Thursday, 12 July 2018

PROVIDING KYC DETAILS MADE MANDATORY FOR DIRECTORS TO STAY ON BOARD




By way of the Companies (Appointment and Qualification of Directors) Fourth Amendment Rules, 2014 notified on 5th July 2018, the Ministry of Corporate Affairs has made it mandatory for all the “active directors” to submit PAN-authenticated digital signatures and a certificate from Chartered Accountant or a Company Secretary to continue on the board of directors. Such certification will guarantee that the credentials of the director are verified and the legal status is known to the board member. This rule covers Indian as well as foreign directors on board of the Indian companies.

The government has undertaken this KYC exercise to make certain that only genuine individuals assume responsibility of the affairs of the company. This KYC exercise will take place by the MCA with all the 50 lakh individuals holding Director Identification Numbers (DINs) and covers all DINs issued upto 31st March 2018. For the KYC, these individuals are required to fill an electronic form by August 31, 2018 failing which their DINs will be deactivated.

The filing has to be made in e-Form DIR-3 KYC and would be mandatory even for the disqualified directors to fill the form. On expiration of due date, the MCA-21 system will be used to mark all the approved DINs against which forms DIR-3 KYC are not filed as ‘deactivated’ and provide the reason for the same as ‘non-filing of DIR-3 KYC’. However, an another opportunity for filing the form to such deactivated DINs will be given upon payment of certain fees specified under Companies (Registration Office and Fees) Rules, 2014.

Major reason for carrying out this move is to do away with the shell companies and bogus directors from the corporate sector. It was noted that many businessmen were in the practice of appointing their drivers, household helps, gardeners on the board of directors. Most often these individuals are not even aware that they are on the board of the company promoted by the employers and details come to light only when some action is initiated by the company or its owners.

The details of KYC will be made available in a short period of time as the government is working on invoking a legal provision to enjoin the two professional institutes- ICAI and ICSI to contribute in national cause to clean up the corporate sector from now on.


Salient Points on DIR-3 KYC

  1. OTP will be valid for 15 minutes
  2. Foreign citizens – the passport is mandatory, and attachment also mandatory, the permanent address should be abroad; 
  3. Aadhar mandatory for Indian citizens, 
  4. Not required to attach PAN for Indian citizens
  5. Personal Mobile no. and e-mail id should not be linked to any other director or certifying professional 
  6. Personal e-mail id should not be official e-mail id – it should be personal like gmail, yahoo etc. 
  7. Foreign citizens – mobile no. should be foreign
  8. Foreign citizens but resident in India – mobile no. can be Indian
  9. Foreign DSCs not allowed, only Indian DSCs. 
  10. Attestation of documents by practicing professional – mandatory
  11. In case of the change in address from the DIN records, first file form DIR-6 and then file form DIR-3-KYC
  12. Passport not mandatory for Indian citizens, but if you mention Yes to do you have your passport, then mandatory to give details and attach passport. 
  13. Attestation rules to be followed as specified in the Companies (Incorporation) Rules
  14. Driving licence and EC Id – not mandatory, but if you specify the details, then you have to attach the documents.



Compiled by CS Pankaj Jain - Source: ICSI webinar   


New Corporate Laws Treatise (c) all rights reserved.

Knowledge Partner: 
VEDA LEGAL, Advocates & Solicitors, New Delhi 
Contact: 011 41039024 Email: vedalegal@outlook.com 


Tuesday, 10 April 2018

Clarification on clubbing of investment limits of foreign Government/ foreign Government related entities : SEBI





The Securities and Exchange Board of India (“SEBI”) vide its circular no. SEBI/HO/IMD/FPIC/CIR/P/2018/66 dated April 10, 2018 clarified on clubbing of investment limits of foreign Government/ foreign Government related entities.       

SEBI has been monitoring investment by foreign Governments and their related entities viz. foreign central banks, sovereign wealth funds and foreign Governmental agencies registered as foreign portfolio investors (hereinafter referred to as FPIs) in India. Since various stakeholders have been seeking guidance on clubbing of investment limits to be applied to foreign Government/ its related entities, the following clarifications are issued:

a.    What is the investment limit for foreign Government/ foreign Government related entities registered as Foreign Portfolio Investors (FPI)?


Reply: The purchase of equity shares of each company by a single FPI or an investor group shall be below ten percent of the total paid up capital of the company. [Ref. Regulation 21(7) of FPI Regulations].

b.  What is an investor group?

