LKS Corporate Amicus, June 2024

Article

RoC’s recent adjudication order against a global corporate – A regulatory oversight on Significant Beneficial Ownership

Recently, the Registrar of Companies, NCT of Delhi & Haryana imposed penalties against a global corporate and its Directors along with its Global CEO, including CEO of the holding company, for violating the provisions related to non-disclosure of Significant Beneficial Ownership (‘SBO’) under Section 90 of the Companies Act, 2013. The article in this issue of Corporate Amicus analyses the jurisprudence behind the SBO and the RoC’s approach towards the Order. The article notes that the RoC has outlined the parameters such as control over the Board of Directors, financial control with the upstream entities, control through contractual agreements, Directors of the subject company holding top positions in the upstream entities, and power of the top managerial personnel through bylaws of the upstream entities as criteria to determine control through ‘significant influence’. According to the authors (Noorul Hassan and Aman Gupta), companies with global corporate structures, need to relook at the requirement of reporting the SBO in the companies.

Read the full article here.

Notifications and Circulars

• Foreign Exchange Management (Overseas Investment) Directions, 2022 revised to clarify on investments in foreign funds
• International trade settlement in Indian Rupees (INR) – Opening of additional Current Account for settlement of import transactions as well
• Insolvency Professionals to act as Interim Resolution Professionals, Liquidators, Resolution Professionals and Bankruptcy Trustees (Recommendation) Guidelines, 2024 issued
• Lending to Micro, Small & Medium Enterprises (MSME) Sector – Master Direction revised
• Priority Sector Lending – Master Direction revised
• Foreign Portfolio Investors – SEBI updates disclosure requirements
• Foreign Portfolio Investors allowed flexibility in managing securities post registration expiry
• Offer for sale of shares to employees via stock exchange mechanism – SEBI modifies framework

Ratio decidendi

• MSME Promoters are exempt from net worth criteria for submitting a Resolution Plan under IBC if they provide security deposit and earnest money deposit – NCLT Kolkata
• Application under Section 9 of IBC by Operational Creditor must be supported by strict proof of debt and default – NCLT, Mumbai
• Acceptance of partial payments by Financial Creditor does not invalidate default or legitimacy of insolvency proceedings – NCLAT
• Arbitration award passed in disregard of evidence on record makes it liable to be set aside as being irrational and patently illegal – Delhi High Court
• Corporate Debtor can pursue remedies under IBC even if it had initiated Arbitration proceedings – Delhi High Court

News Nuggets

• Start-ups – DPIIT to focus on early-stage funding, other relaxations, in 100-day action plan
• MSME – Micro, Small and Medium Enterprises Development Act, 2006 set to be revamped
• Donations through Social Security Exchanges recommended to be included for CSR
• Food Business Operators not to claim ‘100% fruit juice’ on their labels: FSSAI
• Entities listed on Social Security Exchanges to submit impact reports for FY 2024
• ESG disclosure norms for listed entities may be eased

Read the full newsletter LKS Corporate Amicus, June 2024 (Complete)......

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