from the government

639 MAY2011

Corporate Laws

1Amendment in Notification No. G.S.R. 978,dated 28-5-1963 as amended by Notification

Nos. G.S.R. 84(E) & G.S.R. 517(E), dated 23-2-1988 and 31-8-2006 respectively

[Issued by the Ministry of Corporate Affairs, vide NotificationNo. GSR 326(E), dated 08.04.2011]In exercise of the powers conferred by sub-section of section620A read with sub-section (1) of section 637A of theCompanies Act, 1956 (1 of 1956), the Central Governmenthereby makes the following amendments in the Notificationof the Government of India, the erstwhile Ministry ofCommerce and Industry (Department of Company LawAdministration) No. G.S.R. 978 dated 28th May, 1963 andpublished in the Gazette of India, in Part II, section 3, sub-section (i) dated 28th May, 1963 as amended by No. G.S.R.84(E), dated 23rd February, 1988 and No. G.S.R. 517(E),dated 31st August, 2006.

2. In Schedule III to the said Notification in column (2) belowthe entry occurring against the entry “Section 309(4)” inproviso (b) of the words “five lakh rupees”, the word “fifteenlakh rupees” shall be substituted.

(GN - 107)

The Companies (Amendment) Regulations,2011

[Issued by the Ministry of Corporate Affairs, Published inthe Gazette of India, Extraordinary, Part II, Section 3(i),vide Notification No. GSR 304(E), dated 06.04.2011]In exercise of the Powers conferred by sub-sections (1), (2),(5) and (8) of section 25 and sub-section (2) of section 609 ofthe Companies Act, 1956 (1 of 1956), the Central Governmenthereby makes the following regulations further to amend theCompanies Regulations, 1956, namely :

1. (1) These regulations may be called the Companies(Amendment) Regulations, 2011

(2) They shall come into force on the date of their publicationin the official Gazette

2. In the Companies Regulations, 1956, in regulation 2, for clause(d), the following clause shall be substituted, namely : –

‘(d) “Regional Director” means the person appointed bythe Central Government in the Ministry of CorporateAffairs as a Regional Director for the respective regionsas under : –

(1) (2) (3)

(i) Regional Director North Region Directorate States of Jammu and Kashmir, Punjab, Himachal Pradesh, Haryana,Headquarter at Noida National Capital Territory of Delhi, Uttar Pradesh, Uttarakhand and Union(Gautam Budh Nagar) Territory of Chandigarh.

(ii) Regional Director Southern Region Directorate States of Andhra Pradesh, Karnataka, Tamil Nadu, Kerala and Union TerritoryHeadquarter at Chennai of Lakshadweep, Union Territory of Andaman and Nicobar Islands and Puducherry.

(iii) Regional Director Eastern Region States of Bihar, Jharkhand, Orissa and West Bengal.Directorate Headquarter at Kolkata

(iv) Regional Director Western Region States of Maharashtra, Goa and Union Territory of DamanDirectorate Headquarter and Diu.at Mumbai

(v) Regional Director North Western Region States of Gujarat, Rajasthan, Madhya Pradesh, Chhattisgarh and Union TerritoryDirectorate Headquarter at of Dadra and Nagar HaveliAhmedabad

(vi) Regional Director North Eastern Region States of Meghalaya, Assam, Arunachal Pradesh, Nagaland, Mizoram,Directorate Headquarter at Guwahati Manipur and Tripura.”

Renuka Kumar

Jt. Secretary

2

MAY 2011640

In exercise of the powers conferred by sub-section (2A) ofsection 217 read with clause (a) of sub-section (1) of section642 of the Companies Act, 1956 (1 of 1956), the CentralGovernment hereby makes the following rules further to amendthe Companies (Particulars of Employees) Rules, 1975,namely:–

1. (1) These rules may be called the Companies (Particularsof Employees) Amendment Rules, 2011.

(2) They shall come into force on the date of their publicationin the Official Gazette.

2. In the Companies (Particulars of Employees) Rules, 1975(hereinafter referred to as the said rules), in rule 1A, –

(i) in clause (a), for the words "rupees twenty-four lakhs",the words "sixty lakh rupees" shall be substituted;

(ii) in clause (b), for the words "rupees two lakhs", thewords "five lakh rupees" shall be substituted.

3. In the first proviso to rule 2 of the said rules, –

(a) for the words "particulars of employees of companies",the words "particulars of Government Companies andcompanies" shall be substituted;

(b) for the words "rupees twenty-four lakhs per financialyear or rupees two lakhs per month", the words "sixtylakh rupees per financial year or five lakh rupees permonth" shall be substituted.

Renuka Kumar

Jt. Secretary

Amendment in Notification No. S.O. 447(E),dated 28-2-2011

[Issued by the Ministry of Corporate Affairs, Published inthe Gazette of India, Extraordinary, Part II, Section 3(i),vide Notification No. SO 653(E), dated 30.03.2011]

In exercise of the powers conferred by clause(a) of sub-section(1) of section 642 read with sub-section(1) of section210A and sub-section (3C) of section 211 of the CompaniesAct,1956, (1 of 1956), the Central Government hereby makesthe following amendment to paragraph 2 of the notificationNo.447(E) dated the 28th February, 2011 : –

“The notification shall come into force for the Balance Sheetand Profit and Loss Account to be prepared for the financialyear commencing on or after 1.4.2011.”

Avinash K Srivastava

Joint Secretary

(GN - 108)

Director's Relatives (Office or Place ofProfit) (Amendment) Rules, 2011

[Issued by the Ministry of Corporate Affairs, Published inthe Gazette of India, Extraordinary, Part II, Section 3(i),vide Notification No. GSR 303(E), dated 06.04.2011]In exercise of the powers conferred by clause (b) of sub-section(1) of section 642, read with sub-section (1B) of section 314of the Companies Act, 1956, the Central Government herebymakes the following rules to amend the Director’s Relatives(Office or Place of Profit) Rules, 2003, namely : –

1. (1) These rules may be called Director’s Relatives (Officeor Place of Profit) Amendment Rules, 2011.

(2) They shall come into force on the date of theirpublication in the Official Gazette.

2. In the Director’s Relatives (Office or Place of Profit) Rules,2003, (‘the said rules’), in rule 3, for the figures “50,000”,the figures “2,50,000” shall be substituted.

3. In the said rules, for the figures “50,000”, the figures“2,50,000” shall be substituted.

4. In the said rules, for rule 7, the following rule shall besubstituted, namely : –

‘The selection and appointment of a relative of a director holdingoffice or place of profit in the company shall be approved byadopting the same procedure applicable to non-relatives :

Provided that, in the case of listed public companies, theselection of director for holding place of office or profit inthe company shall have to be also approved by a SelectionCommittee.

Explanation : For the purpose of this sub-rule, the expression“Selection Committee” means a committee, the majority ofwhich shall consist of independent directors and an expert inthe respective field from outside the company :

Provided that in case of unlisted companies, independentdirectors are not necessary but outside experts should bethere in the Selection Committee :

Provided further that in the case of private companies,independent directors and outside experts are not necessary.’

Dr. T.V. Somanathan

Joint Secretary

The Companies (Particulars of Employees)Amendment Rules, 2011

[Issued by the Ministry of Corporate Affairs, Published inthe Gazette of India, Extraordinary, Part II, Section 3(i),vide Notification No. GSR 289(E), dated 31.03.2011]

3

5

4

641 MAY 2011(GN - 109)

391-394 of the Companies Act, 1956. Without prejudice tothe generality of Section 396, it has now been decided that, inappropriate cases, simpler procedures shall be adoptedfor the amalgamation of Government Companies undersection 396 of the Companies Act, 1956 as given below :-

(1) (a) Every Central Government Company which isapplying to the Central Government for amalgamationwith any other Government Company or Companiesunder the simplified procedure prescribed in thiscircular, shall obtain approval of the Cabinet i.e. UnionCouncil of Ministers to the effect that the proposedamalgamation is essential in the ‘public interest’.

(b) In the case of State government companies, theapproval of the State Council of Ministers would berequired.

(c) Where both central and state government companiesare involved, approval of both State Cabinet(s) andCentral Cabinet shall be necessary.

(2) (i) A Government Company may, by a resolution passedat its general meeting decide to amalgamate with anyother Government Company, which agrees to suchtransfer by a resolution passed at its general meeting;

(ii) Any two or more Government Companies may, bya resolution passed at any general meetings of itsMembers, decide to amalgamate and with a newGovernment Company.

(3) Every resolution of a Government Company under thissection shall be passed at its general meeting by membersholding 100% of the voting power and such resolutionshall contain all particulars of the assets and liabilitiesof amalgamating government companies.

(4) Before passing a resolution under this section, theGovernment Company shall give notice thereof of notless than 30 days in writing together with a copy of theproposed resolution to all the Members and creditors.

(5) A resolution passed by a Government Company underthis section shall not take effect until (i) the assent ofall creditors has been obtained, or (ii) the assent of90% of the creditors by value has been received andthe company certifies that there is no objection fromany other creditor.

(6) The resolutions passed by the transferor and transfereecompanies along with written confirmation of theCabinet decision referred to in para (i) shall then besubmitted to the Central Government which shall, if itis satisfied that all the requirements of Section 396 and

Green Initiatives in the Corporate Governance– Clarification regarding service of

documents by e-mode instead of Under PostingCertificate (UPC).

[Issued by the Ministry of Corporate Affairs, vide CircularNo. 17/2011, dated 21.04.2011]The Ministry of Corporate Affairs has taken a “Green Initiativein the Corporate Governance” by allowing paperlesscompliances by the Companies after considering sections 2,4, 5, and 81 of the Information Technology Act, 2000 forlegal validity of compliances under Companies Act throughelectronic mode.

Section 53 of the Companies Act, 1956 provides service ofdocuments under ‘Certificate of posting’ as one of the acceptedmode of service. Whereas the Department of posts has recentlydiscontinued the postal facility under ‘Certificate of posting’vide their letter dated 23.02.2011. The InformationTechnology Act, 2000 also permits service of documents etc.,in electronic mode.

Keeping in view of above, it is hereby clarified that a companywould have complied with Section 53 of the Companies Act,if the service of document has been made through electronicmode provided the company has obtained e-mail addresses ofits members for sending the notice/documents through e- mailby giving an advance opportunity to every shareholders toregister their e- mail address and changes therein from time totime with the company.

In cases where any member has not registered his e-mail addresswith the company, the service of document etc will be effectedby other modes of service as provided under section 53 of theCompanies Act, 1956.

Kamna Sharma

Assistant Director

AMALGAMATION OF GOVERNMENT COMPANIES

Simplified Procedure for amalgamation ofGovernment Companies under section 396 ofthe Companies Act, 1956

[Issued by the Ministry of Corporate Affairs, vide GeneralCircular No. 16/2011, dated 20.04.2011]The Ministry of Corporate Affairs have been dealing with theamalgamation of Government Companies in the Public Interestunder section 396 of the Companies Act, 1956 by followingthe procedures prescribed under Companies (Court) Rules,1959 which are applicable to amalgamation under Sections

6

7

MAY 2011642

of this circular, have been fulfilled, order bynotification in the Gazette that the said amalgamationshall take effect.

(7) The order of the Central Government shall provide:-

(a) for the transfer to the transferee company of thewhole or any part of the undertaking, property orliabilities of any transferor company.