Reply:  In case, same set of beneficial owners are constituents of two or more FPIs and such investor(s) have a common beneficial ownership of more than 50% in those FPIs, all such FPIs will be treated as forming part of an investor group and the investment limits of all such entities shall be clubbed at the investment limit as applicable to a single foreign portfolio investor. [Ref. Regulation 23(3) of FPI Regulations and FAQ 58].

c.  How to ascertain whether an FPI is forming part of any investor group?


Reply: The designated depository participant engaged by an applicant seeking registration as FPI shall ascertain at the time of granting registration and whenever applicable, whether the applicant forms part of any investor group. [Ref. Regulation 32(2)(a) of FPI Regulations].

Further, at para 2.2 in the Form A of first schedule, the applicant seeking registration as FPI is required to furnish information regarding foreign investor group. Accordingly, it is the prime responsibility and obligation of the FPI to disclose the information with regard to investor group.

d.   How is the beneficial ownership of foreign Government entities/ its related entities determined for the purpose of clubbing of investment limit?

Reply:  The beneficial owner (BO) of foreign Government entities/ its related entities shall be determined in accordance with Rule 9 of Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (hereinafter referred to as PMLA Rules).The said PMLA Rules provide for identification of BO on the basis of two methodologies namely (a) controlling ownership interest (also termed as ownership or entitlement) and (b) control in respect of entities having company or trust structure. In respect of partnership firms and unincorporated associations, ownership or entitlement is basis for identification of BO.

e.    Whether two or more foreign Government related entities from the same jurisdiction will individually be permitted to acquire equity shares in an Indian company up to the prescribed limit of 10%?

Reply:  In case the same set of beneficial owner(s) invest through multiple entities, such entities shall be treated as part of same investor group and the investment limits of all such entities shall be clubbed as applicable to a single FPI. [Ref. Regulation 23(3) of FPI Regulations].

Accordingly, the combined holding of all foreign Government/ its related entities from the same jurisdiction shall be below ten percent of the total paid up capital of the company.

However, in cases where Government of India enters into agreements or treaties with other sovereign Governments and where such agreements or treaties specifically recognize certain entities to be distinct and separate, SEBI may, during the validity of such agreements or treaties, recognize them as such, subject to conditions as may be specified by it. [Ref. Regulation 21(9) of FPI Regulations].

f.     How will the investment by a Foreign Government Agency be treated?

Reply: Foreign Government Agency is an arm/ department/ body corporate of Government or is set up by a statute or is majority (i.e. 50% or more) owned by the Government of a foreign country and has been included under “Category I Foreign portfolio investors”. [Ref. Regulation 5(a) of FPI Regulations].

The investment by foreign Government agencies shall be clubbed with the investment by the foreign Government/ its related entities for the purpose of calculation of 10% limit for FPI investments in a single company, if they form part of an investor group.

g.    Whether any investment by World bank group entity viz. IBRD, IDA, MIGA and IFC should be clubbed with the investment from a foreign Government having ownership in such World bank group entity?

Reply:  Government of India, vide letter No. 10/06/2010-ECB dated January 06, 2016 has exempted World Bank Group viz. IBRD, IDA, MIGA and IFC from clubbing of the investment limits for the purpose of application of 10% limit for FPI investments in a single company.

h.    Where Provinces/States of some countries with federal structure have set up their separate investment funds with distinct beneficial ownership constituted with objectives suitable for their respective provinces, such funds not only have separate source of financing but also have no management, administrative or statutory commonality. Kindly inform whether investments by these foreign Government entities shall be clubbed?

Reply:  The investment by foreign Government/ its related entities from provinces/ states of countries with federal structure shall not be clubbed if the said foreign entities have different BO identified in accordance with PMLA Rules.

i.      How will the foreign Government/ its related entities know the available limit for investment, to avoid breach of the limit?

Reply: The custodian of securities reports the holdings of FPIs/ investor groups to depositories who monitor the investment limits. As such, NSDL is in ready possession of aggregate holdings of FPIs/ investor groups in any particular scrip. [Ref. Regulation 26(2)(d) of FPI Regulations]. To this effect, SEBI, vide communication dated November 02, 2017 has already advised DDPs/ custodians of securities to approach NSDL to get information regarding aggregate percentage holdings of the group entities on whose behalf they are acting in any particular company before making investment decisions. SEBI has no objection to the said arrangement for sharing of data.

j.      What if the investment by foreign Government/ its related entities cause breach of the permissible limit?

