Finance Bill 2018 and key takeaways of amendments to certain Corporate Laws
The Union Budget of India, 2018 was presented today, i.e. 1st February, 2018 in the Lok Sabha by the Finance Minister – Arun Jaitley by means of the Finance Bill, 2018 (“Bill”).
The Bill seeks to amend laws like Income Tax, Customs, Central Goods and Services Tax, etc. and also includes amendments to laws like Securities and Exchange Board of India Act, 1992, Depositories Act, 1996 and Securities Contracts (Regulation) Act, 1956.
We have listed some of the key amendments of the corporate laws in this update:
Amendment to Securities and Exchange Board of India Act, 1992
- Amendment to Section 15A. Previously, the section provided punishment in case of failure of a person to furnish a document, report or a return to the board. Now, the proposed amendment also provides for the punishment in case a person provides false, incorrect or incomplete document, returns, information to the board.
- New penalty provision added, Section 15EA, which provides for penalty for default in case of alternative investment funds, infrastructure investment funds and real estate investment trusts. The bill levies a penalty of one lakh rupees which may extend to one lakh rupees for each day the failure continues and maximum of one crore rupees or three times the amount of gains made out of such failure, whichever is higher.
- Amendment to Section 15F, which provides punishment for default on the part of stock brokers. In place of the words “he sponsors or carries on any such collective investment scheme including mutual funds” the words “such failure continues” have been substituted. Now, the penalty will be levied every day during which the contravention continues.
- The Bill proposes to amend Section 27 relating to offences by companies. It seeks to amend the marginal heading to “Contravention by companies” and also proposes to substitute the words “an offence under this Act” with “a contravention of any of the provisions of this Act or any rule, regulation, direction or order made thereunder”. Due to this, Section 27 will cover contravention under any rule, regulation etc that has been framed under the Securities and Exchange Board of India Act, 1992.
Amendment to Depositories Act, 1996
- Proposal has been made to penalize person(s) filing and furnishing false incorrect or incomplete information, returns, report, books etc. under Section19A.
- Penalty has been proposed to be imposed on Depositories on failing to conduct business with its participants or any issuer or its agent or any person associated with the securities markets in a fair manner.
- A new Section 19-IC has been proposed to be introduced whereby the legal representatives of a deceased person, who was liable to make payment under the Act including any penalty, will be made liable to pay such amount in the like manner and to the same extent as the deceased.
- The scope of Section 21 of the Act dealing with the offences by Companies has been proposed to be widened to include contravention of the provisions of any Rule, Regulation, Direction or Order made under the Act. Presently, Section 21 includes offences by companies only under the Act.
These aforementioned proposals have been stated under Sections 188 to 200 of the Bill and shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint.
Amendment to Securities Contracts (Regulation) Act, 1956
- Section 12A (Power to SEBI to suspend business of recognised stock exchanges): The amendment seeks to insert a new sub section wherein SEBI may levy penalty stating the reasons in writing and after holding an inquiry in the prescribed manner under sections 23A, 23B, 23C, 23D, 23E, 23F, 23G, 23GA and 23H, i.e., [Penalty for failure to furnish information, return, etc.; Penalty for failure by any person to enter into an agreement with clients; Penalty for failure to redress investors’ grievances; Penalty for failure to segregate securities or moneys of client or clients; Penalty for failure to comply with provision of listing conditions or delisting conditions or grounds; Penalty for excess dematerialisation or delivery of unlisted securities; Penalty for failure to furnish periodical returns, etc.; Penalty for contravention where no separate penalty has been provided].
- Section 23A (Penalty for failure to furnish information, return, etc.): The amendment seeks to expand the purview of ‘any person’ covered under this penalty provision to include persons who furnishes false, incorrect or incomplete information, document, books, return or report.
- Section 23E (Penalty for failure to comply with provision of listing conditions or delisting conditions or grounds): The amendment seeks to expand the purview of this Section to include real estate investment trust or infrastructure investment trust or alternative investment fund in addition to collective investment scheme or mutual funds.
- Section 23JA (Settlement of administrative and civil proceedings), seeks to insert a new sub-section, wherein any person who files for settlement of the proceedings under this Section shall have to credit the settlement amount, excluding the disgorgement amount and legal costs to the Consolidated Fund of India.
- A new Section 23JC has been inserted, titled as Continuance of proceedings, initiating continuance of proceedings in case a person dies. In such a case, the legal representative shall be liable to pay the penalty payable under this Act only if the penalty has been imposed before the death of the deceased person.
Please refer to the hyperlink below for further details on the Bill.
Source: Press Information Bureau