In this column , I will discuss important company law case laws and intricacies surrounding the interpretation of Indian Company Law.
Thursday, February 20, 2025
#PAYTM'S FORMER INDEPENDENT DIRECTOR ,COMPLIANCE OFFICER AND FORMER DIRECTORS WERE DIRECTED TO PAY RS 3.32 CRORE TO SETTLE ALLEGED SEBI NORMS VIOLATIOS
#PAYTM'S FORMER INDEPENDENT DIRECTOR ,COMPLIANCE OFFICER AND FORMER DIRECTORS WERE DIRECTED TO PAY RS 3.32 CRORE TO SETTLE ALLEGED SEBI NORMS VIOLATIOS
Allegations include those involving benefits given to Vijay Shekhar
Sharma, Promoter of the company and his relatives, and authorising and signing
public offer documents that contained incorrect statements and incomplete
disclosures on the promoter entity.
The above mentioned officials of
Paytm have paid fines to the Securities and Exchange Board of India
(SEBI) to settle alleged violation of norms.
Failure to ensure conformity with the regulatory provisions applicable to
the listed entity in letter and spirit, in violation of Regulation 6 (2) of
LODR Regulations, 2015.
Independent Directors being part of NRC failed to discharge duties with
unbiased and independent approach while decision-making w.r.t. matters
involving benefits to Mr. Vijay Shekhar Sharma (MD&CEO, Paytm) and his
relatives, in violation of Regulation 4 (2) of LODR Regulations, 2015.
Directors being part of
Board of Director as on date of Prospectus authorized and signed offer
documents containing incorrect statement and incomplete disclosures w.r.t.
Company being professionally managed company.
NON COMPLIANCE WILL
RESULT IN NOT ONLY MONETARY LOSSES BUT ALSO BAD IMAGE IN THE INVESTORS MARKET.
Monday, February 10, 2025
Monday, February 3, 2025
WHY COMPLIANCE OFFICERS OF SOME LISTED COMPANIES ARE RESIGNING THEIR POSITION OF LATE ?
WHY COMPLIANCE OFFICERS OF SOME LISTED COMPANIES ARE RESIGNING THEIR POSITION OF LATE ?
MANDATORY APPOINTMENT OF COMPLIANCE OFFICER FOR LISTED COMPANIES
SEBI expects numerous compliances from listed entities and vide SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”) establishes a framework for corporate governances applicable to every entity listed with stock exchange(s) in India.
One of the primary requirements of the LODR is the appointment of a qualified company secretary in the capacity of a compliance officer, to ensure conformity with SEBI regulations in letter as well as spirit.
In majority of the cases, as per the PIT Regulations, a compliance officer could be any senior officer who is designated so and is reporting to the board of directors and in normal course , Company Secretaries are designated as Compliance Officer in a listed company.
Compliance officer being one of the key personnel has an important role to play in the company for monitoring adherence to SEBI regulations, preservation of price sensitive information and implementation of code.
WHAT ARE THE ROLES AND RESPONSIBILITIES OF A COMPLIANCE OFFICER?
- To carry out due diligence on the company’s records.
- To Handle Quarterly, half-yearly& annual compliances.
- To liaison before stock exchanges on behalf of the company and to take care of compliancesf PIT Regulations , Insider trading and LODR provisions.
- To authenticate all legal documents of the company.
- To bridge the gap between the company and investors.
- To draft minutes and keep records of all statutory meetings.
- Implementation and management of compliance reporting to all the statutory bodies.
POOR SALARY , IMPROPER TREATMENT OF COMPLIANCE OFFICERS
A Compliance officer has so many responsibilities and compliances to be under taken other than SEBI LODR ,PIT & Stock Exchange regulations in the case of listed companies. However , majority of listed companies pay very minimum salary as compared to their over burden work nature. Many compliance officers are under stress and send sleepless nights worrying about the compliances. Poor salary , improper treatment of compliance officers by listed companies management make them to resign their jobs at frequent intervals.
What are the compliance requirements for a company?
Some of those important laws have been briefly explained below:
Factories Act, 1948: An Act dedicated to the occupational safety, health and welfare of workmen employed at factories or manufacturing units.
Employees Provident Fund (EPF) Act, 1952: Provisions dedicated to the security of an employee after retirement from service.
Employees’ State Insurance (ESI) Act, 1948: An Act containing health safety provisions to grant security to employees against risks during employment.
