July 2013

Genicon Legal Strings

Inside

ECB in Civil Aviation Sector for working capital

Buyback / Prepayment of FCCBs

ECB for the low cost affordable housing projects

Amendment in SEBI (Buy Back of Securities) Regulations, 1998

Enabling Listing of Start-Ups and SMEs on Institutional Trading Platform (ITP)

without having to make an IPO

Amendments to SEBI ICDR - preferential issue

Manner of Dealing with Audit Reports filed by Listed companies Clarification

TDS for Professional / Technical Fee made by the resident to a foreign entity

Rates at a Glance

Wisdom Corner Tea and Meditation by Osho

Editorial Team

N.A. Srinivasan
M. Alagar
T.V. Sureshkumar
Support Team
S. Snegaa
R.V. Sureshbabu

ECB in Civil Aviation Sector for working capital

Vide APDIR Circular No.113 dated April 24, 2013 the companies in civil
aviation sector are permitted to raise ECB for working capital within 12
months from 24th April 2012 (date of notification of earlier circular).
On a review, Vide APDIR Circular No.116 dated June 25, 2013, it has now
been decided that the scheme of availing of ECB for working capital by the
Companies in civil aviation sector will continue till December 31, 2013.

Buyback / Prepayment of FCCBs

Vide APDIR Circular No.115 dated June 25, 2013 it has been decided that
the existing scheme of Buyback / Prepayment of FCCBs under the approval
route which expired on March 31, 2013 may be continued till December 31,
2013 and shall stand discontinued thereafter.

ECB for the low cost affordable housing projects

Amendment in SEBI (Buy Back of Securities)

Regulations, 1998
The SEBI has approved Chandrasekhar Committee's recommendations
on SEBI (Buy Back of Securities) Regulations, 1998.
These
amendments are in recognition of the fact that the buyback
regulations for the stock exchange mechanism (i.e open market
purchase) have been grossly misused over the years. Initially, there
was no mandate on the amount of buyback that was required and
therefore, companies would announce very high buyback price, not
buy single share for the whole year and give wrong signal to the
investors. Then the SEBI came up the regulation mandating minimum
buy back of 25% of the amount earmarked for buy back couple of years
ago.
Further, if you analyse the capital market data of the last 15 months or
so, it is found that every third issue mobilised less than one third of its
intended buyback amount. So 14 out of 43 companies bought back less
than 30 percent of the intended buyback, this included some of the
largest buyback announcements like Reliance industries and Reliance
Infrastructure that ended up with 25-30 percent.
The SEBI has made the following amendments in SEBI Buy Back
Regulations to arrest misuse of open market buy back mechanism;

As per existing ECB policy, ECB for low cost affordable housing projects is
allowed as a permissible end-use under the approval route subject to
certain terms and conditions;

1.

RBI reviewed ECB policy in this regard and decided to modify the conditions
as detailed below;
Developers/builders should have a minimum of three (3) years experience
in undertaking residential projects as against five (5) years prescribed
earlier and should have good track record in terms of quality and delivery.
The condition of minimum paid-up capital of not less than INR 50 crore, as
per the latest audited balance sheet, for Housing Finance Companies (HFCs)
stands withdrawn. However, the condition of the minimum Net Owned
Funds (NoF) of Rs. 300 crore for the past three financial years remains
unchanged.
The aggregate limit for ECB under the low cost affordable housing scheme is
extended for the financial years 2013-14 and 2014-15 with a ceiling of USD
1 billion in each of the two years, subject to review thereafter.
The ECB availed of by developers and builders shall be swapped into Rupees
for the entire maturity on fully hedged basis.

2.
3.

4.

5.

6.
7.
8.

9.

Hanging onto resentment is letting someone you

despise live rent-free in your head

Laziness is nothing more than the habit of resting

before you get tired

The mandatory minimum buy-back has been increased to

50% of the amount earmarked for the buy-back from 25%,
failing which amount in the escrow account would be
forfeited subject to a maximum of 2.5% of the total amount
earmarked.
The maximum buy-back period has been reduced to 6
months from 12 months.
The companies shall create an escrow account towards
security for performance with an amount equivalent to at
least 25% of the amount earmarked for buy-back.
The company shall not raise further capital for a period of
one year from the closure of the buy-back except in
discharge of subsisting obligations as against the existing 6
months.
The company shall not make another buy-back offer within a
period of one year from the date of closure of the preceding
offer.
Rationalization of disclosure requirement.
The companies can buy-back 15% or more of capital (paid-up
capital and free reserves) only by way of tender offer.
The companies are permitted to extinguish shares bought
back during the month, within fifteen days of the succeeding
month subject to the last extinguishment within seven days
of the completion of the offer.
The promoters of the company shall not execute any
transaction, either on-market or off-market, during the buyback period.

