PROPERTY LOST/DEMOLISHED IN THE LAKE BED, GOMALA, CIVIC AMENITY SITES, GUNDU THOPU, BDA, KIADB LAND AND OTHER ENCROACHEMENTS SOLD BY LAND MAFIA AND DEVELOPERS = THE LOOSERS/PROPERTY(PRESENT) OWNERS OF THE PROPERTY CAN SUE THE SELLERS/BUILDERS AND RECOVER THE AMOUNT ALONG WITH DAMAGES AND COMPENSATION


HAVE YOU BOUGHT A PROPERTY, WHICH IS TERMED AS ILLEGAL OR IRREGULAR OR SOLD WITH FAKE OR FABRICATED DOCUMENTS OR CLOSE TO RAJA KALUVE OR LAKE?

DO NOT LOOSE HOPE.  THE OWNERS, IF ALL OTHER THINGS ARE GOOD, CAN FIGHT AND INITIATE ACTION AND RECOVER THE LOSS, BASED ON THE DOCUMENTS ON WHICH IT IS BOUGHT. 

YES. YOU CAN FIGHT.  YOU CAN, DEFINITELY TAKE ACTION AGAINST YOUR SELLER. BOTH CRIMINAL AND CIVIL SUITS CAN BE INSTITUTED, SUBJECT TO THE THOROUGH EXAMINATION AND INVESTIGATION OF TITLE DEEDS, APPROVALS AND KATHAS.

BEFORE EMBARKING UPON SUCH EXPENSIVE, TIME CONSUMING, SENSITIVE ISSUE AND FILING OF THE SUIT, ALL THE DETAILS AND DOCUMENTS MUST BE THOROUGHLY VERIFIED AND CHECKED FOR ITS AUTHENTICITY AND GENUINENESS. AN INVESTIGATION ABOUT THE SELLER/PREDECESSOR OF THE PROPERTY AND HIS CURRENT POSITION AND HIS OTHER PROPERTIES AND ACTIVITIES ARE A MUST.

INITIATE APPROPRIATE PROCEEDINGS IMMEDIATELY UPON THE SELLER, THEIR COMPANY, TOWN PLANNING OFFICIALS AND  REVENUE OFFICIALS WITH THOROUGH UNDERSTANDING OF THE KARNATAKA LAND REVENUE ACT, KARNATAKA LAND REFORMS ACT, KARNATAKA MUNICIPAL ACT AND KARNATAKA TOWN AND COUNTRY PLANNING ACT ALONG WITH APPROPRIATE AND SUSTAINABLE PROVISIONS OF IPC AND CPC.

THE LOOSERS CAN DEFINITELY INITIATE ACTION, HAD THERE BEEN MISREPRESENTATION OF FACTS, FAKE DOCUMENTS, FABRICATED DOCUMENTS, INDEMNITY CLAUSE IN THE ABSOLUTE SALE DEED, NON COMPLIANCE OF CONDITIONS LAID DOWN IN THE APPROVALS, PROVIDED HAVE SUFFICIENT FEE PAYING POWER AND TO MEET THE EXPENSES AND FIGHT THE SUIT TILL ITS LOGICAL END.

BUT, IN MOST OF THE CASES OF DC CONVERSION, THE CONDITIONS ARE FLOUTED AND THE BUYERS OR THE OWNERS WILL ALSO BE EFFECTED.  HENCE, A CAREFUL HANDLING OF THE ENTIRE PROCESS IS VERY IMPORTANT.

DID YOU CHECK AND VERIFY THE VAT TAX, SERVICE TAX, BESCOM DEPOSIT AND BWSSB DEPOSIT CHARGED BY THE SELLER/DEVELOPER ?


ONE OF OUR READER HAS DONE A CALCULATION OF VALUE ADDED TAX, SERVICE TAX, BESCOM DEPOSIT, BWSSB DEPOSIT, LEGAL CHARGES, GENERATOR CHARGES, STAMP DUTY AND REGISTRATION FEES, WHICH WORKS OUT AT OVER 20% OF THE STATED OR QUOTED PRICE OF THE PROPERTY, APART FROM THE CHARGES PAID OR PAYABLE FOR OBTAINING THE BANK LOAN, WHICH MAY BE ANOTHER 1/2% OR 1%.

IN SOME CASES, THESE CHARGES AMOUNTED TO OVER 25% AND 75% OF THE CASES, THE BUYERS DO NOT HAVE KATHA FROM BBMP, STILL HAVE TO REMIT THE BETTERMENT CHARGES AND PAY THE KATHA FEE, WHICH WORKS OUT AT APPROXIMATELY AT 1%.

Many of the buyers are under the wrong impression and notion that the approval or sanction of BANK LOAN will confer the best right, title and interest of the property.  IT IS WRONG. 

TAKE CARE. CHECK THE CHARGES. DEMAND THE BILLS. DEMAND THE RECEIPTS. 

AKRAMA-SAKRAMA – GAZETTE NOTIFICATION BY THE URBAN DEVELOPMENT SECRETARIAT ON 28-05-2014- akrama_sakrama_2014-gazette


akrama_sakrama_2014-gazette

THE GOVERNMENT OF KARNATAKA HAS ISSUED A GAZETTEE NOTIFICATION OF THE AMENDMENT TO THE KARNATAKA TOWN AND COUNTRY PLANNING(REGULARISATION OF UNAUTHORISED DEVELOPMENT OR CONSTRUCTION)RULE, 2013.

THE GAZETTE NOTIFICATION DATED 28-05-2014

akrama_sakrama_2014-gazette

Akrama-Sakrama-Gazette notification on 28-05-2014-page-1 001

akrama_sakrama_2014-gazette

SOME ARGUMENTS , ANSWERS AND COUNTER ARGUMENTS ABOUT THE CLEARING AND DEMOLITION OF ILLEGAL CONSTRUCTION ON THE ENCROACHED LANDS AT BANGALORE


ENCROACHMENT OF LAKE BED CLEARED:

A KATHA AND OCCUPANCY CERTIFICATE ISSUED –

ISSUE OF A KATHA DOES NOT ENTITLE ANY PERSON TO OBTAIN A KATHA ON MISREPRESENTATION OF FACTS AND THE KATHA AUTOMATICALLY GETS CANCELLED.

OCCUPANCY CERTIFICATE IS ISSUED TO THE BUILDINGS WHICH HAVE COMPLIED WITH ALL STATUTORY REQUIREMENTS AND CONSTRUCTED AS PER SANCTIONED PLAN.

DOES OC ALLOW ENCROACHMENT OF GOVERNMENT LANDS?

DOES ALL THESE ARGUMENTS ARE VALID AND HOLD GOOD IN THE EYES OF LAW?

DEFINITELY NO. NEVER.

ANOTHER ARGUMENT PUT FORTH BY THE OWNERS THAT THE ENCROACHMENTS MUST NOT BE REMOVED BECAUSE THEY ARE NOT AWARE, BECAUSE THEY HAVE INVESTED AND IT IS THEIR PROPERTY.

IT MEANS, EVEN, IF THE DEVELOPER OR THE OWNER HAVE ENCROACHED GOVERNMENT LAND STATING THAT THEY ARE NOT AWARE OR IGNORANT ABOUT THE ENCROACHMENT OF GOVERNMENT LAND, HENCE IT IS LEGAL.

 

THE TRUTH:

THE MATTER WAS BEFORE THE HIGH COURT AND THE COURT DIRECTED THE ASSISTANT COMMISSIONER TO CONDUCT A SURVEY.

HOW CAN ANYBODY SAY THAT THEY ARE NOT AWARE?

The answer to your question is in the above article itself: “Chowdegowda, BBMP additional director, Town Planning, said: We issue the plan sanction based on the availability of ‘A’ Khata and later on, occupancy certificate for constructing without deviating from the sanctioned plan.

Town planning officials cannot be held responsible for issuing an occupancy certificate for the allegedly encroached lake land by Developers.”

 

A COMMENT IN ONE OF THE SITES ABOUT THE ISSUE:
In Bangalore’s real estate history, around 00 flat owners of XXXX XXXXXX have decided to file a cheating case against the developers, 14 years after taking possession of their apartments. The decision came after the Bangalore Urban district administration on Tuesday carried out a partial demolition (COMPOUND WALL)of the apartment allegedly constructed on the Iblur lakebed.

A ground + seven floors apartment complex, has been under existence since the year 2001-02. Flat owners’ association president alleged that they had been kept in the dark about a legal battle between the developers and the state government.