Professional Tax Act (State Laws): Some states in India like Telangana, and Maharashtra have imposed taxes on certain professions including trades and employment.
Labour Welfare Fund Acts (State Laws): States like Haryana, Punjab, Maharashtra etc. have this legislation to finance certain activities dedicated to the welfare of the labour.
Maternity Benefit Act, 1961: The legislation protects the employment of a woman during her maternity period through certain benefits.
Contract Labour (Regulation and Abolition) Act, 1970: An Act to protect contract labour and to ensure safe work conditions for them.
Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013: A legislation to protect women against any sexually coloured acts or remarks at the workplace and ensure a safe work environment.
Minimum Wages Act, 1948: An Act dedicated to the fixation of minimum wage rates in certain occupations.
Payment of Wages Act, 1936: Provisions for regulation of period of wages and to provide a remedy against unexplained or unauthorised deductions.
Payment of Gratuity Act, 1972: An Act that requires certain industries or employers to pay their retiring employees a one-time gratuity amount.
Payment of Bonus Act, 1965: Based on the profits of a company, the Act obliges employers to designate the minimum and maximum bonus percentage.
Equal Remuneration Act, 1976: A legislation to prevent any discrimination at the workplace based on gender.
Compliances under GST Act, Income –Tax Act.
CONCLUSION
The role of compliance officer in a listed company for the aforesaid reasons is abound with risks for a professional from a regulatory perspective. Therefore, it is extremely important for the professional to meticulously examine the applicable SEBI regulations while accepting the role of a compliance officer and negotiate on matters such as D&O liability insurance or indemnity protection prior to accepting such a position in a listed entity.
Thursday, January 23, 2025
LETHARGY IN COMPLIANCE -TATA STEEL IS TO PAY A PENALTY OF RS 1.46 CRPRES AS LATE STAMP DUTY PAYABLE IN A MERGER
LETHARGY IN COMPLIANCE- TATA STEEL IS TO PAY A PENALTY OF RS 1.46 CRORES AS LATE STAMP DUTY FILING IN TATA –TINPLATE MERGER MOVE · Tata Steel Limited received an Adjudication Order imposing a penalty of ₹1,46,14,380/- for late filing of a stamp-duty application for merger.
· The penalty relates to the stamp duty payable for the amalgamation of The Tinplate Company of India Limited and Tata Steel Limited, sanctioned by the National Company Law Tribunal , Mumbai.
· The Collector of Stamps, Enforcement – I, Mumbai, Government of Maharashtra under Section 39 of the Maharashtra Stamp Act, 1958 issued the Order imposing a penalty of ₹1,46,14,380/- on Tata Steel.
· As per the Maharashtra Stamp Act, on an order of amalgamation wherein there is some immoveable property of the transferor present in the state, the stamp duty payable can be up to 5% of the total consideration for the amalgamation (aggregating both the cash paid as well as market value of shares exchanged).
· The penalty is towards the belated filing of stamp-duty application for necessary payment of stamp duty to the appropriate authority as per the provisions of Maharashtra Stamp Act, 1958
· There is a failure in compliance by Tata Steel Ltd to pay stamp duty on merger within the prescribed time and hence it has to pay a huge and heft penalty of Rs 1,46,14,380/-.
COMPLIANCE IS LESS COSTLIER THAN NON-COMPLIANCE
Thursday, January 16, 2025
#SEBI LODR THIRD AMENDMENT 2024 COMING INTO EFFECT FROM 01-04-2025
#SEBI LODR THIRD AMENDMENT 2024 COMING INTO EFFECT FROM 01-04-2025
SEBI LODR THIRD
AMENDMENT 2024 COMING INTO EFFECT FROM 01.04.2025
Certain provisions, such as those concerning
secretarial audit, will come into force starting 01.04.2025. THESE CHANGES ARE
SET TO AFFECT LISTED COMPANIES AND AIM TO ENHANCE CORPORATE GOVERNANCE,
INCREASE TRANSPARENCY AND ENSURE TIMELY REPORTING OF MATERIAL EVENTS.
Some changes
come with stringent timelines, while others mandate adopting new compliance
measures.
