Export of services (Amendment) Rules, 2009- Amendment in rule 3

Export of services (Amendment) Rules, 2009- Amendment in rule 3

Notification No. 25/2009-Service Tax, dated 19-8-2009

In exercise of the powers conferred by sections 93 and 94 of the Finance Act, 1994 (32 of 1994), the Central Government hereby makes the following rules further to amend the Export of Services Rules, 2005, namely :­–

1. 1. (1) These rules may be called the, Export of Services (Amendment) Rules, 2009.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Export of Services Rules, 2005, in rule 3, for the Explanation the following Explanation shall be substituted, namely:­–

"Explanation.-For the purposes of this rule "India" includes the installations, structures and vessels in the continental shelf of India and the exclusive economic zone of India.";

Amendment to SEBI (DIP) Guidelines, 2000 - Rights Issue Process/Procedure

Amendment to SEBI (DIP) Guidelines, 2000 - Rights Issue Process/Procedure

Circular No. CFD/DIL/DIP/38/2009/08/20, dated 20-8-2009

1. In exercise of the powers conferred under Section 11 read with Section 11A of the Securities and Exchange Board of India Act, 1992, in order to simplify the rights issue process as well as to make it more efficient and effective, it has been decided to amend the SEBI (Disclosure and Investor Protection) Guidelines, 2000 (hereinafter referred to as “the SEBI (DIP) Guidelines”).

2. The full text of amendments is given in Annexure I and the brief of amendments are as under:

2.1 Rationalisation of rights issue disclosure requirements:

2.1.1 Rights issues are further issuances of capital made by listed entities to existing shareholders. These shareholders are generally in possession of basic information about the issuer company and are generally updated on major developments in the company on a continuous basis.

2.1.2 In order to encourage listed companies to look at rights issues as a viable form of capital raising by reducing the overall cost of such issuances and also to make the process of such issues faster, it has been decided to rationalise the disclosure requirements for rights issues.

2.2 Applications Supported by Blocked Amount (ASBA) in rights issues:

2.2.1 SEBI, vide circular dated September 25, 2008, had enabled the facility of applying in rights issue through ASBA on a pilot basis.

2.2.2 It has now been decided to make ASBA applicable to all rights issues. ASBA will co-exist with the current process, wherein cheque/demand draft is used as a mode of payment. Since the web enabled interface of stock exchanges is now operational for the purpose of acceptance of the rights issue applications, self certified syndicate banks shall upload the application data in to the aforesaid interface of stock exchanges.

2.2.3 All applicants who desire to apply through ASBA should hold shares of the issuer company in a depository account.

2.2.4 The applicants shall indicate either in (i) in Part A of the composite application form of rights issue or (ii) in the plain paper application, as to whether they desire to avail of the ASBA option.

2.2.5 The ASBA process, from the time of submission of application by the applicants till transfer of shares in the depository account of the investors, as specified for book built public issues, shall be followed in the case of rights issues also. The role and responsibilities of self certified syndicate banks, stock exchanges, registrars and merchant bankers, as enumerated in the ASBA process for book built public issues, shall be applicable mutatis mutandis.

2.3 Utilisation of issue proceeds after finalization of the basis of allotment in the issue:

2.3.1 Clause 8.19 of the SEBI (DIP) Guidelines provides that in a rights issue, the issuer may utilise the issue proceeds collected after satisfying the designated stock exchange that minimum 90% subscription is received. In a public issue, in terms of section 73 of the Companies Act, 1956, the issuer company can access the issue proceeds only after allotment and listing is completed.

2.3.2 SEBI has reduced the time period taken for finalization of basis of allotment in the rights issues to 15 days from the earlier period of 42 days from the date of closure of the issue. In view of this, it has been decided to amend clause 8.19 of the SEBI (DIP) Guidelines to provide that the issuer company can utilize the issue proceeds only after the basis of allotment is finalized.

2.4 Applicability:

2.4.1 This circular shall be applicable as follows:

a. Amendments in Annexure-1 pertaining to rationalised disclosures for Rights Issues shall be applicable for all rights issues where draft letters of offer are filed with SEBI on or after the date of this circular;

b. All other amendments in Annexure-1 shall be applicable to:

i. all rights issues where draft letters of offer are filed with SEBI on or after the date of this circular;

ii. all rights issues where draft letters of offer have been filed with SEBI but no observations has been issued on them by SEBI; and iii. all rights issues where SEBI has issued observations but where the letter of offer is yet to be filed with the designated stock exchanges.

