Monthly Archives: January 2016

New rules for railway bookings

Railway Ministry introduces new checks on booking of e-ticket/i-ticket through IRCTC website with a view to further prevent possible misuse

 

Under the new provisions a maximum of 6 tickets can be booked online by an individual user in a month on IRCTC website

This new provision will come into effect w.e.f. 15th February, 2016

The move aims to deter touts and to facilitate genuine users

 

In order to facilitate genuine users and prevent touting activities, various checks have already been put in place for the booking of e-ticket/i-ticket on IRCTC website including the following existing provision: –

 

  1. Individuals are allowed only 2 tickets per user-ID in a day (for ARP booking) from 08:00 hours to 10.00 hours.
  2. Individuals are allowed only 2 tickets per user-ID in a day (for Tatkal booking) from 10:00 hours to 12:00 hours.
  3. Quick Book Option is disabled from 08:00 to 12:00 hours
  4. All types of ticketing agents (YTSK, RTSA, IRCTC agents etc.) have been debarred from booking tickets during the first thirty minutes of opening of booking i.e. from 08:00 to 08:30 hours for general bookings, and from 10:00 to 10:30 hours and 11:00 to 11:30 hours for Tatkal booking in AC and non-AC classes respectively.
  5. Booking is not allowed through e-wallet and cash cards from 08:00 to 12:00 hours.
  6. There is only one booking in one user login session except for return/onward journey between 08:00 to 12:00 hours.

 

To further prevent any possible misuse, Ministry of Railways has now decided that effective from 15th February, 2016, a maximum of 6 tickets can be booked online by an individual user in a month on IRCTC website. This will replace the existing system under which a maximum of 10 tickets can be booked online through IRCTC website in a month by an individual. However, the existing condition will continue wherein these booking will be subject to a limit of booking 2 opening Tatkal tickets in 10:00- 12:00 hours period in a day and 2 opening Advance Reservation Period (ARP) tickets in 08:00-10:00 hours period in a day.

This has been done keeping in view the analysis of usage of quota of 10 tickets which indicated that 90% of users are booking upto 6 tickets in a given month and only 10% are making more than 6 tickets. It is suspected that the 10% users might be involved in touting activities. Therefore to deter such touts and to facilitate genuine users, it has been decided that a maximum of 6 tickets can be booked by an individual user in a month.

 

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Fraud Reporting

The Ministry of Corporate Affairs has vide its gazette notification dated 14th December, 2015 amended the Rule 13 of the Companies (Audits and Auditors), Rules, 2014 as under.

“13. Reporting of frauds by auditor and other matters:

(1) If an auditor of a company, in the course of the performance of his duties as statutory auditor, has reason to believe that an offence of fraud, which involves or is expected to involve individually an amount of rupees one crore or above, is being or has been committed against the company by its officers or employees, the auditor shall report the matter to the Central Government.

(2) The auditor shall report the matter to the Central Government as under:-
(a) the auditor shall report the matter to the Board or the Audit Committee, as the case may be, immediately but not later than two days of his knowledge of the fraud, seeking their reply or observations within forty-five days;
(b) on receipt of such reply or observations, the auditor shall forward his report and the reply or observations of the Board or the Audit Committee along with his comments (on such reply or observations of the Board or the Audit Committee) to the Central Government within fifteen days from the date of receipt of such reply or observations;
(c) in case the auditor fails to get any reply or observations from the Board or the Audit Committee within the stipulated period of forty-five days, he shall forward his report to the Central Government along with a note containing the details of his report that was earlier forwarded to the Board or the Audit Committee for which he has not received any reply or observations;
(d) the report shall be sent to the Secretary, Ministry of Corporate Affairs in a sealed cover by Registered Post with Acknowledgement Due or by Speed Post followed by an e-mail in confirmation of the same;
(e) the report shall be on the letter-head of the auditor containing postal address, e-mail address and contact telephone number or mobile number and be signed by the auditor with his seal and shall indicate his Membership Number; and
(f) the report shall be in the form of a statement as specified in Form ADT-4.