Bangalore district incharge minister Ramalinga Reddy told Bangalore Mirror: “The apartments have been built on encroached lakebed land by the developers. A resurvey by the Assistant Commissioner was also done, the encroachment has been confirmed. The Thasildar has gone for demolition after the Lokayukta served a notice on him asking him why no action has been taken. He has to follow orders.”

One of the affected owners said: ”We bought flats by spending our hard-earned money. The Developers never informed us about the alleged encroachment of the lake land.(even though, they were contesting the suit in the court) BBMP has also issued ‘A’ Khata and the town planning department has also given us the occupancy certificate, then how can we have encroached the lake land.”

ISSUE OF A KATHA DOES NOT ENTITLE ANY PERSON TO OBTAIN A KATHA ON MISREPRESENTATION OF FACTS (encroached government lands ) AND THE KATHA AUTOMATICALLY GETS CANCELLED.

OCCUPANCY CERTIFICATE IS ISSUED TO THE BUILDINGS WHICH HAVE COMPLIED WITH ALL STATUTORY REQUIREMENTS AND CONSTRUCTED AS PER SANCTIONED PLAN.

DOES OC ALLOW ENCROACHMENT OF GOVERNEMENT LANDS?

DOES ALL THESE ARGUMENTS ARE VALID AND HOLD GOOD IN THE EYES OF LAW?

Another flat owner said: “The developer has cheated us. Officials cannot just demolish a part of the apartment. Officials came this morning and pasted the notice on our compound wall. This is not the way to treat tax-payers.”

IGNORANCE OF LAW IS NO EXCUSE- EVERYBODY FEIGNS IGNORANCE, THINKING THAT THEY CAN GET AWAY WITH IT!!! WHEN THE MATTER WAS BEFORE THE HIGH COURT, HOW CAN THEY SAY, THEY ARE NOT AWARE OR IGNORANT.

HOW TRUE IS THEIR REAL IGNORANCE?

Bangalore urban deputy commissioner’s office Tashildar (enforcement) Chudamani said, ” On Tuesday, around 18 acre of lake land worth Rs 15 crore has been recovered.”

Bangalore South Tahsildar B R Dayanand said, “Everything has been carried out according to the law. The present outer ring road is itself on lake land, but the then cabinet decided to take up the road work. ”

On January 18, 2013, the then Bangalore South Tahsildar had issued orders for recovering lake land, but the process was kept in abeyance. On February 19 this year, Dayanand issued the fresh recovering order which was executed on March 4.

Dayanand said, “Iblur village survey No 36 is a genuine lake land. Two people, Harish Krishna and Papanna, had encroached 81 gunta, while Jacob had encroached 4 gunta, Rajesh Babu 3/4 gunta, Sun City developers 4 gunta, Sobha Developers 4 gunta, Pujari Krishnappa 12 gunta, Flower school 1 gunta, and another person Narasa Reddy has also encroached some land.”

Sobha maintained that their apartment was legal, based on a Plan Sanction bearing P.S/EM/TA-3/E/02-1999-2000, dated 17.11.1999 and an Occupancy Certificate bearing No. BDA/EM/TA-3/T-101/2002-03 dated 05.03.2003 issued by the Bangalore Development Authority. They accused the tashildar of not complying with the orders of the High Court as also the Asst Commissioner. ”Without hearing the owners or providing them with the Survey Report, the tahsildar has pasted a notice dated March 1, 2014.’ ‘ a Sobha representative aid.

A flat owner, said: ”The developer kept us in the dark. The association has decided to take up a legal battle against them.”


The builders made their money, even the investors have offloaded all their units by now and the only one suffering will be the end-users.

ALL IS NOT WELL.

THE OWNERS HAVE OBTAINED A TEMPORARY STAY ORDER FROM THE COURT, NOW, THE BURDEN OF PROOF LIES ON THEM TO PROVE THAT THE SAID LAND IS THEIR OWN AND IT IS NOT AN ENCROACHED LAND.

 

BUILDERS DENIED BAIL FOR SELLING FLAT ON ILLEGAL FLOOR – A NEWS REPORT


READ:

http://articles.timesofindia.indiatimes.com/2013-12-24/mumbai/45538986_1_aftab-manzil-50-lakh-rizwan-merchant

ONE OF OUR READER INTIMATED US THAT THE NEWS MAY NOT BE TRUE.

HENCE, WE ARE PUBLISHING THIS LINK.

PLEASE READ:

Builders denied bail for selling flat on illegal floor

Shibu Thomas, TNNDec 24, 2013, 02.21AM IST

MUMBAI: The Bombay high court has refused to grant bail to two developers who allegedly cheated a woman by promising her a fifth-floor flat in an under-construction building in Bandra that had permissions only to build up to the third floor.

The builders, Sharif Altaf Furniturewala and his uncle Aftab Latif, have been in jail for two months since their arrest on October 19.

Their claims that the case was a civil one and their offer to return the sum of Rs 50 lakh they had taken from the complainant, Rubina Ansari, failed to impress the court.

One of the two builders, Furniturewalla, was charged earlier this year along with his two brothers after the Aftab Manzil building which they owned in Mahim came crashing down, killing 10 persons, including advocate Rizwan Merchant’s mother, wife and son.

Merchant, who is Ansari’s lawyer in this case, argued it was not a simple case of cheating but part of an “epidemic of illegal constructions in the city”, where an attempt was made to put up a building “up to the 7th floor without there being any sanction from local authorities” with a “design to earn huge profits at the cost of lives of flat purchasers”.

The complaint said Furniturewala and Latif signed an agreement to sell a 600 sq ft flat on the fifth floor of their under-construction seven-storey building Concrete Construction in Bandra to Rubina in 2010. Rubina paid Rs 50 lakh of the total cost of Rs 78 lakh.

However, she soon came to know the building did not have permissions. When her notice for refund of money went unanswered, she lodged a criminal complaint with the police.

Rubina’s lawyers, while opposing the bail plea, pointed out that around five documents were forged, including the commencement certificate to show the BMC had given permissions for a seven-storey building.

Advocate Merchant said it was an attempt to violate civic rules “for construction of the building which, if it collapses, will cause casualty of human lives—as has happened in the collapse of Aftab Manzil”.

Justice A R Joshi agreed. “The present matter cannot be viewed as a simple breach of contract and cheating an individual and as such entitling the applicants to bail on their willingness to deposit an amount of Rs 50 lakh.”

Justice Joshi added that since the matter was still being investigated, it was not proper to release the accused on bail.

Frequently Asked Questions on Real Estate (Regulation and Development) Bill, 2013


Frequently Asked Questions on Real Estate (Regulation and Development) Bill, 2013

 

1 Q : Why need for regulation in real estate sector’?

Ans:The real estate sector plays a  catalytic role in fulfilling the need and demand for housing and infrastructure in the country. While this sector has grown significantly in recent years, it has been largely unregulated, with absence of professionalism and standardization, and lack of adequate consumer protection, which has constrained the healthy and orderly growth of the industry.

Also, the need for regulating the sector has been emphasized in various platforms, forums, and media reports. This view has also been strongly reiterated by the Ministry of Consumer Affairs, the Competition Commission and Tariff Commission, in recent times.

 

2. Q :  What are the most important provisions of the Bill?

Ans: The proposed Bill applies to residential real estate i.e. housing and any other independent use ancillary to housing. However, it is important to know that the Bill only intends to regulate ‘transactions’ i.e. buying and selling of residential real estate, and does not intend to regulate ‘construction’ which is the domain of States/ULB’s.  As the Bill is aimed at infusing the much lacked, transparency in the sector, it provides to mandatory Public Disclosure of all project details, with specified functions and duties of promoter.

The Bill provides for establishment of Real Estate Regulatory Authority and Appellate Tribunal for a speedier dispute redressal mechanism

 

One of the novel provisions are the registration of real estate agents, which have hitherto been un-regulated, with clear responsibilities and functions, which would lead to money trail and curb money laundering. And like all regulatory Bills the Bill provides for Punitive Provisions to ensure compliance and to enforce the provisions of the Bill. Punitive provisions include de-registration of the project and penalties are provided in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal.

 

3. Q : Some people are calling it a populist move, realtors’ body CREDAI has said the proposed law should govern all stakeholders of the industry and not only the developers?

