Restoration of requirement of appointing whole-time company secretary by all companies having paid up share capital of INR 50 million and above
Following representations by the Institute of Company Secretaries of India (ICSI), the Ministry of Corporate Affairs has issued a notification on June 9, 2014 which amends the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, pursuant to which now all companies having paid up share capital of INR 50 million and above are required to appoint a whole-time company secretary.
Prior to this amendment the said Rules provided for mandatory appointment of whole-time key managerial personnel (including company secretary) by all listed companies and by public companies having paid up capital of INR 100 million or more. Accordingly, all unlisted public companies having paid up share capital below INR 100 million and all private companies, irrespective of their paid up share capital, were exempted from appointing a whole-time company secretary.
Government proposes liberalisation of the foreign direct investment (FDI) scheme
For easing the inflow of FDI, the Ministry of Finance has put in a proposal for liberalising the FDI policy. For the sectors that are regulated by the FDI policy and having sectoral conditions and caps in place, the ministry has proposed a composite 49% FDI cap under the automatic route (barring a few strategic sectors), which cap would include all types of investments such as FDI, foreign institutional investment, investment by non-resident Indians. The said cap is likely to be imposed in sectors such as railways, defence and e-commerce.
Proposals are also under consideration by the Government for raising the FDI limits in insurance sector from 26% to 49%, subject to certain conditions and also in the defence sector from 26% to 100% through the approval route subject to strict riders.
Reserve Bank of India (RBI) simplifies the procedure for raising external commercial borrowings (ECB) from foreign equity holder
The RBI has simplified the procedure for raising of ECB from foreign equity holder under the ECB policy, which were earlier considered both under the automatic route as well approval route. Now, the following cases which were earlier under the approval route have been placed under the automatic route and powers have been delegated by the RBI to Authorised Dealer banks to approve the same:
- Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors from indirect equity holders and group companies.
- Proposals for raising ECB for companies in miscellaneous services from direct / indirect equity holders and group companies. Miscellaneous services mean companies engaged in training activities (but not educational institutes), research and development activities and companies supporting infrastructure sector. However, companies doing trading business, companies providing logistics services, financial services and consultancy services are not covered under the facility.
- Proposals for raising ECB by companies belonging to manufacturing, infrastructure, hotels, hospitals and software sectors for general corporate purpose. ECB for general corporate purpose (which includes working capital financing) is, however, permitted only from direct equity holder.
- Proposals involving change of lender when the ECB is from foreign equity holders (direct/indirect) and group company.
All the other conditions under the ECB policy remain unchanged.