(3) In case of a fraud involving lesser than the amount specified in sub-rule (1), the auditor shall report the matter to Audit Committee constituted under section 177 or to the Board immediately but not later than two days of his knowledge of the fraud and he shall report the matter specifying the following:-
(a) Nature of Fraud with description;
(b) Approximate amount involved; and
(c) Parties involved.

(4) The following details of each of the fraud reported to the Audit Committee or the Board under sub-rule (3) during the year shall be disclosed in the Board’s Report:-
(a) Nature of Fraud with description;
(b) Approximate Amount involved;
(c) Parties involved, if remedial action not taken; and
(d) Remedial actions taken.

(5) The provision of this rule shall also apply, mutatis mutandis, to a Cost Auditor and a Secretarial Auditor during the performance of his duties under section 148 and section 204 respectively.”; 

Now onerous duties has been cast on the auditors, cost auditors and secretarial auditors to report frauds and the process for reporting auditors has been laid down in the above notification. 

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Non compliance with listing regulations – penalties thereof

SEBI has vide its circular no. CIR/CFD/CMD/12/2015 dated 30th November, 2015 laid down certain uniform fine structure for non compliance with listing regulations regarding non submission of certain periodic disclosures and standard operating procedures for suspension and revocation of suspension of trading of specified securities for such non compliances thereof.

Accordingly for non submission of corporate governance compliance report within the period specified in regulation 27(2) of the listing agreements will entail fine of Rs.1000/- per day of non-compliance till the date of compliance. This is in case of first non compliance. For each subsequent non compliances, it is Rs.2000/- per day of non compliance till the date of compliance.

Similarly it is the same for non submission of shareholding pattern u/r 31 with a further condition specified that if the non compliance continues for more than 15 days, additional fine of 0.1% of the paid up capital of the company or Rs.1 crore, whichever is less.

In case of non submission of the financial results u/r 33 thereof, the fines are Rs.5000/- per day for 1st non compliance and Rs.10000 per day for subsequent non compliances and if the non compliance continues for 15 or more days, then fine structure is as described above.

In case of non submission of annual report u/r 34, if the non compliance continues for five more days, then fine of Rs.1000 per day until the date of compliance for 1st non compliance and Rs.2000/- per day for subsequent non compliances.

Paid up capital is taken as at the beginning of the financial year in which the non compliance occurs.

Further standard operating procedures have been laid down for suspension of trading in case the non compliances under the above mentioned regulations continues for two consecutive quarters and in case of annual report for two consecutive financial years.

The SEBI circular can be found at its website.

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Aadhar based e-KYC process

SEBI vide circular dated October 8, 2013, enabled Aadhaar based e-KYC service offered by UIDAI for KYC verification. Intermediaries have sought clarifications from SEBI on certain operational aspects of the same. It is clarified that for accessing the details enabling client identification and authentication from UIDAI based on client authorisation, on voluntary basis, intermediaries who utilize the services of KYC Service Agencies (KSAs) would be registered as KYC User Agencies (KUA) with UIDAI.

1. For entering into account based relationship, the client may provide the following information to the intermediary: i. Name ii. Aadhaar number iii. Permanent Account Number (PAN)

2. The above information can be provided by the client electronically including through any web enabled device.

3. The intermediary shall perform verification of the client with UIDAI through biometric authentication (fingerprint or iris scanning). Mutual Funds can also perform verification of the client with UIDAI through One Time password (OTP) received on client’s mobile number or on e-mail address registered with UIDAI provided, the amount invested by the client does not exceed Rs. 50,000 per financial year per Mutual Fund and payment for the same is made through electronic transfer from the client’s bank account registered with that Mutual Fund.

4. PAN of such client is to be verified from the income tax website.

5. After due validation of Aadhaar number provided by the client, the intermediary (acting as KUA) shall receive the KYC information about the client from UIDAI through KSA.