3. All registered merchant bankers are advised to ensure compliance with this circular including the amendments contained in Annexure I of this circular.

4. This circular and the entire text of the SEBI (DIP) Guidelines, including the amendments contained in Annexure I of this circular, are available on SEBI website at www.sebi.gov.in under the categories “Legal Framework” and “Issues and Listing”.

Annexure I

President assent to finance bill, 2009

Extension of Time Limit for filing ITR V

Extension of time limit for filing ITR-V form
	20:48 IST

The Central Board of Direct Taxes had, vide circular No.3/2009 dated 21.05.2009, allowed assessees who file their income tax returns in electronic form without digital signature to submit their verified ITR-V form, within a period of 30 days, thereafter. The ITR-V form was required to be sent to Post Bag No.1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary Post. It has now been decided to extend the time limit for filing the ITR-V form by relaxing the stipulations in the circular dated 21.05.2009. The ITR-V form relating to returns which have been filed electronically (without digital signature) on or after 1st April, 2009 can now be filed on or before the 30th September, 2009 or within a period of 60 days of uploading of the electronic return data, whichever is later. The ITR-V should continue to be sent by ordinary post to Post Bag No.1, Electronic City Post Office, Bengaluru, and Karnataka-560100. HZ/AS

Amedmend to SEZ rules

Special Economic Zones (Third Amendment) Rules, 2009 - Amendment in Chapter II, III, IV and VIII

Notification No. G.S.R. 562(E), dated 3-8-2009

In exercise of the powers conferred by section 55 of the Special Economic Zone Act, 2005 (28 of 2005), the Central Government hereby makes the following rules further to amend the Special Economic Zones Rules, 2006, namely:—

1. (1) These rules may be called the Special Economic Zones (Third Amendment) Rules, 2009.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Special Economic Zones Rules, 2006, (hereinafter referred to as the principal rules), Chapter II in rule 11, after sub-rule (11), the following sub-rule shall be inserted, namely:—

"(12) The Central Government may lay down guidelines for development, operation and maintenance of Special Economic Zones."

3. In the principal rules, in Chapter III, in rule 17, after sub-rule (2), the following sub-rule shall be inserted, namely:—

"(2A) The Approval Committee shall meet once in every fortnight on a fixed pre-determined day."

4. In the principal rules in Chapter IV, in rule 26, after the second proviso, the following provisos shall be inserted, namely:—

"Provided also that the Foreign Trade Policy restrictions on State Trading Enterprises shall not apply to Special Economic Zone Manufacturing Units:

Provided also that export of iron-ore shall be subject to the conditions as imposed by the Central Government."

5. In the principal rules, in Chapter IV, in rule 27, in sub-rule (9), after the first proviso, the following proviso shall be inserted, namely :—

"Provided further that the goods which are sent outside the Special Economic Zone for repairs are returned to the Special Economic Zone, within 180 days from the date of removal from the Special Economic Zone, under intimation to the specified officer. In case goods are sent out for replacement then on replaced goods, no Duty Entitlement Passbook Scheme, duty drawback or other export incentives shall be claimed for this purpose."

6. In the principal rules, in Chapter IV, in rule 39 for sub-rule (4) the following shall be substituted, namely :—

"Where any goods procured from Domestic Tariff Area under claim of drawback or Duty Entitlement Passbook Scheme credit or under any export promotion scheme are destroyed due to natural calamities, the zone unit shall be required to pay drawback or Duty Entitlement Passbook Scheme credit or any other export incentive claimed on such goods:

Provided that in case where the Unit has procured the goods from Domestic Tariff Area against payment of foreign exchange, the Unit shall not be liable to pay back drawback or Duty Entitlement Passbook Scheme credit or any export incentive claimed on such goods."

7. In the principal rules, in Chapter IV, for rule 40, the following rule shall be substituted, namely :—

"The movement of goods to and from non-processing area to a processing area and from one processing area of Special Economic Zone to a different processing area of the same Special Economic Zone shall be under serially numbered challans pre-authenticated by the owner or Managing Director or working partner or the company secretary or by any person duly authorised in this behalf by the unit or developer, as the case may be, and the challans shall contain complete description of goods."

8. In the principal rules, in Chapter IV, in rule 46, in sub-rule (8), for the proviso the following proviso shall be substituted, namely:—

"Provided that the items not sold abroad may be re-imported within a period of three hundred and sixty five days from the date of their export."