Reply:  The FPIs investing in breach of the prescribed limit shall divest their holdings within 5 trading days from the date of settlement of the trades causing the breach. Alternatively, the investment by such FPIs shall be considered as investment under Foreign Direct Investment (FDI) at the FPI’s option. However, the FPIs need to immediately inform of such option to SEBI & RBI, since they cannot hold equity investments in a particular company under FPI and FDI route, simultaneously

Friday, 6 April 2018

Process to be followed for registration as Registered Valuer






Process to be followed for registration as Registered Valuer with the Authority under the Companies (Registered Valuers and Valuation) Rules, 2017

The Central Government notified the commencement of section 247 (relating to valuers) of the Companies Act, 2013 with effect from 18th October, 2017. It also notified the Companies (Registered Valuers and Valuation) Rules, 2017 (hereafter, Rules) on the same day.

2. Vide notification dated 23rd October, 2017, the Central Government issued the Companies (Removal of Difficulties) Second Order, 2017 to provide that valuations required under the Companies Act, 2013 shall be undertaken by a person who, having the necessary qualifications and experience, and being a valuer member of a recognised valuer organisation (RVO), is registered as a valuer with the Authority. Vide another notification on the same date, the Central Government delegated its powers and functions under section 247 of the Companies Act, 2013 to the Insolvency and Bankruptcy Board of India (IBBI) and specified the IBBI as the Authority under the Rules.

3. Subject to meeting other requirements, an individual is eligible to be a registered valuer, if he:
 (i) is a fit and proper person,
 (ii) has the necessary qualification and experience,
 (iii) is a valuer member of a RVO,
 (iv) has completed a recognised educational course as member of a RVO, and
 (v) has passed the valuation examination conducted by the IBBI, and (vi) is   recommended by the RVO for registration as a valuer. A partnership entity or a company is also eligible for registration subject to meeting the requirements.

4. The process of registration as registered valuer with the IBBI is as under:

A)  For Individuals

Step 1: Satisfy yourself that you meet the eligibility requirements prescribed in rule 3 and qualification and experience prescribed in rule 4 of the Rules.

Step 2: Thereafter, seek enrolment as a valuer member of a RVO recognized by the IBBI.

Step 3:  As a member of a RVO, complete the educational course recognised by the IBBI.

Step 4: Register and pass the computer based Valuation Examination of the relevant Asset Class conducted by the IBBI. Details of the Valuation Examination are available at IBBI website (www.ibbi.gov.in).

Step 5: Within three years of passing the valuation examination, submit Form A appended to the Rules, duly filled in along with a payment of Rs.5900 (Fee of Rs.5000 + 18% GST) in favour of the Insolvency and Bankruptcy Board of India and supporting documents, to your RVO. Quote GST number, if required by you. The Form A is to be submitted, documents to be uploaded and payment is to be made online. Please visit the IBBI web site www.ibbi.gov.in for this purpose.

Step 6: Thereafter, RVO shall verify Form A and other requirements and then submit the Form A along with its recommendation for registration as a valuer to the IBBI. The Form is to be submitted by the RVO online.

Step 7: On receipt of Form A along with recommendation of the RVO, the fee and other documents, the IBBI shall process the application for registration in accordance with the Rules.

B)  For Entities (Partnership Firms, LLP and Companies)

Step 1: Satisfy yourself that you meet the eligibility requirements prescribed in rule 3 and qualification and experience prescribed in rule 4 of the Rules.

Step 2: Submit Form B appended to the Rules, duly filled in along with a payment of Rs.11,800 (Fee of Rs.10,000 + 18% GST) in favour of the Insolvency and Bankruptcy Board of India and supporting documents, to your RVO. Quote GST number, if required by you. The Form B is to be submitted, documents to be uploaded and payment is to be made online. Please visit the IBBI web site www.ibbi.gov.in for this purpose.

Step 3: Thereafter, RVO shall verify Form B and other requirements and then submit the Form B along with its recommendation for registration as a valuer to the IBBI. The Form is to be submitted by the RVO online.

Step 4: On receipt of Form B along with recommendation of the RVO, the fee and other documents, the IBBI shall process the application for registration in accordance with the Rules.

5. This is issued to familiarise the eligible and desirous individuals and entities with the process of registration as a valuer with the IBBI.

Friday, 30 March 2018

Liquidator may sell the corporate debtor as a going concern: IBBI



The Insolvency and Bankruptcy Board of India (“IBBI") issues IBBI(Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2018 and the IBBI(Liquidation Process) (Amendment) Regulations, 2018.

