India: India Update – Volume 1 Of 2022

CORPORATE & COMMERCIAL

CSR disclosure requirements for companies

On February 11, 2022, MCA amended the Companies (Accounts) Amendment Rules, 2022 (Amendment), effective immediately. As per the Amendment, every company covered under Section 135 of the Companies Act, 2013 shall furnish a report on Corporate Social Responsibility (CSR) with MCA in Form CSR-2 to the Registrar for the preceding financial year (2020-2021) and onwards.

The newly introduced Form CSR-2 is required to be filed by the following companies falling under the purview of Section 135, Companies Act, 2013:

• Companies having net worth of INR 500 crore
• Companies with turnover of INR 1000 crore or more
• Companies with net profit of INR 5 crore or more in the immediately preceding financial year
• Companies that have constituted a CSR Committee as per the provisions of the section

Under the new 11-page form, as part of the Amendment, companies will have to provide the following information:

• Details of the CSR amount spent in three preceding financial years and details of all ongoing projects
• Details of CSR Committee
• Details of CSR disclosed on the website of the company in pursuance of Rule 9 of Companies (CSR Policy) Rules, 2014
• Net profit and other details of the company for the preceding financial years
• If any capital assets have been created or acquired through CSR spending, companies will have to provide relevant details, including the address, location, pin code of the property, along with amount spent and its registered owner
• As per the Amendment, Form CSR-2 for the preceding financial year shall be filed by March 31, 2022 and thereafter after filing the Form AOC-4 or AOC-4 XBRL or AOC-4 NBFC (Ind AS) (collectively Addendums), as the case may be. Prior to release of this Amendment, there was no prescribed form to furnish a report on CSR. The only mandate was to annex details of CSR in the board Report and disclose on the company's website as per Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014.

While both the changes were expected – bringing the units by pooled investment vehicles within the ambit of stamp duty regime, as well as clear recognition of debt fund raising by vehicles (including INVITs and REITs) – clarity on the potential inconsistencies shall, of course, be welcome.

Consolidated guidelines & standards for EV charging infrastructure

Ministry of Power (MOP) on January 14, 2022 issued the revised and consolidated 'Charging Infrastructure for Electric Vehicles - Guidelines & Standards (Guidelines)' with the aim to enable faster adoption of Electric Vehicles (EVs) in India and accelerate the e-mobility transition of the country.

The Guidelines were first released in 2018, revised in 2019 and subsequently amended in 2020. The Guidelines emphasize on provisions for Public Charging Stations (PCS) and individual owners.

Key highlights

• Definitions: Key definitions such as a Public Charging Station, Captive Charging Station, Battery Charging Station, Battery Swapping Station have been provided.

• Use of existing electricity connections: Owners are allowed to charge their EVs at their residence/offices using their existing electricity connections.

• Who can set-up a PCS? As per the Guidelines, any individual/entity is free to setup a PCS subject to meeting technical and safety requirements as laid down by the MOP, Bureau of Energy Efficiency (BEE) and Central Electricity Authority.

• Alternate mode of obtaining electricity: any PCS or chain of Charging Stations may obtain electricity from any generation company through open access. Such Open Access shall be provided within 15 days of receipt of application and shall be subject to payment of applicable surcharge, as per Tariff Policy Guidelines.

• Setup requirements: The Guidelines have provided a set of certain requirements to be fulfilled for setting up the public charging infrastructure, such as appropriate exclusive transformer, civil works, fire protection equipment, tie up Network Service Providers (NSPs) to provide real time status of charging stations, compliance to all relevant Acts and Rules by Authority, etc.

• Online information to EV owners: A tie-up with an NSP will be required while setting up the public charging infrastructure, to enable advance remote/online booking of charging slots by EV owners, which shall also include information of location, types and no. of chargers installed/available, service charges, etc.

• Public charging infrastructure for long range/heavy duty EVs: Enable setup of Fast Charging Stations (FCS) for long range/heavy duty EVs such as trucks, buses, etc.

• Easy accessibility of charging stations: It will be enabled that at least one charging station will be available in every 3 km, and one charging station to be setup at every 25 km on both sides of highways/roads. For long range/heavy duty EVs, to ensure setup of FCS at every 100 km, on both sides of highways/roads.

• Database of PCS: the BEE shall create and maintain a national online database of all PCS in consultation with the State Nodal Agencies (SNAs), where the BEE shall create a Web Portal/Software/Mobile Application for such database throughout the country.

• Tariff and service charge: The tariff for supply to PCS shall be a single part tariff and shall not exceed the 'average cost of supply' till March 31, 2025. Additionally, State Government shall fix the ceiling of the service charges to be charged by such PCS/FCS.

• Provision of land at promotional rates: As per the Guidelines, the land available with the Government/Public Entities can be provided for setting up PCS to a Government/Public entity on a revenue sharing basis for installation of PCS at a fixed rate of INR 1/kWh to be paid to the Land-Owning Agency from such PCS business payable on quarterly basis. Whereas the land by Land-Owning Agency is provided to a private entity for installation of PCS on bidding basis with floor price of INR 1/kWh

• Rollout mechanism: Phases divided in sets of 1-3 years and 3-5 years post consultations with State Governments and different agencies/departments of Central Government. BEE has been appointed as the Central Nodal Agency for the development of PCS Infrastructure. Every State Government will nominate a State Nodal Agency. An Implementation Agency may also be selected by the respective SNA for installation, operation, maintenance of PCS/FCS for designated period as per the policies in place and as entrusted by the SNA.