   Ans : There has been a crying need for a real estate regulator, on the lines of telecom, securities, insurance, electricity etc. In fact on the Regulatory Index India is ranked quite low, in the sector, which has prevented domestic and foreign investment into the sector, which could have contributed to enhanced activity, and increase in GDP growth.

 

The Bill regulates ‘transactions’ in the sector, and thus all the stakeholders involved in the ‘transaction’ i.e. the promoter/seller, the allottee/buyer and the real estate agent, all three are regulated under the proposed Bill, with specified functions and duties.

 

The Bill does not regulate ‘construction’ which is the domain of States/ULBs. The main concern of the developers is the need for a single window system for project approvals/clearances, towards which my Ministry has constituted an Expert Committee, which is also represented by industry bodies, which would recommend to the States to implement single window system.

 

As far as the Real Estate Bill is concerned its remit is limited to transactions, and thus regulates all parties involved in it.

 

4. Q : The Real Estate Regulatory Bill that seeks to bring transparency and accountability in the realty sector contention that prices would rise by 30 per cent once this Bill is passed in the Parliament?

Ans:  This is not true, and from where have such estimates come. The Bill is aimed at consumer protection, by creating an online system for information sharing so that there is mutual trust between the developers and the buyers, and projects implemented in time.

 

The enactment of the Bill will lead to enhanced activity in the sector, leading to more housing units being supplied to the market. It will bring in the much needed confidence to infuse more investment and in turn to stabilize the prices of houses being sold.

 

The Bill works for the benefits of consumers and also for the benefits of promoters, and for the overall benefit of the sector.


 

5.   Q: Delay due to approval from government agencies. Why only to residential projects and commercial real estate property is not considered under this regulation?

Ans:  On the delay due to approval from government agencies, The Ministry of Housing & Urban Poverty Alleviation is advising the States to follow a single window model for project clearances, but that’s an exercise beyond the provisions of the Bill.

 

One point often missed is that, the proposed Bill only regulates the sale of residential real estate, and not its development. The promoter is free to carry on development, but what the Bill provides is that he can only sell after all approvals are in place and he has registered his project with the Regulator under the Bill. And the registration requirements under the Bill are on a real-time basis, which does not lead to another layer of approvals, as are made out to be.

Limiting the application of the Bill to residential properties would keep the focus of the Regulator, and the need for consumers too is in that part of the sector.

6.        Q:  The projects, which are already built or are in construction  Registration with the regulator won’t be mandatory for projects less than 4000 square meter. So, many small developers will escape from registration and government regulator’s control?

 

Ans:  The initial draft had provided for 4000 square meters, which has now been reduced to 1000 square meters or 12 apartments, whichever is applicable, after extensive consultations with the States and other stakeholders. Also, the Bill very specifically provides for prospective regulation.

7.      Q: Specifying actual carpet area becomes mandatory Developers are selling flats on the basis of super built area, which includes common passage area, stairs and other areas that is 20-30 percent more than actual flat area?

Ans: What the Bill says is the disclosure by the promoter of the number of apartments for sale has to be based on carpet area, and carpet area has been defined. The buyer should know what he is actually getting and paying for. Concepts such as super-build up etc. are confusing and the Bill intends to standardize the requirements .This will substantially reduce the power asymmetry prevalent in real estate transactions.

 

 

Highlights of Companies Bill as passed by Rajya Sabha on August 8, 2013


NEW COMPANIES BILL AS PRESENTED TO THE RAJYA SABHA

Disclaimer

This document has been prepared on the basis of Companies Bill, 2012 as passed by the Lok Sabha on 18th December, 2012 and as passed by the Rajya Sabha on 08 August , 2013.

The author and the publisher do not own the responsibility of any error or omission.

The users and readers are advised to cross check with the original Bill before acting upon this document.

This is not an official document nor a copy of the statute.

Highlights of the Companies Bill

(as passed by the Lok Sabha on 18.12.12 and by the Rajya Sabha on 08.08.13)

• The Bill has 470 clauses as against 658 Sections in the existing Companies Act, 1956.

• The entire bill has been divided into 29 chapters.

• Many new chapters have been introduced, viz., Registered Valuers (ch.17); Government companies (ch. 23); Companies to furnish information or statistics (ch. 25); Nidhis (ch. 26); National Company Law Tribunal & Appellate Tribunal (ch. 27); Special Courts (ch. 28).

• The Bill is forward looking in its approach which empowers the Central Government to make rules, etc. through delegated legislation (clause 469 and others).

• The Companies Bill is the result of detailed consultative process adopted by the Government.

The salient and unique features of the Bill are as under:

1. DEFINITIONS

• New definitions are introduced in the Bill, some of which are accounting standards, auditing standards, associate company, CEO, CFO, control, deposit, employee stock option, financial statement, global depository receipt, Indian depository receipt, independent director, interested director, key managerial personnel, promoter, one person company, small company, turnover, voting right etc.

• Definition of private company changed – the limit on maximum number of members increased from 50 to 200.

• Private company which is a subsidiary of a public company shall be deemed to be a public company.

• Listed company – A company which has any of its securities listed on any recognised stock exchange.

• Associate Company – A company is considered to be an associate company of the other, if the other company has significant influence over such company (not being a subsidiary) or is a joint venture company. Significant influence means control of at least 20 per cent. of total share capital of a company or of business decisions under an agreement.

• Dormant Company – Where a company is formed and registered under this Act for a future project or to hold an asset or intellectual property and has no significant accounting transaction, such a company or an inactive company may make an application to the Registrar for obtaining the status of a dormant company.

• “expert” includes an engineer, a valuer, a chartered accountant, a company secretary, a cost accountant and any other person who has the power or authority to issue a certificate in pursuance of any law for the time being in force.

• “foreign company” means any company or body corporate incorporated outside India which,-

(a) has a place of business in India whether by itself or through an agent, physically or through electronic mode; and

(b) conducts any business activity in India in any other manner.

• “Key Managerial Personnel (KMP), in relation to a company, means-

(i) the Chief Executive Officer or the Managing Director or the Manager,

(ii) the Company Secretary;

(iii) the whole-time director;

(iv) the Chief Financial Officer; and

(v) such other officer as may be prescribed

• “officer who is in default”, means any of the following officers of a company, namely:-

(i) whole-time director;

(ii) key managerial personnel;

(iii) where there is no key managerial personnel, such director or directors as specified by the Board in this behalf and who has or have given his or their consent in writing to the Board to such specification, or all the directors, if no director is so specified;

(iv) any person who, under the immediate authority of the Board or any key managerial personnel, is charged with any responsibility including maintenance, filing or distribution of accounts or records, authorises, actively participates in, knowingly permits, or knowingly fails to take active steps to prevent, any default;

(v) any person in accordance with whose advice, directions or instructions the Board of Directors of the company is accustomed to act, other than a person who gives advice to the Board in a professional capacity;

(vi) every director, in respect of a contravention of any of the provisions of this Act, who is aware of such contravention by virtue of the receipt by him of any proceedings of the Board or participation in such proceedings without objecting to the same, or where such contravention had taken place with his consent or connivance;

(vii) in respect of the issue or transfer of any shares of a company, the share transfer agents, registrars and merchant bankers to the issue or transfer.

• Bill defines the term ‘promoter’ to mean a person –

(a) who has been named as such in a prospectus or is identified by the company in the annual return, or

(b) who has control over the affairs of the company, directly or indirectly whether as a shareholder, director or otherwise; or

(c) in accordance with whose advice, directions or instructions the Board of Directors is accustomed to act.

Provided that nothing in sub-clause (c) shall apply to a person who is acting merely in a professional capacity.

• Subsidiary company in relation to any other company (that is holding company), means a company in which the holding company –

o Controls the composition of the Board of Directors; or

o Exercises or controls more than one half of the total share capital (instead of equity share capital as prescribed under the 1956 Act) either at its own or together with one or more of its subsidiary companies.

Provided that such class or classes of holding companies as may be prescribed shall not have layers of subsidiaries beyond such numbers as may be prescribed.

• Small company has been defined as a company other than a public company having a paid-up share capital of which does not exceed fifty lakh rupees or such higher amount as may be prescribed not exceeding Rs.5 crore or turnover of which does not exceed two crore rupees or such higher amount as may be prescribed not exceeding twenty crore rupees. [clause 2(85)].

• The number of persons in any association or partnership not to exceed such number of persons as may be prescribed (not exceeding one hundred). The restriction not to apply to an association or partnership, constituted by professionals who are governed by special Acts. (clause 464)

2. CLASSIFICATION & REGISTRATION

• Concept of One Person Company (OPC limited) introduced [Clause 2(62)].

