LEGAL UPDATE October, 2011

Transcription

1 LEGAL UPDATE October, 2011 A. MDP Highlights MDP & Partners represented Ashika Stock Broking Limited ( Ashika ) before Securities Appellate Tribunal ( SAT ) challenging order of SEBI against Ashika MDP & Partners represented Ashika before SAT and instructed Senior Counsel Mr. Janak Dwarakadas to appear on behalf of Ashika challenging the Orders passed by SEBI restraining Ashika from carrying out proprietary trades by an Order dated September 12, SAT has set aside the impugned order and has accepted the Undertaking given by Ashika. MDP & Partners represents Oil and Natural Gas Corporation Limited ( ONGC ) one of the leading global energy major against Punj Llyod Limited ( Punj Llyod ) on an Award of USD million Contract MDP & Partners are representing ONGC in Writ Petition No. 644 of 2011 filed by Punj Lloyd Ltd., challenging the award of the Contract to M/s Swiber ( Swiber ) for USD million. ONGC ranks 3rd as Oil & Gas Exploration & Production ( E&P ) Company in the world and is also amongst leading global energy majors. The said Contract was for the purpose of sub-sea pipeline project for B-193 field development. The Writ Petition by Punj Llyod was dismissed by the Division Bench comprising of Justice Mr. D.K. Deshmukh and Mr. Justice Anoop V. Mohta of the Bombay High Court by an Order dated April 6, The said Order was challenged by Punj Llyod by way of a SLP filed before the Hon ble Supreme Court and by an Order dated July 28, 2011 passed by the Hon ble Supreme Court the matter has been remanded back to the Bombay High Court for considering certain contentions taken up by Swiber being the successful bidder. ONGC is represented by Attorney General Mr. Goolam E. Vahanvati instructed by MDP & Partners. Swiber is represented by Senior Counsel Mr. Rafique Dada and Punj Lloyd is represented by Senior Counsel Mr. Iqbal Chagla. Page 1

2 MDP & Partners represents GSL India Limited ( GSL ) against Arcil MDP & Partners are representing GSL, in challenging the sale process undertaken by Arcil in selling the factory premises of GSL situated at Village Amletha, Taluka Rajpipla, District Narmada , Gujarat. The claim of Arcil which has taken over the debts of various lenders being banks and financial institutions is for the sum of more than Rs. 1,000 crores. GSL has challenged the process of sale initiated by Arcil under Section 17 of the SARFAESI Act on the grounds that Arcil has not followed the due processes of law including the rules and regulations as framed under the SARFAESI Act and has blatantly accepted the offers under an auction disregarding the entire legal processes. The Debt Recovery Tribunal ( DRT ) by an Order dated August 1, 2011 has granted a status quo including restraining the purchasers i.e. Shreeji Fibre Private Limited from creating any third party rights. MDP & Partners represented IDBI Bank against an order of Central Information Commissioner under the Right to Information Act, 2005 ( RTI ) MDP & Partners represented IDBI Bank wherein, Order was passed by the Central Information Commission in an appeal filed by the appellant Mr. Shivprakash Makharia before the Central Information Commissioner under the RTI Act calling upon IDBI bank to furnish the correspondence exchanged between the erstwhile United Western Bank (now merged with IDBI Bank) and RBI with regards to the shareholding on Mittal Fabrics Manufacturing Co. Pvt. Ltd., has been set aside by the Division Bench of Bombay High Court comprising of Justice Sinha and Justice Smt. Tahilramani, by an Order dated October 10, B. Corporate Laws Press Release dated October 31, 2011 by Department of Industrial Policy & Promotion ( DIPP ), Ministry of Commerce and Industry, Government of India - Corrigendum to Circular 2 of Consolidated Foreign Direct Investment ( FDI ) Policy. Page 2

