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SPARSH…..
Touches
September, 2013
Vinod Kothari & Company Vinod Kothari Consultants P Ltd Academy of Financial Services P Ltd 1012 Krishna 224 AJC Bose Road Kolkata – 700017 91-33-22817715/ 1276/ 3742 Also at: 601-C, Neelkanth, 98, Marine Drive, Mumbai- 400 002 91-22-22817427
In this Issue:
Editorial
Our Articles Published
What’s happening at VKC and VK & Co.
Our Corner
Contact Us
2 Focus on capabilities, opportunities will follow
Editorial
“Knowledge is the eye of desire and can become the pilot of the soul.”
-Will Durant
As rightly said by Will Durant, we at VKCPL & VK & Co, believe in setting goals that opens the eye of desire through knowledge, which automatically culminates into the pilot of the soul by driving us to work towards achieving those goals. With this encouraging thought in mind, we come again with “Sparsh” Stay in touch with us through SPARSH!!
Editor: -Pooja Rawal
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Articles Published An Article on Righting a wrong, RBI way, by Vinod
Kothari published in The Hindu. An Article on Securitisation Tax Rules: Uncertainty still
prevails, by Nidhi Bothra published in MoneyLife. An Article on Damodaran Committee Report: Impact on
Impulsive Law Making, by Nidhi Bothra published in IndianCorpLaw.
An Article on Rotation of auditors: Inconsistency between new Companies Act and Draft Rules, by Nidhi Ladha published in MoneyLife.
An Article on Companies Act, 2013: Additional Disclosures in Notices of Meetings, by Nidhi Ladha published in IndianCorpLaw.
An Article on Companies Act 2013: Enforcement a day too soon?, by Aditi Jhunjhunwala published in MoneyLife.
An Article on Vigil mechanism: Will it lead to overdrive of vigilance under new Companies Act?, by Nivedita Shankar published in MoneyLife.
An Article on Shareholders’ title disputes come back to Company Law Board, by Nivedita Shankar published in MoneyLife.
An Article on Non-bailable offences under the new Companies Act, by Prachi Narayan published in MoneyLife.
Article on New report reveals rapid inward investment is paving the way for Indonesian leasing, by Shampita Das and Abhirup Ghosh published in Asset Financce International
An Article on RBI compliances getting tougher for NBFCs, by Pooja Rawal published in MoneyLife
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Our Forthcoming Workshops
Workshop on Corporate Debt Restructuring and SARFAESI proceedings of Non Performing Assets, Kolkata, 26th October 2013
Workshop on Moving from Basel II to Basel III Framework, Mumbai, 22nd-23rd October, 2013
Workshop on Key Accounts: Credit and Receivables management, Mumbai, 5th-6th November, 2013
Workshop on Leasing & Asset Backed Lending, Mumbai, 8th – 9th November, 2013
Workshop on Housing Finance Workshop, Mumbai 15th-16th November, 2013
What’s happening at VKCPL and VK & Co. Book on Corporate Laws and Companies Act (Palmtop
Edition), Referencer by Vinod Kothari Revised Book on Securitisation Asset Reconstruction and
Enforcement of Security Interests,4th edition published by LexisNexis
Seminars & Sessions taken by Team Vinod Kothari & Company Session on Auditors' Appointment, Liability &
Responsibilities Changing Concept Of Director & Directorship on 7th September, 2013 at Vitta Salahkar CA. Study Circle- EIRC.