(b) that the amalgamation of companies under theforegoing sub-sections shall not in any mannerwhatsoever affect the pre-existing rights orobligations and any legal proceedings that mighthave been continued or commenced by or againstany erstwhile company before the amalgamation,may be continued or commenced by, or against,the concerned resulting company, or transfereecompany, as the case may be.

(c) for such incidental, consequential and supplementalmatters as are necessary to secure that theamalgamation shall be fully and effectively carriedout.

(8) The Cabinet decision referred to in para (1) above mayprecede or follow the passing of the resolution referredto in para (2).

(9) When an order has been passed by the CentralGovernment under this section, it shall be a sufficientconveyance to vest the assets and liabilities in thetransferee.

(10) Where one government company is amalgamatedwith another government company, under theseprovisions, the registration of the first-mentionedCompany i.e. transferor company, shall stand cancelledand that Company shall be deemed to have beendissolved and shall cease to exist forthwith as a corporatebody.

(11) Where two or more Government Companies areamalgamated into a new Government Company inaccordance with these provisions and the GovernmentCompany so formed is duly registered by the Registrar,the registration of each of the amalgamating companiesshall stand cancelled forthwith on such registration andeach of the Companies shall thereupon cease to exist asa corporate body.

(12) The amalgamation of companies under the foregoingsub-sections shall not in any manner whatsoever affectthe pre-existing rights or obligations, and any legalproceedings that might have been continued or

commenced by or against any erstwhile companybefore the amalgamation, may be continued orcommenced by, or against, the concerned resultingcompany, or transferee company, as the case may be.

(13) The Registrar shall strike off the names of everyGovernment Company deemed to have been dissolvedunder sub-sections (10) to (11).

(14) Nothing in this Circular shall prevent governmentcompanies from applying for amalgamation before theCentral Government under Sections 391-394 of theCompanies Act.

Rita Dogra

Under Secretary to the Govt. of India

Appointment of Cost Auditor byCompanies

[Issued by the Ministry of Corporate Affairs, vide GeneralCircular No. 15/2011, dated 11.04.2011]Ministry has reviewed the existing procedure followed by thecompanies for seeking prior approval of the CentralGovernment for appointment of cost auditor under section233B (2) of the Companies Act, 1956. In supersession of anyearlier order/circular issued in this regard, the revisedprocedure to be followed by the companies and cost auditorshall be as under:

(a) The company required to get its cost records auditedunder section 233B (1) of the Companies Act, 1956shall appoint a cost auditor who is a cost accountant asdefined in clause (b) of sub-section (1) of section 2 ofthe Cost and Works Accountants Act, 1959 (23 of 1959)and who holds a valid certificate of practice under sub-section (1) of section 6 of that Act and includes a firmof cost accountants.

(b) The Audit Committee of the Board shall be the first pointof reference regarding the appointment of cost auditors.

(c) The Audit Committee shall ensure that the cost auditoris free from any disqualifications as specified undersection 233B (5) read with section 224 and sub-section(3) or sub-section (4) of section 226 of the CompaniesAct, 1956.

(d) While a cost auditor shall have prime responsibility toensure that he does not violate the limits specified undersection 224 (1-B) of the Companies Act 1956, the AuditCommittee shall also be responsible for such complianceby the cost auditor.

(e) The Audit Committee shall obtain a certificate from

(GN - 110)

8

643 MAY 2011

the cost auditor certifying his/its independence andarm’s length relationship with the company.

(f) The company shall e-file its application with the CentralGovernment on www.mca.gov.in portal, in theprescribed form 23C within ninety days from the dateof commencement of each financial year, along withthe prescribed fee as per the Companies (Fees onApplications) Rules, 1999 as amended from time-to-time and other documents as per existing practice i.e.

(i) certified copy of the Board Resolution proposingappointment of the cost auditor; and

(ii) copy of the certificate obtained from the costauditor regarding compliance of section 224 (1-B) of the Companies Act, 1956.

(g) On filing the application, the same shall be deemed tobe approved by the Central Government, unless contraryis heard within thirty days from the date of filing suchapplication.

(h) If within thirty days from the date of filing suchapplication, the Central Government directs thecompany to re-submit the said application with suchadditional information or explanation, as may bespecified in that direction, the period of thirty days fordeemed approval of the Central Government shall becounted from the date of re-submission by the company.

(i) After expiry of thirty days, as the case may be, thecompany shall issue formal letter of appointment tothe cost auditor, as approved by the Board.

(j) Within thirty days of receipt of formal letter ofappointment from the company, the cost auditor shallinform the Central Government in the prescribed form,alongwith a copy of such appointment. An e-form forthe same is being developed and will be notified shortly.

(k) The company shall disclose full particulars of the costauditor, along with the due date and actual date of filingof the cost audit report by the cost auditor, in its AnnualReport for each relevant financial year.

(l) In those companies where constitution of an AuditCommittee of the Board is not required by law, thewords “Audit Committee” shall stand substituted bythe words “Board of Directors”.

2. If a company contravenes any provisions of this circular,the company and every officer thereof who is in default,including the persons referred to in sub-section (6) of section209 of the Act, shall be punishable as provided under sub-section (2) of section 642 read with sub-sections (5) and (7)

of section 209 and sub-section (11) of section 233B ofCompanies Act, 1956.

3. If default is made by the cost auditor in complying with theaforesaid provisions, he shall be punishable with fine, whichmay extend to five thousand rupees.

4. The modified procedure contained in this circular shall beeffective from the financial year commencing on or after the1” day of April, 2011.

5. The Institute is requested to bring this to the general informationof all Members in practice, and of the corporate sector.

B.B. Goyal

Adviser (Cost)

Certification of e-forms under theCompanies Act, 1956 by the Practicing

professionals

[Issued by the Ministry of Corporate Affairs, vide CircularNo. 14/2011, dated 08.04.2011]Ministry of Corporate Affairs has been steadily progressingtowards total electronic filing and approval regime. Objectiveis to do away with human intervention in MCA approvals tothe maximum extent possible.

2. For this purpose, Ministry of Corporate Affairs has entrustedpracticing professionals registered as Members of theprofessional bodies namely, ICAI, ICSI & ICWAI with theresponsibility of ensuring integrity of documents filed by themwith MCA in electronic mode. Professionals are now to beresponsible for submitting /certifying documents (to be signeddigitally by them) and system would accept most of thesedocuments online without approval by Registrar of Companiesor other officers of the Ministry.

3. However, to ensure that the data integrity is maintained atall times, there will be checking of such submissions to guardagainst fraudulent filing. In addition to the penal actions againstthe companies and their officers in default for furnishingincorrect or false information in the documents as providedunder the Companies Act, 1956, action would also be takenon receipt of any complaint, anonymous or otherwise, againstsuch professionals in the following manner:-

(a) Alleged wrong submissions: In such cases, quick enquirywill be conducted by the concerned RD who will beassessing prima facie, cases of wrong doing by theprofessionals. Concerned professionals will be given timefor furnishing explanation before conveying to a cancellation.

(b) This report will be submitted to e-Governance Cell of

(GN - 111)

9

MAY 2011644

MCA. The Cell will inform in the concerned ProfessionalInstitute to initiate an enquiry and complete the samewithin a month’s time.

(c) Simultaneously, the concerned professional shall bedebarred and shall not be allowed to enter to submit anydocument on MCA Portal. This debarment will be for aperiod of 30 days or till the final enquiry report isreceived from the respective Professional Institute.

(d) MCA will take a final decision after considering the reportso received.

Sanjay Shorey

Dy. Director

Clarification regarding Easy Exit Scheme(EES)

[Issued by the Ministry of Corporate Affairs, vide GeneralCircular No. 12/2011, dated 07.04.2011]Ministry has received certain proposals for simplification inthe procedures of Easy Exit Scheme (EES), 2011. Theproposals have been examined in the Ministry and the revisedsimplified procedures for dealing with applications under EasyExit Scheme (EES), 2011 are enclosed herewith.

J.N. Tikku

Joint Director

(GN - 112)

10

REVISED PROCEDURE FOR EASY EXIT SCHEME/STRIKE OFF UNDER SECTION 560OF THE COMPANIES ACT , 1956

F.No. 2/7/2010-CL.V

Sr. Issues raised in Existing Procedure Revised procedures to be followed by ROCsNo.

1. Prosecution if pending has to be If the pending prosecutions are only for non-filing of Annual Returnscompounded or disposed by Court. U/s 159 and Balance Sheets U/s 220 of the Companies Act, 1956 and the

company is actually a defunct one as reflected in the Statement of Accountssubmitted along with their application under EES Scheme, suchapplication may be accepted., provided the applicants have already filedcompounding application or has furnished an undertaking that thecompounding application will be filed before closing of EES Scheme.Steps for final strike of the name of the company should be takenonly after disposal of compounding application by the competentauthority.

2. How to deal with Companies having Ministry cannot advise directors and shareholders for waiver of theirassets and liabilities is not specifically liabilities and distribution of assets, to the shareholder other then thediscussed in the scheme. process provided in the Act. It is for the management of the company to

take action, as permissible under law of the land.

3. Directors should be as per database. Application with certificates from practicing Chartered Accountants,Cost Accountants and Company Secretaries giving their membershipnumber and certifying that the applicants are present Directors of companycan be considered. In such cases, the applicants shall not be asked to fileForm 32.

4. As per the procedure signatories details Application with certificates from practicing Chartered Accountants,are checked from the database and Cost Accountants and Company Secretaries giving their membershipsometimes it does not match and needs number and certifying that the applicants are present Directors of companyclarification / documentary evidence in can be considered.this regard.

5. Indemnity Bond and affidavit needs to Foreign nationals and NRIs have to get their Indemnity Bond andbe furnished by the directors Affidavit notarized as per their respective country’s law.

645 MAY 2011

Allotment of Director IdentificationNumber (DIN) under Companies Act, 1956

[Issued by the Ministry of Corporate Affairs, vide GeneralCircular No.11/2011, dated 07.04.2011]The Ministry of Corporate Affairs has already simplifiedthe process for obtaining DIN online, if the DIN-1 eformhas been digitally signed by the practicing CharteredAccountant, Company Secretary or Cost Accountant,verifying the particulars of the applicants given in theapplication. However, in other cases, where the DIN form isdigitally singed by the applicant only, the applications arebeing disposed off with in one or two days after examinationby the Central Government.

2. As another step towards simplification in allotment of DIN,the Ministry is considering to allot all DIN applications online.To examine the DIN-4 eform through the system, it has beendecided that following fields in the DIN-1 eform will bemandatory : -

(i) Name of Applicant

(ii) Father’s name of the Applicant

(iii) Date of Birth

(iv) Income Tax Permanent Account Number (PAN) in caseof all Indian Nationals.

(v) Passport in case of all Foreign Nationals.

3. At present, the PAN of the applicant is not a mandatory fieldin DIN eform-1. In order to examine DIN-4 eform throughthe system and to avoid duplicate DIN, it has been decided thatall existing DIN holders who have not furnished their PANearlier at the time of obtaining DIN, are required to furnishtheir PAN by filing DIN-4 eform by 31st May, 2011.

J.N. Tikku

Joint Director

Interpretation of the word “Partnership”for the purpose of Chartered Accountants

Act, 1949, Cost and Works Accountants Act,1959 and Company Secretaries Act, 1980.