3 The FDI policy effective from October 1, 2011 outlawed options in securities (such as call and put options) held by foreign investors in Indian companies. Paragraph of the Policy provides as under: Only equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares, with no in-built options of any type, would qualify as eligible instruments for FDI. Equity instruments issued/transferred to nonresidents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant ECB guidelines. DIPP has vide a press release dated October 31, 2011 deleted the aforesaid paragraph In view of the same, securities with in built options will now not be treated as ECB. General Circular No. 65/2011 issued by Ministry of Corporate Affairs, Government of India ( MCA ) on October 04, 2011 Company Law Settlement Scheme, 2011 ( Scheme ) In continuation of MCA Circulars No. 59/2011 dated August 5, 2011 and No. 60/2011 dated August 10, 2011 on the subject cited above, the Scheme has been extended up to December 15, All the terms and conditions of the General Circulars shall remain the same. General Circular No. 66/2011 issued by MCA on October 4, 2011 Allotment of Director s Identification Number ( DIN ) under Companies Act, 1956 In continuation of MCA Circular No. 32/2011 dated May 31, 2011 on the subject cited above, the time for filing DIN-4 by DIN holders for furnishing the PAN and to update PAN details has been extended till December 15, General Circular No. 17/165/2011-CL-V (Pt.) issued by MCA on October 10, 2011 Registration of Companies or LLPs which have one of their objectives to do business as an Architect MCA is of the opinion that the Registrar of Companies and the Registrar of LLPs are incorporating the companies and LLPs in contravention to the provisions of the Architect Act, According to sections 36 and 37 of the Architect Act, 1972 as well as Rules and Regulations only Architect Page 3

4 registered with the Council of Architecture or a firm of Architects can represent itself as an Architect or use the title and style of Architect of practicing the profession of an Architect in India with the exception of a landscape Architect and naval Architect. Pending finalization, MCA has directed incorporation of Companies/LLPs where one of the objects of such entities is to carry on business of Architect, should not proceed with till further order. C. Securities Laws Circular No. SEBI/Cir/ISD/05/2011 issued by the Securities and Exchange Board of India ( SEBI ) on September 30, 2011 Clarification on 100% promoter holding in demat form This is in furtherance to SEBI Circular bearing No. SEBI/Cir/ISD/3/2011 dated June 17, 2011 regarding 100% promoter holding in demat form. SEBI has decided to extend the current deadline by one quarter i.e. the new deadline will be the quarter ending December Circular No. CIR/CFD/DIL/7/2011 issued by SEBI on October 5, 2011 Amendments to the Equity, IDR and SME Equity Listing Agreements To enhance the quality of disclosures made by listed entities, certain amendments are carried out to the Equity Listing Agreement, Model Listing Agreement for Indian Depository Receipts and Model SME Equity Listing Agreement. Some of the key amendments are as under:- a) Disclosure of quarterly financial results - (Clause 41, sub-clause (I) in Para (d) of Equity Listing Agreement and Clause 43, sub-clause (I) in Para (d) of Model SME Equity Listing Agreement): - Listed entities shall disclose figures in respect of immediately preceding quarter as well in addition to the existing requirements and shall also submit the last quarter results along with the audited annual results. b) Submission of financial results - (Clause 41, sub-clause (I) in Para (c) of Equity Listing Agreement and Clause 43, sub-clause (I), in Para (c) of Model SME Equity Listing Agreement): - Submission of unaudited results shall be accompanied by the limited review report of the auditors. Page 4

