Month: April 2019

BSDA

Happy Financial New Year

Zappy wishes you and your team a very happy financial new year. May this New Year, you achieve your desired Financial Milestones.

In this edition, we will be seeing about “Basic Services Demat Account” (BSDA) and it’s latest amendments. Our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST will follow the article.

CEO Saranya Deivasigamani,
CEO

BSDA

Since holding of demat account is beneficial to individual investors, SEBI initiated extensive consultations with all the stakeholders to address the concerns and suggestions with respect to cost of demat accounts especially from small individual investors.

The SEBI Board had taken decisions to extend the reach of IPOs for the benefit of retail investors. With a view to achieve wider financial inclusion, encourage holding of demat accounts and to reduce the cost of maintaining securities in demat accounts for retail individual investors, it has been decided that all depository participants (DPs) shall make available a “Basic Services Demat Account” (BSDA) with limited services and reduced costs. The details are provided in the circular dated August 27, 2012. In this edition, we will be seeing all about BSDA and it’s latest amendments.

The salient features of the BSDA are as follows:

a. Eligibility Criteria:

All the individuals who have or propose to have only one demat account where they are the sole or first holder shall be eligible to have a BSDA provided that the value of securities held in the demat account does not exceed Rupees Two Lakhs at any point of time. An individual can have only one BSDA in his/her name across all depositories.

b. Charges: 

The Annual Maintenance Charges (AMC) structure for BSDA shall be on a slab basis; if the value of holding is
(i)  upto INR. 50,000 there will be NIL AMC and

(ii) for value of holding from INR. 50,001 to INR. 200,000 AMC will be upto INR. 100

The value of holding shall be determined by the DPs on the basis of the daily closing price or NAV of the securities or units of mutual funds. If the value of holding in such BSDA exceeds the prescribed criteria at any date, the DPs may levy charges as applicable to regular accounts (non-BSDA) from that date onwards.

c. Transaction Statements:

Transaction statements shall be sent to the BO at the end of each quarter. If there are no transactions in any quarter, no transaction statement may be sent for that quarter.

d. Holding Statement:

One annual physical statement of holding shall be sent to the stated address of the BO in respect of accounts with no transaction and nil balance and for remaining accounts one annual statement of holding shall be sent in electronic or physical form as opted for by the BO.

e. Charges for statements: 

Electronic statements shall be provided free of cost. In case of physical statements, the DP shall provide at least two statements free of cost during the billing cycle. Additional physical statement may be charged at a fee not exceeding INR.25/- per statement.

Rationalisation of services with respect to  regular accounts: In order to reduce the cost of compliance of DPs, following rationalisation measures were decided for regular accounts:

a. Accounts with zero balance and nil transactions during the year:  The DPs shall send one physical statement of holding annually to such BOs and shall resume sending the transaction statement as and when there is a transaction in the account.

b. Accounts which become zero balance during the year:  For such accounts, no transaction statement may be sent for the duration when the balance remains nil. However, an annual statement of holding shall be sent to the BO.

c. Accounts with credit balance:  For accounts with credit balance but no transactions during the year, one statement of holding for the year shall be sent to the BO.

Latest Amendments

  1. SEBI vide   circulars CIR/MRD/DP/22/2012   dated   August   27,   2012 and CIR/MRD/DP/20/2015 dated December 11, 2015, introduced the facility of “Basic Services Demat Account” (BSDA) with limited services for eligible individuals with  the  objective  of  achieving  wider  financial  inclusion  and  to  encourage  holding  of demat accounts.
  2. In order to further boost participation in Debt Market and based on representation received from  market  participants, in  partial  modification  of  the  abovementioned SEBI  circulars, it  has  been  decided  to  revise  the structure of  charges for  debt securities  as defined  in SEBI  (Issue  and  Listing  of  Debt  Securities)  Regulations, 2008, as given below:
  3. No AMC shall be levied in case the value of holdings of debt securities is up to INR.  1  lakh  and a maximum  AMC of  INR. 100 shall be levied if the value  of  holdings  of debt  securities is between  INR.  1,00,001  and INR.2,00,000. And
  4. No AMC shall be  levied in  case  the  value  of  holdings  other  than debt securities is below INR. 50,000 and a maximum AMC of INR. 100 shall be levied  if  the  value  of holdings  other  than  debt  securities is between INR.50,001 and INR.2,00,000.
  5. This circular shall come into effect from June 01, 2019.
  6. The Depositories are advised to:-
  7. make amendments to  the  relevant  bye-laws,  rules  and  regulations  for  the implementation of the above decision as may be applicable / necessary; and
  8. communicate to SEBI,  the  status  of implementation  of  the  provisions  of  this circular by the DPs in the Monthly Development Report.
  9. This circular is being issued in exercise of the powers conferred by Section 11 (1) of Securities and Exchange Board of India Act, 1992 and section 19 of the Depositories Act, 1996  to  protect  the  interest  of  investors  in  securities  and  to  promote  the development of, and to regulate, the securities market.