These regulations shall be effective from 1st April, 2018.

IBBI (Liquidation Process) (Amendment) Regulations, 2018 inserted the definition of “liquidation cost” which is:

(ea) “liquidation cost” under sub-section 16 of section 5 means-
            (a) fees payable to liquidation under regulation 4;
            (b) remuneration payable to liquidator under regulation 7;
            (c) cost incurred by the liquidator under regulation 24; and
(d) interest on interim finance for a period of twelve months or for a period from the liquidation commencement date till repayment of interim finance, whichever is lower.”

Further, IBBI (Liquidation Process) (Amendment) Regulations, 2018 allows the liquidator to sell the corporate debtor as a going concern. Now Regulation 32 allows Liquidator to realize the assets of in the following manner:

            (a) sell an asset on a standalone basis; or
            (b) sell
·      the asset in a slump sale,
·      a set of assets collectively;
·      the assets in parcels; or
(c) sell the corporate debtor as a going concern.

IBBI also amends IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, wherein after the 1st April 2018 resolution professional would be required to disclose item wise insolvency resolution process cost and resolution professional shall identify the prospective resolution applicants on or before the 105th day from the insolvency commencement date.

Thereafter, IBBI states that as per the amendment Regulation the expenses incurred by resolution professional would be considered as the fee to be paid to the IRP, fee to be paid to insolvency professional entity (if any) and fee to be paid to professionals (if any) and other expenses to be incurred by the IRP.


The amendment Regulation clearly directs financial creditor to declare whether financial creditor is or is not related party in relation to the corporate debtor while submitting the claim to the interim resolution professional. The Amendment Regulation also disperses with the requirement of affidavit that was required to be submitted with the forms for submission of claims from claimants.

Monday, 26 March 2018

IBC, 2016 - Tribunal to be empowered to discontinue Insolvency Resolution Process in case of settlement between parties



                                                                                                               

The government had appointed a 14-member panel presided by Injeti Srinivas the Secretary of Corporate Affairs and 
M S Sahoo, chief Insolvency and Bankruptcy Board of India (IBBI)  to review the (Insolvency and Bankruptcy Code) IBC, 2016 to make the resolution process smoother. 

The panel may suggest that National Company Law Tribunal (Tribunal) should be empowered to dismiss/halt the resolution proceedings if 90% of the Creditors or Lenders agree or give their consent for the withdrawal of the resolution proceeding.

Till now this power is exercised by only the Supreme Court of India under Article 142 of the Constitution of India.   

Ordinarily the CIRP process once commenced cannot be ended even if the debt of the Petitioner creditor has been paid in full or settlement is reached between the Corporate Debtor and claimant.  

Recent Supreme Court Ruling


The Hon'ble Supreme Court while hearing a case concerning corporate debtor Lokhandwala Kataria Construction Pvt. Ltd on an application filed by Financial Creditor Nisus Finance and Investment Manager LLP ruled that a settlement agreement can be considered and a case can be withdrawn after Insolvency Proceedings have started against a company. The said case was initiated before Mumbai bench of the National Company Law Tribunal (NCLT).

Later the Company and the Creditor approached the National Company Law Appellate Tribunal (NCLAT) with an appeal to withdraw the petition filed under IBC as they had settled the dispute and that some of the dues had already been paid to which NCLAT ruled that a case under IBC, 2016 can only be withdrawn before the admission of an insolvency case and not after that, aggrieved to this, the parties filed an appeal before the Supreme Court.

At a policy level, the argument is that once the resolution process is triggered, a collective mechanism commences which places all creditors at par.  Allowing the (single) triggering party to settle the dispute post admission may adversely impact the interests of other creditors, whose rights and interests would have otherwise been protected during the resolution process.

Also “The policy underlying IBC shifts the incentive of the parties from individual recovery actions to collective action. In that context, after a petition has been filed in NCLT, allowing out-of-court bilateral settlement between the borrower and one creditor may contradict that basic objective of collective action,”

However, Supreme Court allowed a settlement to be considered under Article 142 of the Indian Constitution which provides that “the Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it”.  In the order, Supreme Court also observed that NCLT and NCLAT do not have inherent powers and will be ruled by provisions of IBC.

Re: Uttara Foods and Feeds Private vs. Mona Pharmachem (Civil Appeal No. 18520 OF 2017) 

The Hon'ble Supreme Court directed the competent authorities (i.e MCA/ IBBI) to formulate rules in such manner so as to include inherent powers of the NCLAT, eliminating unnecessary appeals being filed before Courts in the matters where settlement has been reached between the parties.

