ICAI - Representation made by ICAI w.r.t. new formats of Form No.3CA/3CB and 3CD

Representation made by ICAI with respect to new formats of Form No.3CA/3CB and 3CD.

The new formats of tax audit reports namely Form No.3CA, 3CB and 3CD have been notified through Notification no. 33/2014 on 25/7/2014 with immediate effect. With regard to the same, certain genuine concerns were raised by the members, which, ICAI has, through a representation dated 07.08.2014, brought to the notice of the Hon’ble Finance Minister, Revenue Secretary, and Chairman CBDT for appropriate action at their end. Also, certain preliminary observations on the new forms have been shared with them.

For the reasons mentioned in detail in the representation and summarized below, ICAI has suggested:

The new formats of tax audit reports be made effective from the Assessment Year 2015-16 and not Assessment Year 2014-15. Alternatively, the due date for furnishing tax audit reports for the Assessment Year 2014-15 may be extended to 30th November, 2014

It has also been suggested that appropriate clarification be issued with regard to the position of the tax audit reports e-filed during 01.04.2014 to 24.07.2014 relating to Assessment Year 2014-15.

Reasons given in brief:

a) The Internationally accepted Standard on Auditing-700 has not been considered.

b) The audit of 50% of the taxpayers like listed companies, PSUs, Banks, Insurance Companies have already been completed and the financial statements are published. Only, the audit reports are pending for uploading in the e-filing portal.

c) The notification has been issued just two months before the last date of furnishing tax audit report and the schema for the same is not yet made available. This will cause undue hardship to both the taxpayer and the auditors.

Source: The Institute of Chartered Accountants of India.

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SEBI Circular on expanding the framework of OFS of Shares through Stock Exchange Mechanism

Expanding the framework of Offer for Sale (OFS) of Shares through Stock Exchange Mechanism

Circular, CIR/MRD/DP/24/201, dated 08th August, 2014

1. Comprehensive guidelines on sale of shares through Offer for Sale mechanism were issued vide circular no CIR/MRD/DP/18/2012 dated July 18, 2012. These guidelines have been modified vide circulars dated CIR/MRD/DP/04/2013 dated January 25, 2013 and CIR/MRD/DP/17/2013 dated May 30, 2013.

2. While the OFS mechanism has been successfully used to divest promoter stake, market feedback indicated that there is a need to take measures to encourage retail participation in OFS, enable other large shareholders to use the OFS mechanism and expand the universe of companies to use this framework.

3. Accordingly, the OFS framework shall be modified as under.

3.1. The OFS mechanism shall be available to top 200 companies by market capitalization in any of the last four completed quarters.

3.2. Any non-promoter shareholder of eligible companies holding at least 10% of share capital may also offer shares through the OFS mechanism.

3.3. In case a non-promoter shareholder offers shares through the OFS mechanism, promoters/ promoter group entities of such companies may participate in the OFS to purchase shares subject to compliance with applicable provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

3.4. Minimum 10% of the offer size shall be reserved for retail investors. For this purpose, retail investor shall mean an individual investor who places bids for shares of total value of not more than Rs.2 lakhs aggregated across the exchanges. If the cumulative bid value across exchanges exceeds Rs.2 lakhs in the retail category, such bids shall be rejected.

3.5. Individual retail investors shall have the option to bid in the retail category and the general category. However, if the cumulative bid value of such investors exceeds Rs.2 lakhs, the bids in the retail category shall become ineligible.

3.6. The cut off price i.e. the lowest price at which the entire offer gets sold, shall be determined based on all valid bids. The cut off price shall be determined separately for bids received in the retail category and for bids received in the non-retail category.

3.7. Upon determining the cut-off price, the offer size reserved for retail investors shall be allocated to eligible bids of retail investors. Any unutilized portion shall be offered to non-retail category of investors. In case of excess demand in retail category at the cut-off price, allocation shall be on proportionate basis.

