Corporate Law Daily
Dear Reader,
Today’s newsletter analytically summarizes the top Corporate Law stories reported at?taxmann.com.
The Ministry of Finance has notified an amendment in the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. As per the amended norms, a new clause ‘db’, defining ‘Politically Exposed Persons’ has been introduced in Rule 2(1).
“Politically Exposed Persons” (PEPs) are the individuals who have been entrusted with prominent public functions by a foreign country, including the heads of States or Governments, senior politicians, senior government or judicial or military officers, senior executives of state-owned corporations and important political party officials;”
Further, the rules now require every Banking Company or Financial Institution to register the details of non-profit organisation clients on the DARPAN Portal of NITI Aayog. Also, they must maintain such records for a period of 5 years after the business relationship between a client, and a reporting entity has ended or the account has been closed, whichever is later.
The Ministry of Finance has notified an amendment to the Prevention of Money-Laundering Act, 2002. The amendment aims to expand the scope of the Act to cover a wide range of cryptocurrency or virtual digital assets (VDA) transactions under the purview of PMLA, 2002.
Under the new amendment, activities by a person carrying on designated business or profession under section 2(1)(sa) of the PMLA, 2002, shall also include the following activities -
(a)?the exchange between virtual digital assets and fiat currencies;
(b)?the exchange between one or more forms of virtual digital assets;
(c)?transfer of virtual digital assets;
(d)?safekeeping or administration of virtual digital assets or instruments enabling control over virtual digital assets; and
(e)?participation in and provision of financial services related to an issuer’s offer and sale of a virtual digital asset.
Further, “virtual digital asset” shall have the same meaning assigned to it in clause (47A) of section 2 of the Income-tax Act, 1961.
The SEBI has informed all the existing investors to ensure the linking of their PAN with the Aadhaar number by March 31, 2023, for continual and smooth transactions in the securities market. The linking of PAN with Aadhaar has been made mandatory to avoid any potential consequences of non-compliance with the Central Board of Direct Taxes (CBDT) circular no. 7 of 2022, dated March 30, 2022.
As per the said CBDI circular, if the PAN allotted to a person is not linked with Aadhaar by March 31, 2023, it will become inoperative, and the person shall be liable to all the consequences under the Income-tax Act, 1961 for not furnishing, intimating or quoting the PAN.
Since PAN is the key identification number and part of the KYC requirements for all transactions in the securities market, all SEBI-registered entities and Market Infrastructure Institutions (MIIs) are obligated to ensure valid KYC for all participants.
Further, in case the linking is not done, accounts may be deemed non-KYC compliant, leading to restrictions on securities until the PAN and Aadhaar are linked. Therefore, it is imperative for investors to ensure that their PAN and Aadhaar numbers are linked before the deadline of March 31, 2023.
The SEBI has notified SEBI (Buy-Back of Securities) (Amendment) Regulations, 2023. Some additional restrictions have been imposed on the placement of bids, price and volume for the companies undertaking buy-back through the stock exchange route.
Under these restrictions, a company shall not purchase more than 25% of the average daily trading volume (in value) of its shares in the 10 trading days preceding the day in which such purchases are made.
Further, the company shall not place bids in the pre-open market, first 30 minutes and the last 30 minutes of the regular trading session, and the company’s purchase order price should be within the range of ±1% from the last traded price.
Additionally, the company, as well as its appointed broker, must ensure compliance with the aforesaid provisions. The stock exchange shall monitor their compliance and, in case of any instance of such non-compliance, shall impose appropriate fines and/or other enforcement actions as deemed fit.
With regard to margin requirements for deposits in an escrow account, the escrow account should consist of cash and/or other than cash. The portion of the escrow account in the form of other than the cash shall be subject to the appropriate haircut, in accordance with the SEBI Master Circular for Stock Exchange and Clearing Corporations dated July 05, 2021, as amended from time to time.
Also, the merchant banker to buy-back offer is advised to ensure that the adequate amount after the applicable haircut is available in an escrow account till the completion of all formalities of the buy-back.
That’s it from us for today! Stay Tuned for more updates from?Taxmann.com.
领英推荐
Register Now for Taxmann's Classes | [Virtual] Workshop on Lifecycle of Foreign Investments in Indian Start-ups – Tax & FEMA Aspects
1 Session | 1 Speaker | 180 Minutes
?? 29th March 2023 (Wednesday) | ?? 4:00 PM – 7:00 PM (IST)
Fees: ? 795/- + GST @18% Extra
Register Now! (Limited Slots Available):?https://taxmann.social/NrRjM
Faculty:
? Harshal Bhuta – Partner | P.R. Bhuta & Co.
Mr Bhuta has delivered over 70 lectures (including multiple full-day Masterclasses) on varied topics under FEMA, International Tax and Transfer Pricing at various professional & private forums.
Key Learnings:
?? Understand – The foreign investment framework for start-up fundraising
?? Learn – The tax regulations applicable to foreign investments in start-ups
?? Avoid – Compliances lapses under FEMA
?? Navigate – The tax & FEMA regime throughout the investment period
?? Fulfil Exit Expectations – Of foreign investors in sync with the regulatory regime
Benefits to Participants:
?? Get Replies to your Queries?
?? Complimentary Access to the Income Tax & FEMA Module of Taxmann.com | Practice for one month
?? Complimentary Virtual Access to Taxmann’s Foreign Exchange Management Manual for one month [Virtual/e-Book]
?? Certificate of Participation
?? Relevant For:
? Start-up Founders
? Start-up CXOs
? Angel Networks
? Start-up Investment Platforms
? Foreign Private Equity & Venture Capital Executives
? Chartered Accountants
? Company Secretaries
? Cost Management Accountants
? Corporate Laws
? Tax Professionals