Reg. 6 -
Compliance Officer |
The compliance
officer shall be an officer who is in whole-time employment of the listed entity, not more than one
level below the BoD and shall be designated as key managerial personnel
(‘KMP’). |
KMP FOR CIRP COMPANIES |
Listed entities
undergoing the corporate insolvency resolution process (‘CIRP’) must appoint
KMP within 3 months of the approval of the resolution plan. During the
interim period, at least one full-time KMP must be responsible for managing
day-to-day operations. |
Reg. 13 -
Investor Grievance Redressal |
This amendment
introduces the requirement for listed entities to submit a detailed statement
on a quarterly basis that outlines how investor grievances have been
addressed in the format and timeline as may be prescribed by the BoD. |
Reg. 17 - BoD |
Non-executive
directors (NEDs) aged over 75 years require shareholder approval for
appointment or continuation in office. |
|
Any vacancy in
the committees of the BoD must be filled within 3 months or by the date of
the vacancy’s occurrence, whichever is earlier. |
Reg. 23 -
Related Party Transactions (‘RPTs’) |
Corporate
actions such as dividends, stock splits, and rights issues that are uniformly
applicable to all shareholders are excluded from the definition of RPTs. |
|
Omnibus
approvals can now be granted for recurring RPTs involving subsidiaries.
Ratification provisions have also been introduced, allowing RPTs to be
ratified by the Audit Committee within 3 months. |
Reg. 24A -
Secretarial Audit |
Secretarial
audits must now be conducted by peer-reviewed company secretaries starting
01.04.2025. |
|
Restrictions
have been placed on secretarial auditors from rendering services that may
impair independence. |
Reg. 30 -
Disclosure of Material Events |
Disclosure
timelines for material events, including litigation disclosures, have been
relaxed. For example, entities now have 72 hours instead of 24 to disclose
non-tax litigation claims. |
|
Enhanced
thresholds for disclosing acquisitions and penalties imposed by sectoral
regulators have been introduced. |
Reg. 31A -
Promoter Reclassification |
Stricter
timelines for promoter reclassification have been introduced: a. The BoD must
analyse requests within two months. |
|
Shareholder
approvals must be obtained within 60 days of the stock exchange’s
no-objection certificate (NOC). |
Reg. 46 -
Website Disclosures |
Mandatory
disclosures include Articles of Association (AoA), employee benefit scheme
documents, and detailed profiles of BoD. |
|
Companies may
provide QR codes and web links in newspaper advertisements for better
investor access. |
The above Amendment Regulations significantly
overhaul corporate governance and disclosure requirements for listed entities.
SEBI has taken a definitive step toward strengthening India’s securities
market.
An employee can save Income-Tax up to Rs. 48,000 in tax if his salary structure includes gadget allowance as well.
A gadget allowance can help an employee to save 90% tax on the amount he pay for his gadget purchases.
For example ,If you’re in the 30% tax slab, you’d normally pay ~₹30,000 or more in taxes on that ₹1 lakh.
But if your employer pay it under gadget allowance, it’s taxed at just 10%.
10% of Rs 1 lakh = ₹10,000 → tax @ 30% Rs 3,000.
You just saved Rs 27,000
Yes that’s what is a laptop reimbursement, it doesn’t make your laptop free but helps you save on taxes.
Under Section 17(2) Income-Tax Act, gadgets and appliances bought in the name of the company and given to the employee for personal use are taxed at 10% of their value.
GENEROUS AND EMPLOYEE BENEFIT CENTRIC COMPANIES, NOT JUST GIVE GADGET ALLOWANCE BUT ALSO DIFFERENT TYPES OF ALLOWANCES TO SAVE TAXES ON:
1. Your every day food and grocery purchases: Meal Allowance ( exempt up to 26,400 p.a )2. The courses you take to upskill yourself: Professional pursuit allowance ( fully tax-exempt, no limit )
3. The newspaper subscriptions you buy both physical and online: Books & Periodicals ( fully tax-exempt, no limit )
4. Internet and telephone bills you pay for your WiFi at home ( fully tax-exempt, no limit )
5. An employee who opted for the NPS benefit from his employer. Can save tax. Under Section 80CCD(2), 10% of her basic pay put in the pension scheme is tax-free.
To be Remain in the Old Tax Regime
6. If an employee has chosen to stay in the old tax regime because he claims exemption for house rent allowance, invests in tax-saving options under Section 80C and has bought medical insurance covers for his family and her parents. He also invests Rs.50,000 in the NPS to claim deduction under Section 80CCD(1b). These deductions would not be available to him under the new tax regime and his tax would be significantly higher by almost Rs.1.22 lakh.
Courtesy : Economic Times
R V Seckar , FCS ,LLB
rvsekar2007@gmail.com