6. The information downloaded from UIDAI shall be considered as sufficient information for the purpose of KYC verification. The intermediary shall upload this KYC information on the KRA system in terms of KRA Regulations.

7. In case material difference is observed either in the name (as observed in the PAN vis-a-vis Aadhaar) or photograph in Aadhaar is not clear, the intermediary shall carryout additional due diligence and maintain a record of the additional documents sought pursuant to such due diligence.

8. The records of KYC information so received shall be maintained by the intermediary as per the SEBI Act, Regulations and various circulars issued thereunder.

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HUF/ Karta cannot be partner in LLP

MCA has vide its circular no. 2/2016 clarified that Hindu Undivided Family or its Karta cannot become a partner or a designated partner of a Limited Liability Partnership. As per section 5 of the LLP Act, 2008 only an individual or a body corporate can become a partner in LLPs. Since HUFs are not treated as a body corporate it cannot become a partner in a LLP.

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Exit opportunity to dissenting shareholders

SEBI has vide its press release dated 11th January, 2016 clarified that exit opportunity has to be given to the dissenting shareholders wherever the company is passing a special resolution to change its objects for which it raised the public money and which company still has some unutilised moneys left. The operative of the said press release is given below:

Companies Act, 2013 provides that a company, which has raised money from public through prospectus and still has any un-utilised amount out of the money so raised, shall not change its objects for which it raised the money through prospectus or vary the terms of a contract referred to in the prospectus unless a special resolution is passed by the company. The Act also provides that dissenting shareholders, shall be those shareholders who have not agreed to the proposal and they shall be given an exit opportunity by promoters and shareholders having control over the company, in such manner and conditions as may be specified by SEBI by making regulations in this behalf. Accordingly, following a consultative process, the Board approved the proposal to amend the SEBI (ICDR) Regulations, 2009 for laying down the framework in this regard. The salient features of the said framework are:

(i)            The provisions shall be applicable on a prospective basis i.e. for issues which opened after the commencement of the related provisions in the Companies Act, 2013, i.e. April 01, 2014.

(ii)          It would be applicable in those cases where the proposal is dissented by at least 10% of the shareholders and if the amount to be utilized for the objects for which the prospectus was issued is less than 75% of the amount raised (including the amount earmarked for general corporate purposes as disclosed in the offer document).

(iii)         Investors holding shares as on the date of the board meeting in which the proposal to change the objects is approved and those who cast their vote against the resolution shall be eligible to avail of the exit opportunity under this provision.

(iv)         The exit price shall be based on the pricing parameters applicable in case of exit offer given to the existing shareholders in terms of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, which is applicable for both frequently and infrequently traded shares. The relevant date for pricing shall be the date of the board meeting in which the proposal for change in objects is approved.

(v)          Companies with no identifiable promoters or shareholders having control would be exempted from this requirement.

(vi)         Further, the acquisition under this framework shall be exempted from the applicability of following regulatory provisions:

  1. Mandatory open offer obligations stipulated under SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
  2. Restriction on acquiring shares beyond 75% under the provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 subject to compliance with minimum public shareholding requirements within a period of twelve months in terms of Rule 19A(2) of Securities Contracts (Regulation) Rules, 1957;
  3. Contra trade restrictions on promoters / controlling shareholders / dissenting shareholders, under the SEBI (Prohibition of Insider Trading) Regulations, 2015.

(vii)        The procedural details such as appointment of merchant banker, determination of price, tendering of shares, submission of compliance certificate etc. shall be specified in the regulations. 

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Mobile Banking Transactions

RBI has issued a notification on 17th december, 2015 reiterating the need for registration of customers for the purpose of extending mobile banking transactions to them. The operative part of the said notification is given below:

A reference is invited to para 7 of the Master Circular on Mobile Banking transactions in India – Operative Guidelines for Banks dated July 1, 2015. Given the high mobile density in the country, the policy focus of RBI has been to encourage banks to leverage on the mobile channel for widening the access to banking services. Irrespective of whether the services are offered through SMS, USSD or application channels, customer registration for mobile banking is critical. Towards this end, RBI has been reiterating the need for simplification of procedure and greater degree of standardization in procedures relating to registering of customers for mobile banking.