• Concept of Small companies have been introduced which shall be subjected to a lesser stringent regulatory framework [Clause 2(85)].

• Provision for Conversion of Companies already registered has been introduced [Clause 18].

• Registration process has been made faster and compatible with e-governance.

• For the first time, articles may contain provisions for entrenchment [clause 5(3)].

• A declaration, in the prescribed form, required to be filed with the Registrar at the time of registration of a company that all the requirements of the Act in respect of registration and matters precedent or incidental thereto have been complied with, will be required to signed by both – a person named in the articles as a director, manager or secretary of the company as well as by an advocate, a chartered accountant, cost accountant or company secretary in practice, who is engaged in the formation of the company. (clause 7)

Registered office

• A company shall, on and from the 15th day of its incorporation and at all times thereafter have a registered office capable of receiving and acknowledging all communications and notices as may be addressed to it.

• Company is required to furnish to the Registrar verification of its registered office within 30 days of its incorporation in the prescribed manner.

• Where a company has changed its name(s) during the last two years, it shall paint or affix or print, along with its name, the former name or names so changed during the last two years.

• Notice of change, verified in the manner prescribed, shall be given to the Registrar, within 15 days of the change, who shall record the same.

Commencement of business

• A company having a share capital shall not commence business or exercise any borrowing powers unless a declaration is filed with Registrar by a director verified in the manner as may be prescribed that:

o every subscriber to the memorandum has paid the value of shares agreed to be taken by him;

o Paid-up capital is not less than Rs. five lakhs in the case of public company and one lakh in case of a private company.

o the company has filed with the Registrar the verification of its registered office.

3. PROSPECTUS AND ALLOTMENT OF SECURITIES

• This chapter is divided into two parts. Part I relates to ‘Public offer’ and Part II relates to ‘Private Placement’

• “Public offer” includes initial public offer or further public offer of securities to the public by a company, or an offer for sale of securities to the public by an existing shareholder, through issue of a prospectus.’

• The term ‘private placement’ has been defined to bring clarity. “Private placement” means any offer of securities or invitation to subscribe securities to a select group of persons by a company (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in this section.

• Detailed disclosures are provided in the Bill itself. It includes disclosures about sources of promoter’s contribution.

• In case of variation in the terms of contract referred to in the prospectus or objects for which the prospectus was issued, the dissenting shareholders shall be given exit opportunity by promoters or controlling shareholders.

Punishment for fraudulently inducing persons to invest money (clause 36)

• Any person who, either knowingly or recklessly makes any statement, promise or forecast which is false, deceptive or misleading, or deliberately conceals any material facts, to induce another person to enter into, or to offer to enter into any agreement for, or with a view to, obtaining credit facilities from any bank or financial institution shall be liable for punishment for fraud. This provision is proposed to help in curbing a major source of corporate delinquency.

4. SHARE CAPITAL AND DEBENTURES

• If a company with intent to defraud, issues a duplicate certificate of shares, the company shall be punishable with fine which shall not be less than 5 times the face value of the shares involved in the issue of the duplicate certificate but which may extend to 10 times the face value of such shares or rupees 10 crores, whichever is higher. Stringent penalties have also been imposed for defaulting officers of the company. [clause 46(5)]

• Where any depository has transferred shares with an intention to defraud a person, it shall be liable under section 447 i.e. provisions for punishment for fraud.[clause56(7)] _ Security Premium Account may also be applied for the purchase of its own shares or other securities. [Clause 52(2)(e)]

• Except as provided in section 54 (Issue of sweat equity shares), a company shall not issue shares at a discount [Clause(53)]

• A company limited by shares cannot issue any preference shares which are irredeemable. However, a company limited by shares may, if so authorised by its articles, can issue preference shares which are liable to be redeemed within a period not exceeding twenty years from the date of their issue.

• A company may issue preference shares for a period exceeding twenty years for infrastructural projects subject to redemption of such percentage of shares as may be prescribed on an annual basis at the option of such preference shareholders. [Clause 55].

• Every company shall deliver debenture certificate within six months of allotment. [Clause 56(4)(d)].

• Reduction of share capital to be made subject to confirmation by the Tribunal. The Tribunal on receiving an application for reduction of share capital, shall give   notice to the Central Government, Registrar and to the SEBI and consider the representations received in this behalf. (Clause 66)

5. E-GOVERNANCE

E-Governance proposed for various company processes like maintenance and inspection of documents in electronic form, option of keeping of books of accounts in electronic form, financial statements to be placed on company’s website, holding of board meetings through video conferencing/other electronic mode; voting through electronic means.

6. BOARD AND GOVERNANCE

Number of directors

• Minimum : Public company -3 Private -2 , OPC-1.

• Maximum : limit increased to 15 from 12 .

More directors can be added by passing of special resolution without getting the approval of Central Government as earlier required.

Woman director

At least one woman director shall be on the Board of such class or classes of companies as may be prescribed.

Resident Director

Every company shall have at least one director who has stayed in India for a total period of not less than one hundred and eighty-two days in the previous calendar year. [clause 149(2)].

Appointment of Key Managerial Personnel [Clause 203(1)]

• Every company belonging to such class or classes of companies as may be prescribed shall have the wholetime key managerial personnel.

• Unless the articles of a company provide otherwise or the company does not carry multiple businesses, an individual shall not be the chairperson of the company as well as the managing director or Chief Executive Officer of the company at the same time [Proviso to

Clause 203(1)]

Provided that nothing contained above shall apply to such class of companies engaged in multiple businesses and which has appointed one or more chief executive officers for each such business as may be notified by the Central Government.

• Every Company Secretary being a whole-time KMP shall be appointed by a resolution of the Board which shall contain the terms and conditions of appointment including the remuneration.

• If the office of any whole-time KMP is vacated, the same shall be filled up by the Board at a meeting of the Board within a period of six months from the date of such vacancy [Clause 203 (2) & (4)].

• If a company does not appoint a Key Managerial Personnel, the penalty proposed is :

On company – one lakh rupees which may extend to five lakh rupees.

On every director and KMP who is in default – 50,000 rupees and 1,000 rupees per day if contravention continues.

Independent Directors

• Concept of independent directors has been introduced for the first time in Company Law: [clause 149(5)]

• All listed companies shall have at least one-third of the Board as independent directors.

• Such other class or classes of public companies as may be prescribed by the Central Government shall also be required to appoint independent directors.

• The independent director has been clearly defined in the Bill.

• Nominee director nominated by any financial institution, or in pursuance of any agreement, or appointed by any government to represent its shareholding shall not be deemed to be an independent director.

• An independent director shall not be entitled to any remuneration other than sitting fee, reimbursement of expenses for participation in the Board and other meetings and profit related commission as may be approved by the members.

• An Independent director shall not be entitled to any stock option.

• Only an independent director can be appointed as alternate director to an independent director. [clause 161(2)].

Person other than retiring director

• If a person other than retiring director stands for directorship but fails to get appointed, he or the member intending to propose him as a director, as the case may be, shall be refunded the sum deposited by him, if he gets more than twenty five per cent of total valid votes [clause 160(1)].

Resignation of director

• A director may resign from his office by giving notice in writing. The Board shall, on receipt of such notice, intimate the Registrar and also place such resignation in the subsequent general meeting of the company. [clause 168(1)]. The director shall also forward a copy of resignation alongwith detailed reasons for the resignation to the Registrar.

• The notice shall become effective from the date on which the notice is received by the company or the date, if any, specified by the director in the notice, whichever is later. [clause 168(2)].

• If all the directors of a company resign from their office or vacate their office, the promoter or in his absence the Central Government shall appoint the required number of directors to hold office till the directors are appointed by the company in General Meeting [clause 168(3)].

Participation of directors through video-conferencing

• Participation of directors at Board Meetings has been permitted through video-conferencing or other electronic means, provided such participation is capable of recording and recognizing. Also, the recording and storing of the proceedings of such meetings should be carried out [clause 173(2)].

The Central Government may however, by notification, specify such matters which shall not be dealt with in the meeting through video-conferencing and such other electronic means as may be prescribed. [clause 173(2)]

• At least seven days’ notice is required to be given for a Board meeting. The notice may be sent by electronic means to every director at his address registered with the company. [clause 173(3)].