[Issued by the Ministry of Corporate Affairs, vide GeneralCircular No. 10/2011, dated 04.04.2011]The Acts governing the three professional Institutes define inSection 2 members who are deemed to be in practice. In allthe three Acts, there is a provision for a member to be inpractice when he is in partnership with certain others. In the

case of Chartered Accountants and Cost & Works Accountants,such persons must be member of the same Institute, while inthe case of Company Secretaries, it is provided that thepartnership could also be with members of such otherrecognised professions as may be prescribed.

2 At the time of enactment of the three Acts governing theprofessional Institutes, only one form of partnership existedin India, namely Partnerships under Indian Partnership Act,1932. Subsequently, Parliament has enacted the LimitedLiability Partnerships Act, 2008. Though Limited LiabilityPartnerships are bodies corporate under Section 3(i) of theLLP Act, the fact that LLPs are basically partnerships may beseen from the definition in Section 2(i) (n) :-

“ Limited Liability Partnerships means a partnership formedand registered under this Act.

Section 2(i)(q) defines a partner as “any person who becomesa partner in the limited liability partnership in accordancewith the Limited Liability Partnership Agreement”

It is thus clear that a Limited Liability Partnership is also apartnership and its members are also partners.

3. The matter of permitting member of ICAI, ICWAI andICSI has been examined in this Ministry. Acts governing theseprofessionals were passed at a time when limited liabilitypartnership did not exist. It is also clear from the definitionsin the Limited Liability Partnership Act that such entities arealso partnerships and their members are also partners. In thecontext of Section 2 of the Acts governing the professionalInstitutes, this interpretation is also not repugnant to the context.Accordingly, it is clarified that the words “partnership”wherever occurring in the Chartered Accountants Act, 1949,the Cost and Works Accountants Act, 1959 and the CompanySecretaries Act, 1980 shall mutatis mutandis be construed asincluding those Limited Liability Partnerships where all theother partners are natural persons(individuals). The word“partner” shall also be construed accordingly. This clarificationshall apply only to these three Acts and not to any otherenactment where the word “partnership’ occurs.

4. This issues with the approval of Competent Authority.

Seema Rath

Assistant Director (Inspection)

Filing of Balance Sheet and Profit and LossAccount in eXtensible Business Reporting

Language (XBRL) mode.

[Issued by the Ministry of Corporate Affairs, vide GeneralCircular No. 09/2011, dated 31.03.2011]

(GN - 113)

11

12

13

MAY 2011646

It has been decided by the Ministry of Corporate Affairs tomandate certain class of companies to file balance sheets andprofit and loss account for the year 2010-11 onwards by usingXBRL taxonomy. The Financial Statements required to befiled in XBRL format would be based upon the Taxonomy onXBRL developed for the existing Schedule VI, as per theexisting, (non converged) Accounting Standards notified underthe Companies (Accounting Standards) Rules, 2006. The saidTaxonomy is being hosted on the website of the Ministry atwww.mca.gov.in shortly. The Frequently Asked Questions(FAQs) about XBRL have been framed by the Ministry andthey are being annexed as Annexure I with this circular forthe information and easy understanding of the stakeholders.

Coverage in Phase I

2. The following class of companies have to file the FinancialStatements in XBRL Form only from the year 2010-2011 :-

(i) All companies listed in India and their subsidiaries,including overseas subsidiaries;

(ii) All companies having a paid up capital of Rs. 5 Croreand above or a Turnover of Rs 100 crore or above .

Additional Fee Exemption

3. All companies falling in Phase -I are permitted to file upto30-09-2011 without any additional filing fee.

Training Requirement

4. Stakeholders desirous to have training on the XBRL or ontaxonomy related issues, may contact the persons as mentionedin Annexure II.

J.N. Tikku

Joint Director

ANNEXURE I

Frequently Asked Questions

1. What is XBRL?

XBRL is a language for the electronic communication ofbusiness and financial data which is revolutionizing businessreporting around the world. It provides major benefits in thepreparation, analysis and communication of businessinformation. It offers cost savings, greater efficiency andimproved accuracy and reliability to all those involved insupplying or using financial data. XBRL stands for eXtensibleBusiness Reporting Language. It is already being put to practicaluse in a number of countries and implementations of XBRLare growing rapidly around the world.

2. Who developed XBRL?

XBRL is an open, royalty-free software specificationdeveloped through a process of collaboration between

accountants and technologists from all over the world.Together, they formed XBRL International which is now madeup of over 650 members, which includes global companies,accounting, technology, government and financial servicesbodies. XBRL is and will remain an open specification basedon XML that is being incorporated into many accounting andanalytical software tools and applications.

3. What are the advantages of XBRL?

XBRL offers major benefits at all stages of business reportingand analysis. The benefits are seen in automation, cost saving,faster, more reliable and more accurate handling of data,improved analysis and in better quality of information anddecisionmaking. XBRL enables producers and consumers offinancial data to switch resources away from costly manualprocesses, typically involving time-consuming comparison,assembly and re-entry of data. They are able to concentrateeffort on analysis, aided by software which can validate andprocess XBRL information. XBRL is a flexible language,which is intended to support all current aspects of reporting indifferent countries and industries. Its extensible nature meansthat it can be adjusted to meet particular business requirements,even at the individual organization level.

4. Who can benefit from using XBRL?

All types of organizations can use XBRL to save costs andimprove efficiency in handling business and financialinformation. Because XBRL is extensible and flexible, it canbe adapted to a wide variety of different requirements. Allparticipants in the financial information supply chain canbenefit, whether they are preparers, transmitters or users ofbusiness data.

5. What is the future of XBRL?

XBRL is set to become the standard way of recording, storingand transmitting business financial information. It is capableof use throughout the world, whatever the language of thecountry concerned, for a wide variety of business purposes. Itwill deliver major cost savings and gains in efficiency,improving processes in companies, governments and otherorganisations.

6. Does XBRL benefit the comparability of financialstatements?

XBRL benefits comparability by helping to identify data whichis genuinely alike and distinguishing information which is notcomparable. Computers can process this information andpopulate both pre defined and customised reports.

7. Does XBRL cause a change in accounting standards?

No. XBRL is simply a language for information. It must

(GN - 114)

647 MAY 2011

accurately reflect data reported under different standards - itdoes not change them.

8. What are the benefits to a company from putting itsfinancial statements into XBRL?

XBRL increases the usability of financial statementinformation. The need to re-key financial data for analyticaland other purposes can be eliminated. By presenting itsstatements in XBRL, a company can benefit investors andother stakeholders and enhance its profile. It will also meetthe requirements of regulators, lenders and others consumersof financial information, who are increasingly demandingreporting in XBRL. This will improve business relations andlead to a range of benefits.

With full adoption of XBRL, companies can automate datacollection. For example, data from different company divisionswith different accounting systems can be assembled quickly,cheaply and efficiently. Once data is gathered in XBRL,different types of reports using varying subsets of the data canbe produced with minimum effort. A company financedivision, for example, could quickly and reliably generateinternal management reports, financial statements forpublication, tax and other regulatory filings, as well as creditreports for lenders. Not only can data handling be automated,removing time-consuming, error-prone processes, but the datacan be checked by software for accuracy.

9. How does XBRL work?

XBRL makes the data readable, with the help of two documents- Taxonomy and instance document. Taxonomy defines theelements and their relationships based on the regulatoryrequirements. Using the taxonomy prescribed by the regulators,companies need to map their reports, and generate a validXBRL instance document. The process of mapping meansmatching the concepts as reported by the company to thecorresponding element in the taxonomy. In addition to assigningXBRL tag from taxonomy, information like unit ofmeasurement, period of data, scale of reporting etc., needs tobe included in the instance document.

10. How do companies create statements in XBRL?

There are a number of ways to create financial statements inXBRL:

� XBRL-aware accounting software products arebecoming available which will support the export ofdata in XBRL form. These tools allow users to mapcharts of accounts and other structures to XBRL tags.

� Statements can be mapped into XBRL using XBRLsoftware tools designed for this purpose

� Data from accounting databases can be extracted in XBRLformat. It is not strictly necessary for an accountingsoftware vendor to use XBRL; third party products canachieve the transformation of the data to XBRL.

� Applications can transform data in particular formatsinto XBRL. The route which an individual companymay take will depend on its requirements and theaccounting software and systems it currently uses,among other factors.

11. Is India a member of XBRL International?

India is now an established jurisdiction of XBRL International.A separate company, under section 25 has been created, tomanage the operations of XBRL India. The main objectivesof XBRL India are

� To create awareness about XBRL in India

� To develop and maintain Indian Taxonomies

� To help companies, adopt and implement XBRL.

For more information, visit www.xbrl.org/in

12. Which taxonomies developed for Indian reportingrequirements? Where can I find the taxonomies?

Taxonomies for Indian companies are developed based on therequirements of

� Schedule VI of Companies Act,

� Accounting Standards, issued by ICAI

� SEBI Listing requirements.

Taxonomies for Manufacturing and service sector (referredas Commercial and Industrial, or C&I) and Banking sector, isacknowledged by XBRL International. These taxonomies areavailable at http://www.xbrl.org/in/

13. Where can I find more information about XBRL?

Please visit www.xbrl.org . Also Ministry of Corporate Affairswould be shortly developing its webpage on XBRL with listof contact persons for training purposes.

14. What are XBRL Documents?

An XBRL document comprises the taxonomy and the instancedocument. Taxonomy contains description and classificationof business & financial terms, while the instance document ismade up of the actual facts and figures. Taxonomy and Instancedocument together make up the XBRL documents.

15. What is Taxonomy?

Taxonomy can be referred as an electronic dictionary of thereporting concepts. Taxonomy consists of all the data definitions,the basic XBRL properties and the interrelationships amongstthe concepts. It includes terms such as net income, EPS, cash,

(GN - 115)

MAY 2011648

etc. Each term has specific attributes that help define it, includinglabel and definition and potentially references. Taxonomies mayrepresent hundreds or even thousands of individual businessreporting concepts, mathematical and definitional relationshipsamong them, along with text labels in multiple languages,references to authoritative literature, and information about howto display each concept to a user.

16. What is meant by extending taxonomy?

Taxonomy is extended to accommodate items/relationshipspecific to the owner of the information. Taxonomy extensiontherefore can be

(a) Modification in the existing relationships

(b) Addition of new elements in the taxonomy

(c) Combination both a & b

17. Are Taxonomies based on any standards?

Yes, taxonomies are based on the regulatory requirements andstandards which are to be followed by the companies.Accordingly, depending on the requirements of every country,there can be country-specific taxonomies.

18. What is an Instance document?

An XBRL instance document is a business report in anelectronic format created according to the rules of XBRL.It contains facts that are defined by the elements in thetaxonomy it refers to, together with their values and anexplanation of the context in which they are placed. XBRLInstances contain the reported data with their values and“contexts”. Instance document must be linked to at leastone taxonomy, which defines the contexts, labels orreferences.

Thus, in order to concluded the usage and explain the XBRLtechnology which leads to more information exchanges thatcan be effectively automated by use. This one standard approachleads to the best interest of the company or more so for theinternational business interests globally that warrant theaccuracy of all the financial data for the end users and earlycollaborative decisions by the companies or those whose interstis involved for acquisition/ rights etc.