9. In the principal rules, in Chapter VIII, in rule 70, in sub-rule (2), after the proviso, the following proviso shall be inserted, namely:—

"The identity card shall be valid up to a period of . five years and shall be issued, in the format given in Form 'K', to the entrepreneurs and regular employees of the Units :

Provided that when any employee who has been issued an identity card ceases to be in employment of the Unit or Developer, the said identity card shall be surrendered forthwith and shall be deemed to be invalid from such date:

Provided further that when the Unit ceases to hold a valid Letter of Approval, all identity cards issued to the Entrepreneurs and employees of such Unit shall be deemed to be invalid and shall be surrendered forthwith"

[F. NO. C.2/3/2008-SEZ]

Interpretative circular under regulation 5 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997 - Applicability of provisions of regulation 11 (2) thereof, as amended on October 30, 2008

Circular No. CFD/DCR/TO/Cir-01/2009/06/08, dated 6-8-2009

1. SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (hereinafter referred to as “SAST Regulations”) were amended by SEBI (Substantial Acquisition of Shares and Takeovers) (Amendment) Regulations, 2008 on October 30, 2008, whereby inter alia second proviso to sub-regulation (2) of Regulation 11¹ was inserted.

2. Subject to the conditions as specified in this newly inserted proviso, an acquirer (together with persons acting in concert with him), holding fifty five per cent (55 %) or more but less than seventy five per cent (75 %) of the shares or voting rights in a target company, may acquire (either by himself or through or with persons acting in concert with him) additional shares or voting rights entitling him up to five per cent (5 %) voting rights in the target company without making a public announcement under the SAST Regulations.

3. SEBI has been receiving representations from market participants / listed companies with respect to the interpretation of the proviso inserted by the aforesaid amendment. After examining these representations, it is hereby clarified that –

a. The acquisition, within the limit of five per cent (5%) under the second proviso to sub-regulation (2) of regulation 11, may be made by an acquirer who, together with persons acting in concert with him, holds fifty five per cent (55 %) or more but less than seventy five per cent (75 %) of the shares or voting rights in the target company ;

b. The acquirer together with persons acting in concert with him, holding shares or voting rights as specified at (a) above, may acquire additional shares or voting rights upto a maximum of five per cent (5 %) voting rights in the target company in one or more tranches, without any restriction on the time-frame within which the same can be acquired;

c. The aforesaid acquisition of five per cent (5 %) shall be calculated by aggregating all purchases, without netting the sales.

d. Consequent to such acquisition, the percentage of shareholding / voting rights of the acquirer, together with persons acting in concert with him, in the target company, shall not increase beyond seventy five per cent (75 %). This limit is applicable irrespective of the level of minimum public shareholding required to be maintained by the target company in terms of clause 40A of the Listing Agreement.

4. This circular is issued under regulation 5 of the SAST Regulations, read with section 11 of the Securities and Exchange Board of India Act, 1992, for removal of difficulties in the interpretation of the second proviso to sub-regulation (2) of regulation 11 of the SAST Regulations.

Service Tax on Commssion paid to Directors

Service tax on commission paid to Managing Director/Directors by the company

Circular No. 115/09/2009-ST, dated 31-7-2009

Below mentioned issues have been referred to the Board seeking clarifications,-

(i) applicability of service tax under ‘Business Auxiliary service’ on commission paid to Managing Director / Directors (whole time, or Independent) by the company,

(ii) applicability of service tax on Independent Directors who are part of the Board of Directors under ‘Management Consultant service’.

2. Both the matters have been examined by the Board and the clarifications are as under, -

(i) Some Companies make payments to Managing Director/Directors (Whole-time or Independent), terming the same as ‘Commissions’. The said amount paid by a company to their Managing Director/Directors (Whole-time or Independent) even if termed as commission, is not the ‘commission’ that is within the scope of business auxiliary service and hence service tax would not be leviable on such amount.

(ii) The Managing Director / Directors (Whole-time or Independent) being part of Board of Directors perform management function and they do not perform consultancy or advisory function. The definition of management consultant service makes it clear that what is envisaged from a consultant is advisory service and not the actual performance of the management function. The payments made by Companies, to Directors cannot be termed as payments for providing management consultancy service. Therefore, it is clarified that the amount paid to Directors (Whole-time or Independent) is not chargeable to service tax under the category ‘Management Consultancy service’. However, in case such directors provide any advice or consultancy to the company, for which they are being compensated separately, such service would become chargeable to service tax.

3. In view of the above, it is clarified that remunerations paid to Managing Director / Directors of companies whether whole-time or independent when being compensated for their performance as Managing Director/Directors would not be liable to service tax.

Pending issues may be resolved in line with the above.