SEBI Updates: SEBI raises overseas investment limit of AIFs and VCFs

SEBI by issuing a Circular dated 03rd July, 2018 enhanced the overseas investment limit of Alternative Investment Fund (AIFs) and Venture Capital Fund (VCFs) to USD 750 million from the current USD 500 million

The decision has been taken in consultation with the Reserve Bank of India, the Securities and Exchange Board of India (SEBI) said in a circular. In order to monitor the utilisation of overseas investment limits, SEBI has asked AIFs and VCFs to mandatorily disclose the utilisation of the such limits within 5 working days of such usage on the regulator's intermediary portal. 

In case an alternative investment fund (AIF) or venture capital fund (VCF) has not utilised the overseas limit granted them within 6 months from SEBI's approval, the same will have to be reported within 2 working days after expiry of the validity period. 

"In case an AIF or VCF has not utilized a part of the overseas limit within the validity period, the same shall be reported within 2 working days after expiry of the validity period," the regulator noted.

Further, if an AIF or VCF wishes to surrender the overseas limit at any point of time within the validity period, the same will have to be reported within two working days from the date of decision to surrender the limit, it added. The regulator said it has decided to enhance the overseas investment limit of AIFs and VCFs to USD 750 million. 

Earlier in October 2015, the regulator had allowed overseas investment by AIFs and VCFs to the extent of USD 500 million.

AIFs are funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per a pre-decided policy, while VCFs are investment funds that manage the money of investors who seek private equity stakes in startups.

Copy of Circular can be accessed below:

Source: Economic Times

MCA Updates: Directors to submit their KYC to MCA

MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYC to be notified and deployed shortly.

Update 25/07/2018: Click here for more detailed information on DIN KYC

Following points to be kept in mind in this regard by every director.

1. Every Director who has been allotted DIN on or before 31st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file Form DIR-3 KYC on or before 31st August, 2018.

2. While filing the form, the Unique Personal Mobile Number and Personal Email ID would have to be mandatorily indicated and would be duly verified by One Time Password (OTP). 

3. The form should be filed by every Director using his own DSC and should be duly certified by a practicing professional (CA/CS/CMA). 

4. Filing of DIR-3 KYC would be mandatory for Disqualified Directors also.

5. After expiry of the due date by which the KYC form is to be filed, the MCA21 system will mark all approved DINs (allotted on or before 31st March 2018) against which DIR-3 KYC form has not been filed as ‘Deactivated’ with reason as ‘Non-filing of DIR-3 KYC’. 

6. After the due date, filing of Form DIR-3 KYC in respect of such deactivated DINs shall be allowed upon payment of a INR 5,000 only, without prejudice to any other action that may be taken.

7. While filing form, a person is required to use PAN based DSC in case of Indian national, whereas in case of foreign national, applicant's name in DSC should be matched with name mentioned in Passport.

You can find below copy of notification.

SEBI Updates: Filing of Term Sheet by Angel Funds

Angel funds will have to disclose details related to investment as well as venture capital undertakings and "material changes", within 10 days of launching a scheme, markets regulator SEBI said.

Releasing the format of the term sheet, the regulator said that angel fund can launch new schemes, subject to the filing of the term sheet, it needs to contain material information and have to be filed with SEBI within 10 days of launching the scheme. The term sheet has three categories — information related to investment and investee company; compliance with SEBI’s AIF regulation; and “material change”, the regulator said in a circular.

Angel Funds, a sub-category Alternative Investment Funds (AIFs), encourage entrepreneurship by financing small startups at a stage when they find it difficult to obtain capital from traditional sources of finance such as banks and financial institutions. The markets regulator, last month, had replaced the requirement of filing of scheme memorandum to SEBI by angel funds with the requirement of filing term sheet containing material information.

Now, the Securities and Exchange Board of India (SEBI) has released the format of the term sheet. With regard to investment and investee firm, information pertaining to name of the angel fund as well as scheme, name of the investee company, services offered by it, its business details, present investment size, investment highlight, total capital commitment by investors, capital drawn by the fund, price per share, details of lock in for share and exit strategy for angel fund among others need to be divulged.

Further, the term sheet will also have information pertaining to list of investors in the scheme and compliance with the AIF rules, whether the fund has corpus of Rs 5 crore and whether the funds have been raised through private placement among others. Besides, angel fund will have to submit details of material changes, rationale for such change and date of approval from SEBI in this regard.

Besides, the regulator has raised the maximum period of accepting funds from an angel investor to five years, from three years. The move will provide angel funds more time to identify opportunities and invest in venture capital firms. Earlier, SEBI had formed a working group comprising various angel networks, consultants and start-ups in a bid to provide ease of doing business for angel funds.

Copy of Circular can be accessed below:

Source: Financial Express

GST Updates: Reverse Charge Mechanism is deferred till 30 September

The Central Board of Indirect Taxes and Customs issued a notification on 29th June, 2018, postponing the roll-out of the reverse charge mechanism by three more months.

