checks and balances. And, measures for dispute settlement within reasonable time limits. Taxpayers often accuse assessing officers of pegging their income at high levels, particularly in transfer pricing cases, to meet their own revenue collection target. This often leads to litigation. The Commission is considering suggestions for accountability in making assessments and raising demands, widening the scope of dispute resolution panels to cover domestic companies (currently restricted to international tax and transfer pricing disputes) and bringing in people from outside the department in the panel. Also, an independent panel for clarification on various issues and settling disputes through an arbitration process, as in the Consent Committee of the Securities & Exchange Board of India, among others. The report might propose to involve both private sector representatives as well as revenue officials in identifying quicker solutions for longterm issues. It will also suggest how to use technology and analyse data to sharpen the focus of tax administration, besides adopting a customercentric approach. TARC was formed in the wake of an announcement in this regard in Budget 2013- 14 by Finance Minister P Chidambaram. The idea was to review application of tax policies and laws in the context of global best practices. And, to recommend measures for reforms in tax administration to enhance its effectiveness. The term of the Commission is 18 months and it works as an advisory body to the ministry. UNDER TARC'S CONSIDERATION |Mechanism to track assessments exceeding a particular limit |Making assessing officers more accountable |Bringing Indian corporate under Dispute Resolution Panel |People from outside department to constitute DRP |Opportunities to approach DRP before draft order is passed |An independent panel for giving non- binding clarifications |A system of settling disputes through an arbitration process |
| Competition lawviolations get personal |
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The CCI in a recent order against Bengal Chemist and Druggist Association ( BCDA) not only penalised the association for its anti- competitive conduct but additionally held 78 of its senior officers to be personally liable for taking/ endorsing such anti- competitive conduct of the BCDA. The aggregate fine imposed on the BCDA and its officers was approximately ₹ 18.38 crore ( out of which the amount of fine imposed upon the BCDA was a mere ₹ 13.24 lakh). The BCDA case marks the first instance when the infringement of competition law by a trade association triggered action against its senior officers. Under the Competition Act, the term "company" includes a partnership firm or a trade association. Thus, the provisions of the Competition Act under which the BCDA officers were held personally liable are equally applicable to directors and senior officers of a company or the managing partner of a firm. Therefore, from now on directors and senior officers of a company are equally vulnerable to such liability. At the core of an anti- competitive conduct by a company is a decision of a director and/ or its corporate officers to pursue such an anti- competitive conduct. A company cannot remain in compliance with rules of competition law if its corporate officers either willingly or unknowingly adopt corporate practices that are anti- competitive in nature or willingly ignore their commitment towards competition law compliance programmes. A survey conducted by Deloitte in 2007 revealed that one of the top- most incentives for senior management to comply with competition rules are sanctions that operate at the individual, as opposed to corporate, level. Section 48 of the Competition Act provides such an incentive by rendering directors and other officers who are in charge of the affairs of the company to be personally liable, where their actions result in the company falling foul of the rules of Indian competition law. In the BCDA case, the CCI found, among other things, that the trade association engaged in issuing anti- competitive circulars directing its memberretailers not to give any discount to consumers and to sell drugs only at their MRP, thereby indirectly determining the sale prices of drugs and controlling or limiting the supply of such drugs in the market. The CCI found such practices of the BCDA to be anti- competitive in nature and violative of the provisions of the Competition Act. The CCI also identified: ( a) senior officers of the BCDA who were directly responsible for the BCDA to adopt such anti- competitive practices; and ( b) members of the BCDA's executive committee who ratified such decisions. The senior officers and the executive committee members were penalised at the rate of 10 and seven per cent of their annual salary/ receipts for the preceding three years, respectively. The law does not expect the directors or the senior management of a company to be experts in competition law. However, they should be aware of the basic rules, which will allow them to manage and avoid the risk of a competition law infringement. It is pertinent to note that since offences under the Competition Act are not criminal in nature, the CCI may hold directors personally liable for offences committed by their corporations based solely on circumstantial or indirect evidence. There is, however, a silver lining. The Competition Act provides that directors and senior officers may avoid liability through a " due diligence defence". This would require them to demonstrate that an anti- competitive act occurred despite there being an appropriate competition law compliance programme in place, which consisted of proper controls and systems, or without their knowledge. The due diligence defence relies more on the process that the directors or senior officers followed than on the result. Therefore, if the directors " inform" themselves before making a decision – for example, if they approve the merger of the company with a competitor after due discussions, asking the appropriate questions and seeking advice from experts – they may be able to use the due diligence defence to avoid personal liability, even if their decision produces results that contravene Indian competition law. The CCI would usually not second- guess the business judgement of a company's directors where they have followed the proper procedure in reaching their business decisions. In the BCDA decision, the CCI did not have an opportunity to address the issue of personal liability of an independent director for the company's anticompetitive conduct, since the decision dealt with the anti- competitive conduct of a trade association that typically does not have any independent board members. In my opinion, executive directors are more likely to be held liable for anticompetitive acts of a company than independent directors because they usually have decision- making responsibilities and a supervisory role over the company's business on an ongoing basis. However, even an independent director may be held liable if s/ he knowingly endorses an anti- competitive conduct of the company. The writer is a competition lawyer with the Competition Commission of India. These views are personal Directors and senior officers could be now fined for the anti- competitive conduct of their companies THINKSTOCK Since offences under the Competition Act are not criminal in nature, the CCI may hold directors personally liable for offences committed by their corporations based solely on circumstantial or indirect evidence |
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Source Business Line
RBI opens the field wider for foreign investments OUR BUREAU
Allows portfolio investors to participate in open offers, buybacks, disinvestment MUMBAI, MARCH 25: To attract more investments into the equity and debt markets, the Reserve Bank of India has decided to put in place a framework for investments which allows foreign portfolio investors to participate in open offers, buyback of securities and disinvestment of shares by Central or State Governments. The framework has been unveiled at a time when the Indian equity market is experiencing a bull run, with the BSE S&P Sensex racing past the 22,000-point mark to a lifetime high on expectations of a stable government emerging at the Centre post elections. Under a new scheme called 'Foreign Portfolio Investment', the RBI said portfolio investors — foreign institutional investors (FIIs) and qualified foreign investors (QFIs) registered in accordance with SEBI guidelines — will now be called Registered Foreign Portfolio Investors (RFPIs). According to the scheme, RFPIs can sell shares or convertible debentures in an open offer or through buyback of shares by a listed Indian company. RFPIs can also acquire shares or convertible debentures in any bid for, or acquisition of, securities in response to an offer for divestment of shares made by the Central or any State Governments. Further, they can acquire shares or convertible debentures in any transaction in securities pursuant to an agreement entered into with a merchant banker in the process of market making or subscribing to unsubscribed portion of the issue. The RFPI can offer cash or foreign sovereign securities with "AAA" rating or corporate bonds or domestic Government securities, as collateral to the recognised stock exchanges for their transactions in the cash as well as derivative segments of the market. The portfolio investors will be eligible to open a special non-resident rupee (SNRR) account and a foreign currency account with the authorised dealer bank, and transfer sums from the foreign currency account to the SNRR account at the prevailing market rate for making genuine investments in securities. The authorised dealer bank can transfer repatriable proceeds (after payment of applicable taxes) from the SNRR to the foreign currency account. The individual and aggregate investment limits for the RFPIs will be below 10 per cent and 24 per cent, respectively, of the total paid-up equity capital, or 10 per cent and 24 per cent, respectively, of the paid-up value of each series of convertible debentures issued by an Indian company. (This article was published on March 25, 2014) |
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