Session on Valuation of bonds and Debentures on 7th September, 2013 at ICSI-EIRC
Session on Judicial Pronouncements on Oppression & Mismanagement-Vinod Kothari, September 27, 2013
Vinod Kothari was invited as a guest speaker to deliberate on Overview of New Companies Bill-2013 by DTPA Chartered Accountant’s study circle-EIRC,9th September, 2013
Aditi Jhunjhunwala invited as a judge in 11th All India moot court competition conducted by EIRC-ICSI
Our Corner
Chit-o-Chat with Ms. Neha Gupta
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Our Articles Published
Righting a wrong, RBI way
by Vinod Kothari published in The Hindu
The recent Reserve Bank of India notification on vendor subvention loans, zero-cost credit card EMI (equated monthly instalment) loans, and so on will go a long way to create an environment for truth-in-lending regulations. Truth-in-lending laws, found in many countries ensure that lenders make a truthful disclosure of their rates of interest, and do not try to attract borrowers with misleading rates of interest. Truthful disclosure of rates of interest is as important as fair disclosures made by a vendor selling goods. There was a time when there was no truth in lending in India at all. A lender could get away with disclosure of what was called ‘flat rate of interest’, which was almost like half of the actual interest rates. Leading housing finance lenders would show what was called ‘annually declining rate of interest’, which was also deceptively lower than the actual interest rates. It was in 2009 that the RBI required disclosure of the actual rates of interest in case of loan transactions. To view the article click here. Also, the article was published in The Hindu journal and can be read here.
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Securitisation Tax Rules: Uncertainty still prevails, by Nidhi Bothra
published in MoneyLife
Clause 30 of the Finance Bill, 2013 (now Act) inserted a new Chapter XII-EA consisting of new sections 115TA, 115TB and 115TC in the Income Tax Act with regard to special provisions relating to tax on distributed income by securitisation trusts. Section 115TA – 115TC (along with the explanations) of the chapter provided for the Income Tax Authorities to prescribe two set of rules. One, section 115TA sub-section (3) states that – (3) The person responsible for making payment of the income distributed by the securitisation trust shall, on or before the 15th day of September in each year, furnish to the prescribed income-tax authority, a statement in the prescribed form and verified in the prescribed manner, giving the details of the amount of income distributed to investors during the previous year, the tax paid thereon and such other relevant details, as may be prescribed. Read the full article here. The article was also published in MoneyLife and can be viewed here
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Damodaran Committee Report: Impact on Impulsive Law Making
by Nidhi Bothra published in IndianCorpLaw
If you have already not had enough of ever changing regulations you probably have been outpaced by the speed with which regulations are changing. It may have also, so to speak become a trend with policy makers to act on impulses and come running behind slightest hint of things going out of control. As if the common man’s hue and cry was not enough, it was certified in the Doing Business Report of World Bank where India ranked 183 out of 184 countries on ease of doing business. In this pretext, the Damodaran Committee was set up by the Ministry of Corporate Affairs to make recommendations for reforming the regulatory environment for doing business in India. The report1 of the Committee was submitted to the Ministry on 2nd September, 2013 and is available in the public domain. The report is classified into 6 chapters and relates to a) dispute resolution/ legal reforms, b) architecture of regulatory space, c) measures to boast efficacy of regulatory process, d) improving business for MSMEs, e) addressing issues at state level and f) reviewing World Bank’s Doing Business Report Read the full article here. The article was also published in IndianCorpLaw and can be viewed here
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Rotation of auditors: Inconsistency between new
Companies Act and Draft Rules, by Nidhi Ladha
published in MoneyLife
