March 01, 2018
SEBI on Minimum Public Shareholding
SEBI, via its circular dated February 22, 2018, has introduced two more methods of achieving Minimum Public Shareholding (“MPS”):
- Qualified Institutions Placement; and
- Sale of shares up to 2% held by promoters/promoter group in open market, subject to certain conditions.
The MPS rule requires all listed companies in India to ensure that at least 25% of their equity shares are held by non-promoters (public). This rule was implemented after the amendment of Securities Contracts Regulation Rules by SEBI in 2010. Under this rule promoters with a higher than 75% stake in listed companies were asked to compulsorily sell down their stake by placing shares with institutions or issuing rights or bonus shares.
This circular also approved necessary amendments in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009.
TRAI Releases Recommendations for Ease of Doing Business
In an effort to facilitate a smoother licensing regime in the broadcasting sector, TRAI has released its recommendations on February 26, 2018 titled “Ease of Doing Business in the Broadcasting Sector”. Some of the key recommendations to the government are:
- Streamlining of the process of granting of licenses for broadcasting services through the use of Information and Communication Technology.
- Setting up of an online integrated portal for the filing, processing and tracking of applications, payments, frequency assignments etc. for the access, use and benefit of all stakeholders.
- Speedy issuance of security clearances.
- Speedy verification of relevant compliances via self-declaration systems.
- Institution of a centre of excellence exclusively for broadcasting services.
Supreme Court Settles NHAI Contracts Arbitration Cases
The Supreme Court in National Highway Authority of India (“NHAI”) v M/S Progressive MVR (JV) settled the issue regarding the ‘price adjustment’ clause in the contracts awarded by the NHAI. The contentious ‘price adjustment’ clause in these contracts stipulated a method for computing monthly variable prices of certain raw materials. The dispute was regarding the method of computation. This case is notable because the Supreme Court had to face the dilemma of dealing with conflicting arbitral awards on the same issue. The Court held in favour of NHAI eventually, but it also held that “the purpose is to avoid such a situation which cannot be permitted as it would result in upholding both kinds of arbitral awards interpreting the same clause, whether they go in favour of the employer or they go in favour of the contractor.”
RBI on Extending KYC Deadline
The RBI has refused to extend the February 28, 2018 deadline for prepaid payment instruments (“PPIs”) such as mobile wallets to complete know-your-customer (“KYC”) verification of their users. This deadline was specified in the RBI’s Master Directions on Issuance and Operation of Prepaid Payment Instruments dated October 11, 2017.
RBI deputy governor B.P. Kanungo said in a press briefing on February 26, 2018 that “…sufficient time has already been given to meet the prescribed guidelines. In the event, PPI issuers not obtaining the KYC related inputs of their customers within the timeline, the customer will not lose their money. They can continue to undertake transactions for purchase of goods and services as thereto to the extent of available balance in the PPI. Reloading of the PPI and remittances can resume after completing the KYC requirement”.
MCA Amends Companies (Accounts) Rules, 2014
The Ministry of Corporate Affairs on February 27, 2018 amended the Companies (Accounts) Rules, 2014 by inserting a new form AOC-3A after Form AOC-3. The Form AOC-3 is a statement containing salient features of balance sheet and profit and loss account. The amendment notification stipulates that companies that are required to comply with Companies (Indian Accounting Standards) Rules, 2015 shall forward their statement in the new Form AOC-3A.