A Board Meeting may be called at shorter notice subject to the condition that at least one independent director, if any, shall be present at the meeting. However, in the absence of any independent director from such a meeting, the decisions taken at such meeting shall be final only on ratification thereof by at least one independent director. [clause 173(3)].

Duties of directors (clause 166)

For the first time, duties of directors have been defined in the Bill. A director of a company shall :

• act in accordance with the articles of the company.

• act in good faith in order to promote the objects of the company for the benefit of its members as a whole, and in the best interests of the company, its employees, the shareholders, the community and for the protection of environment.

• exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.

• not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.

• not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.

• not assign his office and any assignment so made shall be void.

Penalty

If a director of the company contravenes the provisions of this section such director shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Board Committees

• Besides the Audit Committee, the constitution of Nomination and Remuneration Committee has also been made mandatory in the case of listed companies and such other class or classes of companies as may be prescribed. [clause 178(1)].

• The Audit committee shall consist of a minimum of three directors with independent directors forming a majority and majority of members including its Chairperson shall be persons with ability to read and understand the financial statement. [clause 177(2)].

• The Nomination and Remuneration Committee shall formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees [Clause 178(3)].

• The Nomination and Remuneration Committee shall consist of three or more non-executive director(s) out of which not less than one half shall be independent directors. [clause 178(1)].

• Where the combined membership of the shareholders, debenture holders, deposit holders and any other security holders is more than one thousand at any time during the financial year, the company shall constitute a Stakeholders Relationship Committee. [clause 178(5)].

Managerial Remuneration [clause 197]

• Provisions relating to limits on remuneration provided in the existing Act being included in the Bill. Maximum limit of 11% (of net profits) being retained.

• For companies with no profits or inadequate profits remuneration shall be payable in accordance with new Schedule of Remuneration (Schedule V) and in case a company is not able to comply with Schedule V, approval of Central Government would be necessary.

Certain Insurance Premium not to be treated as part of the remuneration

• The premium paid on any insurance taken by a company on behalf of its managing director, whole-time director, manager, Chief Executive Officer, Chief Financial Officer or Company Secretary for indemnifying any of them against any liability in respect of any negligence, default, misfeasance, breach of duty or breach of trust for which they may be guilty in relation to the company, shall not be treated as part of the remuneration payable to any such personnel. [Clause 197 (13)]

7. DISCLOSURES

Annual return [clause 92]

• Every company shall prepare a return (hereinafter referred to as the annual return) in the prescribed form containing the particulars as they stood on the close of the financial year regarding;

(i) its registered office, principal business activities, particulars of its holding, subsidiary and associate companies;

(ii) its shares, debentures and other securities and shareholding pattern;

(iii) its indebtedness;

(iv) its members and debenture-holders along with changes therein since the close of the previous financial year;

(v) its promoters, directors, key managerial personnel along with changes therein since the close of the last financial year;

(vi) meetings of members or a class thereof, Board and its various committees along with attendance details;

(vii) remuneration of directors and key managerial personnel;

(viii) penalties imposed on the company, its directors or officers and details of compounding of offences;

(ix) matters related to certification of compliances, disclosures as may be prescribed;

(x) details in respect of shares held by foreign institutional investors; and (xi) such other matters as may be prescribed.

The prescribed disclosures under the Annual Return shows significant transformation in non financial annual disclosures and reporting by companies as compared to the existing format.

Similar to the existing compliance certificate as stipulated under section 383A of Companies Act, 1956 certification of compliances has been prescribed under clause 92(1 )(ix).

• Annual Return is required to be signed by :

(i) A director and the Company Secretary, or where there is no Company Secretary, by a Company Secretary in whole-time practice.

It means that now in respect of all the companies (except one pferson companies and small companies), whether private or public, listed or unlisted, the annual return has to be signed by either a company secretary in employment or by a company secretary in practice i.e. where no Company Secretary is appointed by the company, the Annual Return is compulsorily required to be signed by the Company Secretary in practice.

(ii) in addition to the above, the annual return, filed by a listed company or by a company having such paid-up capital and turnover as may be prescribed, shall be certified by a company secretary in practice that the annual return discloses the facts correctly and adequately and that the Company has complied with all the provisions of the Act.

It means, in case of a listed company and other prescribed companies, even if the Annual Return is signed by the Company Secretary in employment, it is further required to be certified by the Company Secretary in Whole time practice.

(iii) In relation to a One Person Company and Small Company, the annual return is required to be signed by the Company Secretary, or where there is no Company Secretary, by one director of the company.

Penalty

In case a Company Secretary in practice certifies the annual return otherwise than in conformity with the requirements of this section or the rules made there under, such Company Secretary shall be punishable with fine which shall not be less than fifty thousand rupees but which may extend to five lakh rupees.

Changes in shareholding of promoters and top ten shareholders

• A return to be filed with the Registrar with respect to change in the number of shares held by promoters and top ten shareholders (to ensure audit trail of ownership) by a listed company.

Board’s report (Clause 134)

• Board’s Report has been made more informative and includes extensive disclosures like –

(i) extract of annual return in the prescribed form;

(ii) company’s policy on director’s appointment and remuneration including

the criteria for determining qualifications, positive attributes,

independence of a director etc. ;

(iii) a statement of declaration by independent directors;

(iv) explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the auditor in his report and by the company secretary in practice in his secretarial audit report;

(v) particulars of loans, guarantees, or investments made;

(vi) particulars of contracts or arrangements entered into;

(vii) the conservation of energy, technology absorption, foreign exchange earnings and outgo in the prescribed manner;

(viii) statement indicating development and implementation of a risk management policy for the company including identification therein of elements of risk, if any, which in the opinion of the Board may threaten the existence of the company;

(ix) the details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year in case of listed companies and other prescribed class of companies, a statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of committees and individual directors.

• The Directors’ Responsibility Statement shall also include the statement that the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

• The Boards’ Report is to be signed by the Chairperson of the company if he is authorized by the Board and where he is not so authorized, it shall be signed by at least two directors, one of whom shall be a managing director, or by the director where there is one director. (Clause 134).

Related Party Transactions

• Every contract or arrangement entered into with a related party shall be referred to in the Board’s Report along with the justification for entering into such contract or arrangement [Clause 188(2)].

• Any arrangement between a company and its directors in respect of acquisition of assets for consideration other than cash shall require prior approval by a resolution in general meeting and if the director or connected person is a director of its holding company, approval is required to be obtained by passing a resolution in general meeting of the holding company [Clause 192].

• Where a one person company limited by shares or by guarantee enters into a contract with the sole member of the company who is also its director, the company shall, unless the contract is in writing, ensure that the terms of the contract or offer are contained in the memorandum or are recorded in the minutes of the first Board meeting held after entering into the contract. The company shall inform the Registrar about every contract entered into by the company and recorded in the minutes (Clause 193).

8. CORPORATE SOCIAL RESPONSIBILITY (CLAUSE 135)

• Every company having net worth of rupees 500 crore or more, or turnover of rupees 1000 crore or more or a net profit of rupees 5 crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director.

• The CSR Committee shall formulate and recommend Corporate Social Responsibility Policy which shall indicate the activity or activities to be undertaken by the company as specified in schedule VII and shall also recommend the amount of expenditure to be incurred on the CSR activities.

• The Board of every company shall ensure that the company spends in every financial year atleast 2% of the average net profits of the company made during the three immediately preceding financial years in pursuance of its CSR policy.

• Where the company fails to spend such amount, the Board shall in its report specify the reasons for not spending the amount. The approach is to ‘comply or explain’.

• The company shall give preference to local areas where it operates, for spending amount earmarked for Corporate Social Responsibility (CSR) activities.

9. DEPOSITS (CLAUSE 173)

• A company may, subject to the passing of a resolution in general meeting and subject to the prescribed rules, accept deposits from its members subject to fulfillment of the following specified conditions:

i. passing of resolution in a general meeting.

ii. issue of circular to members including therein a statement showing the financial position of the company, the credit ratings obtained, the total number of depositors and the amount due towards deposits in respect of any previous deposits accepted by the company and such other particulars in such form and in such manner as may be prescribed.

iii. filing a copy of the circular along with such statement with the registrar within 30 days before the date of issue of the circular.

iv. Providing deposit insurance.

v. Certification by the company that it has not defaulted in the repayment of deposits.

vi. Provision of security in respect of deposit and interest and creation of charge on company’s properties and assets. An amount of not less than 15% of the deposits maturing during a financial year shall be deposited in deposit repayment reserve account.