ANNEXURE II

(i) Smt. Nirupama Kotru, DirectorMinistry of Corporate affairs 5th Floor, ‘A’ Wing,Shastri Bhavan, Dr.R.P. Road, New DelhiContact No. 011-23384470Email: [email protected]

(ii) Dr. Avinash Chandra, Technical DirectorThe Institute of Chartered Accountants of India,‘ICAI Bhawan’, Post Box No. 7100,

Indraprastha Marg, New Delhi-110002.Contact No. 011-3011456, 30110427Email: [email protected]

(iii) Shri Pankaj Srivastava, Joint DirectorMinistry of Corporate affairs 5th Floor, ‘A’ Wing,Shastri Bhavan, Dr.R.P. Road,New Delhi Contact No. 011-23384657Email : [email protected]@gmail.com

(iv) Dr. Surinder Pal,Secretary, Committee on Members in Industry(CMII), The Institute of Chartered Accountants ofIndia, ‘ICAI Bhawan’, Indraprastha Marg,New Delhi-110002. Contact No. 011-30110450

(v) Mr. N.K. Bansal, Secretary,Continuing Professional Education (CPE), TheInstitute of Chartered Accountants of India,‘ICAI Bhawan’, Indraprastha Marg,New Delhi-110002. Contact No. 0120-3045957

Applications Supported by BlockedAmount (ASBA) facility

[Issued by the Securities and Exchange Board of India, videCircular No. CIR/CFD/DIL/1/2011 dated 29.04.2011]

1. SEBI has issued circular no. CIR/CFD/DIL/8/2010 datedOctober 12, 2010, enabling the syndicate / sub-syndicatemembers to procure ASBA forms (hereinafter referred as“Syndicate ASBA”) from the investors, upload the bid andother relevant details of such ASBA forms in the biddingplatform and thereafter forward the ASBA forms to the SCSBs.SCSBs shall carry out further action for the ASBA formssuch as signature verification, blocking of funds and forwardthe forms to the registrar to the issue.

2. The respective intermediaries shall take note of thefollowing:

(a) Bidding Centers: ASBA facility through syndicate /sub-syndicate member shall initially commence withthe following bidding centers:

(i) Mumbai

(ii) Chennai

(iii) Kolkata

(iv) Delhi

(v) Ahmedabad

(vi) Rajkot

(GN - 116)

14

649 MAY 2011

(vii) Jaipur

(viii) Bangalore

(ix) Hyderabad

(x) Pune

(xi) Baroda

(xii) Surat

The syndicate / sub-syndicate members located in theabovementioned centers shall accept ASBA forms.Before accepting these ASBA forms syndicate / sub-syndicate members shall satisfy themselves that theSCSBs whose name has been filled in the ASBA formhas named a branch in that centre to accept ASBAforms.

(b) Naming of Branch: All the SCSBs which are providingASBA facility in any of the above mentioned centersare required to name atleast one branch where syndicate/sub-syndicate members can submit the ASBA forms.The format in which SCSBs has to provide to SEBIthe details of the branch to accept ASBA forms fromthe syndicate / sub- syndicate member is placed atAnnexure A. This list would be displayed on the websiteof SEBI.

(c) Syndicate ASBA process: An indicative process flow

for ASBA through syndicate members vis-à-vis non-ASBA is placed at Annexure B.

3. It has been decided that non-retail investors i.e. QualifiedInstitutional Buyers and Non-Institutional Investors, makingapplication in public/ rights issue shall mandatorily make useof ASBA facility. In this regard, disclosures shall be made inthe offer document such as in issue procedure section as partof payment instructions.

4. Merchant Bankers shall ensure that appropriate disclosuresare made in the offer document in this regard.

5. All intermediaries are directed to comply with theinstructions contained in this circular.

6. This circular shall be applicable for Red Herring Prospectus/Prospectus / Letter of Offer filed with Registrar of Companies/Stock Exchanges, as the case may be, on or after May 2, 2011.

7. This circular is issued in exercise of the powers conferredunder Section 11 read with Section 11A of the Securities andExchange Board of India Act, 1992.

8. This circular is available on SEBI website at www.sebi.gov.inunder the categories

“Legal Framework” and “Issues and Listing”.

Sanjay Purao

Deputy General Manager

(GN - 117)

ANNEXURE A

Format for providing the details of the branches named for Syndicate ASBA

All SCSBs are required to submit to SEBI the details of the branches, in the format as below, where syndicate / sub-syndicatemembers are required to submit bidded Syndicate ASBA forms:

Details of Branch for Syndicate ASBA:

Branches named for Syndicate ASBA

Sl. Bidding Branch Contact Contact Fax EmailNo. Centre Address Person Number

1.

2.

ANNEXURE B

Indicative timeline schedule for various activitiesSl. Details of Activities Due DateNo. Non-ASBA ASBA through Syndicate (Working

Member Day)

1. Investor submits a completed bid cum Investor submits a completed bid cum Issue openingapplication form to Syndicate /Sub-Syndicate application form indicating the mode of date to issueMember, who shall upload bid details in the payment option as ASBA to Syndicate closing dateelectronic bidding system of stock exchange(s). Member. (where T is

MAY 2011650

Syndicate members need to ensure that Syndicate Member shall give an issue closing

required documents are attached with the acknowledgement by giving the counter foil date)

application form as proof of having accepted his/ herapplication.

Syndicate Member shall upload bid details inthe electronic bidding system of stockexchange(s).

2. Issue closes. T

3. Stock exchange(s) to allow syndicate members to undertake modification of select fields in thebid details already uploaded.

Registrar to get the electronic bid details from the stock exchanges at the end of the day.

4. Issuer, merchant banker and registrar to T+1submit relevant documents to the stockexchange(s) except listing application,allotment details and demat credit andrefund details for the purpose of listingpermission.

Syndicate members to forward a schedule Syndicate members to forward a schedule(containing application number, payment (containing application number and amount)instrument number and amount), application along with application forms to the branchforms and payment instruments to collecting named for ‘Syndicate ASBA’ of the respectivebanks. SCSBs for blocking of Fund.

Collecting banks may not accept bid schedule, Designated branches may not accept schedulebid applications and payment instrument after and applications after T+2 day.T+2 day.

Registrar to give bid file received from the Registrar to give bid file received from thestock exchanges containing the application stock exchanges containing the applicationnumber and amount to all the collecting number and amount to respective SCSBsbanks who can use this file for validation at duly sorted centre wise who may use this filetheir end. for reconciliation.

Registrar to commence validation of the SCSBs to start blocking funds.electronic bid details with depositoriesrecords for DP ID, Client ID and PAN.

5. Registrar to continue validation of the Blocking funds continues. T+3electronic bid details with depositoriesrecords.

Collecting banks to commence clearingof payment instruments.

6. Registrar to complete validation of the SCSBs to start forwarding application T+4electronic bid details with depositories forms along with bank schedules torecords. registrar.

Collecting banks to start forwardingapplication forms along with bank schedulesto registrar.

(GN - 118)

651 MAY 2011(GN - 119)

7. Registrar to prepare list of rejected bids based on mis-match between electronic bid details T+5and depositories data base.

Registrar to undertake “Technical Rejection” test based on electronic bid details and prepare listof technical rejection cases.

8. Collecting banks to submit status of clearance SCSBs to submit status of blocking of fund T+6status of payment instrument i.e. “Final i.e. “Final Certificate” to the registrar.Certificate” to the registrar.

9. Collecting banks/SCSBs to ensure that all application forms are forwarded to the registrar. T+7

Registrar to undertake and complete reconciliation of final certificate received from thecollecting banks with electronic bid details.

Registrar submits the final basis of allotment to Designated Stock Exchange(s) for approvingthe basis of allotment.

10. Designated stock exchange(s) to approve the basis of allotment. T+8

Registrar to prepare funds transfer schedule based on approved allotment.

Registrar to give instructions to depositories to carry out lock-in for pre issue capital.

11. Registrar and merchant banker to issue funds transfer instructions to collecting banks/SCSBs. T+9

Collecting banks/SCSBs to credit the funds in Public Issue Account of the issuer and confirmthe same.

Issuer to make allotment.

Registrar to give instruction to depositories for credit of shares to successful allottees.

Registrar to receive confirmation for pre-issue capital lock-in from depositories.

12. Issuer and registrar to file allotment details with designated stock exchange(s) and confirm all T+10formalities are completed except demat credit and refund.

Registrar to complete refund dispatch.

Registrar to issue bank-wise data of allottees, allotted amount and refund amount to collectingbanks/SCSBs.

13. Registrar to receive confirmation of demat credit from depositories and submit the same to the T+11stock exchange(s).

Issuer and registrar to file confirmation of demat credit and refund dispatch with stockexchange(s).

Issuer to make a listing application to stock exchange(s) and stock exchanges to give listingand trading permission.

Issuer, merchant banker and registrar to publish allotment advertisement before thecommencement of trading, prominently displaying the date of commencement of trading, inall the newspapers where issue opening/closing advertisements have appeared earlier.

Stock exchange(s) to issue commencement trading notice.

14. Trading commences T+12

MAY 2011652

Review of Annual Issuers’ charges

[Issued by the Securities and Exchange Board of India,vide Circular No. CIR/MRD/DP/ 05 /2011 dated 27.04.2011]1. Please refer to SEBI Circulars No. MRD/DoP/SE/Dep/Cir-4/2005 dated January 28, 2005 and No. MRD/DoP/SE/Dep/Cir-2/2009 dated February 10, 2009 on the captioned subjectmatter.

2. In partial modification to the above circulars, it has beendecided to modify the methodology of calculating the AnnualIssuers charges. The annual issuer charges would be based onthe average no. of folios (ISIN positions) during the previousfinancial year instead of the total number of folios (ISINpositions) as on 31st March of the previous financial year.

3. The average no. of folios (ISIN positions) for an Issuermay be arrived at by dividing the total number of folios forthe entire financial year by the total number of working daysin the said financial year.

4. All the Stock Exchanges are advised to:-

4.1. implement the above by making necessary amendmentsto the bye-laws and Listing Agreement, as applicable;

4.2. to bring the provisions of this circular to the notice of thelisted companies/Issuers and also to put up the same on thewebsite for easy access to the investors; and

4.3. communicate to SEBI the status of the implementationof the provisions of this circular and the action taken in thisregard in the Monthly Development Report.

5. The Depositories are advised to:-

5.1. make amendments to the relevant bye-laws, rules andregulations for the implementation of the above decision, asmay be applicable/necessary;

5.2. bring the provisions of this circular to the notice of theDPs of the Depositories and the issuers whose securities havebeen admitted into the depositories and also to disseminatethe same on the website; and

5.3. communicate to SEBI the status of the implementationof the provisions of this circular in the Monthly DevelopmentReport.

6. The depositories, may adjust the excess or deficit arisingout of the change, with the issuers for the current financialyear.

7. This circular is being issued in exercise of powers conferredunder Section 11 (1) of the Securities and Exchange Board ofIndia Act, 1992 and Section 19 of the Depositories Act, 1996to protect the interests of investors in securities and to promote

the development of, and to regulate the securities market. Thiscircular is available on SEBI website at www.sebi.gov.in.

Harini Balaji


Limitation period for filing an arbitrationreference

[Issued by the Securities and Exchange Board of India, videCircular No. CIR/MRD/DP/4/2011, dated 07.04.2011]SEBI has earlier issued directions to stock exchanges withregard to the limitation period for filing an arbitrationreference. In view of streamlining the provisions in thedepositories on the captioned subject, it is decided that thelimitation period for filing an arbitration reference shall begoverned by the law of limitation, i.e., The Limitation Act,1963. The modified limitation period shall also be applicableto cover inter alia the following cases:

(i) where the limitation period (in terms of LimitationAct 1963) have not yet elapsed and the parties havenot filed for arbitration with the depository, or,

(ii) where the arbitration application was filed but wasrejected solely on the ground of delay in filing withinthe earlier limitation period; and the limitation period(in terms of Limitation Act 1963) have not yet elapsed.