Rationale behind prohibiting the tribunals:- 

After the admission of the petition, it acquires the character of representative suit and through publication in newspapers, other creditors get a right to participate in the insolvency resolution process and therefore IBC does not allow the petition to be dismissed on the basis of a compromise between the operational creditor and corporate debtor.

To make sure that Article 142 is restricted to facts of a particular case and may not act as a precedent for the NCLT or NCLAT to assert an out-of-court settlement in every other insolvency case, Supreme Court also observed that “Since this order is under Article 142, it should be treated on the facts of that particular case and not as a precedent of general applicability “which will be highly subjective in its substantial.

However, we might see some more cases of similar nature come up and process would need to mature accordingly. The government may also consider amending the IBC, 2016 to make provisions for settlement of insolvency proceedings once a plea is admitted.

Providing the power to the NCLT to halt the resolution process while considering the settlement agreement could help avoid complications like the one that has arisen in the Binani Cement resolution in which the defaulting promoters and UltraTech, which came in behind winning bidder Dalmia Bharat, have struck a deal to take over the promoters’ stake. Currently, only the Supreme Court can exercise powers under Article 142 of the constitution in cases that are pending in the NCLT.

Consequences

“If this recommendation is accepted, it will significantly impact the bidding process. For the banks, this will bring an opportunity of minimizing their losses on defaulting loans as after gathering the 90% support of the lenders and creditors effectively gives likely buyers an opportunity to enter into one-time settlement with banks, operational creditors and employees/workmen while bankruptcy proceedings are on.

In the Binani Cement case, the bid from Dalmia Bharat-led consortium was approved by the lenders Ultra-Tech said its offer to the Binani promoters improves on the Dalmia. Under IBC, once a company is admitted to the bankruptcy process, it cannot exit until a resolution plan is put in place within 270 days or the loan account is regularised. If this doesn’t happen before the 270-day deadline, the company has to go into liquidation. However, a case can be withdrawn during the period between the referral of the case to NCLT and before admission of the Insolvency process.

Current research states that out of 2,700 cases that have been referred to NCLT by operational creditors, close to 2,000 were withdrawn before admission since the dispute was settled outside court.

Even after the strict ruling laid down by the Supreme Court National Company Law Tribunal and National Company Law Appellate Tribunal did not adhere to the decision of the apex court and allowed the out of court settlement after the admission of the case for insolvency process under IBC.

Some cases on settlement agreement :-

NCLAT 


Argoh Infrastructure Developers

The appellant, corporate debtor first argued that no notice under Section 8 was provided by the operational creditor, which was rejected.

The appellant also argued that no notice by the NCLT was given and therefore, the order admitting the application was in violation of principles of natural justice. The NCLAT, here as well, declined to agree.

But the judgment somewhat ambiguously records that the parties have ‘settled’ the dispute and if the appealed order is set aside on grounds of violation of principles of natural justice, the respondent, operational creditor will withdraw the application .

It appears from the wordings of the judgment, thus, that the NCLT order was set aside on grounds of violation of principles of nature justice to simply pave the way for settlement post admission. 

Ruling by NCLT, Chennai

In the case of Phoenix Global DMCC Chennai Bench allowed settlement exercising its powers under Rule 11, and also because the Resolution Professional hadn’t been appointed and public announcement wasn’t made. 

Although this ruling came before the Supreme Court had passed its Order, the NCLAT ruling in the case of Lokhandwala would still serve as precedent.  In fact, the facts of this case are similar to Lokhandwala to the extent that a public announcement wasn’t made in either. And on that point, the NCLAT had ruled,

“Mere admission without subsequent step of advertisement having carried out, would not amount to refusal of claim of other creditors.  Such submission as made by learned counsel for the appellant cannot be accepted in view of the provisions of the Act. ”

Call this ignorance of law or, defiance to precedents. 




Other important questions required to be answered from the panel:-
  • Among them is one that lenders should be allowed to invoke personal guarantees of promoters of companies facing bankruptcy while the resolution process is underway. There is no clarity on similar seizures with regard to guarantees made by corporates. 

  • Other recommendations are that home buyers should be treated on par with unsecured creditors and lenders should be allowed to implement a resolution plan if two-thirds of them by value agree to it, versus 75% now. 

  • The first is aimed at protecting those who have bought homes from real estate developers that enter the insolvency process while the second is to prevent smaller borrowers from delaying resolution plans. 