Try to know everything of something and

something of everything

Enabling Listing of Start-Ups and SMEs on

Institutional Trading Platform (ITP) without
having to make an IPO
Lack of exit opportunities for the existing investors and restricted access to
new investors is one of the problems faced by Start-Ups and SMEs. With a
view to provide easier exit options for informed investors like Angel
Investors, VCFs, PE, etc. to provide better visibility, wider investor base and
greater fund raising capabilities to such companies, the Board approved the
proposal to amend the SEBI (ICDR) Regulations to permit listing of Start-ups
and SMEs in Institutional Trading platform (ITP) without having to make an
IPO.
The companies eligible to be listed on this Institutional Trading Platform
can access investment only from the informed investors. Therefore the
minimum amount for trading or investment on the ITP will be Rs 10 lakh.
These companies shall be exempted from the requirements of rule 19(2)(b)
of SC(R)R 1957 under which companies have to offer upto 25% of its
shareholding to public through an offer document in order to get listed.
Therefore the listing can be done without an IPO and the expenses
associated with it. While such companies are listed on the ITP they will not
be permitted to raise capital though they can continue to make private
placements.
Listing on ITP by Start-Ups and SMEs is expected to offer their existing
investors better chances to find alternate buyers than if they search using
their own network in the investment community. Standardized norms of
entry for companies, eligibility criteria, continuous disclosure requirements,
simplified exit rules and corporate governance norms will be prescribed.

Amendments to SEBI ICDR - preferential issue

With a view to enhance transparency, ensure adequate audit trail and apply
lock-in for the shares allotted in preferential issues, the Board approved the
following;

Manner of Dealing with Audit Reports filed by

listed companies - Clarification
SEBI has, vide circular dated August 13, 2012, provided for the
"Manner of Dealing with Audit Reports filed by Listed companies", by
which it has mandated listed companies to submit either Form A
(Unqualified/ Matter of Emphasis Report) or Form B (Qualified/ Subject
To/ Except For Audit Report) along with the Annual Report to the Stock
Exchanges. It is also envisaged that the qualified audit reports will be
scrutinized by Qualified Audit Review Committee (QARC) and if
necessary, the company will be required to restate its books of
accounts to provide true and fair view of its financial position.
With regard to restatement of books of accounts, SEBI vide circular
dated 5th June 2013 clarified that the restatement of books of
accounts shall mean that the company is required to disclose the effect
of revised financial accounts by way of revised pro-forma financial
results immediately to the shareholders through Stock Exchange(s).
However, the financial effects of the revision may be carried out in the
annual accounts of the subsequent financial year as a prior period item
so that the tax impacts, if any, can be taken care of.

Service Tax
Amendment to Principal Notification No.6/2013, dated 18th April 2013
vide Notification No.11/2013, dated 13th June 2013.

After the first proviso (in the said Principal Notification No.6/2013), the
following proviso shall be inserted, namely:Provided further that for the purpose of calculation of export
performance or for computation of entitlement under paragraph
3.14.4 or paragraph 3.14.5 of the Foreign Trade Policy, the incremental
growth shall be in respect of each exporter [Importer Exporter Code
(IEC) holder] without any scope of combining the export for group
company or for transferring export performance from any other IEC
holder and the incremental growth shall be in terms of freely
convertible currency to the designated markets.

1.

Preferential issue shall be subscribed only through the allottees

own bank account. Further, the issuing company shall disclose
the ultimate beneficial owner of allotted shares.

2.

Allotments in preferential issues shall only be made in

dematerialized form.

Also as per the above amendment, certain categories of exports shall

not be counted for calculation of export performance or for
computation of entitlement.

3.

Shares allotted in the preferential issue shall not be transferred

till trading approval is granted for such shares by the stock
exchanges. Further, the lock-in period shall commence on the
date of such trading approval

Love is not blind - it sees more, not less. But because it sees
more, it is not willing to see less.

Good manners sometimes means simply putting up with other

people's bad manners.
We must use time wisely and forever realize that the time is
always ripe to do right.

Be ready when opportunity comes...Luck is the time when

preparation and opportunity meet.
Success is the sum of small efforts, repeated day in and day
out.