2. Accordingly, the Depositories shall:

(i) make necessary amendments to the relevant bye-lawsfor the implementation of the above decision,

(ii) bring the provisions of this circular to the notice of theDepository Participants and direct them to communicatethe same to all the Beneficial Owners (BOs), and,

(iii) disseminate the same on the website.

3. This circular is being issued in exercise of powers conferredunder Section 11(1) of the Securities and Exchange Board ofIndia Act, 1992 read with Section 19 of the Depositories Act,1996 in the interests of investors in securities and to promotethe development of, and to regulate the securities market.

Harini Balaji


FII Investment in corporate bonds infralong term category

[Issued by the Securities and Exchange Board of India, videCircular No. CIR/IMD/FIIC/5/2011, dated 31.03.2011]

15

16

17

(GN - 120)

653 MAY 2011

Please refer to the SEBI circular CIR/IMD/FIIC/18/2010 datedNovember 26, 2010 wherein the mechanism of allocation ofnewly announced limit of long-term corporate debt(infrastructure) was announced.

Increase in overall limits

1. The existing limit of USD 5 billion for investment by foreignInstitutional investors (FIIs) in corporate bonds issued bycompanies in the infrastructure sector with a residual maturityof over five years has been increased by an additional limit ofUSD 20 billion taking the total limit to USD 25 billion. Theseinvestments are now permissible in unlisted instruments.

Investments in unlisted bonds

2. FIIs shall now be eligible to invest in unlisted bonds issuedby companies in the infrastructure sector that are generallyorganised in the form of special purpose vehicles.

Lock-in period for investments subject to inter FII trading

3. Investments in such bonds shall have a minimum lock-inperiod of three years. However, during the lock-in period,FIIs will be allowed to trade amongst themselves. During thelock-in period, the investments cannot however, be sold todomestic investors.

No change in identification of companies eligible as“Infrastructure”

4. Identification of corporate bonds issued by companies inthe infrastructure sector shall be in terms of SEBI circularIMD/FII&C/18/2010 dated November 26, 2010.

Manner of allocation

5. In partial amendment to the aforesaid circular IMD/FII&C/18/2010, it is decided to do away with the allocationmethodology for investment in Corporate Debt -Long termInfra category.

6. FII/sub-accounts can now avail of these limits withoutobtaining SEBI approval till the overall FII investments reaches90% (ninety percent) i.e. USD 22.5 billion. After which theprocess mentioned in circular dated November 26, 2010 shallbe initiated for allocation of remaining limits.

Special window at exchanges

7. To facilitate to the FIIs during the lock-in period asmentioned at para 3 above, a special trading window for FIIsshall be provided by Exchanges on the same lines as is availablefor equities in companies where the overall FII investmenthas touched the maximum limit.

This circular is issued in exercise of the powers conferred underSection 11 (1) of the Securities and Exchange Board of India Act1992, read with Section 10 of the Securities Contracts (Regulation)Act, 1956 to protect the interests of investors in securities and topromote the development of, and to regulate the securities market.

A copy of this circular is available at the web page “F.I.I.” onour website www.sebi.gov.in. The custodians are requestedto bring the contents of this circular to the notice of their FIIclients.

Jeevan Sonparote

General Manager

Banking/Tax LawsNotification No. 32/2011 Dated 25.04.2011Rescinds Notification No.25/2006-Service

Tax, dated the 13.07.2006

[Issued by the Ministry of Finance (Department of Revenue),vide Notification No.32/2011 – Service Tax, dated 25.04.2011]

In exercise of the powers conferred by sub-section (1) of section93 of the Finance Act, 1994 (32 of 1994), the CentralGovernment, on being satisfied that it is necessary in the publicinterest so to do, hereby rescinds the notification of theGovernment of India in the Ministry of Finance (Departmentof Revenue) No.25/2006-Service Tax, dated the 13th July, 2006(Reproduced below), published in the Gazette of India,Extraordinary, Part II, Section3, Sub-section (i) vide numberG.S.R. 418(E) dated the 13th July, 2006, except as respectsthings done or omitted to be done before such rescission.

2. This notification shall come into force on the 1st day ofMay, 2011.

Sanjeev Kumar SinghUnder Secretary to the Government of India

Notification No. 25/2006-service Tax, dated 13.07.2006

In exercise of the powers conferred by sub-section (1) of section93 of the Finance Act, 1994 (32 of 1994) (hereinafter referredto as the Finance Act), the Central Government, on beingsatisfied that it is necessary in the public interest so to do, herebyexempts the taxable services falling under sub-clauses (s), (t)and (u) of clause (105) of section 65 of the Finance Act,provided or to be provided by a practicing chartered accountant,a practicing cost accountant and a practicing company secretaryrespectively, in his professional capacity, to a client, relating torepresenting the client before any statutory authority in the courseof proceedings initiated under any law for the time being in

18

(GN - 121)

MAY 2011654

force, by way of issue of notice, from the whole of service taxleviable thereon under section 66 of the said Finance Act.

The Point of Taxation (Amendment) Rules,2011

[Issued by the Ministry of Finance, Department of Revenue,vide Notification No.25/2011-Service Tax, dated31.03.2011]In exercise of the powers conferred by clause (a) and clause(hhh) of sub-section (2) of section 94 of the Finance Act,1994 (32 of 1994) the Central Government hereby makes thefollowing rules further to amend the Point of Taxation Rules,2011, namely:-

1. (1) These rules may be called the Point of Taxation(Amendment) Rules, 2011.

(2) They shall come into force on the 1st day of April, 2011.

2. In the Point of Taxation Rules, 2011 (hereinafter referredto as the “said rules”), for rule 3, the following rule shall besubstituted, namely:-

“3. Determination of point of taxation. – For the purposesof these rules, unless otherwise provided, ‘point of taxation’shall be, –

(a) the time when the invoice for the service providedor to be provided is issued :

Provided that where the invoice is not issued withinfourteen days of the completion of the provisionof the service, the point of taxation shall be dateof such completion.

(b) in a case, where the person providing the service,receives a payment before the time specified inclause (a), the time, when he receives suchpayment, to the extent of such payment.

Explanation. – For the purpose of this rule, wherever anyadvance by wh atever name known, is received by theservice provider towards the provision of taxable service,the point of taxation shall be the date of receipt of eachsuch advance.”.

3. In rule 4 of the said rules,-

(i) for the words “change of rate”, wherever they occur,the words “change in effective rate of tax” shall besubstituted;

(ii) for the words “change of rate of tax” or “change in taxrate” or “change of tax rate”, respectively at both theplaces where they occur, the words “change in effectiverate of tax” shall be substituted;

(iii) after sub-clause (iii) of clause (b), the following

Explanation shall be inserted, namely:-

“Explanation. – For the purposes of this rule, “changein effective rate of tax” shall include a change in theportion of value on which tax is payable in terms of anotification issued under the provisions of Finance Act,1994 or rules made thereunder.”.

4. For rule 6 of the said rules, the following rule shall besubstituted, namely:-

“6. Determination of point of taxation in case ofcontinuous supply of service.-Notwithstanding anythingcontained in rules 3,4 or 8, in case of continuous supply ofservice, the `point of taxation’ shall be,-

(a) the time when the invoice for the service providedor to be provided is issued:

Provided that where the invoice is not issued withinfourteen days of the completion of the provisionof the service, the point of taxation shall be dateof such completion.

(b) in a case, where the person providing the service,receives a payment before the time specified inclause (a), the time, when he receives suchpayment, to the extent of such payment.

Explanation 1. – For the purpose of this rule, where theprovision of the whole or part of the service is determinedperiodically on the completion of an event in terms of acontract, which requires the service receiver to make anypayment to service provider, the date of completion of eachsuch event as specified in the contract shall be deemed tobe the date of completion of provision of service.

Explanation 2.- For the purpose of this rule, wherever anyadvance, by whatever name known, is received by theservice provider towards the provision of taxable service,the point of taxation shall be the date of receipt of eachsuch advance.”.

5. For rule 7, the following rule shall be substituted, namely:-

“7. Determination of point of taxation in case ofspecified services or persons.-Notwithstanding anythingcontained in these rules, the point of taxation in respect of,–

(a) the services covered by sub-rule (1) of rule 3 ofExport of Services Rules, 2005;

(b) the persons required to pay tax as recipients underthe rules made in this regard in respect of servicesnotified under sub-section (2) of section 68 of theFinance Act, 1994;

(c) individuals or proprietary firms or partnershipfirms providing taxable services referred to in sub-

(GN - 122)

19

655 MAY 2011

clauses (p), (q), (s), (t), (u), (za), (zzzzm) ofclause (105) of section 65 of the Finance Act,1994,

shall be the date on which payment is received or made, asthe case may be:

Provided that in case of services referred to in clause (a),where payment is not received within the period specifiedby the Reserve Bank of India, the point of taxation shall bedetermined, as if this rule does not exist.

Provided further that in case of services referred to in clause(b) where the payment is not made within a period of sixmonths of the date of invoice, the point of taxation shall bedetermined as if this rule does not exist.

Provided also that in case of “associated enterprises”, wherethe person providing the service is located outside India,the point of taxation shall be the date of credit in the booksof account of the person receiving the service or date ofmaking the payment whichever is earlier.

6. For rule 9, the following rule shall be substituted, namely:-

“9. Transitional Provisions.- Nothing contained in thissub-rule shall be applicable,-

(i) where the provision of service is completed; or

(ii) where invoices are issued

prior to the date on which these rules come into force.

Provided that services for which provision is completed onor before 30th day of June, 2011 or where the invoices areissued upto the 30th day of June, 2011, the point of taxationshall, at the option of the taxpayer, be the date on whichthe payment is received or made as the case may be.”.

Samar Nanda

Under Secretary to the Government of India

Setting up of Central Electronic Registryunder the Securitisation and

Reconstruction of Financial Assets andEnforcement of Security Interest Act 2002[Issued by the Reserve Bank of India, vide DBOD.Leg.No.BC.86/09.08.011/2010-11, dated 21.04.2011]Pursuant to the announcement made by the Finance Ministerin the budget speech for 2011-12, Government of India,Ministry of Finance notified the establishment of the CentralRegistry. The objective of setting up of Central Registry is toprevent frauds in loan cases involving multiple lending fromdifferent banks on the same immovable property. ThisRegistry has become operational on March 31, 2011. TheCentral Registry of Securitisation Asset Reconstruction and

Security Interest of India (CERSAI), a Government Companylicensed under section 25 of the Companies Act 1956 has beenincorporated for the purpose of operating and maintaining theCentral Registry under the provisions of the Securitisationand Reconstruction of Financial Assets and Enforcement ofSecurity Interest Act, 2002 (SARFAESI Act).

2. It may be noted that initially transactions relating tosecuritization and reconstruction of financial assets and thoserelating to mortgage by deposit of title deeds to secure anyloan or advances granted by banks and financial institutions,as defined under the SARFAESI Act, are to be registered inthe Central Registry. The records maintained by the CentralRegistry will be available for search by any lender or anyother person desirous of dealing with the property. Availabilityof such records would prevent frauds involving multiplelending against the security of same property as well asfraudulent sale of property without disclosing the securityinterest over such property. It may be noted that under theprovisions of Section 23 of the SARFAESI Act , particularsof any charge creating security interest over property isrequired to be filed with the Registry within 30 days from thedate of creation.

