{"id":5147,"date":"2023-07-21T15:44:38","date_gmt":"2023-07-21T15:44:38","guid":{"rendered":"https:\/\/zeus.firm.in\/zeus-newsletter-july-2023\/"},"modified":"2023-07-21T15:44:38","modified_gmt":"2023-07-21T15:44:38","slug":"zeus-newsletter-july-2023","status":"publish","type":"post","link":"https:\/\/zeus.firm.in\/zeus-newsletter-july-2023\/","title":{"rendered":"ZEUS Newsletter July 2023"},"content":{"rendered":"
\u00a0<\/em>Circular No. 05 dated 06.06.2023 of A.P. (DIR Series)<\/strong> RBI\/2023-24\/36 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n With an aim to develop the onshore market in Indian currency, the RBI has revised the existing definition of the NDDCs and has now permitted the Authorised Dealer Category-I (AD Cat-I) banks operating IFSC Banking Units (IBUs), in respect of the following:<\/p>\n Notification number CO.DPSS.POLC.No.S-258\/02-01-010\/2023-24 dated 07.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n To ease constraints faced by the Micro, Small and Medium Enterprises (MSMEs) in converting their trade receivables to liquid funds, the RBI had issued the \u2018Guidelines for the TReDS (updated as on 02.07.2018. Based on the experience gained, and as announced in the Statement on Developmental and Regulatory Policies dated 08.02.2023, the RBI has decided to make the following enhancements to the TReDS guidelines;<\/p>\n Notification Number DOR.CRE.REC.18\/07.10.002\/ 2023-24 dated 08.06.2023 of <\/strong>the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n In order to rationalize the process of branch opening and to enable the UCBs to tap growth opportunities in the sector, it has been decided to grant general permission for branch expansion in the approved area of operation to financially strong UCBs.<\/p>\n Circular Number DOR.CRE.REC.21\/21\/07.001\/ 2023-24 dated 08.06.2023 of <\/strong>the Reserve Bank of India (RBI):<\/strong><\/span><\/p>\n The recommendation pertaining to the FLDG (First Loss Default Guarantee) was under examination with the RBI. Arrangement between the regulated entities and lending service providers or between two regulated entitles involving Default Loss Guarantee (DLG), commonly known as FLDG, has since been examined by the RBI, it has been decided to permit such arrangements subject to the guidelines provide in the said Circular.<\/p>\n Notification Number DOR.STR.REC.20\/21.04.048\/ 2023-24 dated 08.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span><\/p>\n RBI has issued a comprehensive regulatory framework governing compromise settlements and technical write-offs covering all the regulated entities. The Framework provides for the regulated entities to put in place the board-approved policies in respect of the compromise settlements and technical write-offs.<\/p>\n The Framework also prescribes broad framework for delegation of power, prudential treatment, reporting mechanism, oversight by the board, cooling period, treatment of accounts categorized as fraud and willful defaulter, and other legal provisions to be included by the regulated entities in the said policies.<\/p>\n The Framework defines:<\/p>\n Circular Number RBI\/2023-24\/38 of A.P. (DIR Series) Circular No. 06 dated 08.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n The RBI vide the said review of the Directions permitted the scheduled commercial banks (excluding small finance banks and payment banks) to set their own limits for borrowing in call and notice money markets and such banks shall put in place internal board approved limited for borrowing within the prudential limits for inter-bank liabilities.<\/p>\n Circular number 06 of A.P. (DIR Series) RBI\/2023-24\/45 dated 22.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n Presently, remittances to IFSCs under LRS can be made only for making investments in securities.\u00a0 In view of the gazette notification no. SO 2374(E) dated 23.05.2022 issued by the Central Government, the RBI has now directed that the Authorised Persons may facilitate remittances by resident individuals under purpose \u2018studies abroad\u2019 as mentioned in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000 for payment of fees to foreign universities \/ institutions in IFSC region, for pursing courses which are mentioned in the above gazette notification.<\/p>\n Circular Number RBI\/2023-24\/46\/FMRD.FMSD.03\/ 03.07.25\/2023-24 dated 23.