Mobile Banking Registration through ATMs

2. As advised by us, the National Payment Corporation of India (NPCI) has since developed the mobile banking registration service / option on the National Financial Switch (NFS). After a pilot with a few banks, the service is ready to be deployed on ATMs of all the NFS member banks. The necessary instructions for integration have been issued to banks by NPCI.

3. In view of the above, all the banks participating in NFS should carry out necessary changes in their respective ATM switches and enable the capability of customer registration for mobile banking at all their ATMs latest by 31st March 2016.

Registration through other Channels and Customer Awareness

4. In addition to the above, banks should also strive to facilitate customer registration for mobile banking through other channels including internet banking, IVR, phone banking, etc. As customer registration is an important pre-requisite for offering mobile banking services, banks should also use multiple channels to create awareness among their customers regarding mobile banking services and options available for customer registration.

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Payment of Bonus Amendment Act

The Payment of Bonus Act, 1965 has been amended vide Payment of Bonus Amendment Act, 2015 which received the assent of the President on 31st December, 2015 and gazetted the next day. There are two amendments i.e.

Section 2(13) – definition of employee amended to read as follows:

“employee” means any person (other than an apprentice) employed on a salary or wage not exceeding 1*[twenty one thousand rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward whether the terms of employment be express or implied;

The limits has been raised from Rs.10,000 to Rs.21000/-

Section 12 – calculation of bonus with respect to certain employees

[12. Calculation of bonus with respect to certain employees.- Where the salary or wage of an employee exceeds *[seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher] per mensem, the bonus payable to such employee under section 10 or, as the case may be, under section 11, shall be calculated as if his salary or wage were *[seven thousand rupees or the minimum wage for the scheduled employment, as fixed by the appropriate Government, whichever is higher] per mensem.]

An explanation has been added at the end of section 12 as follows:

Explanation.—For the purposes of this section, the expression ‘‘scheduled employment’’ shall have the same meaning as assigned to it in clause (g) of section 2 of the Minimum Wages Act, 1948.’.

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Negotiable Instruments Amendment Act 2015

The Negotiable Instruments (Amendment) Bill, 2015 was passed by the Parliament in the recently concluded Winter Session of the Parliament. The Negotiable Instruments (Amendment) Act, 2015 received the assent of the President on the 26th December, 2015 and has been published in the Gazette of India, Extraordinary on 29th December, 2015. The provisions of the Negotiable Instruments (Amendment) Act, 2015 shall be deemed to have come into force on the 15th Day of June, 2015, the day on which the Negotiable Instruments (Amendment) Ordinance, 2015 was promulgated to further amend the Negotiable Instruments Act, 1881.

The Negotiable Instruments (Amendment) Act, 2015 is focused on clarifying the jurisdiction related issues for filing cases for offence committed under section 138 of the Negotiable Instruments Act, 1881. The Negotiable Instruments (Amendment) Act, 2015, facilitates filing of cases only in a court within whose local jurisdiction the bank branch of the payee, where the payee delivers the cheque for payment through his account, is situated, except in case of bearer cheques, which are presented to the branch of the drawee bank and in that case the local court of that branch would get jurisdiction. The Negotiable Instruments (Amendment) Act, 2015 provides for retrospective validation for the new scheme of determining the jurisdiction of a court to try a case under section 138 of the Negotiable Instruments Act, 1881. The Negotiable Instruments (Amendment) Act, 2015 also mandates centralisation of cases against the same drawer.