3. A copy of the Securitisation and Reconstuction of FinancialAssets and Enforcement of Security Interest (Central Registry)Rules, 2011 along with a copy of Notification dated March31, 2011 issued by the Government in this regard, is enclosedfor necessary action at your end.

P.R.Ravi Mohan

Chief General Manager

Overseas forex trading throughelectronic/internet trading portals

[Issued by the Reserve Bank of India, vide AP (DIR Series)Circular No.53, dated 07.04.2011]Attention of the Authorised Dealer Category - I (AD Category- I) banks is invited to Regulation 4 of the Foreign ExchangeManagement (Foreign Exchange Derivative Contracts)Regulations, 2000 (Notification No. FEMA 25/2000-RB datedMay 3, 2000), as amended from time to time, in terms ofwhich a person resident in India may enter into a foreignexchange derivative contract in accordance with the provisionscontained in Schedule I to hedge an exposure to risk in respectof a transaction permissible under the Foreign ExchangeManagement Act (FEMA), 1999 or rules or regulations ordirections or orders made or issued thereunder. Further, interms of Regulation 5A, ibid., a person resident in India mayenter into currency futures or currency options on a stockexchange recognized under section 4 of the Securities Contract(Regulation) Act, 1956, to hedge an exposure to risk or

(GN - 123)

20

21

MAY 2011656

otherwise, subject to such terms and conditions as may be setforth in the directions issued by the Reserve Bank of Indiafrom time to time. In terms of A.P. (DIR Series) Circular No.32 dated December 28, 2010, a derivative transaction is onlypermitted based on the presence of an underlying price riskexposure for which purchase and/or sale of foreign exchangeis permitted under FEMA, 1999. Further, attention of the ADCategory – I banks is invited to A.P. (Dir Series) CircularNo. 51 dated May 8, 2007 in terms of which remittances underthe Liberalised Remittance Scheme are allowed only in respectof permissible capital or current account transactions or acombination of both. All other transactions, which areotherwise not permissible under FEMA, 1999, including thetransactions in the nature of remittance for margins or margincalls to overseas exchanges/overseas counterparty, are notallowed under the Scheme.

2. It has been observed that overseas foreign exchange tradinghas been introduced on a number of internet/electronic tradingportals luring the residents with offers of guaranteed high returnsbased on such forex trading. The advertisements by these internet/online portals exhort people to trade in forex by way of payingthe initial investment amount in Indian Rupees. Some companieshave reportedly engaged agents who personally contact peopleto undertake forex trading/investment schemes and entice themwith promises of disproportionate/exorbitant returns. Most ofthe forex trading through these portals are done on a marginingbasis with huge leverage or on an investment basis, where thereturns are based on forex trading. The public is being asked tomake the margin payments for such online forex tradingtransactions through credit cards/deposits in various accountsmaintained with banks in India. It is also observed that accountsare being opened in the name of individuals or proprietaryconcerns at different bank branches for collecting the marginmoney, investment money, etc.

3. AD Category - I banks are, therefore, advised to exercisedue caution and be extra vigilant in respect of the abovetransactions. It is clarified that any person resident in Indiacollecting and effecting/remitting such payments directly/indirectly outside India would make himself/herself liable tobe proceeded against with for contravention of FEMA, 1999besides being liable for violation of regulations relating toKnow Your Customer (KYC) norms/Anti Money Laundering(AML) standards.

4. AD Category - I banks may bring the contents of this circularto the notice of their constituents and customers concerned.Authorised Dealers may also give wide publicity to theinstructions contained in the A.P. (DIR Series) Circulars referredto above and the Press Release issued by the Reserve Bank datedFebruary 21, 2011 (see annexure). The instructions contained inthis circular may also be brought to the attention of the card

issuing companies who may also be advised to remain alert againstpermitting payments for such unauthorised transactions.

5. The directions contained in this circular have been issuedunder sections 10(4) and 11(1) of the Foreign ExchangeManagement Act, 1999 (42 of 1999) and are without prejudiceto permissions/approvals, if any, required under any other law.

Dr. Sujatha Elizabeth Prasad


ANNEXURE

RBI Advisory on Overseas Forex Trading throughElectronic/Internet Trading Portals

The Reserve Bank of India has today clarified that remittancein any form towards overseas foreign exchange trading throughelectronic/internet trading portals is not permitted under theForeign Exchange Management Act (FEMA), 1999. TheReserve Bank has also clarified that the existing regulationsunder FEMA, 1999 do not permit residents to trade in foreignexchange in domestic/overseas markets.

Residents are, however, permitted to trade in currency futuresand options contracts, traded on the stock exchanges recognisedby the Securities and Exchange Board of India (SEBI) in India,subject to the conditions specified by the Reserve Bank fromtime to time.

Background

The Reserve Bank had noticed advertisements issued byelectronic/internet portals offering trading or investing in foreignexchange with guaranteed high returns. Many companies evenengage agents who personally contact gullible people toundertake forex trading/investment schemes and entice themwith promises of disproportionate/exorbitant returns.

The Reserve Bank of India cautions the public not to remit ordeposit money for such unauthorised transactions. The advicehas become necessary in the wake of many residents fallingprey to such tempting offers and losing money heavily in therecent past.

Alpana Killawala


Anti-Money Laundering (AML)standards/Combating the Financing of

Terrorism (CFT) Standards - Cross BorderInward Remittance under Money TransferService Scheme

[Issued by the Reserve Bank of India, vide AP (DIR Series)Circular No.52/AP (FL Series) Circular No. 14, dated06.04.2011]

(GN - 124)

22

657 MAY 2011

Attention of all Authorised Persons, who are Indian Agentsunder Money Transfer Service Scheme (MTSS) is invited toParagraph 5.10(b) of Annex-I, Annex to A.P. (DIR Series)Circular No. 18 [A.P. (FL Series) Circular No. 5], datedNovember 27, 2009 on the captioned subject.

2. Financial Action Task Force (FATF) has issued a furtherStatement on October 22, 2010 on the subject (copy enclosed)calling upon jurisdictions listed in the Statement to completethe implementation of their action plan within the timeframe.The FATF, in the Statement has called upon its members toconsider the information given in the Statement.

3. All Authorised Persons (Indian Agents) are accordingly advisedto consider the information contained in the enclosed Statement.

4. Authorised Persons (Indian Agents) may bring thecontents of this circular to the notice of their constituentsconcerned.

5. Please advise your Principal Officer to acknowledge receiptof this circular letter.

6. The directions contained in this Circular have been issued undersection 10(4) and section 11(1) of the Foreign ExchangeManagement Act, 1999 (42 of 1999) and also under the Preventionof Money Laundering Act, (PMLA), 2002, as amended byPrevention of Money Laundering (Amendment) Act, 2009 andPrevention of Money-Laundering (Maintenance of Records ofthe Nature and Value of Transactions, the Procedure and Mannerof Maintaining and Time for Furnishing Information andVerification and Maintenance of Records of the Identity of theClients of the Banking Companies, Financial Institutions andIntermediaries) Rules, 2005 as amended from time to time. Non-compliance with the guidelines would attract penal provisions ofthe Acts concerned or Rules made there under.

Smt. Sujatha Elizabeth Prasad


Anti-Money Laundering (AML)standards/Combating the Financing of

Terrorism (CFT) Standards - Money changingactivities

[Issued by the Reserve Bank of India, vide AP (DIR Series)Circular No.51/AP (FL/RL Series) Circular No. 13, dated06.04.2011]Attention of all Authorised Persons is invited to Paragraph4.10(b) of F-Part-I, Annex to A.P. (DIR Series) Circular No.17 [A.P. (FL/RL Series) Circular No. 4], dated November 27,2009 on the captioned subject.

2. Financial Action Task Force (FATF) has issued a furtherStatement on October 22, 2010 on the subject (copy enclosed)

calling upon jurisdictions listed in the statement to completethe implementation of their action plan within the timeframe.The FATF, in the Statement has called upon its members toconsider the information given in the Statement.

3. Authorised Persons are accordingly advised to consider theinformation contained in the enclosed Statement.

4. Authorised Persons may bring the contents of this circularto the notice of their constituents concerned.





Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/

Combating the Financing of Terrorism (CFT)/Obligation of Authorised Persons underPrevention of Money Laundering Act, (PMLA),2002, as amended by Prevention of MoneyLaundering (Amendment) Act, 2009 CrossBorder Inward Remittance under MoneyTransfer Service Scheme

[Issued by the Reserve Bank of India, vide AP (DIR Series)Circular No.50/AP (FL Series) Circular No. 12, dated06.04.2011]Attention of all Authorised Persons, who are Indian Agentsunder Money Transfer Service Scheme (MTSS) is invited toParagraph 5.10(b) of Annex-I, Annex to A.P. (DIR Series)Circular No. 18 [A.P. (FL Series) Circular No.5], datedNovember 27, 2009 on the captioned subject.

2. Financial Action Task Force (FATF) has issued a furtherStatement on October 22, 2010 on the subject (copy enclosed).

(GN - 125)

23

24

MAY 2011658

It may be observed that the statement divides the strategicAML/CFT deficient jurisdictions into two groups as under:

(a) Jurisdictions subject to FATF call on its members andother jurisdictions to apply countermeasures to protectthe international financial system from the ongoingand substantial money laundering and terroristfinancing (ML/FT) risks emanating from thejurisdiction : Iran

(b) Jurisdictions with strategic AML/CFT deficiencies thathave not committed to an action plan developed withthe FATF to address key deficiencies as of October2010. The FATF calls on its members to consider therisks arising from the deficiencies associated with eachjurisdiction: Democratic People’s Republic of Korea(DPRK).

3. All Authorised Persons (Indian Agents) are accordinglyadvised to take into account risks arising from the deficienciesin AML/CFT regime of these countries, while entering intobusiness relationships and transactions with persons (includinglegal persons and other financial institutions) from or in thesecountries/jurisdictions.

4. Authorised Persons (Indian Agents) may bring the contentsof this circular to the notice of their constituents concerned.





Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/

Combating the Financing of Terrorism (CFT)/Obligation of Authorised Persons underPrevention of Money Laundering Act, (PMLA),2002, as amended by Prevention of Money

Laundering (Amendment) Act, 2009 Moneychanging activities

[Issued by the Reserve Bank of India, vide AP (DIR Series)Circular No.49/AP (FL/RL Series) Circular No. 11, dated06.04.2011]

Attention of all Authorised Persons is invited to Paragraph4.10(b) of F-Part-I, Annex to A.P. (DIR Series) Circular No.17 [A.P. (FL/RL Series) Circular No. 4], dated November 27,2009 on the captioned subject.

2. Financial Action Task Force (FATF) has issued a furtherStatement on October 22, 2010 on the subject (copyenclosed). It may be observed that the statement divides thestrategic AML/CFT deficient jurisdictions into two groupsas under :

(a) Jurisdictions subject to FATF call on its members andother jurisdictions to apply countermeasures to protectthe international financial system from the ongoing andsubstantial money laundering and terrorist financing(ML/FT) risks emanating from the jurisdiction : Iran

(b) Jurisdictions with strategic AML/CFT deficiencies thathave not committed to an action plan developed with theFATF to address key deficiencies as of October 2010.The FATF calls on its members to consider the risks arisingfrom the deficiencies associated with each jurisdiction:Democratic People’s Republic of Korea (DPRK).