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n The company administering financial benchmarks, that is Financial Benchmarks India Private Limited (FBIL) has been accorded approval to cease the publication of Mumbai Interbank Forward Outright Rate (MIFOR) after 30.06.2023. Accordingly, the MIFOR administered by FBIL shall cease to be a significant benchmark after 30.06.2023. The updated list of \u2018sigificant benchmarks\u2019 administered by FBIl is as follows (effective from 01.07.2023):<\/p>\n Master Direction Number RBI\/DOR\/2023-24\/ 103 DOR.ORG.REC.22\/21.06.050\/2023-24 dated 26.06.2023 of the Reserve Bank of India (RBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n The RBI has issued Master Direction on Minimum Capital Requirements for Operational Risk for all Commercial Banks.<\/p>\n The directions are called \u201cthe Reserve Bank of India (Minimum Capital Requirements for Operational Risk) Directions, 2023. The said Directions apply to all Commercial Banks (excluding Local Area Banks, Payments Banks, Regional Rural Banks, and Small Finance Banks).<\/p>\n The said Directions replace the existing approaches with a new standardised approach, i.e. Basel III Standardised Approach. The Directions has been divided into 4 parts \u2013 Part A contains provisions which are mandatory, Part B specifies guidelines which the banks are encouraged to comply, Part C contains frequently asked questions and Part D contains illustrations.<\/p>\n The effective date of implementation of these Directions shall be communicated separately by the RBI.<\/p>\n Master Circular Number SEBI\/HO\/MRD\/MRD-Pod-1\/P\/CIR\/2023\/82 dated 01.06.2023 of the Securities and Exchange Board of India (SEBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n SEBI has been issuing various circulars from time to time for specifying the framework for EGRs, its risk management, standard operating guidelines for Vault Managers and Depositories, etc. In order to enable the stakeholders to have access to all the provisions mentioned in these circulars at one place, the provisions of the said circulars are incorporated in this Master Circular for EGRs.<\/p>\n Circular Number SEBI\/HO\/AFD\/PoD-I\/P\/CIR\/2023\/098 dated 21.06.2023 of Securities and Exchange Board of India (SEBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n The said Circular dated 21.06.2023 amends the SEBI (Alternative Investment Funds) Regulations, 2012 to provide flexibility to the AIFs to deal with those investments that are not sold due to lack of liquidity during the winding up process. The Circular presents two primary paths for AIFs in such a case:<\/p>\n Circular No. CIR\/2023\/106 dated 27.06.2023 of the Securities and Exchange Board of India (SEBI):<\/strong><\/span>\u00a0<\/strong><\/p>\n To facilitate the achievement of minimum 25% (twenty five percent) public holding for listed REITs, SEBI vide its circular dated 27.06.2023, has provided the following methods:<\/p>\n Guideline no: RERA\/DELHI\/Guidelines\/2\/2023 dated 01\/06\/2023 issued by Real Estate Regulatory Authority, NCT of Delhi regarding registration and extension of registration of projects. <\/strong><\/span><\/p>\n The Real Estate Regulatory Authority, NCT of Delhi has issued guidelines for registration of projects and extensions of registration with RERA, namely, \u201cThe National Capital Territory of Delhi Real Estate (Regulation & Development) (Registration of Projects and Extension of Registration) Guidelines, 2023\u201d.<\/p>\n The purpose of these guidelines is to define categories of real estate projects that require prior registration with the Real Estate Regulatory Authority, NCT of Delhi. The guidelines also outline the procedures for registration of real estate projects, grant and extension of validity of registration and process to be followed for uploading the details of the registered projects. Additionally, the guidelines cover the process for inclusion of fresh details and prescribe the fees associated with these purposes.