Important Amendments for Paper 4 CA Final Law – Nov’22

Provision
“Matters not to be dealt with in a meeting through video conferencing or other audio visual means” –
Deleted

Section 393A: Exemption by CG

CG may, by notification, exempt from prov. of this chap:
a. FC
b. Co. incorp o/s India whether or not having POB
insofar as they related to offering of securities, relating to prospectus or incidental matters in the
International Financial Service Centers set up u/s 18 of SEZ Act, 2005

Copy of such notification should be laid before HoP

Addition to definition of Foreign Company

E-offering of securities, subscription, and listing of securities in IFSCs shall not be construed as an
electronic mode for Foreign Cos.

Online Proficiency Self-Assessment Test (SAT) –

o Within 2 years of inclusion of name else removed.
o No limit on no. of attempts. Score 50% to pass the test
o Test N.A for person who have served for > = 3 years (If more than 1 co., count once) as:
a) who is director or KMP in:
 Listed public co.
 Unlisted Public Co. having PUSC >= Rs. 10 crore
 Body Corporate listed in RSE
 Body corporate incorporated outside India – PUSC >= $2mn
 Stat. corp (Ex. LIC)
b) Pay scale of Director or equivalent or above in any Ministry or Department, of CG/SG +
experience in handling:
(i) matters relating to commerce, corp. affairs, finance, industry or public enterprises; or
(ii) affairs related to Government companies or statutory corporations set up under an Act of
Parliament or any State Act and carrying on commercial activities.
c) Pay scale of Chief General Manager or above in SEBI, RBI, IRDA, PFRDA and having experience
in handling matters related to corporate/sec/eco. Law

Provided also that the following individuals, who are or have been, for at least 10 years:
(A) an advocate of a court; or
(B) in practice as a CA; or
(C) in practice as a cost accountant; or
(D) in practice as a CS,
shall not be required to pass the online proficiency SAT

By CA Shubham Singhal (AIR 4)

Nidhi (Amendment) Rules, 2022: [Applicable from 19th April 2022]
New definition:
'Branch' means a place other than the registered office of Nidhi",

Rule 4: Incorporation:
 Public co. with min. PUESC of Rs. 5 lakhs Rs. 10 Lakhs
 No Nidhi shall issue preference shares.
 Object of Nidhi co. – No object other than those defined (habit of thrift).
 Nidhi shall have “Nidhi Ltd” as last words in its name

Note – Existing Nidhi co. to comply with this rule within 18 months of commencement of this Rule.

Rule 5 - Minimum no. of members and NoF: The provisions of this rule shall not be applicable for the
companies incorporated as Nidhi on or after the commencement of the Nidhi (Amendment) Rules, 2022

Extra for knowledge:

On and after commencement of Nidhi (Amendment) Rules, 2022, public company
desirous to be declared as a Nidhi shall apply, in Form NDH-4, within 120 days
of its incorporation for declaration as Nidhi, if it fulfils the following
conditions, namely:
a. it has not less than 200 members ; and
b. it has Net Owned Funds of Rs. 20 lakhs or more.

Rule 6: General Restrictions or Prohibitions: No Nidhi shall:

a. Carry on business of: f. Accept Deposits from/lending to any person
 Chit fund, other than members
 hire purchase Finance, g. take Deposits from/lend money to body
 leasing finance, corporate;
 insurance or h. pledge any of the assets lodged by its members
 acquisition of securities issued by any BC as security
b. Issue preference shares, debentures, or other i. enter into any partnership arrangement in its
debt instruments borrowing or lending activities;
c. Opening current a/c with members j. issue any advertisement to solicit deposit
d. acquire or purchase sec. of any other co. or [Note – Private circulation of FD scheme
control comp. of BoD of any other co. in any amongst members carrying words “For Pvt.
manner whatsoever or enter into any circulation to members only” not considered as
arrangement for change of its mgt. (not even advt.]
with SR or approval of RD) k. pay brokerage/incentives for mobilizing deposit
e. carry on any Biz. other than biz. of borrowing or raise loans from banks or FIs or any other
lending in its own name. source for the purpose of advancing loans to
members of Nidhi

Rule 8: Membership:
 Body Corporate or trust – cannot be members
 Not reduced below 200 at any time

By CA Shubham Singhal (AIR 4)

 No minor shall be member.
Proviso - Deposit may be accepted in name of minor if made by legal guardian who is a member of
Nidhi
 [Amendment] A member shall not transfer > 50% of his shareholding (as on date of availing of loan
or making of deposit) during subsistence of such loan or deposit, as the case may be.
Provided that member shall retain min. no. of shares as per Rule 7 at all times

Rule 9: Net Owned Fund: Every Nidhi shall maintain NoF of >= Rs. 10 lakhs Rs. 20 lakhs or higher amt.
as CG may specify
Note – Existing Nidhi co. to comply with this rule within 18 months of commencement of this Rule.