• A public company having prescribed net worth or turnover may accept deposits from persons other than its members subject to compliance of rules as may be prescribed by Central Government in consultation by Reserve Bank of India. (Clause 76).

• The penalty for failure to repay deposit has been made extremely stringent. Where a company fails to repay the deposit and it is proved that the deposits had been accepted with intent to defraud the depositors or for any fraudulent purpose, every officer of the company who was

responsible for the acceptance of such deposit shall, without prejudice to liability under section 447 i.e. punishment for fraud), be personally responsible, without any limitation of liability, for all or any of the losses or damages that may have been incurred by the depositors (Clause 75).

Stringent punishment is proposed for failure to distribute dividend within thirty days of its declaration. (Clause 127)

10.INVESTMENT COMPANIES (CLAUSE 186)

• A company can make investment through not more than two layers of investment companies, unless otherwise prescribed.

• This shall not affect

o a company from acquiring any other company incorporated in a country outside India if such other company has investment subsidiaries beyond two layers as per the laws of such country;

o a subsidiary company from having any investment subsidiary for the purposes of meeting the requirements under any law or under any rule or regulation framed under any law for the time being in force.

• The restriction on the number of step-down subsidiary companies has been introduced to prevent the abuse of diversion of funds through many step-down subsidiaries.

11. COMPANY SECRETARY

Functions of Company Secretary (clause 205)

• The functions of the company secretary shall include –

o to report to the Board about compliance with the provisions of this Act, the rules made there under and other laws applicable to the company;

o to ensure that the company complies with the applicable secretarial standards;

o to discharge such other duties as may be prescribed.

Secretarial Audit (Clause 204)

• Every listed company and a company belonging to other class of companies as may be prescribed shall annex with its Board’s report a Secretarial Audit Report, given by a Company Secretary in Practice, in such form as may be prescribed.

• It shall be the duty of the company to give all assistance and facilities to the Company Secretary in Practice, for auditing the secretarial and related records of the company.

• The Board of Directors, in their report shall explain in full any qualification or observation or other remarks made by the Company Secretary in Practice in his report.

• If a company or any officer of the company or the Company Secretary in Practice, contravenes the provisions of this section, the company, every officer of the company or the Company Secretary in Practice, who is in default, shall be punishable with fine which shall not be less than one lakh rupees but which may extend to five lakh rupees.

Secretarial Standards Introduced [Clause 118(10) & 205]

• For the first time, the Secretarial Standards has been introduced and provided statutory recognition

• Clause 118(10) reads as:

“Every company shall observe Secretarial Standards with respect General and Board Meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 and approved by the Central Government.”

• Clause 205 casts duty on the Company Secretary to ensure that the company complies with the applicable Secretarial Standards.

• It is the beginning of a new era where non financial standards have been given importance and statutory recognition besides Financial Standards.

12. GENERAL MEETINGS

• To encourage wider participation of shareholders at General Meetings, the Central Government may prescribe the class or classes of companies in which a member may exercise their vote at meetings by electronic means [clause 108].

• One person companies have been given the option to dispense with the requirement of holding an AGM. [clause 96(1)].

Report on annual general meeting [clause 121]

• Every listed company shall prepare a Report on each Annual General Meeting including confirmation to the effect that the meeting was convened, held and conducted as per the provisions of the Act and the Rules made there under.

The report shall be prepared in the manner to be prescribed. A copy of the report shall be filed with the Registrar within 30 days of the conclusion of the AGM. Non-filing of the report has been made a punishable offence.

13. AUDITORS

• A company shall appoint an individual or a firm as an auditor at annual general meeting who shall hold office till the conclusion of sixth annual general meeting.

• However, the company shall place the matter relating to such appointment for ratification by members at every annual general meeting.

• No listed company or a company belonging to such class or classes of companies as may be prescribed, shall appoint or re-appoint-

(a) an individual as auditor for more than one term of five consecutive years; and

(b) an audit firm as auditor for more than two terms of five consecutive years:

Provided that-

(i) an individual auditor who has completed his term under clause (a) shall not be eligible for re-appointment as auditor in the same company for five years from the completion of his term;

(ii) an audit firm which has completed its term under clause (b), shall not be eligible for re- appointment as auditor in the same company for five years from the completion of such term:

• Members of a company may resolve to provide that in the audit firm appointed by it, the auditing partner and his team shall be rotated at such intervals as may be resolved by members.

• The limit in respect of maximum number of companies in which a person may be

appointed as auditor has been proposed as twenty companies. (clause 141)

• Auditor cannot render any of the following services, directly or indirectly to the company or its holding company or subsidiary company:

• Accounting and book-keeping service

• Internal audit

• Design and implementation of any financial information system

• Actuarial services

• Investment advisory services

• Investment banking services

• Rendering of outsourced financial services

• Management services

• Other prescribed services

Internal Audit

• Prescribed class of companies shall be required to appoint an internal auditor to conduct internal audit of the functions and activities of the company. (clause 138)

Cost Audit (clause 148)

• The Central Government after consultation with regulatory body may direct class of companies engaged in production of such goods or providing such services as may be prescribed to include in the books of accounts particulars relating to utilisation of material or labour or to such other items of cost.

• If the Central Government is of the opinion, that it is necessary to do so, it may, direct that the audit of cost records of class of companies, which are required to maintain cost records and which have a net worth of such amount as may be  prescribed or a turnover of such amount as may be prescribed, shall be conducted in the manner specified in the order.

• ‘cost auditing standards’ have been mandated.

14. FINANCIAL STATEMENT (CLAUSE 2(40)]

• For the first time, the term ‘financial statement’ has been defined to include:-

(i) a balance sheet as at the end of the financial year;

(ii) a profit and loss account, or in the case of a company carrying on any activity not for profit, an income and expenditure account for the financial year;

(iii) cash flow statement for the financial year;

(iv) a statement of changes in equity, if applicable; and

(v) any explanatory note annexed to, or forming part of, any document referred to in sub-clause (i) to subclause (iv):

• the financial statement, with respect to One Person Company, small company and dormant company, may not include the cash flow statement;

Signing of financial statement (Clause 134)

The financial statement, including consolidated financial statement, if any, shall be approved by the Board of directors before they are signed on behalf of the Board at least by the Chairperson of the company authorised by the Board or by two directors out of which one shall be managing director and the Chief Executive Officer, if he is a director in the company, the Chief Financial Officer and the company secretary of the company, wherever they are appointed, or in the case of a One Person Company, only by one director, for submission to the auditor for his report thereon.

15.NATIONAL FINANCIAL REPORTING AUTHORITY (NFRA) (CLAUSE 132)

• The Central Government may be notification constitute a National Financial Reporting Authority to provide for matters related to accounting and auditing standards.

• Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall-

(a) make recommendations to the Central Government on the formulation and laying down of accounting and auditing policies and standards for adoption by companies or class of companies or their auditors, as the case may be;

(b) monitor and enforce the compliance with accounting standards and auditing standards in such manner as may be prescribed;

(c) oversee the quality of service of the professions associated with ensuring compliance with such standards, and suggest measures required for improvement in quality of services and such other related matters as may be prescribed; and

(d) perform such other functions relating to clauses (a), (b) and (c) as may be prescribed.

• Notwithstanding anything contained in any other law for the time being in force, the National Financial Reporting Authority shall-

(a) have the power to investigate, either suo moto or on a reference made to it by the Central Government, for such class of bodies corporate or persons, in such manner as may be prescribed into the matters of professional or other misconduct committed by any member or firm of chartered accountants, registered under the Chartered Accountants Act, 1949:

Provided that no other institute or body shall initiate or continue any proceedings in such matters of misconduct where the National Financial Reporting Authority has initiated an investigation under this section;

(b) have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908, while trying a suit.

(c) where professional or other misconduct is proved, have the power to make order for-

(A) imposing penalty of –

(I) not less than one lakh rupees, but which may extend to five times of the fees received, in case of individuals; and

(II) not less than ten lakh rupees, but which my extend to ten times of the fees received, in case of firms;

(B) debarring the member or the firm from engaging himself or itself from practice as member of the institute for a minimum period of six months or for such higher period not exceeding ten years as may be decided by the National Financial Reporting Authority.

• Any person aggrieved by any order of the National Financial Reporting Authority, may prefer an appeal before the Appellate Authority constituted by the Central Government.