<\/p>\n As per the said guidelines, the following projects, developed by the promoter themselves or in collaboration, and intended for sale, in full or in part, anywhere in NCT of Delhi, in both planned or unplanned areas, must be registered with the Real Estate Regulatory Authority, NCT of Delhi:<\/p>\n Guideline no: RERA\/NCTD\/guidelines\/1\/2023 dated 01\/06\/2023 issued by Real Estate Regulatory Authority, NCT of Delhi <\/strong>regarding mandatory bank accounts for registration of projects. <\/strong><\/span><\/p>\n The Real Estate Regulatory Authority NCT of Delhi, has issued the \u201cThe National Capital Territory of Delhi Real Estate (Regulation & Development) (Mandatory Bank Accounts for Registration of Projects) Guidelines, 2023\u201d to define the types and categories of the accounts to be opened by the promoter prior to registration of the project with Real Estate Regulatory Authority, NCT of Delhi. The guidelines prescribe procedure regarding the operation of accounts and for utilization of funds collected from the allottees.<\/p>\n The guidelines provide that the following categories of accounts required to be opened by the promoter prior to registration of the project:<\/p>\n of the amount received from the buyers after depositing 70% in the RERA Account. 30% amount from the Master Account is required to be transferred to this account automatically at the end of each business day<\/p>\n It’s important to note that these accounts and their operations are subject to the specific provisions and regulations of the Real Estate (Regulation and Development) Act, 2016.<\/p>\n Guideline no: RERA\/DELHI\/Guidelines\/3\/2023 dated 01\/06\/2023, issued by Real Estate Regulatory Authority, NCT of Delhi for<\/strong> real estate agents. <\/strong><\/span><\/p>\n Real Estate Regulatory Authority, NCT of Delhi has issued guidelines for Real Estate Agents, namely, \u201cThe National Capital Territory of Delhi Real Estate (Regulation & Development) (Real Estate Agent) Guidelines, 2023\u201d.<\/p>\n The objective of these guidelines is to establish the procedures for making changes in details of the real estate agent’s information after the issuance of the registration certificate. The guidelines also provide a mechanism to re-validate period of registration due to extension of lease of premises or renewal of the registration upon completion of the period of five years from the date of registration. Furthermore, the guidelines specify the fee applicable for these purposes.<\/p>\n Notice No. MahaRERA\/Secy\/Notice\/913\/2023 dated 08\/06\/2023 issued by Maharashtra Real Estate Regulatory Authority on anti-money laundering, countering the financing of terrorism, and combating proliferation financing for real estate agents. <\/strong><\/span><\/p>\n The purpose of these guidelines is to provide an overview and summary of the relevant anti-money laundering and anti-terrorism financing legislations in India. Specifically, it covers the Prevention of Money Laundering Act, 2002 (referred to as the “PMLA”), the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (referred to as the “PMLR”), the Unlawful Activities (Prevention) Act, 1967 (referred to as the “UAPA”), and The Weapons of Mass Destruction and their Delivery Systems (Prohibition of Unlawful Activities) Act, 2005 (referred to as the “WMDA”).<\/p>\n These guidelines highlight the applicability and implications of these legislations for real estate agents so as to enable compliance of the provisions and obligations as incorporated in the said guidelines.<\/p>\n Circular No. 1\/RERA\/AML\/(Re-agent)\/2023\/511 dated 09\/06\/2023 issued by GOA Real Estate Regulatory Authority regarding registration of reporting entities (real estate agents) with Financial Intelligence Unit (FIU-IND). <\/strong><\/span><\/p>\n As per the said Circular dated 09\/06\/2023, the Financial Intelligence Unit (FIU-IND) is created under Prevention of Anti Money Laundering Act, 2022 by the Ministry of Finance to receive cash\/ suspicious transactions reports, analyze them and to disseminate financial information to regulatory\/ intelligence authorities.<\/p>\n This Circular directs all Real Estate Agents registered with RERA having annual turnover of Rupees twenty lakhs and above to register themselves with FIU-IND on top priority latest by 10\/6\/23.