TDS for Professional / Technical fee made by a

resident to the Foreign Company
Sec 195 of the Income Tax Act deals with TDS for Professional / Technical
fees made by a Person (resident or non-resident) to the foreign company.
TDS is to be deducted at the rate specified under Sec 195 or under
Avoidance of Double taxation agreement whichever is lower:
If the tax deductor is having any doubt on what amount the TDS is to be
deducted then he can make an application to the TDS cell to determine on
what amount he is required to deduct the TDS. The deductor can deduct
the TDS on the amount determined by the assessing officer.
Furnishing information regarding remittance to Non- resident:
The Person making payment will obtain a certificate from a Practicing
Chartered Accountant in Form No: 15CB.
The remitter then access the website: www.incometaxindia.gov.in to
electronically upload the remittance details to the department in Form No:
15CA. The information to be furnished in Form No: 15CA is to be filled using
the information contained in Form no:15CB certificate.
The remitter will then take a printout of this filled up Form No:15 CA which
will bear an acknowledgement Number generated by the system and sign
it. Form 15CA can be signed by the person authorised to sign the return of
income of the remitter or a person so authorised by him in writing.
The duly signed form 15CA and Form no: 15CB will be submitted in
duplicate to the RBI/authorized dealer. The RBI/authorized dealer will in
turn will forward a copy of the certificate to the assessing officer.
The remitter who has obtained the certificate from the assessing officer
regarding the rate at or amount on which the tax is to be deducted, is not
required to obtain a certificate from the accountant in Form no:15CB.
However, he is required to furnish information in Form no:15CA and submit
it along with a copy of the certificate from the assessing officer as per the
procedure given above.

Rates at a glance:
Commodity
1
2
3
4
5
6
7
8

Gold (22k)/gm
Silver
Petrol
Diesel
LPG
Subsidized
Non Subsidized
Dollar
Euro
Pound

Rates (in Rs)

01st June 2013
30th June 2013
2536
2437
44.64
43.60
66.75
71.71
52.92
53.53
398
398
827
827
54.96
59.70
73.44
78.06
85.95
90.90

Wisdom Corner - Tea and Meditation Osho

All the Buddhist masters have been drinking tea, it has been their
discovery. It was Bodhidharma who discovered tea. The name `tea'
comes from the mountain Tha in China, where Bodhidharma was
meditating. And the name has remained the same in different
languages ... just slight changes. In Hindi it is chai, in Marathi it is
cha, in Chinese it is tha, in English it has become tea. But a thousand
masters have never denied tea as something unspiritual. On the
contrary, Zen has in its monasteries a special teahouse, and when
they go for tea it is called a tea ceremony. They have transformed
the simple act of drinking tea into a beautiful meditation. You have
to leave your shoes outside as if you are entering into a temple. And
there is a master who is going to lead the ceremony. Then
everybody sits down in the silence of the monastery, the tea is
prepared on the samovar and everybody listens to the music of the
samovar boiling the tea. It becomes a meditation. Watchfulness is
meditation, what you watch does not matter. Then the master with
great grace brings the tea to everybody; pours the tea with immense
awareness, consciousness, carefulness, respectfulness, and
everybody receives the tea as if something divine is being received.
In that silence sipping the tea ... and this very ordinary thing has
become a spiritual experience. Nobody can speak in the teahouse,
silence is the rule. When you put down your cups and saucers you
also bow down with gratitude to existence. The tea was only a
symbol.
From Mundane to Meditative
A cup of tea in Zen is not the same as it is anywhere else in the
world. A cup of tea is the greatest reception a Zen master can give to
you. The cup of tea represents awareness. After drinking tea you
cannot go to sleep; hence tea became one of the most important
symbols of awareness, of meditation. "Have a cup of tea" does not
simply mean, "Have a cup of tea." Certainly the tea is offered, but
with the understanding that the cup is full of awareness. A cup of
tea has been used in many ways by the Zen masters.
To make tea a meditative ceremony is just symbolic. It shows that
any mundane activity can become meditative. Digging a hole in the
garden, planting new roses in the garden... you can do it with such
tremendous love and compassion, you can do it with the hands of
the buddha. There is no contradiction. The tea ceremony is only the
beginning.
I say unto you: Your every act should be a ceremony. If you can
bring your consciousness, your awareness, your intelligence to the
act, if you can be spontaneous, then there is no need for any other
religion, life itself will be the religion.

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