Corporate Laws

Reserve Bank of India (India) has issued the Circular No. 15 dated November 07, 2016 to provide the clarity and bring uniformity in hedging practices in the market so as to effectively address currency risk at a systemic level. 

 Following clarifications are issued:

  1. Coverage: Wherever hedging has been mandated by the RBI, the ECB borrower will be required to cover principal as well as coupon through financial hedges. The   financial hedge for all exposures on account of ECB should start from the time of each such exposure (i.e. the day liability is created in the books of the borrower).
  2. Tenor and rollover: A minimum tenor of one year of financial hedge would be required with periodic rollover duly ensuring that the exposure on account of ECB is not unhedged at any point during the currency of ECB.
  3. Natural Hedge: Natural hedge, in lieu of financial hedge, will be considered only to the extent of offsetting projected cash flows / revenues in matching currency, net of all other projected outflows. For this purpose, an ECB may be considered naturally hedged if the offsetting exposure has the maturity/cash flow within the same accounting year. Any other arrangements/ structures, where revenues are indexed to foreign currency will not be considered as natural hedge.
Posted on: 09-11-2016
Companies (Acceptance of Deposits) Amendment Rules 2016 dated June 29, 2016

The Ministry of Corporate Affairs (MCA) has notified further amendments in Deposit Acceptance Rules.  The key highlights are as under:

·         In order to open up investment routes in start-ups, amounts of Rs. 25 lakh or more received by a start-up company by issuing convertible note, convertible to equity or refundable within 5 years, have been excluded from the purview of deposits under the Companies Act.

·         Companies can now accept deposits from members (including other outstanding deposits)upto 25 percent of their paid up capital and free reserves as against the earlier limit of 35 percent. For Private Companies the limit has been increased to 100 percent.

·         Companies are now required to make following disclosures, by way of notes, in their financial statements:

o   Private Companies: Money received from directors or their relatives

o   Public Companies: Money received from directors

·         Time period of Compulsorily Convertible Debentures has been increased from five years to ten years.

  Further Reading
Posted on: 06-07-2016
Notifications S.O. 1933(E) and S.O. 1935(E) dated June 01, 2016


The Ministry of Corporate Affairs (MCA) has issued a notification for Constitution of the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) with effect from June 01, 2016. Simultaneously a number of provisions of Companies Act 2013 relating to matters requiring approval of NCLT/NCLAT have been brought into force. The NCLT has been set up with eleven benches including one principal bench at New Delhi.


With the constitution of the NCLT, the Company Law Board constituted under the Companies Act, 1956 and the Board for Industrial and Financial Reconstruction stand dissolved. It is a part of the Government’s efforts of moving towards a regime of faster resolution of corporate disputes, thereby improving the ease of doing business in India. NCLT and NCLAT will also pave the way for the faster implementation of the bankruptcy code. The NCLT would also deal with various matters, which were earlier under the jurisdiction of High Court such as winding up, mergers and amalgamations but presently these sections have not been notified.

  Further Reading
Posted on: 08-06-2016
(Companies (Corporate Social Responsibility Policy) Amendment Rules, 2016 dated 23th May, 2016)

Companies are now permitted to undertake CSR activities through Govt established non-profit entities established by the Central or State Government. Previously, Companies were only permitted to undertake these activities through a non-profit entity established by them or jointly with other companies. 


Non-profit entities can be in the form or Section 8 Company, or a registered Trust or a registered Society. It is to be noted that such companies/trust/society should have an established track record of three years in undertaking similar programs or projects.


Posted on: 28-05-2016