IBBI (Insolvency Resolution Process for CPs) (Second Amendment) Regulations, 2019

IBBI (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2019 notified on 25^th July 2019

·         Important Amendments in the following Regulations / Sections:

·         Substitution of Regulation 30A relating to “Withdrawal of Application”

·         Changes in Regulation 31 relating to “Insolvency Resolution Process Costs”

·         Insertion of Regulation 39B relating to “Meeting Liquidation Cost”

·         Insertion of Regulation 39C relating to Assessment of Sale as a going concern”

·         Insertion of Regulation 39D relating to “Fee of Liquidator”

·         Changes in Regulation 40A relating to “Model Time-line for CIRP”

·         Substitution of Form FA relating to “Application for withdrawal of CIRP”

Amendment in Form DPT-3

Vide MCA Notification dated January 22, 2019, there is an amendment in the Companies (Acceptance of Deposits) Rules, 2014 with regard to filing of e-Form DPT-3 relating to Return of Deposit.

As per the above said amendment, Annual Return in Form DPT-3 is required to be filed by all companies, except a Government Company, to provide disclosure of -

·         Deposits, and

·         Transactions not considered as deposits.

As per Rule 2 [1] [c], the definition of the term deposit is an inclusive definition, which included any receipt of money by way of deposit or loan or in any other form by a company.  The said definition of deposit also excluded certain transactions from the purview of the term deposit.

Prior to the above said amendment, the companies were required to give details regarding deposit received in e-Form DPT-3.    If any money was received by the company which was excluded from the definition of ‘deposit’, such company was not required to file e-Form DPT-3.

Now, after the amendment, every company, whether public or private, whether it has received any amount within the definition of ‘deposit’ or not (i.e. falling under the excluded categories), is required to file e-Form DPT-3.

Further, the Annual Return is required to be filed on or before 30^th June to furnish such details as on 31^st of March every year duly audited by the Auditor of the Company.

As you are aware, the companies are allowed to hold Annual General Meeting to consider and adopt its annual accounts till 30^th September (or any extension thereof) every year.  Hence the companies were in a position to complete its account audited till September.  However, the above requirement of filing e-Form DPT-3 mandates every company to audit it accounts well in advance, so as to file such audited figures on or before 30^th June.  Practically this may put some hardship / difficulty to most of the companies.  Probably we may expect some amendment to this amendment.

Apart from the Annual Return, every company other than Government Company is now required to file one-time return for disclosure of details of outstanding money or loan received by a company although not falling under the ambit of deposit as defined in the Rules as above.

This one-time return covering all such outstanding receipts of money or loans from April 1, 2014 to January 22, 2019 is required to be filed in Form DPT-3 on or before April 22, 2019.

In effect, for the year 2019, every company is now required to file e-Form DPT-3 on two occasions – One Time Return on or before 22^nd April, 2019 and the Annual Return on or before 30^th June 2019.  In the subsequent years, only Annual Return shall be filed.

Mind your words ...

One wrong word can negatively impact your entire message. Fair or unfair, it happens.  For example, if your Resume contains the word “Carrier Objective” instead of “Career Objective”, probably your chances of attending the interview itself is very less, while you may have the real talent and capability to be successful in the interview.

So mind your words.  Here are a few commonly confusing words.

Compliment and complement

Compliment is to say something nice. Complement is to add to, enhance, improve, complete, or bring close to perfection. 

I can compliment your staff and their service.

Your new app may complement your website.

Criteria and criterion

"We made the decision based on one overriding criteria" sounds pretty impressive but is wrong.

Remember: one criterion, two or more criteria, although you could always use "reason" or "factors" and not worry about getting it wrong.

Discreet and discrete

Discreet means careful, cautious, showing good judgment: "We made discreet inquiries to determine whether the founder was interested in selling her company."

Discrete means individual, separate, or distinct: "We analyzed data from a number of discrete market segments to determine overall pricing levels." And if you get confused, remember you don't use discreetion to work through sensitive issues; you exercise discretion.

Elicit and illicit

Elicit means to draw out.. Think of elicit as the mildest form of extract or, even worse, extort. So if one lucky survey respondent will win a trip to the Bahamas, the prize is designed to elicit responses.

Illicit means illegal or unlawful. I suppose you could "illicit" a response at gunpoint.

Farther and further

Farther involves a physical distance: “The distance between Chennai and Delhi is farther than the distance between Chennai and Bangalore.”

Further involves a figurative distance: "We can take our business plan no further."  Or, "I am not going to trust you any further."

Interpretation of “Proviso”

A ‘proviso’ is a clause in a statute, which begins with the phrase Provided that.  Literally it means ‘on the condition or understanding that’.

A ‘proviso’ has one or more of the following three functions:

1.  Exception to the main provision;
2.  Condition to the main provision;
3.  Additional requirement.

Sometimes, we get a doubt whether a ‘proviso’ should be interpreted along with the section or sub-section to which it is appended or should it be interpreted separately.

For example, Section 188 of the Companies Act, 2013 deals with Related Party Transactions.  The 4^th Proviso of Section 188 (1) provides that “nothing in this sub-section shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm’s length basis”.

Now the question is whether the sub-section (1) of Section 188 ends with 188 (1) (g) or it extends with further ‘Provisos’.  If it ends with Section 188 (1) (g), then the 4^th Proviso exempts only the Board Approval.  Only if the sub-section (1) extends beyond 188 (1) (g), i.e. only if it extends to the further provisos, then the 4^th proviso exempts shareholders’ approval also.

The cardinal Rule of Interpretation is, a ‘proviso’ must be interpreted harmoniously with the section or subsection to which it is appended. A ‘proviso’ qualifies the generality of the main enactment.

Unless the words of the ‘proviso’ indicate otherwise, the ‘proviso’ applies to the whole of the main part of the section or subsection under which the proviso has been inserted.  For example, the 3^rd Proviso provides that “nothing contained in the second proviso shall apply to a company in which ninety per cent or more members, in number, are relatives or promoters or are related parties”. 

Again, if you see Explanation to Section 188 (1), it starts with the words – “In this sub-section” and explains the expression “arm’s length transaction”.  The said expression “arm’s length transaction”  is mentioned in the 4^th Proviso to sub-section (1) of Section 188.  This clearly indicates that the “proviso is part of the sub-section or section to which it is appended.