Corporate Law Daily – Editorial Team
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Today’s newsletter analytically summarizes the top Corporate Law stories reported at taxmann.com.
While settling one of the unanswered legal propositions, the Hon'ble Supreme Court vide its order dated 14.02.2022 has finally concluded that the Banking Institutions can be made a party before the RERA Authority and they are amenable to the jurisdiction of RERA Authority. The Hon'ble Supreme Court vide its order in the case titled ‘Union Bank of India V. Rajasthan Real Estate Regulatory Authority and Ors. (SLP(C) No. 001861 - 001871/2022)’ dismissed the Special Leave Petition filed by the Union Bank of India assailing the judgment delivered by the Hon'ble Rajasthan High Court in the case of Union Bank of India v. Rajasthan Real Estate Authority & Ors., DBCWP No. _____/2021 wherein the Hon'ble High Court has laid down the law that the Banking Institutions would step into the shoes of Promoter and would be considered as ‘Assignee’ of Promoter under section 2(zk) of the RERA Act once they exercise their Security Interest over the Project building and take possession of the Project premise u/s 13(4) of the SARFAESI Act. While upholding the landmark judgment of Rajasthan RERA authority, the Hon'ble High court has further held that the RERA act would prevail over the recovery proceedings of the Bank under the SARFAESI Act. This order of the Hon'ble Supreme Court has settled that the rights of the Allottees as paramount and their interest has been treated as superior in relation to the rights of the banking institutions. ?
Ministry of MSME has released the draft National Policy for MSMEs in India and has recommended "specific action areas" to ensure the sector's speedy growth. The action areas include Intergovernmental Roles & Responsibility, Legislation and Regulatory Framework for MSMEs in India, Access to Finance/Financial Assistance for MSMEs, Technology Upgradation/ Adaptation, Skill Development, Knowledge Management, Ease of Doing Business, Development of MSME Code and Exit Code. ?
1. Introduction ?
In recent years, the government of India has taken several steps to strengthen the MSME sector in recent years such as (i) Introduction of MUDRA Bank with over USD dollar 50 billion disbursements (ii) Launching of an online portal for facilitating payment under SAMADHAN and web-based MSME data bank (iii) 50% fee reduction (iv) financial support for ZERO DEFECT ZERO EFFECT (ZED) manufacturing etc. other measures include Access to easy finance, particularly during CORONA Pandemic, Competitive SME policy themes, digitalization support for SMEs, Skill development of SMEs and lot more. ?
Despite several actions/initiatives taken in the past, there was no specific policy focusing on the development of MSMEs with a vision to steer and shape the future course of the MSME segment in India. Now, the Ministry of MSME has released the draft National Policy for MSMEs (‘Draft Policy’) in India wherein it has recommended "specific action areas" to ensure the sector's speedy growth of the sector. India did not have an MSME policy to date. This write-up aims to provide an overview of the new draft policy.
2. Why is policy needed? ?
As several measures were taken by the government to strengthen the MSME sector. Recent actions have tried to address many of them through notifications from time to time and follow-up actions. Yet, there is a need to systematically look into these issues to form a dynamic policy by GoI to take actions and promote follow-up at the state level to address specific barriers in the growth of MSMEs. These barriers include: ?
(a) Complex Legislative and regulatory framework for MSMEs ?
(b) Inadequate Facilitation Council in majority states ?
(c) Limited scope of facilitation Council as redress cases of MSEs only ?
(d) Lesser supply of electricity & skilled labour. ?
(e) Despite numerous credit schemes, MSMEs still face problems in accessing finance. ?
(f) Lack of convergence and synergy among various stakeholders to enhance MSME productivity ?
(g) Non-friendly dispute resolution mechanism ?
(h) No MSME code to provide SOPs ?
Apart from the aforementioned barriers, there are a few other barriers also like Business environment for ease of doing business and exit code needs to strengthen, need to work more on the education system to address the challenges of skilled youths employed in these industries, etc. ?
The purpose of the policy is to bring together a comprehensive framework of strategies and actions for suitable adaptation and inclusion in the state-level policies. The document needs wider dissemination, debate, and feedback from stakeholders to firm up a national policy for follow-up at the intergovernmental level. ?
1. Background ?
As per SEBI Circular Dated, June 03, 20211, mutual funds are allowed to make overseas investments up to USD 1 billion per mutual fund, with an overall industry limit of USD 7 billion. Earlier, the limit per mutual fund was USD 300 million which was enhanced to USD 600million by the SEBI through a circular dated Nov 05, 20202. Considering the remarkable growth in the quantum of overseas investments made by mutual funds, the limit per mutual fund was raised to USD 1 billion from the earlier limit of USD 600 million, but the overall industry limit was kept as USD 7 billion as capped by the RBI six years ago through circular dated Jan 1, 20163. At that time also there were rumors that the overall limit may be enhanced by the RBI. However, the overall threshold limit is yet to be notified by the RBI. ?
2. Overall Industry Limit about to exhaust ?
As there is an increase in the volume of overseas investments by Mutual funds in the past few years. Fund houses estimate that overseas investments would have crossed (USD6.7billion) as global markets had witnessed a bull run till December. As the overall industry limit is capped asUSD7 billion by the RBI. Currently, Mutual funds are on the verge of crossing the same. The increase in the overall limit by the RBI is the need of the hour. Mutual funds expect the RBI to increase the overseas investment limit fromUSD7 billion to at least USD 15 billion. ?
SEBI has specified certain modifications to the Master Circular for Depositories issued on Feb 05, 2021. As per SEBI’s earlier circular “ In the event of death of Karta of HUF, the name of the deceased Karta in the Beneficial Owner (BO) account shall be replaced by the new Karta appointed by the member of the HUF who in such a case shall be senior most member of the family except married daughter”. SEBI’s earlier circular restricted married daughters from being new Karta of the HUF in case of the death of the Karta. SEBI has taken away that restriction now. ?
Further, SEBI specified that guidelines as specified in SEBI letter No. MRD/DSA1/OW/4946/2018 and 4947/2018 dated February 14, 2018 also need to be followed in case of opening of Demat account in case of death of the Karta. Earlier only SEBI letter No. SEBI/HO/MRD/DP/OW/25739/1 and 25740/1 dated September 14, 2016 was required to be followed. All other provisions of the earlier master circular dated Feb 05, 2021, remain the same.
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