Beware of OPC and AGM due dates

Despite of the 3 month extension given by MCA to hold AGM, the due date has to be calculated duly as per the prevailing Acts. Caution to be taken by OPCs, LLPs and Companies that have conducted previous AGM before 29th June 2019.

In this edition, we will be seeing about the Portfolio Managers in International Financial Services Centres (IFSC’) it’s applicability, registration and a brief about the same. We will have our usual Legal terms and News Bites related to notifications by MCA, SEBI, RBI, IT and GST following the article.

 CS Saranya Deivasigamani,

CEO

Portfolio Managers in IFSC

Based on the representations received from various stakeholders, SEBI has put in place ‘Operating Guidelines for Portfolio Managers in International Financial Services Centres (IFSC’).

Applicability

1. SEBI (Portfolio Managers) Regulations, 2020 (‘PMS Regulations’) All provisions of the PMS Regulations, the guidelines and circulars issued thereunder, shall apply mutatis mutandis to Portfolio Managers setting up/ operating in IFSC subject to these operating guidelines. Further, subsequent amendments, if any, in PMS Regulations, guidelines and circulars issued by SEBI for portfolio managers shall be applicable to Portfolio Managers in IFSC.
2. SEBI (International Financial Services Centres) Guidelines, 2015 (‘IFSC Guidelines’) The provisions of IFSC Guidelines and relevant circulars shall also apply to Portfolio Managers (PM) setting up/ operating in IFSC subject to these operating guidelines.

Registration of Portfolio Managers

1. An application for grant of certificate of registration shall be made in accordance with the provisions of Chapter II of the PMS Regulations, accompanied by a non-refundable application fee.
2. An entity, being a company or a limited liability partnership (LLP), which has the minimum prescribed net worth as specified herein can act as a PM in IFSC, in the following forms-
3. Any SEBI-registered intermediary (except trading member or clearing member) or its international associates in collaboration with such SEBI-registered intermediary may provide portfolio management services in IFSC, by setting up a branch in IFSC, subject to the prior approval of the Board. Further, it shall ensure that:

• Exclusive manpower shall be allocated for providing portfolio management services from the branch in IFSC.
• The branch shall comply with all the provisions (except obtaining Registration) specified in the operating guidelines.
• The parent entity shall be required to ring fence its domestic operations, legally, financially, operationally and technologically, from its operations at IFSC.

1. Other entities (that is in the form of a corporate or LLP or any other similar structure recognised under the laws of its parent jurisdiction), based in India or in a foreign jurisdiction, desirous of operating in IFSC as a PM, may form a company or LLP to provide portfolio management services. However, the formation of a separate company or LLP shall not be applicable in case the applicant is already a company or LLP in IFSC.
2. The obligation of ensuring that the branch complies with PMS Regulations, IFSC Guidelines, and Circulars issued thereunder, shall be onthe parent entity.
3. The Board may grant certificate/ approval if it is satisfied that the applicant fulfils the requirements as specified in the PMS Regulations read with these operating guidelines.
4. Where the PM in IFSC proposes to change its status or constitution, it shall obtain prior approval of the Board for continuing to act as such after the change.

Operational Compliances

1. Certification Requirement—Principal officer and employee having decision making authority related to fund management and who are resident outside India may have certification from any other organization or institution or association or stock exchange which is recognized/ accredited by a Financial Market regulator in that foreign jurisdiction.

However, certification from NISM shall be mandatory in case the aforesaid persons deal in Indian securities markets.

1. Net Worth Requirement—
2. Applicants referred to in para 2 shall have a net worth of not less than USD 750,000.
3. In case the PM is set up as a branch, the net worth requirement is to be met by the parent entity.

iii. In case the PM is set up as a subsidiary, the net worth requirement is to be met by the subsidiary itself. However, if the subsidiary does not meet the criteria, the net worth of the parent entity will be considered.

1. The PM/ parent entity shall fulfil the aforesaid net worth requirement, separately and independently for each activity undertaken by it under the relevant regulations.
2. Eligibility of the client to avail portfolio management services PM operating in IFSC shall provide portfolio management services only to those persons referred in Clause 9(3) of the IFSC Guidelines. Further, PMs shall ensure that, when dealing with persons resident outside India and non-resident Indians seeking portfolio management services from them, the PM complies with the applicable guidelines issued by the relevant overseas regulator/ authority.
3. Minimum investment amount—PM operating in IFSC shall not accept from the client, funds or securities worth less than USD 70,000.
4. Segregation of funds—PM operating in IFSC shall keep the funds of all clients in a separate account to be maintained by them in the IFSC Banking Unit (IBU) as permitted by RBI.

Conditions of RBI

The applicability of these operating guidelines is subject to such conditions that may be prescribed by the Board, Reserve Bank of India and other appropriate authority from time to time.

Amount to be Paid

Legal Terms

Mala Fides

n. bad faith; intent to deceive. mala fide purchaser is one who buys property from another with the knowledge that it has been stolen.

MCA Updates

• Relaxation of CRA-4.
• Companies (Acceptance of Deposits) Rules, 2020.
• Amendment of the Companies (CSR Policy) Rules, 2014 of the Companies Act, 2013.
• Amendment of item no. (ix) in the Schedule VII of the Companies Act, 2013.

SEBI Updates

• Corrigendum to Master Circular for Depositories dated October 25, 2019 on preservation of records.
• SEBI (International Financial Services Centres) Guidelines, 2015- Amendments.
• SEBI (International Financial Services Centres) Guidelines, 2015 – Amendments.
• Temporary relaxation in processing of documents pertaining to FPIs due to COVID-19.
• Relaxation from default recognition due to restructuring of debt.
• Review of debt and money market securities transactions disclosure.
• Operating Guidelines for Portfolio Managers in International Financial Services Centre.
• Automation of Continual Disclosures under Regulation 7(2) of SEBI (Prohibition of Insider Trading) Regulations, 2015 – System driven disclosures
• Circular on Asset Allocation of Multi Cap Funds.

RBI Updates

• Compliance functions in banks and Role of Chief Compliance Officer (CCO).
• Resolution Framework for COVID-19-related Stress – Financial Parameters.
• Long Form Audit Report (LFAR) – Review.
• Master Directions – Priority Sector Lending (PSL) – Targets and Classification.
• New Definition of Micro, Small and Medium Enterprises – clarifications

IT Updates

• Amendment of Income-tax Rules, 1962 rules for providing conditions and guidelines for Pension Funds u/s 10(23FE) of the Income-tax Act, 1961- reg.

GST Updates

• Update regarding enabling on e-invoice portal (https://einvoice1.gst.gov.in/).
• System computed values of GSTR-1 Statement (Monthly filers), made available in Form GSTR-3B, as PDF statement on GST Portal.
• New functionalities made available for TCS and Composition taxpayers.
• Filing Form GSTR-4 Annual Return by Composition Taxpayers on GST Portal.
• ITC Statement Form GSTR-2B.
• Provision for Aadhar Authentication in GST Registration.
• Downloading document-wise details of Table 8A of Form GSTR-9.