5 c) Mode of Supplying Annual Reports to Shareholders - (Clause 32, of Equity Listing Agreement, Clause 34, Para (a) of Model SME Equity Listing Agreement and Clause 36, sub-clause (a) of the Model Listing Agreement for Indian Depository Receipts): - In modification of SEBI Circular No. SEBI/CFD/DIL/LA/2/2007/26/4 dated April 26, 2007 and in line with the green initiative of MCA vide their Circular dated April 29, 2011, SEBI has decided that instead of supplying complete and full annual reports to all the shareholders, listed entities shall supply: i) soft copies of full annual reports to all those shareholders who have registered their addresses for the purpose; ii) hard copy of abridged annual reports to others and iii) hard copies of full annual reports to those shareholders, who request for the same. d) Disclosure of voting results by listed entities (Insertion of Clause 35A of Equity Listing Agreement): - Listed entities shall disclose their voting results in the prescribed format, to the exchanges and also place the same on their websites, within 48 hours from the conclusion of the concerned shareholders meeting. This requirement shall be applicable to top 500 listed entities based on market capitalization computed as on the date of this Circular. Provisions of Paras (a), (b) and (c) above shall be applicable with effect from the quarter/financial year ending on December 31, And provisions of Para (d) shall be applicable for all the shareholders meetings, for which notices are issued on or after January 01, Circular No. MIRSD/SE/Cir-21/2011 issued by SEBI on October 5, 2011 Uniform Know Your Client ( KYC ) Requirements for the Securities Markets In order to bring about uniformity in securities markets, SEBI has decided that the same KYC form and supporting documents shall be used by all captioned SEBI registered intermediaries Depository Participants ( DPs ) through Depositories, Mutual Funds ( MFs ), Association of Mutual Funds in India ( AMFI ), Portfolio Managers ( PMs ), Collective Investment Schemes ( CIS ), Venture Capital Funds ( VCFs ). The KYC form as given in Annexure-1 of the captioned Circular shall be filled by an investor at the account opening stage while dealing with any of the above intermediaries. Additional details specific Page 5

6 to the area of activity of the intermediary being obtained now but not covered in the KYC form shall also be obtained from the investors in Part II of the account opening form. The additional information (Part II) shall be prescribed by Depositories for their depository participants and by AMFI for all MFs. The PMs, VCFs, and CIS shall capture the additional information specific to their area of activities, as considered appropriate by them. The intermediaries are required to take necessary steps to implement this circular and ensure its full compliance in respect of all new clients from January 1, D. Exchange Control Laws A.P. (DIR Series) Circular No. 36 (RBI/ /225) issued by RBI on October 19, 2011 Opening Foreign Currency (Non-Resident) Account (Banks) Scheme [ FCNR(B) ] account in any freely convertible currency liberalisation Previously, AD Category banks were permitted to open FCNR (B) accounts only in permitted currencies, i.e. Pound Sterling, US Dollar, Japanese Yen, Euro, Canadian Dollar and Australian Dollar. Vide A.P. (DIR Series) Circular No. 36 (RBI/ /225) dated October 19, 2011, RBI has permitted the AD banks in India to accept FCNR (B) deposits in any permitted currency. It may be noted that 'Permitted currency' for this purpose would mean a foreign currency which is freely convertible as defined in terms of Regulation 2(v) of FEMA 14/2000-RB dated May 3, 2000, as amended from time to time. A.P. (DIR Series) Circular No. 37 (RBI/ /226) issued by RBI on October 19, 2011 (i) Repatriation of income and sale proceeds of assets held abroad by NRIs who have returned to India for permanent settlement (ii) repatriation of income and sale proceeds of assets acquired abroad through remittances under Liberalised Remittance Scheme - Clarification Previously under section 8 of Foreign Exchange Management Act ( FEMA ), 1999 provided, save as otherwise provided in this Act, where any amount of foreign exchange is due or has accrued to any person resident in India, such person shall take all reasonable steps to realize and repatriate to India Page 6

7 such foreign exchange within such period and in such manner as may be specified by the Reserve Bank. Vide A.P. (DIR Series) Circular No. 37 (RBI/ /226) dated October 19, 2011 it is clarified that: a) Under sub-section 4 of Section (6) of FEMA, 1999, a person resident in India is free to hold, own, transfer or invest in foreign currency, foreign security or any immovable property situated outside India if such currency, security or property was acquired, held or owned by such person when he was resident outside India or inherited from a person who was resident outside India. b) An investor can retain and reinvest the income earned on investments made under the Liberalised Remittance Scheme. This legal update is the copyright of MDP & Partners. The update is not intended to be a form of solicitation or advertising. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate thereafter. No person should act on such information without appropriate professional advice based on the circumstances of a particular situation. MDP & Partners Advocates & Solicitors 1 st floor, Udyog Bhavan, 29, Walchand Hirachand Marg, Ballard Estate, Mumbai Tel: I Fax: newsflash@mdppartners.com I Website: Page 7