3. Authorised Persons are accordingly advised to take intoaccount risks arising from the deficiencies in AML/CFTregime of these countries, while entering into businessrelationships and transactions with persons (including legalpersons and other financial institutions) from or in thesecountries/jurisdictions.

4. Authorised Persons may bring the contents of this circularto the notice of their constituents concerned.


6. The directions contained in this Circular have been issuedunder section 10(4) and section 11(1) of the Foreign ExchangeManagement Act, 1999 (42 of 1999) and also under thePrevention of Money Laundering Act, (PMLA), 2002, asamended by Prevention of Money Laundering (Amendment)Act, 2009 and Prevention of Money-Laundering (Maintenanceof Records of the Nature and Value of Transactions, theProcedure and Manner of Maintaining and Time for FurnishingInformation and Verification and Maintenance of Records ofthe Identity of the Clients of the Banking Companies, FinancialInstitutions and Intermediaries) Rules, 2005 as amended fromtime to time. Non-compliance with the guidelines would attract

(GN - 126)

25

659 MAY 2011

penal provisions of the Acts concerned or Rules made thereunder.



Appointment of Central Registrar forpurpose of registration of transactions

relating to securitisation, reconstruction offinancial assets and security interest createdover properties

[Issued vide Notification No. GSR 278(E), dated 31.03.2011]In exercise of the powers conferred under sub-section (1) ofsection 21 of the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002, theCentral Government hereby appoints Shri R.V. Verma,Chairman and Managing Director, National Housing Bank(NHB), as the Central Registrar to hold additional charge ofthe Central Registrar for the purpose of registration oftransactions relating to securitization, reconstruction offinancial assets and security interest created over properties.

2. Shri R.V. Verma shall hold the charge of Central Registrarfor a period of three months in addition to his duties asChairman and Managing Director, National Housing Bank.

Notified place at which Central Registryis established and its Jurisdiction

[Issued vide Notification No. GSR 277(E), dated31.03.2011]In exercise of the powers conferred under section 21 of theSecuritisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002, the CentralGovernment hereby notifies the establishment of the CentralRegistry at the place mentioned in Column 2 of the Table belowwhich shall exercise jurisdiction in the area specified in thecorresponding entry in Column (3) of the said Table, namely:—

TABLE

Sl. Place at which the Central Registry is established Area ofNo. Jurisdiction

(1) (2) (3)

1. Indian Banks’ Association, Delhi Local Chapter Whole ofC/o Punjab National Bank, Rajendra Bhavan, IndiaRajendra Place, New Delhi-110008.

2. The Central Government hereby, entrusts the operationsand administration of the Central Registry and theMaintenance of the Central Register to a Government

Company licensed under section 25 of the Companies Act,1956, namely, the Central Registry of Securitisation AssetReconstruction and Security Interest of India, having itsRegistered Office at the place mentioned in Column 2 of theabove given Table.

3. The Central Registry shall be under the superintendenceand direction of the Central Registrar appointed by the CentralGovernment under sub-section (1) of section 21 of theSecuritisation and Reconstruction of Financial Assests andEnforcement of Security Interest Act, 2002.

The Securitisation and Reconstruction ofFinancial Assets and Enforcement of

Security Interest (Central Registry) Rules, 2011

[Issued vide Notification No. GSR 276(E), dated 31.03.2011]In exercise of the powers conferred by sub-section (1) andclauses ( c) to (g) of sub-section (2) of section 38 read withsection 20 of the Securitisation and Reconstruction of FinancialAssets and Enforcement of Security Interest Act, 2002 (54 of2002), the Central Government hereby makes the followingrules, namely:–

Short title and commencement.

1. (1) These rules may be called the Securitisation andReconstruction of Financial Assets and Enforcement ofSecurity Interest (Central Registry) Rules, 2011.

(2) They shall come into force on the date of their publicationin the Official Gazette.

Definitions.

2. (1) In these rules, unless the context otherwise requires,—

(a) “Act” means the Securitisation and Reconstruction ofFinancial Assets and Enforcement of Security InterestAct, 2002 (54 of 2002);

(b) “Central Register” means the register kept andmaintained under section 22 of the Act;

(c) “Central Registrar” means a person appointed as suchunder sub-section (1) of section 21 of the Act;

(d) “Central Registry” means the Central Registry set upunder section 20 of the Act;

(e) “Transaction” means any transaction of securitisation offinancial assets or reconstruction of financial assets orsecurity interest created over the property and modificationand satisfaction of any security interest over property.

(2) Words and expressions used in these rules and not definedshall have the meaning respectively assigned to them in theSecuritisation and Reconstruction of Financial Assets andEnforcement of Security Interest Act, 2002 (54 of 2002); or

(GN - 127)

26

28

27

MAY 2011660

the Information Technology Act, 2000 (21 of 2000), as thecase may be.

Maintenance of Central Register.

3. (1) A Central Register shall be kept for the purpose ofmaintaining records of registration of transactions relating tosecuritisation, reconstruction of financial assets and securityinterest created over properties, under the Act.

(2) All electronic documents, required to be signed by theCentral Registrar under the Act or rules made thereunder, shallbe authenticated through his digital signature.

Manner in which particulars of Transaction are to be filedwith the Central Registry.

4. (1) Particulars of every transaction of securitisation orreconstruction of financial assets and satisfaction of suchtransaction on realisation of the financial assets or creation,modification or satisfaction of any security interest requiredto be registered under sections 23, 24 and 25 of the Act, shallbe filed in such Forms as may be specified by the CentralGovernment from time to time as hereinafter provided.

(2) Particulars of every transaction of securitisation andreconstruction of financial assets and creation, modificationor satisfaction of security interest by way of mortgage bydeposit of title deeds shall be filed in Form I, Form II, FormIII or Form IV, as the case may be, and shall be authenticatedby a person specified in the Form for such purpose by use ofa valid digital signature.

(3) The Central Government may specify Forms for filingparticulars of creation, modification or satisfaction of securityinterest other than mortgage by deposit of title deeds byamendment to these rules from time to time.

(4) If any security interest being created in favour of two ormore lenders, the details as to inter se priority amongst themand whether they hold it on a pari passu or subordinate basis

shall be required to be specified :

Provided that if the ranking of security is not available, theCentral Registrar may allow such time, not exceeding sixtydays from the date of application, for the same to be furnishedby the secured creditors.

Time limit for registration and condition of delay.

5. (1) The particulars of every transaction referred to in sub-rule (1) of rule 3 shall be filed the Central Registrar within aperiod of thirty days from the date of such transaction.

(2) In cases where there is a delay in filing the particulars oftransaction for registration or modification or satisfactionwithin the time specified in sub-rule (1), the Central Registrar,on an application in specified form, stating the reasons fordelay not exceeding thirty days from next following the periodof thirty days provided in sub-rule (1) may allow filing of theparticulars of transaction on payment of additional fees asspecified in these rules.

Inspection of records of Central Register.

6. The particulars of any transaction kept in the CentralRegistry shall be open for inspection to any person throughthe website of the Central Registry and during the businesshours at the Central Registry on payment of fee specified inrule 7 :

Provided that the Central Registry may allow the inspectionto be carried out through such person, authorised by it in thisbehalf.

Fees.

7. Every Form for registration of any transaction relating tosecurity interest over any property and every request forinspection of any record maintained by the Central Registryshall be accompanied by a fee specified in the Table givenbelow to be paid to the Central Registry in such manner asmay be specified from time to time.

(GN - 128)

TABLE

Sl. Nature of transaction to be Registered Form No. Amount of fee payable

No.

(1) (2) (3) (4)

1. Particulars of creation or modification of Form I Rs. 500 for creation and for any subsequentSecurity Interest in favour of secured modification of Security interest in favour of a securedcreditors creditor for a loan above Rs. 5 lakh. For a loan upto

Rs. 5 lakh the fee would be Rs. 250 for both creationand modification of security interest.

2. Satisfaction of any existing Security Interest Form II Rs. 250

3. Particulars of securitisation or reconstruction Form III Rs. 1,000of financial assets

4. Particulars of satisfaction of securitisation or Form IV Rs. 50reconstruction transactions

661 MAY 2011

5. Any application for information recorded/ – Rs. 50maintained in the Register by any person

6. Any application for condonation of delay – Not exceeding Rs. 2,500 in case of creation of securityup to 30 days interest for a loan up to Rs. 5 lakh and not exceeding

Rs. 5,000 in all other cases.

maximum coverage, FLCCs may need to be set up at all levelsviz. block, district, town and city levels. Accordingly bankswere expected to initiate setting up of FLCCs.

2. However, the number of FLCCs opened in the country hasbeen low and the pace of setting up such centres is not up tothe desired extent in some States. There is considerable meritin concerns of some key stakeholders with regard to theinadequate number of FLCCs operating in States.

3. As you are aware, FLCCs are integral to financial inclusionand therefore, it is imperative that more such centres are setup. You are, therefore advised to set up FLCCs as envisagedin the Model scheme already communicated to you.

Dr. Deepali Pant Joshi

Chief General Manager-in-Charge

The Banking Companies (Nomination)Rules, 1985 – Clarifications

[Issued by the Reserve Bank of India, vide DBOD.No. Leg.BC. 83/09.07.005/2010-11, dated 30.03.2011]1. Witness in nomination forms

As you are aware, the Banking Companies (Nomination)Rules, 1985 have been framed in exercise of powers conferredby Section 52 read with Sections 45ZA, 45ZC and 45ZE ofthe Banking Regulation Act, 1949. The nomination forms(DA1, DA2 and DA3) have also been prescribed in theNomination Rules. These forms, inter alia, prescribe that thethumb impression of the accountholder is required to be attestedby two witnesses. It has come to our notice that some banksalso insist on attestation of signature by witnesses.

We have examined the issue in consultation with Indian Banks'Association and clarify that signatures of the accountholdersin forms DA1, DA2 and DA3 need not be attested by witnesses.

2. Nomination in case of joint Deposit Accounts

It is understood that sometimes the customers opening jointaccounts with or without "Either or Survivor " mandate, aredissuaded from exercising the nomination facility.

It is clarified that nomination facility is available for jointdeposit accounts also. Banks are, therefore, advised to ensurethat their branches offer nomination facility to all depositaccounts including joint accounts opened by the customers.

(GN - 129)

29

30

Export of Goods and Software –Realisation and Repatriation of export

proceeds – Liberalisation

[Issued by the Reserve Bank of India, vide AP (DIR Series)Circular No. 47, dated 31.03.2011]Attention of Authorised Dealer Category-I (AD Category-I)banks is invited to A.P. (DIR Series) Circular No. 57 datedJune 29, 2010 enhancing the period of realization andrepatriation to India of the amount representing the full exportvalue of goods or software exported, from six months to twelvemonths from the date of export. This relaxation was up toMarch 31, 2011.

2. The issue has since been reviewed and it has been decided,in consultation with the Government of India, to extend theabove relaxation up to September 30, 2011, subject to review.

3. The provisions in regard to period of realization andrepatriation to India of the full export value of goods orsoftware exported by a unit situated in a Special EconomicZone (SEZ) as well as exports made to warehouses establishedoutside India remains unchanged.