16. INVESTOR PROTECTION MEASURES

• Issue and transfer of securities and non-payment of dividend by listed

companies, shall be administered by SEBI by making regulations.(Clause24)

• An act of fraudulent inducement of persons to invest money is punishable with imprisonment for a term which may extend to ten years and with fine which shall not be less than three times the amount involved in fraud.(Clause 36)

• A suit may be filed by a person who is affected by any misleading statement or the inclusion or omission of any matter in the Prospectus or who has invested money by fraudulent inducement. (Clause 37).

Class action suits

• For the first time, a provision has been made for class action suits. It is provided that specified number of member(s), depositor(s) or any class of them, may, if they are of the opinion that the management or control of the affairs of the company are being conducted in a manner prejudicial to the interests of the company or its members or depositors, file an application before the Tribunal on behalf of the members or depositors.

• Where the members or depositors seek any damages or compensation or demand any other suitable action from or against an audit firm, the liability shall be of the firm as well as of each partner who was involved in making any improper or misleading statement of particulars in the audit report or who acted in a fraudulent, unlawful or wrongful manner.

• The order passed by the Tribunal shall be binding on the company and all its members, depositors and auditors including audit firm or expert or consultant or advisor or any other person associated with the company. (clause 245)

Serious Fraud Investigation Office (clause 211)

Statutory status to SFIO has been proposed. Investigation report of SFIO filed with the Court for framing of charges shall be treated as a report filed by a Police Officer. SFIO shall have power to arrest in respect of certain offences of the Bill which attract the punishment for fraud. Those offences shall be cognizable and the person accused of any such offence shall be released on bail subject to certain conditions provided in the relevant clause of the Bill.

Stringent penalty provided for fraud related offences.

Fraud defined (Clause 447)

• The term “Fraud” has for the first time been defined in the Bill. Any person who is found to be guilty of fraud, shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to ten years and shall also be liable to fine which shall not be less than the amount involved in the fraud, but which may extend to three times the amount involved in the fraud. Where the fraud in question involves public interest, the term of imprisonment shall not be less than three years

Prohibition of insider trading

New clause has been introduced with respect to prohibition of insider trading of securities. The definition of price sensitive information has also been included [clause 195].

Prohibition on Forward dealings

Directors and the key managerial personnel of a company are prohibited from forward dealings in securities of the company. (clause 194).

17. INSPECTION, ENQUIRY AND INVESTIGATION

• A new clause has been added to provide that where in connection with enquiry or investigation into the affairs of the company or reference by the Central Government, or on complaint by specified number of members or creditors or any other person having a reasonable any person that the transfer or disposal of funds, properties or assets is likely to take place which is prejudicial to the interest of the company, then the Tribunal may order for the freezing of such transfer, removal or disposal of assets for a period of three years. [clause 221]

• Another new clause seeks to provide that the provisions of inspection or investigation applicable to Indian companies shall also apply mutatis-mutandis to inspection or investigation of foreign companies. (clause 228).

18. RESTRUCTURING AND LIQUIDATION

• The entire rehabilitation and liquidation process has been made time bound.

• Winding up is to be resorted to only when revival is not feasible. (clause 258).

• The Tribunal may appoint an interim administrator or a company administrator from the panel of Company Secretaries, CAs, CWAs, etc. maintained by the Central Government. [clause 259(1)].

• The Company Administrator shall prepare a scheme of revival and rehabilitation. [clause 261(1)].

• If revival scheme is not approved by the creditors, the Tribunal shall order for winding up of the company. (clause 258).

• No civil court shall have jurisdiction in respect of any matter on which Tribunal or Appellate Tribunal is empowered. (clause 268).

19. COMPANY LIQUIDATORS (CLAUSE 275)

The Tribunal may appoint Provisional Liquidator or the Company Liquidator from a panel maintained by the Central Government consisting of Company Secretaries, Chartered Accountants, Advocates and Cost Accountants.

On an appointment as provisional liquidator or Company Liquidator, such liquidator is required to file a declaration in the prescribed form disclosing conflict of interest or lack of independence in respect of his appointment, if any, with the Tribunal.

Professional assistance to Company Liquidator (CLAUSE 291)

The Company Liquidator may, with the sanction of the Tribunal, appoint one or more professionals including Company Secretaries to assist him in the performance of his duties and functions under the Act.

20. COMPOUNDING OF CERTAIN OFFENCES (CLAUSE 441)

This clause provides for the compounding of certain offences by Tribunal or regional director in certain cases before the investigation has been initiated or is pending under this Act. It further provides the procedure followed for compounding of offence. It clause also provides penalty for any officer or other

employee of the company who fails to comply with the order of Tribunal or Regional Director.

21. NATIONAL COMPANY LAW TRIBUNAL AND APPELLATE TRIBUNAL (CLAUSE 408 AND 410)

The Central Government shall, by notification, constitute, a Tribunal to be known as National Company Law Tribunal and an Appellate Tribunal to be known as National Company law Appellate Tribunal.

22. SPECIAL COURTS

• For the speedy trial of offences, the Central Government has been empowered to establish special courts in consultation with the Chief Justice of the High Court within whose jurisdiction the judge is to be appointed. (clause 435).

• All offences under this Act shall be triable by the Special Court established for the area in which the registered office of the company in relation to which the offence is committed or where there are more special courts than one for such area, by such one of them as may be specified in this behalf by the High Court concerned. (clause 436)

• The Special Court would have the liberty to try summary proceedings for offences punishable with imprisonment for a term not exceeding three years, although it may order for the regular trial. (clause 436).

23. MEDIATION AND CONCILIATION PANEL (CLAUSE 442)

• The Central government shall maintain a panel of experts to be called Mediation and Conciliation Panel for mediation between the parties during the pendency of any proceedings before the Central Government or the Tribunal or the Appellate Tribunal under this Act.

24. CROSS – BORDER MERGERS (CLAUSE 234)

• The Bill has allowed cross border mergers with any foreign company;

• The cross border merger may be made between companies registered under this Act and companies incorporated under jurisdiction of such countries as may be notified by the Central Government.

25. REGISTERED VALUERS (CLAUSE 247)

• A new chapter has been inserted in relation to registered valuers.

• Valuation in respect of any property, stock, shares, debentures, securities, goodwill, networth or assets of a company shall be valued by a person registered as a valuer.

• The Central Government shall maintain a register of valuers.

The valuer shall be a person having such qualification and experience and registered as a valuer in such manner and on such terms and conditions as may be prescribed.

26. POWER TO EXEMPT CLASS OR CLASSES OF COMPANIES FROM PROVISIONS OF THIS ACT (CLAUSE 462)

• The Central Government may in the public interest, by notification direct that any provisions of this Act:

1. shall not apply to such class or classes of companies; or

2. shall apply to class or classes of companies with such exceptions, modifications and adaptations as may be specified in the notification.

• The notification in draft to be laid in both the Houses of Parliament for a period of 30 days.

• Houses may disapprove or modify.

27. ADJUDICATION OF PENALTY (CLAUSE 454)

The Central government may by an order publish in the Official Gazette, appoint as many officers of the Central Government, not below the rank of Registrar, as adjudicating officers for adjudicating penalty under the provisions of this Bill in the manner as may be prescribed.

 

President of India promulgates the Securities Laws (Amendment) Ordinance 2013


President of India promulgates the Securities Laws (Amendment) Ordinance 2013

The President of India, Shri Pranab Mukherjee has promulgated the Securities Laws (Amendment) Ordinance, 2013 on July 18, 2013.

Features, Benefits & Advantages of Real Estate Bill, 2013 – THE REAL ESTATE(REGULATION AND DEVELOPMENT) BILL, 2013


The Union Government has proposed to bring in a Real Estate Bill to Protect the Interest of the Consumers and Promote Fair Play in Real Estate Transactions and approved THE REAL ESTATE(REGULATION AND DEVELOPMENT) BILL, 2013

The Objectives of the Bill is to provide for a uniform regulatory environment, to protect consumer interests, help speedy adjudication of disputes and ensure orderly growth of the real estate sector.

With the liberalization of the economy, conscious encouragement was given to the growth of the private sector in real estate sector and especially in construction, with a great deal of success, and the sector today is estimated to contribute substantially to the Country’s GDP.

But currently the real estate and housing sector is largely unregulated and opaque, with consumers often unable to procure complete information, or enforce accountability against builders and developers in the absence of effective regulation.

