–CS. Sandeep J, ACS, B. Com
Govt. widens PMLA's scope, brings directors, nominee shareholders, and formation agents under its ambit
The Indian government has made changes to the Prevention of Money Laundering Act (PMLA) to tackle money laundering and terrorist financing. – The changes require certain individuals, such as directors or secretaries of a company, partners of a firm, trustees of an express trust, and nominee shareholders of a company, to report certain activities undertaken in the course of their business.
– The activities that must be reported include: – Acting as a formation agent of companies and LLPs.
– Providing a registered office, business address, or accommodation, correspondence, or administrative address for a company or an LLP or a trust.
– Acting as a trustee of an express trust or performing the equivalent function for another type of trust.
– Acting as a nominee shareholder for another person, or arranging for another person to act as a nominee shareholder.
Appeal against NCLT’s order rejected as appellant-director disregarded HC’s direction to file an appeal within 2 weeks
M.K. Resely v. Union Bank of India –  (NCLAT – Chennai)
– In this case, a financial creditor filed a Corporate Insolvency Resolution Process (CIRP) application against a corporate debtor, which was admitted by the Adjudicating Authority (National Company Law Tribunal or NCLT).
– The liquidator was appointed by the NCLT to manage the corporate debtor’s affairs.
– After verifying the claims received by the liquidator, they found that a piece of land owned by the corporate debtor’s promoter/director (appellant) was in the possession of the bank (respondent no. 1) that filed the CIRP application.
– The liquidator filed an application before the NCLT, seeking directions for respondent no. 1 to surrender the possession of the land to the liquidate estate of the corporate debtor.
– The NCLT allowed the liquidator’s application.
– The appellant filed a writ petition before the High Court on January 26, 2022, challenging the NCLT’s order.
– On June 22, 2022, the High Court disposed of the writ petition and directed the appellant to file an appeal within two weeks. The High Court also directed the NCLT to pass an order afresh.
– The NCLT affirmed its previous order.
– The appellant filed an appeal before the National Company Law Appellate Tribunal on July 6, 2022.
– The appellant requested the exclusion of the period from January 25, 2022, to June 22, 2022, for filing the appeal, as they were pursuing a remedy in the High Court during that time.
– The NCLAT held that the period from January 25, 2022, to June 22, 2022, could be excluded in computing the period of limitation.
– However, the NCLAT also held that since the last date for filing an appeal based on the High Court’s order expired on July 5, 2022, the appeal filed on July 6, 2022, was beyond the prescribed time limit.
– The NCLAT also noted that the appellant had not followed the High Court’s instructions meticulously and scrupulously.
– As a result, the NCLAT rejected the appeal.
MCA amends Strike-off Rules; brings more clarity on filing of overdue financials before applying for striking-off
Notification No. G.S.R. 354(E), Dated: 10.05.2023
-The Indian Ministry of Corporate Affairs has notified an amendment to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 -Companies must now file their overdue financial statements and annual returns up to end of the financial year in which they stopped doing business before they can apply to be struck off the register.
-This requirement was previously removed, but it has been now been reintroduced. -The new rules come into effect on May 10, 2023.
-It’s important for companies to comply with these requirements to avoid any delays in the process of being struck off the register.
SEBI allows direct market access facility to FPIs for participating in Exchange Traded Commodity Derivatives
Circular No. SEBI/HO/MRD/MRD-PoD-1/P/CIR/2023/68; dated: 10.05.2023
– SEBI has allowed stock exchanges to extend DMA facility to FPIs for participation in Exchange Traded Commodity Derivatives.
– DMA is a trading facility that allows clients of a broker to directly access the exchange trading system through the broker’s infrastructure to place orders without manual intervention by the broker.
– DMA offers certain advantages to brokers such as direct control over orders, faster execution of orders, reduced risk of errors associated with manual order entry, maintaining confidentiality, lower impact costs for large orders and implementing better hedging and arbitrage strategies.
– The permission is subject to certain conditions that require stock exchanges/brokers to follow the procedure for application for DMA, operational specifications, client authorization and broker-client agreement, risk management, etc.
– The circular shall be effective immediately.
SEBI directs all Reporting Entities falling under Debenture Trustee segment to register with FINNET 2.0 system
Circular No. SEBI/HO/DDHS/DDHS-POD1/CIR/P/2023/67, dated: 09.05.2023
– On April 19, 2023, the Financial Intelligence Unit – India (FIU-India) issued guidelines for detecting suspicious transactions by Debenture Trustees (DTs).
– The guidelines included red flag indicators for detecting money laundering and terrorism financing under Rule 7(3) of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005.
– The Securities and Exchange Board of India (SEBI) has directed all Reporting Entities in the DT segment registered in the FINNET 1.0 system of FIU-India to re-register in the new FINNET 2.0 system/module.
– The FINNET 2.0 module aims to provide quality financial intelligence for safeguarding the financial system from money laundering, terrorism financing, and other economic offences.
– Reporting entities who have not yet registered with FIU-India are required to be registered immediately in the FINNET 2.0 system/module in light of the FATF mutual evaluation.