Article

Digital payments - Revised framework on monetary penalties is a step towards transparency

By Kumar Panda

Reserve Bank of India in 2016 had issued a framework for imposing monetary penalties on Authorised Payment Systems Operators / banks under Payment and Settlement Systems Act, 2007. This Framework which provides a procedural guidance on levy of penalties and compounding under the PSS Act, has been recently updated by the RBI. The article in this issue of Corporate Amicus highlights the key changes in the new framework and elaborates upon the introduction of objective methodology to determine the materiality of contravention and determining the amount of penalty, requirement of a speaking order, expansion of provisions relating to compounding, etc. According to the author, by issuance of this framework, RBI has voluntarily clipped its own wings from exercising the wide discretionary powers under the PSS Act. The author believes that the new framework is also a step forward towards transparency in regulatory actions in a sector that is heavily regulated...

Notifications and Circulars

• Foreign Direct Investment in Insurance Sector revised
• Takeover provisions under sub-sections 230(11) and (12) of Companies Act, 2013 notified
• Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 amended in pursuance of notification of sub-sections 230(11) and (12)
• Exceptions/modifications/adaptations applicable to Government Company – Notification revised
• Independent Directors - Companies (Appointments and Qualifications of Directors) Rules, 2014 amended
• Companies (Auditor’s Report) Order, 2020 – Order specifies matters that shall be contained in the Auditor’s Report including a statement on specified matters
• Companies (Issue of Global Depository Receipts) Rules, 2014 amended to substitute “Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993” by “Depository Receipts Scheme 2014”
• Prosecutions against Independent Directors, non-promoters and non-KMP non-executive directors – Standard Operating Procedure
• Filing of forms in MCA-21 Registry by Insolvency Professional appointed under IBC – Procedure
• Securities – New Guidelines for Portfolio Managers to come into effect from 1-5-2020
• Operating Guidelines for Investment Advisors in International Financial Services Centre – Clarifications
• SEBI (International Financial Services Centres) Guidelines, 2015 amended
• Margin Obligations to be given by way of Pledge/Re-pledge in Depository System

Ratio decidendi

• Reverse corporate insolvency resolution process may be followed in the case of real estate companies to keep the company a going concern for completion of the project – National Company Law Appellate Tribunal
• Person having only security interest over assets of corporate debtor is not a ‘financial creditor’ as per definitions contained in sub-sections 5(7) and 5(8) of IBC – Larger Bench of Supreme Court
• When disputed questions of facts are involved to be adjudicated after the parties adduce evidence, the complaint u/s. 138 of NI Act ought not to be quashed – Supreme Court

News Nuggets

• Companies (Incorporation) Amendment Rules, 2020
• Virtual currencies – RBI Circular restricting functioning of VC exchanges set aside
• Consumer Protection Act – Time limit for responding to complaint is mandatory
• Change of auditor – Companies Act Section 140(5) not invokable for negligent acts of auditor
• Criminal investigations against the ‘Corporate Debtor’ stands abated upon approval of Resolution Plan
• Draft Competition (Amendment) Bill, 2020 – Comments invited
• Nidhi Rules, 2014 amended