The proposed legislation would ensure greater accountability towards consumers, and to significantly reduce frauds and aims at restoring confidence of the general public in the real estate sector; by instituting transparency and accountability in real estate and housing transactions which in turn will enable the sector to access capital and financial markets essential for its long term growth. The Bill is also expected to promote regulated and orderly growth through efficiency, professionalism and standardization. It seeks to ensure consumer protection, without adding another stage in the procedure for sanctions, he added.

It contains elaborate provisions dealing with registration of real estate projects and registration of real estate agents with the Real Estate Regulatory Authority; functions and duties of promoters; functions and duties of real estate agents; rights and duties of allottees; establishment of Real Estate Regulatory Authority; establishment of Central Advisory Council; establishment of Real Estate Appellate Tribunal; offences and penalties; Finance, Accounts, Audits and Reports; etc.

Benefits and Advantages of Real Estate Bill, 2013

The Bill proposes to regulate transactions in the real estate sector and is in pursuance of the powers under Entries 6, 7 and 46 of the Concurrent List of the Constitution, which deals with Transfer of Property, Registration of Deeds and Documents, and Contracts. The draft Bill has been prepared after detailed deliberations with the State Governments and concerned Central Government Ministries, and after having suitably incorporated the suggestions received from them.

  •     The Bill will bring about standardization in the sector leading to healthy and orderly growth of the industry through introduction of definitions such as ‘apartment’, ‘common areas’, ‘carpet area’, ‘advertisement’, ‘real estate project’, ‘prospectus’ etc. Introduction of the concept of using only ‘carpet area’ for sale which has till now been ambiguously sold as super area, super built up area etc., will curb unfair trade practices.
  •     The Bill like other sectors such as telecom, electricity, banking, securities, insurance etc. provides for specialized regulation and enforcement which includes both curative and preventive measures, with powers to enforce specific performance, not available under the consumer laws. The Authority has powers to give directions for specific performance powers to impose penalty for non-registration of projects including imprisonment for continuous violation upto 3 yrs and impose penalty in case of other contraventions.
  •    The Bill proposes to register real estate agents which have hitherto been un-regulated, with clear responsibilities and functions, thereby leading to money trail and curbing money laundering. This clause has been added on the recommendations of the Department of Revenue, Ministry of Finance.
  •    The Bill aims to ensure consumer protection, by making it mandatory for promoters to register all projects, prior to sale; and only after having received all approvals from development/municipal authorities thereby protecting buyer investments.
  •     The Bill will promote transparency and fair and ethical business practices, relating to transactions, through disclosure of project details and contractual obligations vis-à-vis the project and the buyer,  promoting informed choice for the buyers. This will substantially reduce the power asymmetry prevalent in real estate transactions.
  •    The Bill seeks to establish a regulatory oversight mechanism, through Real Estate Authority(s) and Appellate Tribunal in the States, to enforce accountability norms for the promoter buyer and the real estate agents.
  •    The Bill will infuse professionalism and promote planned development of the real estate sector through the promotional role of the Regulatory Authority.
  •    The Bill makes it mandatory upon the promoters to deposit  70% or such lesser per cent as notified by the Appropriate Government to cover the construction cost of the project of funds received by the Promoter in a separate bank account, for purposes of ensuring timely completion of projects to be used only for that project, which shall help in timely completion of projects, and prevent fund diversion.
  •    The Bill provides for a speedy and specialized adjudication mechanism to settle disputes between the promoter, buyer and real estate agents, thereby de-clogging the civil courts and consumer forums, from disputes in the real estate sector.
  •    The Bill will catalyze domestic and foreign investment into the sector, thereby contributing to enhanced activity, and increase in GDP growth.

The main features of the Draft Bill:-

  • Applicability of the Bill:

The proposed Bill is limited in its applicability to residential real estate i.e. housing and any other independent use ancillary to housing. The two important definitions in this regard are:

“real estate project means the development of a building or a building consisting of apartments, or converting an existing building or a part thereof into apartments, or the development of a colony into plots or apartments, as the case may be, for the purpose of selling all or some of the said apartments or plots or buildings and includes the development works thereof”

“apartment whether called dwelling unit, flat, premises, suite, tenement, unit or by any other name, means a separate and self-contained part of any immovable property located on one or more floors or any part thereof, in a building or on a plot of land, used or intended to be used for residential  purposes, or for any other type of independent use ancillary to the purpose specified and includes any covered garage, whether or not adjacent to the building in which such apartment is located which has been provided by the promoter for the use of the allottee for parking any vehicle, or as the case may be, for the residence of any domestic help employed in such apartment”

  • Establishment of Real Estate Regulatory Authority:

Establishment of one or more ‘Real Estate Regulatory Authority’ in each State/UT, or one Authority for two or more States/UT, by the Appropriate Government, with specified functions, powers, and responsibilities to exercise oversight of real estate transactions, to appoint adjudicating officers to settle disputes between parties, and to impose penalty and interest;

  • Registration of Real Estate Projects and Registration of Real Estate Agents:

Mandatory registration of real estate projects and real estate agents who intend to sell any immovable property, with the Real Estate Regulatory Authority;

  • Mandatory Public Disclosure of all project details:

Mandatory public disclosure norms for all registered projects, including details of the promoters, project, layout plan, plan of development works, land status, carpet area and number of the apartments booked, status of the statutory approvals and disclosure of proforma agreements, names and addresses of the real estate agents, contractors, architect, structural engineer etc.;

  • Functions and Duties of Promoter:

Duty of promoters towards disclosure of all relevant information and adherence to approved plans and project specifications, obligations regarding veracity of the advertisement for sale or prospectus, responsibility to rectify structural defects, and to refund moneys in cases of default;

  • Compulsory deposit of seventy percent or such lesser percent as notified by the Appropriate Government, to cover the construction cost of the project, of funds received by the Promoter, in a separate bank account:

Provision to compulsorily deposit seventy percent or such lesser percent as notified by the Appropriate Government, of the amounts realized for the real estate project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a scheduled bank within a period of fifteen days of its realization to cover the cost of construction and shall be used only for that purpose.

  • Functions of Real Estate Agents:

Real estate agents not to facilitate the sale of immovable property which are not registered with the Authority required under the provisions of the Act, obligation to keep, maintain and preserve books of accounts, records and documents, obligation to not involve in any unfair trade practices, obligation to facilitate the possession of documents to allottees as entitled at the time of booking, and to comply with such other functions as specified by Rules made in that regard;

  • Rights and Duties of Allottees:

Right to obtain information relating to the property booked, to know stage-wise time schedule of project completion, claim possession of the apartment or plot or building as per promoter declaration, refund with interest in case of default by the promoter, and after possession entitled to necessary documents and plans. Duty of allottees to make necessary payments and carry out other responsibilities as per the agreement;

  • Functions of Real Estate Regulatory Authority:

The Authority to act as the nodal agency to co-ordinate efforts regarding development of the real estate sector and render necessary advice to the appropriate Government to ensure the growth and promotion of a transparent, efficient and competitive real estate sector;

  • Fast Track Dispute Settlement Mechanism:

Establishment of fast track dispute resolution mechanisms for settlement of disputes, through adjudicating officers (an officer not below the rank of Joint Secretary to the State Government) to be appointed by the Authority, and establishment of an Appellate Tribunal to hear appeals from the orders of the Authority and the adjudicating officer;

  • Establishment of Central Advisory Council:

Establishment of Central Advisory Council to advise the Central Government on matters concerning implementation of the Act, with a mandate to make recommendations on major questions of policy, protection of consumer interest and to foster growth and development of the real estate sector. The Council to have among others, five representatives of State Governments, to be selected by rotation;

  • Establishment of Real Estate Appellate Tribunal:

Establishment of Real Estate Appellate Tribunal, by the appropriate government to hear appeals from the orders or decisions or directions of the Authority and the adjudicating officer.  The Appellate Tribunal is to be headed by a sitting or retired Judge of the High Court with one judicial and one administrative/technical member;

  • Punitive Provisions:

Punitive provisions including de-registration of the project and penalties in case of contravention of the provisions of the Bill or the orders of the Authority or the Tribunal;

  • Power to make Rules and Regulations:

Appropriate Government to have powers to make rules over subjects specified in the Bill, and the Regulatory Authority to have powers to make regulations.

 

 

BBMP MUNICIPAL TAX FOR THE YEAR 2013-2014


AVAIL 5% REBATE ON THE PAYMENT OF FULL YEAR MUNICIPAL TAXES TO BBMP FOR THE CURRENT YEAR 2013-2014, TILL THE END OF APRIL, 2013.