01 January 0001

Corporate Amicus: April 2019

Companies (Significant Beneficial Owners) Amendment Rules, 2019 - Significant clarity at last
by Sudish Sharma, Samad Ali and and Anantha Desikan S

The first article in this issue of Corporate Amicus discusses key changes to Significant Beneficial Owners Rules. As per the latest amendments, the Central Government has prescribed a new criterion for determination of SBOs. Only direct holding of shares or voting rights have been ruled out to positively ascertain who an SBO is. This is a significant development as it clarifies the intent of the SBO Rules. The latest amendments have also removed the mandatory condition for every company to identify a person as ‘significant beneficial owner’. Further, elaborating on certain definitions like ‘significant influence’, ‘significant beneficial owner’ and ‘majority stake’, the authors state that the most significant change is the fact that the forms of direct association with a company, i.e., directly holding shares, directly holding voting rights and/or exercising direct control have been ruled out as tests for the identification of SBOs...

Maximum pensionable salary - SC upholds HC judgment quashing cap thereon
by Ankit Parihar

The Central Government had amended the pension scheme in 2014 to provide that employees who were contributing in respect of salaries above the prescribed limit may, on a fresh option to be exercised jointly by the employer and employee within six months, continue to contribute from salaries above the prescribed limit by making an additional contribution of 1.16% towards the salary exceeding Rs. 15,000/-. The Kerala High Court however set aside the amendments observing that since the EPF Act did not contemplate any additional contributions by the employer or the employee towards the Pension Fund, the condition of additional contribution of 1.16% by employees was not sustainable. SLP against this High Court judgement has been recently dismissed by the Supreme Court. According to the author of the second article in this issue, it is likely that several employees will exercise the option to make contribution in excess of the prescribed limit and get the benefit of higher pension. However, it remains to be seen as to whether the EPFO will implement the judgment swiftly...

Notifications and Circulars

  • Foreign Exchange Management (Establishment in India of a Branch Office or a Liaison Office or a Project Office or any Other Place of Business) Regulations, 2016 – Amendments
  • Companies (Incorporation) Amendment Rules, 2019 - Rule 25A pertaining to Active Company Tagging Identity and Verification (ACTIVE) introduced

Ratio Decidendi

  • Claims in quantum merit vis-à-vis damages in breach of contract – Supreme Court
  • Arbitration – No award of interest when not provided for in arbitration agreement – Supreme Court

News Nuggets

  • Mere plea of coercion without evidence is not enough to appoint arbitrator
  • Competition - Failure to pay penalty under Section 43 can attract criminal action
  • Every order of Arbitral Tribunal terminating proceeding is not an award
  • NCLAT Rules – Service of notice for hearing mandatory
  • Insufficient stamping of agreement does not affect appointment of arbitrator
  • Insolvency – NCLT when not to direct RP to file for liquidation
  • Disqualified directors relieved – Section 164(2) of Companies Act prospective
  • View of one judge is view of the bench if other judges do not dissent

April, 2019/Issue-91 April, 2019/Issue-91

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