The government has further deferred the reverse charge mechanism under goods and services tax to September 30. Under this mechanism, GST is levied on goods or services procured from unregistered dealers by the buyer and deposited with the government.

This is an anti-tax-evasion measure to ensure that transactions by unregistered people don’t escape tax. In a normal transaction, the supplier of goods or service charges the tax and pays to the government, but in this case, the responsibility reverses and falls on the buyer. 

The mechanism was to kick in from July 1 this year after it had been deferred earlier. The industry had voiced concern that this would increase their compliance burden.

Source: Economic Times

The notification copy can be found below.

RBI Updates: RBI tightens remittance norms

RBI, by issuing Circular RBI/2017-18/204 A.P. (DIR Series) Circular No. 32 on 19th June, 2018, tightens the remittance norms under Liberalized Remittance Scheme.

The RBI has tightened norms for Liberalised Remittance Scheme (LRS) by making quoting of permanent account number (PAN) mandatory even for transactions below USD 25,000.

Under the LRS, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year for any permissible current or capital account transaction or a combination of both.

Individuals can avail of foreign exchange facility for the purposes within the limit of USD 2,50,000 only.

Further, in the context of remittances allowed under LRS for maintenance of close relatives, it has been decided, in consultation with government, to align the definition of 'relative' with the definition given in Companies Act, 2013 instead of Companies Act, 1956, it added.

Copy of such Circular can be accessed below.

SEBI Updates: Outcome of SEBI's Board meeting

SEBI had its board meeting on 21st June, 2018 to discuss many important issues.

Following are few of important decisions taken by SEBI in its meeting dated 21st June, 2018

1. Review of SEBI (SAST) Regulations, 2011

It has been decided to grant additional time for upward revision of open offer price till one working day before the commencement of the tendering period

2. Replacing SEBI (Buy-back of Securities) Regulations, 1998 with new SEBI (Buy-back of Securities) Regulations, 2018

The Board has approved reframing a new set of SEBI (Buy-back of Securities) Regulations, 2018 (“new Buyback Regulations”) in lieu of the extant Buyback Regulations, 1998 to be in consistent with Section 68 and Section 70 of Companies Act, 2013

3. New SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018

The Board approved the proposed SEBI (Issue of Capital and Disclosure Requirements) Regulations, (“ICDR Regulations”) 2018 after considering the recommendation of the Primary Market Advisory Committee (PMAC) and the public comments on the Consultation Paper.

Some of important changes which are proposed in new ICDR, 2018

• Threshold for submission of draft letter of offer to SEBI in case of rights issues to be increased to Rs. 10 Crores from Rs. 50 Lakhs.
• Shortfall of up to 10% in minimum promoters’ contribution may be met by institutional investors
• For a company to be eligible to make a fast track rights issue, it should not have any audit qualifications or adverse opinion.
• Minimum Anchor investor size to be reduced to Rs. 2 Crore from the existing Rs. 10 Crore.
• The shareholding threshold for identifying promoter group has been revised from 10 percent to 20 percent.

4. Role of Sub-broker vis-a-vis Authorized Person

The Board considered and approved the proposal to discontinue the category of Sub-Brokers as Market Intermediaries. No fresh registration shall be granted as Sub-Brokers. Registered Sub-Brokers shall migrate to Authorised Persons or Trading Members as the case may be and Sub-Brokers, who do not choose to migrate, shall be deemed to have surrendered their registration as Sub-Broker.

5. Establishment of National Centre for Financial Education (NCFE)

The Board approved the establishment of National Centre for Financial Education (NCFE) to undertake financial education activities in terms of the National Strategy for Financial Education (NSFE) as approved by the Sub-Committee of Financial Stability and Development Council (FSDC-SC)

You can find below the complete outcome of SEBI's board meeting dated 21st June, 2018

GST Updates: Common Enrollment Number for transporters

GST: Transporters can now use common enrollment number across multiple states

To help the logistics industry comply with e-way bill requirements with ease, the Finance Ministry has notified new rules for transporters running businesses in multiple States.

The Central Goods and Services Tax (Sixth Amendment) Rules, 2018, which came into effect on June 19, prescribes: “A transporter who is registered in more than one State or Union Territory having the same Permanent Account Number, may apply for a unique common enrolment number by submitting the details in FORM GST ENR-02 using any one of his Goods and Services Tax Identification Numbers, and upon validation of the details furnished, a unique common enrolment number shall be generated and communicated to the said transporter.”

But it comes with a caveat that if the transporter has obtained a unique common enrolment number (UEN), he will not be eligible to use any of the GSTINs.

Transporters are required to submit the final report after the e-way bill is generated.

The report indicates that tax-paid goods have been delivered, and now can be used for verification in the tax assessment of buyers. Under the new rules, transporters will be given extended time not exceeding three days for recording of the final report.

Ease of Compliance

Generation of e-way bills by a transporter registered in multiple States was seen as an arduous task, as the transporter was required to login with the respective GSTINs in various States to generate the bills.

You can find copy of such notifications below.

Source: The Hindu Business Line