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………….provided that in any proceedings against a person in respect of an offence under this section, it shall be a defence to prove that a competent and reliable person was charged with the duty of seeing that the provisions of this section were complied with and was in a position to discharge that duty……

Legal Updates

Listed Companies would have to submit annual audit reports to stock exchanges along with two forms ~ Form A and Form B:

Market regulator Sebi today decided to make it mandatory for top 500 listed companies to facilitate e-voting, making it easier for shareholders to participate in key decisions without being physically present in the meetings.

"In line with the budget make it mandatory for top-listed companies to provide for electronic voting facilities, it has been decided to implement the said proposal by making electronic voting respect of those businesses to be transacted through postal ballot," Sebi said in a statement after its board meeting here.

It said the decision would be implemented in a phased manner, beginning with "top 500 listed companies at BSE and NSE based on market capitalisation. Listed companies may choose any one of the agency which is currently providing the e-voting platform".

Besides, the Securities and Exchange Board of India (Sebi) said that in order to enhance the quality of financial reporting done by listed entities it would create a Qualified Audit Report review Committee (QARC) represented by accounting regulator ICAI and stock exchanges.

The committee would process qualified annual audit reports filed by the listed entities with stock exchanges and reports where accounting irregularities have been pointed out by Financial Reporting Review Board of the Institute of Chartered Accountants of India (ICAI-FRRB).
"Cases wherein the qualifications are significant and explanation given by company is unsatisfactory would be referred to the ICAI-FRRB.

"If ICAI-FRRB opines that the qualification is justified, SEBI may mandate a restatement of the accounts of the entity and require the entity to inform the same to the shareholders by making the announcement to stock exchanges," it said. Further, the regulator said it has modified the minimum subscription requirements for infrastructure companies coming out with IPOs.

"The minimum subscription shall not be less than 90% of the offer, subject to allotment of minimum 25% or 10%, as the case may be, of the securities offered to the public," Sebi said.

e-payment mandatory for importers registered under ‘Accredited Clients Programme’ and those paying customs duty of Rs.1 lakh or more per bill of entry:

Circular No.24/2012-Customs

Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs
Room No. 229-A, North Block,
New Delhi, dated 5th September, 2012.
All Chief Commissioners of Customs
All Chief Commissioners of Central Excise and Service Tax

Subject: Making E-payment of Customs duty mandatory-regarding.
Sir / Madam,

            Kind attention is invited to Board Circular No. 33/2011-Customs dated 29th July, 2011 wherein it was decided that by the Board that the date for mandatory E- payment of Customs duty shall be notified separately.

2.       It has been decided to make e-payment of duty mandatory for importers registered under Accredited Clients Programme and importers paying customs duty of one lakh rupees or more per Bill of Entry with effect from 17.09.2012.

3.       All Chief Commissioners of Customs are therefore advised to give wide publicity to enable trade to be ready in case any change in their software or any internal procedure for effecting E-payment is required. As a large number of taxpayers would be required to pay the taxes electronically, it is requested that importers, trade and industry may be provided all assistance so as to help them in adopting the new procedure.

4.        Suitable Public Notices or Standing Orders may be issued to guide the trade / Industry and officers.

Yours faithfully,

(G.S. Sinha)
OSD (Customs-IV)

Specified categories of assesses who have liaison office in India shall electronically file Form C under Income Tax Rules:

View Notification (.doc)

View Notification (.pdf)

Expanded definition of 'infrastructure facility'- replaced by 'harmonised master list of infrastructure sub-sectors':

Irda expands definition of 'infrastructure facility'
Insurance companies, both life and non-life are mandated to invest a certain percentage in infrastructure
M Saraswathy / Mumbai Nov 12, 2012, 18:42 IST

Insurance Regulatory and Development Authority ( Irda ) has expanded the definition of 'infrastructure facility' under its Registration of Indian Insurance Companies Regulations. In a gazette notification, the insurance regulator passed an amendment to the regulation wherein the term 'infrastructure facility' will be replaced by 'harmonised master list of infrastructure sub-sectors', as specified by the Department of Economic Affairs, Ministry of Finance .

Insurance companies, both life and non-life are mandated to invest a certain percentage in infrastructure. To enable them in this endeavour, Irda has specified a list of 'infrastructure facility' for insurance firms to invest in.

As per the Section 2 (h) of Irda Registration of Indian Insurance Companies Regulations, 2000, infrastructure facility includes highway, bridge, airport, port, railways, road transport system, water supply project, irrigation projects, industrial parks, water treatment system and solid waste management system. It also includes sanitation and sewage system, generation, distribution or transmission of power, telecommunication and project for housing.
The gazette notification by the Irda said that 'infrastructure facility' means 'harmonised master list of infrastructure sub-sectors'. This had been earlier mentioned in a gazette notification by the Department of Economic Affairs, Ministry of Finance in March 2012. The list included master list including master categories like transport, energy, water sanitation, communication, social and commercial infrastructure and various sub-categories within them.

Insurance companies said that this has expanded their investment horizon and will enable them to invest in new categories of infrastructure, since the definition has been expanded.

The Salient features of amendments approved by the Cabinet are as follows:

  1. The words `make every endeavor to` omitted from Clause 135(5). Such clause is also amended to provide that the company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities.
  2. To help in curbing a major source of corporate delinquency, Clause 36 (c) amended, to also include punishment for falsely inducing a person to enter into any agreement with bank or financial institution, with a view to obtaining credit facilities.
  3. Provisions relating to audit of Government Companies by Comptroller and Auditor General of India (C&AG) modified to enable C&AG to perform such audit more effectively.
  4. Clause 186 amended to provide that the rate of interest on inter corporate loans will be the prevailing rate of interest on dated Government Securities.
  5. Provisions relating to restrictions on non audit services modified to provide that such restrictions shall not apply to associate companies and further to provide for transitional period for complying with such provisions.
  6. Provisions relating to separation of office of Chairman and Managing Director (MD) modified to allow, in certain cases, a class of companies having multiple business and separate divisional MDs to appoint same person as `chairman as well as MD.
  7. Provisions relating to extent of criminal liability of auditors particularly in case of partners of an audit firm reviewed to bring clarity. Further, to ensure that the liability in respect of damages paid by auditor, as per the order of the Court, (in case of conviction under Clause 147) is promptly used for payment to affected parties including tax authorities, Central Government has been empowered to specify any statutory body/authority for such purpose.
  8. The limit in respect of maximum number of companies in which a person may be appointed as auditor has been proposed as twenty companies.
  9. Appointment of auditors for five years shall be subject to ratification by members at every Annual General Meeting.
  10. Provisions relating to voluntary rotation of auditing partner (in case of an audit firm) modified to provide that members may rotate the partner `at such interval as may be resolved by members` in stead of `every year` proposed in the clause earlier.
  11. `Whole-time director` has been included in the definition of the term `key managerial personnel`.
  12. The term `private placement` has been defined to bring clarity.
  13. Approval of the Tribunal shall be required for consolidation and division of share capital only if the voting percentage of shareholders changes consequent on such consolidation.
  14. Clarification included in the Bill to provide that `Independent Directors` shall be excluded for the purpose of computing `one third of retiring Directors`. This would bring harmonisation between provisions of Clause 149(12) and rotational norms provided in clause 152.