Lawyer Monthly Magazine - April 2020 Edition

REGULATORY UPDATE OF THE MONTH From Clasis Law offers for companies) can be made under Section 230(11) of the Companies Act by any member (along with other member(s)) holding not less than 3/4th of the ‘shares’ in the concerned company, and where such application has been filed for acquiring all or any part of the remaining ‘shares’ of such company. For this purpose, the term ‘shares’ shall mean “equity shares of the company carrying voting rights, and includes any securities, such as depository receipts, which entitles the holder thereof to exercise voting rights.” Further, it is also clarified that the aforesaid sub-rule will not be applicable in case of any transfer or transmission of shares through a contract, arrangement or succession, as applicable, or any transfer made in pursuance of any statutory or regulatory requirement; and (b) The MCA has also notified the National Company Law Tribunal (Amendment) Rules, 2020 which inter alia provides that an application can be made (in Form NCLT-1) under Section 230(12) (i.e. by an aggrieved party in cases of grievances with respect to a takeover offer of unlisted companies). Further, in terms of sections 230(11) and 230(12) of the Companies Act, 2013 (now notified), the majority shareholders of a company have another option in addition to options already available (such as reduction of share capital under Section 66 of the Companies Act and purchase of minority shareholding under Section 236 of the Companies Act) to achieve the exit of minority shareholders. Common Application Form (CAF) for Foreign Portfolio Investors On 4 February 2020, the Securities and Exchange Board of India (“SEBI”) issued a notification that the applicants seeking Foreign Portfolio Investors (FPIs) registration shall be required to duly fill CAF and ‘Annexure to CAF’ and provide supporting documents with the applicable fees for SEBI registration and issuance of Permanent Account Number (PAN). Further, designated depository participants (DDP) may accept in-transit FPI registration applications, for a period of 60 days from 4 February 2020 as per the form as prescribed in operational guidelines issued on 5 November 2019. This notification was issued in furtherance Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2020 On 3 February 2020, the Central Government notified the provisions of Section 230(11) and (12) of the Companies Act, 2013 which has come into force from 3 February 2020. The provisions enable takeover of a company by way of a scheme of arrangement or raise grievances in this relation, pursuant to an application being made to the National Company Law Tribunal (NCLT). In relation to this, the following notifications have also been issued, with respect to the procedural aspects for making the application(s) under Section 230(11) and (12): (a) The Ministry of Corporate Affairs (“MCA”) has notified the Companies (Compromise, Arrangements and Amalgamations) Amendment Rules, 2020 (“CAA Amendment Rules”) , which amends the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 (“CAA Rules”) . The CAA Amendment Rules inter alia stipulate that an application for arrangement (i.e. for making takeover WWW.LAWYER-MONTHLY.COM | APR 2020 16 REGULATORY UPDATE OF THE MONTH - INDIA