3.8. Indicative price for retail and non-retail portion shall be displayed separately.

3.9. Seller shall announce intention of sale of shares latest by 5 pm on T-2 day (T day being the day of the OFS) to the stock exchange. Stock exchanges shall inform the market immediately upon receipt of notice.

3.10. In case of disclosure of the floor price, seller shall disclose the floor price latest by 5 pm on T-1 day to the stock exchange. Stock exchanges shall ensure that the same is informed to the market immediately.

3.11. Seller may offer discount to retail investors. The details of discount and percentage of reservation for retail investors shall be disclosed upfront in the notice of OFS to the exchange.

3.12. Discount to retail investors may be offered as follows:

Multiple Clearing price OFS-

3.12.1. Retail investors may be allocated shares at a discount to the cut-off price determined in the retail category, irrespective of the bid price entered by them. Or

3.12.2. Retail investors may be allocated shares at a discount to the bid price entered by them.

Single clearing price OFS-

3.12.3. Retail investors shall be allocated shares at a discount to cut off price determined in the retail category.

3.13. In case of both of the above methodologies, the discounted price which shall be the final allocation price to the retail investors may be below the floor price.

4. Para 1, 2, 5 and para 7 of OFS circular dated July 18, 2012 stand accordingly modified. All other conditions for sale of shares through OFS framework contained in the circulars CIR/MRD/DP/18/2012 dated July 18, 2012, CIR/MRD/DP/04/2013 dated January 25, 2013 and CIR/MRD/DP/17/2013 dated May 30, 2013 remain unchanged.

5. Stock Exchanges are advised to:

5.1. take necessary steps and put in place necessary systems for implementation of above within three weeks from the date of this circular.

5.2. take steps to implement para 3.9 and 3.10 above with immediate effect.

5.3. make necessary amendments to the relevant bye-laws, rules and regulations for the implementation of the above decision.

5.4. bring the provisions of this circular to the notice of the member brokers of the stock exchange to also to disseminate the same on their website.

6. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.

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Click here to download the complete text of above Circular in PDF Format.

Source: Securities and Exchange Board of India.

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MCA - Amendment in schedule VII of Companies Act, 2013

Notification, [F. No. 1/18/2013-CL-V], dated 06th August, 2014

G.S.R. 568(E).—In exercise of the powers conferred by sub-section (1) of section 467 of the

Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following further amendments in Schedule VII of the said Act, namely:-

(1) In Schedule VII, after item (x), the following item and entry shall be inserted, namely:-

“(xi) slum area development.

Explanation.— For the purposes of this item, the term ‘slum area’ shall mean any area declared as such by the Central Government or any State Government or any other competent authority under any law for the time being in force.”

2. This notification shall come into force on the date of its publication in the Official Gazette.

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Click here to download the complete text of the above Notification in PDF Format.

Source: Ministry of Corporate Affairs.

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Service Tax – Principal Chief Commissioner and Commissioner of Service Tax

Notification No. 16/2014- Service Tax, [F. No. 334/15/2014-TRU], dated 6th August, 2014

G.S. R.            (E).—In exercise of the powers conferred by sections 83, 93 and 94 of the Finance Act, 1994 (32 of 1994), read with sections 37A and 37B of the Central Excise Act, 1944 (1 of 1944) and of all other powers enabling it in this behalf, the Central Government hereby directs that the references to the authorities specified in column (2) of the Table below, in the rules made or deemed to have been made under the said sections or in any other notification, instructions, decision or orders, issued or made under the said sections or rules or under any other section of the said Acts, shall, unless the context otherwise requires, be construed as references to the authorities specified in column (3) of the said Table, namely:-

Table

Sl. No.	Existing reference	Substituted reference
(1)	(2)	(3)
1.	Chief Commissioner	Principal Chief Commissioner or Chief Commissioner, as the case may be
2.	Commissioner	Principal Commissioner or  Commissioner, as  the case may be

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Click here to view the complete text of above Notification.

Source: Directorate General of Service Tax

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