<\/p>\n Order No. 18\/RERA\/2023\/850 dated 23\/06\/2023 issued by Chhattisgarh Real Estate Regulatory Authority regarding registration of real estate agents with Financial Intelligence Unit (FIU-IND). <\/strong><\/span><\/p>\n In pursuance to the official letter of Additional Secretary, Ministry of Finance, Department of Revenue, Government of India, New Delhi, dated 05\/06\/2023. Chhattisgarh Real Estate Regulatory Authority has directed all Real Estate Agents registered with RERA having annual turnover of Rupees twenty lakhs and above to register themselves with FIU-IND on top priority latest by 26\/6\/23.<\/p>\n Whether the Compulsorily Convertible Debentures (\u201cCCD\u201d) would be treated as equity or as a debt instrument for the purpose of the Insolvency and Bankruptcy Code (\u201cCode\u201d) and whether the amount due and payable from the CCD would fall within the definition of \u2018Financial Debt\u2019 as defined under the Code?<\/strong><\/span><\/p>\n Brief Facts of the Case<\/u><\/strong><\/p>\n IVRCL Limited (\u201cIVRCL\u201d<\/strong>) won a bid in April 2009 for undertaking construction, operation, and maintenance of a project under \u2018National Highway Authority of India\u2019 (\u201cNHAI<\/strong>\u201d). Pursuant thereto, a concession agreement was entered into between the subsidiary of IVRCL, i.e., IVRCL Chengapalli Tollways Limited (\u201cCorporate Debtor<\/strong>\u201d) and NHAI for the execution of the said project. Furthermore, IFCI Bank (\u201cAppellant<\/strong>\u201d) agreed to provide financial assistance to the Corporate Debtor for execution of the project through CCDs issued by the Corporate Debtor.<\/p>\n The Appellant had agreed to subscribe to CCDs amounting to Rs. 12.5 crores vide a \u2018Debenture Subscription Agreement\u2019 (\u201cDSA\u201d<\/strong>). The Corporate Debtor, IVRCL and the Appellant entered into a share buy-back agreement dated 14.10.2011, wherein the terms and conditions of the buy-back of aforementioned CCDs subscribed by the Appellant were mentioned. Furthermore, DSA empowered Appellant to sell the CCDs to a third party.<\/p>\n Vide order dated 20.04.2020, the National Company Law Tribunal, Hyderabad Branch (\u201cNCLT<\/strong>\u201d) initiated the Corporate Insolvency Resolution Process (\u201cCIRP\u201d<\/strong>) of IVRCL. Pursuant thereto, the Appellant filed a claim with the Resolution Professional of the Corporate Debtor; however, the same was rejected. Subsequently, the Appellant filed an application challenging the rejection of claim before the NCLT and the NCLT upheld the decision of the resolution professional rejecting the claim of the Appellant.<\/p>\n The NCLT held that the CCDs subscribed by the appellant was to be treated as equity and not as debt. The NCLT also held that the CCDs cannot acquire the status of debt on default because interest on CCDs is to be paid by the sponsor, i.e., IVRCL, the holding company of Corporate Debtor and the Corporate Debtor was not under any obligation to pay interest on the borrowing.<\/p>\n Aggrieved by the aforesaid order, the Appellant preferred an appeal before the National Company Law Appellate Tribunal, Chennai (\u201cNCLAT<\/strong>\u201d).<\/p>\n Observation and Decision of NCLAT<\/u><\/strong><\/p>\n The NCLAT held that in the present case, the CCDs had matured before the initiation of CIRP proceedings of the Corporate Debtor. The NCLAT observed that it is evident from the record that the investment was in the form of debentures which would be converted into equity. Furthermore, the terms and conditions of the DSA and the parties intent did not specify anywhere that the instrument would acquire the nature of a financial debt in the occurrence of any event which was evident from the provisions of the Loan Agreement and the Concession Agreement executed between NHAI and the Corporate Debtor, which define equity to include CCDs as part of the Project’s equity component.<\/p>\n Thus, the NCLAT held that the CCDs are equity instruments and do not fall within the definition of Financial Debt as defined under Section 5(8) of the Code. Hence, the NCLAT dismissed the appeal.<\/p>\n Case Referred<\/strong>– M\/s IFCI Ltd. Vs. Sutanu Sinha (Comp App (AT) (CH) (Ins) No. 108\/2023)<\/u><\/strong><\/p>\n Elusive<\/strong> errors unveiled through long drawn process of reasoning, are not \u201cErrors on the face of it\u201d<\/strong><\/span><\/p>\n\n
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RERA Brief<\/em><\/strong><\/span><\/h2>\n
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NCLT Brief<\/em><\/strong><\/span><\/h2>\n
Litigation Brief<\/em><\/strong><\/span><\/h2>\n