Following the trend of USA which replaced its 37 years old companies act in 2006, India is also replacing its nearly six decades old Act, the Companies Act, 1956 (the 1956 Act) with the new Companies Act, 2013 (the Act) as already assented by both the Houses of Parliament on December 18, 2012 and on August 8, 2013 respectively and nod from the Hon’ble President on August 29, 2013. The Companies Bill which was in pipelines since 5 years has now been enacted as Act no. 18 of 2013 which will replace the 1956 Act fully. The 1956 Act had some 658 sections and 14 schedules and the Act has 470 sections and 7 schedules. This does not mean that the Act has now been made smaller or simpler. The words ‘as may be prescribed’ is appearing at 416 places in the Act which means a huge amount of law will be enacted by way of rules to be issued by the government in process. As the Act has already got the assent of the President last month, the Ministry of Corporate Affairs has placed on its portal, the draft rules for public comments on September 6, 2013(Draft Rules) inviting comments till October 8, 2013. Read the full article here. The article was also published in MoneyLife and can be viewed here
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The Companies Act, 2013 (the Act) has already been enacted as Act no. 18 of 2013 after getting green signal from the Hon’ble President on August 29, 2013. The Ministry of Corporate Affairs has placed on its portal, the draft rules for public comments on September 6, 2013 inviting comments till October 8, 2013. As a further step and as continuation of its speedy actions, the Ministry has now enforced 98 sections of the Act vide notification dated September 12, 2013. The said sections have come into effect with immediate effect (i.e. from September 12, 2013). One of the enforced sections is section 102 dealing with Statement to be annexed to the notice calling general meetings for every special business [corresponding to section 173 of the Companies Act, 1956 (1956 Act)]. Read the full article here. The article was also published in IndianCorpLaw and can be viewed here
Companies Act, 2013: Additional Disclosures in Notices of Meetings,
by Nidhi Ladha published in IndianCorpLaw
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The Regulators seem to be in haste and accelerated to now reduce the delay caused in to bring the Companies Act, 2013 (“Act 2013”) into force. However, as the saying goes, “Take time for all things- great haste makes great waste”. Evidently, the Act has taken several years to be finally drafted and received the President’s nod, though even then there are glaring loopholes in the Act. Now, that MCA is trying to speed up but even after the glaring loopholes and even before one could think of it has acted within the blink of an eye; and not much surprising, the act surely has several ambiguities. Though the provisions have been notified to come into force, however, we here analyse why the same is premature and therefore, may not really be in spirit. First of all, the Act 2013 says that existing Act shall be repealed by section 465. That section has not been repealed. However, several sections have already been enforced by the department on September 12, 2013. Technically, this means both the Acts are currently in operation. Important notified sections likely to affect Very importantly, the scheme of the new law is that exempting notification will be issued u/s 462. Therefore, unless exempted, all the provisions become applicable to all the Companies. Read the full article here. The article was also published in MoneyLife and can be viewed here
Companies Act 2013: Enforcement a day too soon? by Aditi Jhunjhunwala published in MoneyLife
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In what had been only recommended for listed companies, the Companies Act, 2013 (“Act, 2013”) now prescribes vigil mechanism for listed company and such classes of prescribed companies to put in place a mandatory vigil mechanism for directors and employees. According to a study by Association of Certified Fraud Examiners in their 2012 Global Fraud Study, a typical organization loses 5% of its revenues to fraud each year. Also, nearly half of victim organizations do not recover any losses that they suffer due to fraud. In what is an even more alarming discovery is that it took 18 months for frauds to be reported from the time that it first occurred. Whistle blowing – elsewhere and in India In United States of America, Section 806 of Sarbanes Oxley Act, 2006 requires every public company to provide a whistle blowing mechanism to all its employees. Read the full article here. The article was also published in MoneyLife and can be viewed here
Vigil mechanism: Will it lead to overdrive of vigilance under new Companies Act?