The clarification of jurisdictional issues may be desirable from the equity point of view as this would be in the interests of the complainant and would also ensure a fair trial.Further, the clarity on jurisdictional issue for trying the cases of cheque bouncing would increase the credibility of the cheque as a financial instrument. This is expected to help the trade and commerce in general and allow the lending institutions, including banks, to continue to extend financing to the productive sectors of economy, as the process of pursuing the cheque bouncing cases relating to loan default has been made simpler and efficient through the proposed amendments to the Negotiable Instruments Act, 1881.

The Negotiable Instruments Act, 1881 was enacted to define and amend the law relating to Promissory Notes, Bills of Exchange and Cheques. The object of the Negotiable Instruments Act, 1881 is to encourage the usage of cheque and enhance the credibility of the instrument so that the normal business transactions and settlement of liabilities could be ensured. Section 138 of the Negotiable Instruments Act, 1881 deals with the offence pertaining to dishonor of cheque, drawn for discharge of any debt or other liability, on account of insufficiency of funds in the drawer’s account or on account of the fact that the cheque amount is more than the amount agreed to be paid by the bank, and provides for penalties for such dishonour.

Earlier, the Hon’ble Supreme Court, in its judgment dated 1st August, 2014, in the case of Dashrath Rupsingh Rathod versus State of Maharashtra and another (Criminal Appeal No. 2287 of 2009) held that the territorial jurisdiction for cases relating to offence of dishonour of cheques is restricted to the court within whose local jurisdiction such offence was committed, which in the present context is where the cheque is dishonoured by the bank on which it is drawn. The Supreme Court had directed that only in those cases where post the summoning and appearance of the alleged accused, the recording of evidence has commenced as envisaged in section 145(2) of the Negotiable Instruments Act, 1881, proceeding will continue at that place. All other complaints (including those where the accused / respondent has not been properly served) shall be returned to the complainant for filing in the proper court, in consonance with exposition of the law, as determined by the Supreme Court.

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Stand Up India Scheme

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today approved the “Stand Up India Scheme” to promote entrepreneurship among SC/ST and Women entrepreneurs. The Scheme is intended to facilitate at least two such projects per bank branch, on an average one for eachcategory of entrepreneur. It is expected to benefit atleast 2.5 lakh borrowers.

The expected date of reaching the target of at least 2.5 lakh approvals is 36 months from the launch of the Scheme.

The Stand Up India Scheme provides for:

• Refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of Rs. 10,000 crore.

• Creation of a credit guarantee mechanism through the National Credit Guarantee Trustee Company (NCGTC).

• Handholding support for borrowers both at the pre loan stage and during operations. This would include increasing their familiarity with factoring services, registration with online platforms and e-market places as well as sessions on best practices and problem solving.

The details of the scheme are as follows:

• Focus is on handholding support for both SC/ST and Women borrowers.

• The overall intent of the approval is to leverage the institutional credit structure to reach out to these under-served sectors of the population by facilitating bank loans repayable up to 7 years and between Rs. 10 lakh to Rs. 100 lakh for greenfield enterprises in the non farm sector set up by such SC, ST and Women borrowers.

• The loan under the scheme would be appropriately secured and backed by a credit guarantee through a credit guarantee scheme for which Department of Financial Services would be the settler and National Credit Guarantee Trustee Company Ltd. (NCGTC) would be the operating agency.

• Margin money of the composite loan would be up to 25%. Convergence with state schemes is expected to reduce the actual requirement of margin money for a number of borrowers. • Over a period of time, it is proposed that a credit history of the borrower be built up through Credit Bureaus.

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Maha Driving Penalties

Maharashtra State government has with effect from 1st January, 2016 levied a new set of penalties for various traffic offences.

For drunk driving, talking on the mobile phone while driving, speeding, jumping signals, plying overloaded vehicles and using vehicles meant for carrying goods as passenger vehicles – suspension of driving licence for 3 months

In case of drunk driving, there will be additional police case filed. Even if it is a first offence, police will appeal to the court for a jail term.

Even the pillion rider will have to wear a helmet, failure will result in levy of penalty.

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