4. AD Category-I banks may bring the contents of this circularto the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issuedunder sections 10(4) and 11(1) of the Foreign ExchangeManagement Act (FEMA), 1999 (42 of 1999) and are withoutprejudice to permissions / approvals, if any, required underany other law.

Dr. Sujatha Elizabeth Prasad


Establishment of Financial Literacy andCredit Counselling Centres

[Issued by the Reserve Bank of India, vide RPCD.CO.FID.BC.No.58 /12.01.018/2010-11, dated 31.03.2011]We invite your attention to our circular RPCD.CO.MFFI.BC.NO.86/12.01.018/2008-09 dated February 4, 2009communicating a ‘Model scheme’ with regard to establishmentof Financial Literacy and Credit Counselling Centres (FLCCs).In the Model Scheme, it was envisaged that in order to have

31

MAY 2011662

Banks are advised to ensure strict compliance of the instructionsas per the clarification given above.

P.R. Ravi Mohan


NBFCs not to be Partners in Partnershipfirms

[Issued by the Reserve Bank of India, vide DNBS.PD/CC.NO. 214/03.02.002/2010-11, dated 30.03.2011]It has come to the notice of the Reserve Bank of India thatsome NBFCs have large investments in / have contributedcapital to partnership firms.

2. In view of the risks involved in NBFCs associatingthemselves with partnership firms, it has been decided toprohibit NBFCs from contributing capital to any partnershipfirm or to be partners in partnership firms. In cases of existingpartnerships, NBFCs may seek early retirement from thepartnership firms.

3. Copies of Amending Notifications No. DNBS.227/CGM(US)-2011 and No. DNBS.228/ CGM (US)-2011 dated March30, 2011 are enclosed for meticulous compliance.

Uma Subramaniam


RESERVE BANK OF INDIADEPARTMENT OF NON-BANKING SUPERVISION

CENTRAL OFFICECENTRE I, WORLD TRADE CENTRE,

CUFFE PARADE, COLABA,MUMBAI 400 005.

Notification no. DNBS.227/CGM(US)-2011 dated March30, 2011

The Reserve Bank of India, having considered it necessary inpublic interest and being satisfied that, for the purpose ofenabling the Bank to regulate the credit system to the advantageof the country, it is necessary to amend the Non-BankingFinancial (Deposit Accepting or Holding) CompaniesPrudential Norms (Reserve Bank) Directions, 2007 (hereinafterreferred to as the said Directions) contained in NotificationNo. DNBS. 192/DG(VL)-2007 dated February 22, 2007, inexercise of the powers conferred by section 45JA of the ReserveBank of India Act, 1934 (2 of 1934) and of all the powersenabling it in this behalf, hereby directs that the said Directionsshall be amended with immediate effect as follows-

Insertion of new paragraph 19A –

After paragraph 19 of the said Directions, the followingparagraph 19A shall be inserted.

“NBFCs not to be partners in partnership firms”

19A. (1) No non-banking financial company, which isaccepting public deposit shall contribute to the capital of apartnership firm or become a partner of such firm.

(2) A non-banking financial company, which is acceptingpublic deposit and which had already contributed to thecapital of a partnership firm or was a partner of apartnership shall seek early retirement from the partnershipfirm.

Uma Subramaniam





Notification No. DNBS. 228/CGM(US)-2011 dated March30, 2011

The Reserve Bank of India, having considered it necessaryin public interest and being satisfied that, for the purpose ofenabling the Bank to regulate the credit system to theadvantage of the country, it is necessary to amend the Non-Banking Financial (Non-Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions,2007 (hereinafter referred to as the said Directions) containedin Notification No. DNBS. 193/DG(VL)-2007 datedFebruary 22, 2007, in exercise of the powers conferred bysection 45JA of the Reserve Bank of India Act, 1934 (2 of1934) and of all the powers enabling it in this behalf, herebydirects that the said Directions shall be amended withimmediate effect as follows, namely -

Insertion of new paragraph 20A –

After paragraph 20 of the said Directions, the followingparagraph 20A shall be inserted.

“NBFCs not to be partners in partnership firms”

20A. (1) No non-banking financial company shall contributeto the capital of a partnership firm or become a partner ofsuch firm.

(2) A non-banking financial company, which had alreadycontributed to the capital of a partnership firm or was apartner of a partnership firm shall seek early retirementfrom the partnership firm.

Uma Subramaniam


(GN - 130)

32

663 MAY 2011

Collection of account payee cheques –Prohibition on crediting proceeds to third

party accounts

[Issued by the Reserve Bank of India, vide UBD. BPD. No.41/12.05.001/2010-11, dated 29.03.2011]Please refer to circular UBD.BPD. Cir. No. 30/14.01.062/2005-06 dated January 30, 2006 advising UCBs that theyshould not collect cheques crossed “account payee” for anyperson other than the payee constituent.

2. It has been brought to our notice that since co-operativecredit societies are not even sub-members of clearing houses,members of such co-operative credit societies who do not havebank accounts face difficulties in collection of account payeecheques drawn in their name. With a view to mitigating thedifficulties faced by the members of co-operative credit societiesin collection of account payee cheques, it is clarified thatcollecting banks may consider collecting account payee chequesdrawn for an amount not exceeding Rs.50,000/- to the accountof their customers who are co-operative credit societies, if thepayees of such cheques are the constituents of such co-operativecredit societies. While collecting the cheques as aforesaid, banksshould obtain a clear undertaking in writing from the co-operativecredit societies concerned that, upon realization, the proceedsof the cheques will be credited only to the account of the memberof the co-operative credit society who is the payee named in thecheque. This shall, however, be subject to the fulfillment of therequirements of the provisions of Negotiable Instruments Act,1881, including Section 131 thereof.

3. The collecting bank shall subject the society to the usual KYCnorms and enter into an agreement with the society that the KYCdocuments in respect of the society’s customers are preserved inthe society's records and are available to the bank for scrutiny.The collecting banks should, however, be aware that in the eventof a claim by the true owner of the cheque, the rights of the trueowner of the cheque are not in any manner affected by this circularand banks will have to establish that they acted in good faith andwithout negligence while collecting the cheque in question.

Uma Shankar


Amendment to Definition ofInfrastructure Loan

[Issued by the Reserve Bank of India, vide DNBS (PD) CC.No.213/03.10.001/2010-2011, dated 16.03.2011]The term “Infrastructure Loan” has been defined in Para 2(viii)of Non-Banking Financial (Deposit Accepting or Holding)Companies Prudential Norms (Reserve Bank) Directions, 2007

(GN - 131)

33and Non-Banking Financial (Non - Deposit Accepting orHolding) Companies Prudential Norms (Reserve Bank)Directions, 2007, respectively. It has now been decided toinclude “Telecom Towers” also as an infrastructure facilityfor availing credit facility.

2. It may further be clarified that only Credit RatingAgencies(CRAs) approved by the Reserve Bank can give therating to Infrastructure Finance Companies(IFCs) in terms ofDNBS.PD.CC.No.168/03.02.089/2009-10 dated February 12,2010. Accordingly it has been decided to substitute “creditrating agency accredited by RBI” in place of “accredited CRAs”in Paragraph19A (iii) of the Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms(Reserve Bank) Directions, 2007, issued vide Notification No.DNBS.193/DG (VL)-2007 dated February 22, 2007 andamended from time to time.

3. Amending Notifications No.DNBS(PD)226/CGM(US)2011amending Non-Banking Financial (Deposit Accepting orHolding) Companies Prudential Norms (Reserve Bank)Directions, 2007 and No.DNBS(PD)225/CGM(US)2011amending Non-Banking Financial (Non- Deposit Acceptingor Holding) Companies.

Prudential Norms (Reserve Bank) Directions, 2007 are enclosedfor meticulous compliance.

Uma Subramaniam

Chief General Manager-In-Charge




Notification No.DNBS(PD).225/CGM(US)-2011 datedMarch 16, 2011

The Reserve Bank of India, having considered it necessary inpublic interest and being satisfied that, for the purpose ofenabling the Bank to regulate the credit system to the advantageof the country, it is necessary to amend the Non-BankingFinancial (Non-Deposit Accepting or Holding) CompaniesPrudential Norms (Reserve Bank) Directions, 2007(hereinafterreferred to as the said Directions), contained in NotificationNo. DNBS. 193/DG(VL)-2007 dated February 22, 2007, inexercise of the powers conferred by section 45JA of the ReserveBank of India Act, 1934 (2 of 1934) and of all the powersenabling it in this behalf, hereby directs that the said Directionsshall be amended with immediate effect as follows, namely -

1. Amendment of paragraph 2 –

34

MAY 2011664 (GN - 132)

In sub-clause (e) of clause (viii) in sub-paragraph (1) of thesaid Directions, the term “Telecom Towers” shall be insertedbefore the term “network of trunking”.

2. Amendment of paragraph 19A –

The existing clause (iii) shall be substituted with the followingviz.,

“(iii) have obtained a minimum credit rating 'A' or equivalentof CRISIL, FITCH, CARE, ICRA or equivalentrating by any other credit rating agency accredited byRBI "

Uma Subramaniam





Notification No. DNBS(PD).226/CGM(US)-2011 datedMarch 16, 2011

The Reserve Bank of India, having considered it necessary in

public interest and being satisfied that, for the purpose ofenabling the Bank to regulate the credit system to the advantageof the country, it is necessary to amend the Non-BankingFinancial (Deposit Accepting or Holding) Companies PrudentialNorms (Reserve Bank) Directions, 2007 (here in after referredto as the said Directions), contained in Notification No.DNBS.192/DG(VL)-2007 dated February 22, 2007, in exerciseof the powers conferred by sections 45JA of the Reserve Bankof India Act, 1934 (2 of 1934) and of all the powers enabling itin this behalf, hereby directs that the said Directions shall beamended with immediate effect as follows, namely -

1. Amendment of paragraph 2 –

(i) In sub-clause (e) of clause (viii) in sub-paragraph(1) of the said Directions, the term “TelecomTowers” shall be inserted before the term “network oftrunking”.

(ii) The sub-clause (k) of clause (viii) in sub-paragraph(1) of the said Directions viz; 'constructionof educational institutions and hospitals" shall beomitted.

Uma Subramaniam


REQUIRE

COMPANY SECRETARY – LOCATION GURGAON

A HIGHLY SUCCESSFUL GROUP HAVING BUSINESS INTERESTS IN INDIA AND ABROAD REQUIREFOLLOWING :

1. COMPANY SECRETARY 5 – 7 YEARS POST QUALIFICATION EXPERIENCE (WELL VERSED IN FEMAAND COMPLIANCES UNDER THE RESERVE BANK OF INDIA AND CORPORATE LAWS; DRAFTINGAND VETTING OF AGREEMENTS.

2. COMPANY SECRETARY – TRAINEE THE COMPANY ALSO REQUIRES CANDIDATES SEEKING 15MONTHS TRAINING AS PER INSTITUTE’S GUIDELINES.

THE CANDIDATE FOR BOTH THE POSITION NEED TO BE WELL CONVERSANT WORKING INCOMPUTERISED ENVIRONMENT. CANDIDATES LOCATED IN GURGAON OR READY TO RELOCATE TOGURGAON SHALL BE PREFERRED.

INTERESTED CADIDATES MAY SEND THEIR DETAILED RESUME INDICATING PRESENT AND EXPECTEDSALARY TO:

[email protected]

Appointment