by Nivedita Shankar published in MoneyLife
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Shareholders’ title disputes come back to Company Law Board,
by Nivedita Shankar published in MoneyLife
A revamp of Companies Act, 1956 had been in the making for a long time and finally saw the light of the day with Companies Act, 2013 (“Act, 2013”). With the use of the word “prescribed” 416 times, it was obvious that a major part of the Act, 2013 was to be enforced by way of rules. However, on September 12, 2013 the Ministry of Corporate Affairs (“MCA”) issued notification to enforce 98 sections. This was hailed as a premature action of the MCA case in point being sections relating to insider trading, powers of Board, reference to NCLT, which still required clarifications. The MCA attempted to control its premature action by way of another clarification dated September 13, 2013 and further by way of issue of Companies (Removal of Difficulties) Order, 2013 (“Order, 2013”). Although, the Order, 2013 is surely a backtracking of sorts by the MCA, yet it brings back the power to adjudicate cases pertaining to “rectification of register of members” to Company Law Board (“CLB”). Read the full article here. The article was also published in MoneyLife and can be viewed here
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Non-bailable offences under the new Companies Act, by Prachi Narayan
published in MoneyLife
The Companies Act, 2013 (Act) has brought in extensive changes with the objective to ensure and seek transparency and establish better corporate governance practices. In view of the same, concerted efforts have been taken to bring in stern provisions relating to non-compliances of the Act and substantially enhancing the punishments prescribed for them. The Act has gone a step further to treat certain offences at par with criminal ones, thereby identifying them as cognizable and non-bailable. It thus becomes imperative on part of promoters, directors, officers or any other person of the company to know what offences are classified as non-bailable mean, what does non bailable mean and what are the rights under such circumstances. This article is an effort to provide an insight on concept of offence and bail, constituents of bailable and non-bailable offences, rights of persons arrested and finally on the non-bailable offences that fall under the Act. Read the full article here. The article was also published in MoneyLife and can be viewed here
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New report reveals rapid inward investment is paving the way
for Indonesian leasing, by Shampita Das and Abhirup Ghosh
published in Asset Finance International
Asset finance business in the Asia Pacific region in general has been on an upbeat in recent times, with China being the centre of growth, and Indonesia, Korea and others assisting that growth. One of the factors characterizing the leasing industry in Indonesia is that the economy in general is growing at the rate of 6.5%; secondly, Indonesia is attracting strong foreign direct investment and thirdly, there is high demand in transportation and infrastructural development.
Read the full article here
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RBI compliances getting tougher for NBFCs,
by Pooja Rawal published in MoneyLife
There were times when Non Banking financial Companies (“NBFCs”) had their own set of privileges over banks. The compliances laid down by Reserve Bank of India (“RBI”) were far more lenient for NBFCs than those for banks. But gone are those golden days and now even the NBFCs are under the RBI screening. Having said this, the roots of the new compliances for NBFC, is the famous Sahara Case. It’s quite interesting to know that there have been a series of compliances post the Sahara Judgment in August 2012. Few of the important Guidelines are Guidelines on Securitisation of Standard Assets, Guidelines for Private Placement of NBFCs etc. Apart from these, RBI in recent past kept sending notices to companies asking to send their annual reports, for the RBI to examine whether the company is an NBFC or not. By this we can applaud the efforts of RBI for avoiding speculation in NBFCs. Read the full article here. The article was also published in MoneyLife and can be viewed here
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Upcoming Events
The Calendar of our Forthcoming Courses can be viewed here
Workshop on Corporate Debt Restructuring and SARFAESI proceedings of Non Performing Assets, 26th October 2013, Kolkata
View the brochure here
Workshop on Moving from Basel II to Basel III Framework, Mumbai, 22nd-23rd October, 2013
View the brochure here
Workshop on Key Accounts: Credit and Receivables management, Mumbai, 5th-6th November, 2013 View the brochure here
Workshop on Leasing & Asset Backed Lending, Mumbai, 8th – 9th November, 2013 View the brochure here
Workshop on Housing Finance Workshop, Mumbai 15th-16th November, 2013
View the brochure here
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What’s happening at VKC and VK & Co
LexisNexis publication- Corporate Laws & Companies Act 2013 (Palmtop
Edition) -Referencer by Vinod Kothari
Now, that the Companies Act, 2013 is soon going to be enforced; it becomes imperative to discuss about the intricacies of the Act and hence Mr. Vinod Kothari, who is internationally recognized as an author has taken a step forward and recently written a book on Corporate Laws 2013 covering following segments:
Key Highlights of the Companies Act, 2013 Annotated text of the Companies Act, 2013 Notification enforcing 98 provisions of the
Companies Act, 2013 on 12 Sep 2013, incorporated 24 Allied Acts, Rules and Regulations update till
date (18 Sep 2013) SEBI Act, 1992 as amended by SEBI (Amendment )
Act, 2013 (Act 22 of 2013) Banking Regulation (Amendment Act, 2013) Prevention of Money Laundering (Amendment) Act,
2013 SARFAESI (Amendment) Act, 2013 Comparative table presenting Sections of the
Companies Act, 2013 & Corresponding provisions of the 1956 Act
To know more about this see here
Vinod Kothari recently revised a book on Securitization Asset Reconstruction & Enforcement of Security Interests, 4th edition published by LexisNexis. This book has been followed for like 11 years now across the globe. The issue covers aspects of Resolution of NPAs, Corporate Debt restructuring, Securitization as a financial instrument, detailed commentary on RBI Guidelines on securitization among others.