The committee is expected to submit its recommendations for amendments to the IBC this month to finance minister Arun Jaitley, also corporate affairs minister. Parliament will have to approve them before they become law.
______________________________________________________________
** The author is associated with VEDA LEGAL advocates and solicitors 
** All the views expressed above are personal comments of the author and does not form any sort of legal opinion
** Viewers are requested to refer to original texts of the orders referred above for more details

For daily news and updates on Insolvency and Bankruptcy Code, 2016 matters visit www.ibcode2016.com
_______________________________________________________________
“You take care of your client we are here to look after you”.

For other conveniences stay tuned at corporate laws and insolvency updates knowledge forum (New Corporate Law TreatiseNCLT.in and download the app NCLT.in from Google play store for more virtuous features which will be meritorious for your profession. 


Wednesday, 14 March 2018

Clarification to circular pertaining to Investor Protection Fund and Investor Service Fund





The Securities and Exchange Board of India vide its circular dated March 14, 2018 clarified the Circular pertaining to Investor Protection Fund (IPF) and Investor Service Fund (ISF).

SEBI vide circular no. CIR/CDMRD/DEICE/CIR/P/2017/53 dated June 13, 2017, has issued guidelines covering broad areas of Investor Protection Fund and Investor Service Fund.

Subsequently, SEBI has received representations from the national commodity derivatives exchanges (NCDEs) for clarifications and consideration of their requests with respect to some of the clauses of the said circular. After examination thereof, the following clarifications are being issued.

i.    It is clarified that the unutilized IPF Interest Income accruing during a specific financialyear can be carried forward to the next financial year to enable effective utilization of such money by the exchanges during such extended period.

ii.      NCDEs are hereby permitted to utilize IPF interest income for undertaking research activities related to commodities market, provided every such research activity / project can be undertaken only after obtaining prior written approval of the trustees of the IPF Trust, who would inter alia, record the reasons, relevance and stated objectives of the research project while according approval to such activity/ project. Further, the Board of the exchange may be apprised of the research programs / activities being undertaken at least once in every quarter or half year of a given financial year.

        There will be an overall cap on the total amount, not more than 10% of the interest amount of IPF which can be spent on Research activities related to commodities market. IPF shall frame a policy towards identifying / recognising public and private academic institutions, professional bodies, trade (physical market) associations and industry bodies / chambers through / with whom such Research activities shall be undertaken / organised / sponsored.

iii.      Clause 7.3 of the circular no. CIR/CDMRD/DEICE/CIR/P/2017/53 dated June 13, 2017 provided that the IPF of the exchange shall be utilized for the clients of SEBI registered members. In this connection, it is clarified that exchanges may also use the IPF of the exchange for meeting their liabilities towards the clients of members not registered with SEBI, if the same is allowed under the byelaws of the exchange.

iv.       SEBI has prescribed certain expenditures which are to be met utilizing the ISF and not IPF. However since ISF is of recent origin, its corpus may be inadequate. NCDEs have therefore requested to permit utilizing interest on IPF in lieu of ISF for expenditures meant only for ISF. Accordingly, the NCDEs have been granted 3 years period starting April 1st, 2018 to permit utilizing interest on IPF for activities of ISF also.

The provisions of this circular shall come into effect immediately.

RBI curbs the Practice of Issuing Letters of Understanding and Letters of Comfort for Trade Credits



The Reserve Bank of India ( RBI ) decided to stop the practice of issuing Letters of Undertaking (LoUs) and Letters of Comfort (LoCs) for Trade Credits with immediate effect. A Notification issued by the RBI in this regard said that “On a review of the extant guidelines, it has been decided to discontinue the practice of issuance of LoUs/ LoCs for Trade Credits for imports into India by AD Category –I banks with immediate effect. Letters of Credit and Bank Guarantees for Trade Credits for imports into India may continue to be issued subject to compliance with the provisions contained in Department of Banking Regulation Master Circular No. DBR. No. Dir. BC.11/13.03.00/2015-16 dated July 1, 2015 on “Guarantees and Co-acceptances”, as amended from time to time.” The changes are applicable from 13th March 2018 itself







**All the views expressed above are personal comments of the author and does not form any sort of legal opinion** 
__________________________________________
“You take care of your client we are here to look after you”.

For other conveniences stay tuned at corporate laws and insolvency updates knowledge forum (New Corporate Law TreatiseNCLT.in and download the app NCLT.in from Google play store for more virtuous features which will be meritorious for your profession.