Legal Term

Vindicated

Show or prove to be right, reasonable, or justified.

NewsBites

MCA Updates

  • New version of form for incorporation—eForm INC-35 -AGILE
  • Extension of fees and last date for CRA-2, DIR-3-KYC.
  • Applicability of AS116, AS101

SEBI Updates

  • SEBI (Payment of Fees)(Amendment) Regulations, 2019. – Dated March 22, 2019.
  • Guidelines for BCP and DR of MIIs.
  • Empanelment of Insolvency Professionals (IPs) to be appointed as Administrator, remuneration and other incidental matters.
  • BSDA limit for securities.

RBI Updates

  • Revision on Establishment of Branch Office (BO) / Liaison Office (LO) / Project Office (PO) or any other place of business in India by foreign entities.

IT Updates

  • Income-tax (Second Amendment) Rules, 2019.

GST Updates

  • Advisory to GST Taxpayers on Invoice Series to be used wef 1st April, 2019

DIR-3-KYC and Active-22A

DIR-3-KYC

For Financial year 2018-19 – Any person who has been allotted “Director Identification Number (DIN/DPIN)” on or before 31st March 2018 , needs to file form DIR-3 KYC to update KYC details in the system on or before 15th September 2018.

For Financial year 2019-20 – Any person who has been allotted “Director Identification Number (DIN/DPIN)” on or after 01st April, 2018 and before 31st March 2019, are required to file form DIR-3 KYC to update KYC details in the system on or before 31st April, 2019.

For Financial year 2019-20 onwards – Every Director who has been allotted DIN on or before the end of the financial year, and whose DIN status is ‘Approved’, would be mandatorily required to file form DIR-3 KYC before 30th April of the immediately next financial year.

In the e-form DIR-3-KYC, the following details are required to be intimated to Registrar of Companies:

  • Email id and Phone Number of the Director
  • Proof of permanent address
  • Copy of Aadhaar Card
  • Copy of PAN Card
  • Copy of Passport
  • Proof of present address

Active 22A

After having introduced KYC of directors of Companies in 2018, Ministry of Corporate Affairs (MCA) has introduced KYC of Companies by way of notification dated 21st February, 2019. The said notification shall be effective from 25th February, 2019. By way of above notification, MCA the amended the Companies (Incorporation) Rules, 2014 by insertion of Rule 25A. Every Company incorporated on or before 31st December 2017 is required to file e-Form ACTIVE (Active Company Tagging Identities and Verification) latest by 25th April, 2019. Any Company which has not filed its due financial statements under section 137 or due annual returns under section 92 or both with the Registrar shall be restricted from filing e-Form-ACTIVE unless such company is under management dispute and Registrar has recorded the same on the register. Also Companies have been struck off or are under process of striking off or liquidation or amalgamated or dissolved, as recorded in the register, shall not be required to file e-Form ACTIVE. In case of default in filing of e-Form ACTIVE, on or after 26th April, 2019 the status of the Company in MCA records shall be changed from Active to ACTIVE-non compliant and it shall attract penalties under Section 12(9) of Companies Act, 2013. Further, defaulting Company shall not be able to report the Corporate Actions to Registrar of Companies like i. SH-08 Changes in Authorised Capital ii. PAS-03 Change in Paid-up Capital iii. DIR-12 Changes in directors except cessation iv. INC-22 Change in registered office v. INC-28 Corporate Restructuring. Belated filing will attract an additional fees of Rupees Ten Thousand. In the e-form ACTIVE, the following details are required to be intimated to Registrar of Companies:

  • Address of registered office with photo of registered office also showing at least one Director/Key Managerial Personnel who will sign the e-Form ACTIVE.
  • Latitude and Longitude of Company’s Registered Office.
  • Email ID of Company: Email ID shall be verified through One time password (OTP).
  • Number of Directors with list of directors as on date of filing of e-form.
  • Details of Auditors – Statutory and Cost Auditor.
  • Details of Managing Director, Chief Executive Officer or Manager or Wholetime Director, Chief Financial Officer and Company Secretary.
  • Details of annual returns filed for financial year 2017-18.