Rule 14: Un-encumbered Term Deposit:

 Every Nidhi co. shall
 Invest and continue to keep invested
Sch. Commercial bank (except co-op bank)
 In unencumbered TD with
Post office
 Amount >= 10% of deposit o/s at the close of business on the LWD of 2nd preceding month.

RD may give exception (temporary withdrawal) subject to ensuring restoration of amount. Application
to RD to be made in Form NDH-2 along with prescribed fees.

Rule 15: Loan

In case of Joint in case of joint shareholders, the loan shall be provided to the member whose name
appears first in the Register of members

Rule 18: (Scrap the existing Rule)

A Nidhi shall not declare dividend exceeding 25% in a FY

SEBI LODR:
Applicability: (Amendment)
To the Listed Entity who has listed any of the following Designated securities on RSE(s):
a. specified securities listed on main board or SME Exchange or Innovators Growth Platform;
b. non-convertible securities
c. Indian Depository Receipts;
d. Securitized debt instruments;
da security receipts;
e. units issued by mutual funds;
f. any other securities as may be specified by the Board

Provisions of these regulations which become applicable to listed entities on the basis of market
capitalization/outstanding listed debt securities criteria shall continue to apply to such entities even if
they fall below such thresholds.

By CA Shubham Singhal (AIR 4)

Regulation 18: Audit committee:
Listed entity should have qualified and independent audit committee
 Min. 3 members
 At least 2/3 to be independent

Regulation 19: NRC

SEBI LODR
Constituted by: Board of Directors
No. of directors At least 3
ID At least 50% 2/3rd
Chairperson Must be an ID

Risk management committee (RMC) [Amendment] – Applicable to top 1,000 companies

 Constituted by BoD.
 Minimum 3 members + Majority to be member of BoD
 At least 1 ID. In case of outstanding SR Equity shares >= 2/3rd IDs
 CP – To be a director and Senior executives of co. may be members
 Meet at least twice in a year
 Quorum – 2 members or 1/3rd of total, whichever is higher (at least 1 director to attend)
 Max gap between two consecutive meeting – 180 days
 BoD to define roles and responsibility of RMC
 RMC shall have powers to seek info. from any employee, obtain outside legal or other professional
advice and secure attendance of outsiders with relevant expertise, if it considers necessary.

The following disclosures shall be made in the section on the corporate governance of the annual
report:

Stakeholders’ relationship committee

(a) name of the non-executive director heading the committee;
(b) name and designation of the compliance officer;
(c) number of shareholders’ complaints received during the financial year;
(d) number of complaints not solved to the satisfaction of shareholders;
(e) number of pending complaints.

Risk management committee:

(a) brief description of terms of reference;
(b) composition, name of members and chairperson;
(c) meetings and attendance during the year;

By CA Shubham Singhal (AIR 4)

 Foreign Exchange Management Act
Export of Goods and Services
Advance payment against Export:
If exporter receives advance payment (with or w/o interest) from a buyer named in export
declaration, the exporter shall be obligated to ensure that:
a. Shipment of goods is made within 1 year of date of receipt of advance payment
b. Rate of interest on advance payment < LIBOR (or other applicable benchmark) + 100 bps, &
Docs covering shipment are routed through AD through whom advance payment is received.

External Commercial Borrowing:

All-in-cost ceiling per annum: Benchmark rate + 450 bps spread. (i.e., 4.5% spread)

Before Amendment:
Benchmark rate - 6-months LIBOR rate or any other 6-month interbank interest rate applicable to the
currency of borrowing, e.g., EURIBOR".

After Amendment:
Benchmark rate - Any widely accepted interbank rate or alternative reference rate (ARR) of 6-month
tenor, applicable to the currency of borrowing.

By CA Shubham Singhal (AIR 4)

 Insolvency and Bankruptcy Code:
Section 24 – Meeting of CoC
 Mode of meeting – In person or such e-means as may be specified
 Meetings to be conducted by RP.
 RP to convene meeting on request by members of CoC having >= 33% of voting rights
 Meeting of CoC: [Amendment]
o RP to convene meeting of CoC as and when it considers necessary
o RP to convene meeting on request by members of CoC having at least 33% of voting rights
o RP may place proposal received from member of CoC – If he considers necessary + Such
proposal is made by members representing at least 33% of voting right.
 RP to give notice of each CoC meeting to:
o Members of CoC including ARs
o Members of suspended BOD or partners of CD
o OC if the amount of aggregate dues (towards OD) is >= 10% of total debt
 BOD, partners and 1 rep of OCs may attend the meeting but no right to vote and their absence not
to invalidate proceedings of meeting.
 Period of Notice of meeting
o Not less than 5 days notice to all participants
o CoC may reduce period of notice to not less than 24 hours (48 hrs in case if there is any
Auth. Rep)
 FC who is a member of CoC may at his own cost appoint an IP (other than RP) to represent himself
 Voting shares to be based on financial debt owed to such creditor and shall be determined by RP
 Meeting to be conducted in such manner as specified

By CA Shubham Singhal (AIR 4)