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Seminars & Session taken by Team Vinod Kothari & Company
Session on Auditors' Appointment, Liability & Responsibilities Changing Concept of Director &
Directorship by Vinod Kothari on 7th September, 2013 at Vitta Salahkar CA. Study Circle- EIRC.
Vinod Kothari was invited as a guest speaker on September 27, 2013 by EIRC-ICSI to deliberate on Judicial Pronouncements on Oppression and Mismanagement
Session on Valuation of bonds and Debentures on 7th September, 2013 at ICSI-EIRC, by Vinod Kothari
Ms. Aditi Jhunjhunwala was invited as a judge in 11th All India moot court competition conducted by EIRC-ICSI
Vinod Kothari was invited as a guest speaker to deliberate on Overview of New Companies Bill-2013 by DTPA Chartered Accountant’s study circle-EIRC, on 9th September, 2013
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Our Corner!!!!
1. How did you feel when you were a part of VKC and how do you feel now? I loved being part of the VKC team. I still cherish the moments invested there. I believe that most of the learning’s gathered during my 15 months of training period at VKC in the early part of career enable me to look at things with a different perspective and come up with innovative solutions to complex issues on the professional front.
2. How do you think being in this profession has helped you chase your dreams? I have always dreamt of becoming an accomplished professional and over time have developed a fascination for the mergers and acquisitions domain. The profession has empowered with the knowledge and practical insights (gained during the training period) in pursuit of my dream.
Chit-o-Chat with Neha Gupta Neha Gupta is a Chartered Accountant and a Company Secretary. She is currently working with Deloitte Haskins & Sells as part of the Mergers & Acquisitions team, Gurgaon.
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3. What are your future career endeavors? I am building on the foundation for becoming a successful M & A expert. In pursuit of my longer term professional goals, I am presently working towards building a diversified set of skill-sets and all my endeavors are directed towards the same.
4. How has VKC helped you in grooming your personality both professionally and personally? Walking down the memory lane, I recollect that I started giving shape to my dreams during my stint at VKC. It was during that tenure that I unraveled the finer aspects of my personality and leant the art of presenting myself. I also gathered the mannerisms, etiquettes and personality traits to be followed in the course of engagement with the corporate audience.
5. Finally what is your message to us? Any feedback or suggestions for the team? I consider myself one of the privileged lot for having had the opportunity to work with Mr. Vinod Kothari and Mr. Manoj Banthia. Similarly, I believe that all of you part of the VKC family today are a privileged lot to be associated with VKC and hence, you should invest most of your time in making this experience a learning for life.
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1012 Krishna 224 AJC Bose Road Kolkata – 700017, India Ph: 91-33-22817715/ 1276/ 3742 Mumbai office: 601-C, Neelkanth, 98, Marine drive, Mumbai- 400 002 022-22817427
Mail to: [email protected]; [email protected] Our Websites: www.vinodkothari.com www.india-financing.com
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