Limited Liability (Amendment) Rules, 2022 – Key takeaways

On February 11, 2022, the Ministry of Corporate Affairs (MCA) released the Limited Liability Partnership (Amendment) Rules, 2022 (Amendment) to amend the Limited Liability Partnership Rules, 2009 (2009 Rules), which were published in consonance with the Limited Liability Partnership Act, 2008 (Act). The Amendment will come into effect from April 01, 2022.

Key takeaways from the First Amendment

• New proviso added to Rule 19(1) of the 2009 Rules: Going forward, an application made under Rule 19(1) of the 2009 Rules, which states that a Limited Liability Partnership (LLP) or a company or a proprietor of a registered trademark under the Trade Marks Act, 1999 (47 of 1999) which already has a name or trademark which is similar to or which too nearly resembles the name or new name of an LLP incorporated subsequently, may apply to the Regional Director (RD) in Form 23 to give a direction to that LLP incorporated subsequently to change its name or new name, as

the case may be, shall be maintainable within a period of 3 years from the date of incorporation or registration or change of name of LLP under the Act.

• Compliance in case of default under Section 17 of the Act: In case an LLP fails to change its name in accordance with the directive of the Central Government in accordance with Section 17(1) of the Act within the prescribed period of 3 months from the date of such a directive, the new name of the LLP will be changed to the word 'ORDNC', which is an abbreviation of 'Order of Regional Director Not Compiled', along with the year of the passing of such direction, the serial number and the existing LLPIN of the LLP. The Registrar of Companies (ROC) shall make the necessary entries and issue a fresh certificate of incorporation in FORM 16A. The LLP whose name has been changed by the ROC shall mention the statement 'Order of Regional Director Not Compiled' below its name on all its invoices, official correspondence, and publications.

• Establishment of an adjudicating authority: The 2009 Rules did not provide any provision for any adjudicating authority and its functioning for efficient application and disposal of penalties. To address this, Rules 37A, 37B, 37C and 37D of the Amendment were incorporated. As stated in the Amendment, every notice issued by the adjudicating officer under Rule 37A shall indicate the nature of non-compliance or default and reply to such notice shall be filed in electronic mode only within the prescribed period, the adjudicating officer can impose a penalty on any LLP after sending a notice, the LLP shall pay the penalty on MCA portal only.

• Appeal against the order of adjudicating officer: Under Rule 37B of the Amendment, an appeal against the order of adjudicating officer can be filed with the RD having jurisdiction over the matter within the prescribed period of 30 days and fees in Form No 33- LLP ADJ. Furthermore, any appeal under this rule shall not seek relief against more than one order unless the reliefs prayed for are consequential. Further, under Rule 37C of the Amendment, it is prescribed that on receipt of such appeal, the RD shall endorse the date on such appeal and shall sign such endorsement and if the appeal appears to be in order, the RD shall register the same and assign a serial number or the RD may allow for more time to the appellant if the said appeal is found to be defective.

• Admission of an appeal: Under Rule 37D on the admission of an appeal, the RD shall serve one copy of the appeal on the concerned adjudicating officer on whose order such appeal is sought, and such officer shall file his reply within 21 days. The RD can pass an order after hearing both the parties and recording the reasons for such decision in writing and copies of such order shall be communicated to the appellant and such officer.

The Amendment is a vital addition to the 2009 Rules as it provides for an elaborate adjudication process with certain added provisions for added scrutiny. It further gives more clarity on the redressal mechanism available in case of grievances arising from the orders of the adjudicating officer. The Amendment will put more accountability on the LLPs, as there will be a platform to impose penalties in case of any default. The Amendment is also set to streamline the process of allotment of names of existing LLP and to provide for compliances in case of any default or failure to follow direction as per the provisions of the Act or orders of the ROC, which did not exist earlier.

MCA notified the Limited Liability Partnership (Second Amendment) Rules, 2022 (Amendment) vide its Notification dated March 04, 2022.

Key takeaways from the Second Amendment

• Increase in allotment of number of DPINs at the time of incorporation: The Amendment has been made w.r.t allotment of Designated Partner Identification Number (DPIN) at the time of incorporation. Now, 5 DPINs can be applied at the time of incorporation against the previous framework wherein application for a maximum of two DPINs was allowed at the time of incorporation of a Limited Liability Partnership (LLP).

• Web-based process for LLP incorporation: Just like the SPICe Plus Forms are required for the formation of a company under The Companies Act, 2013, all the forms required for incorporation of LLPs have now become web-based, vide the Amendment. Another important change made in the process of LLP formation through this Amendment is that now every LLP shall have to mandatorily mention the 'Latitude and Longitude' in the address block and the details of the Directors can be fetched from the Digi Locker Database.

• Allotment of PAN & TAN along with Certificate of Incorporation: The Amendment requires that the PAN and TAN would be allotted to LLPs along with the 'Certification of Incorporation' itself. The Amendment has been made to align the incorporation process of LLPs with that of the companies which are incorporated in accordance with The Companies Act, 2013. Previously, there was no implied provision for the automatic allotment of the PAN and TAN for LLPs at the time of incorporation itself and they were required to apply for PAN and TAN separately.

• Relaxation in the requirement of mentioning the name of authority under which the application for changing the name is filed: Previously, whenever an application for changing the name of an LLP is to be made Rule 19(4) of the LLP Rules, 2009 required the person making the application to attach the authority under which he is making such an application and a copy of the incorporation certificate of the limited liability partnership or the company or the registration certificate of the entity, as the case may be. Through this Amendment, the requirement of attaching the authority under which such person is making an application under Rule 19 of the LLP Rules, 2009 is done away with and is beneficial as it reduces the compliance burden of the LLPs.

• Signing of Statement of Account & Solvency of LLPs: The Amendment prescribes that the 'Statement of Account and Solvency' may be signed on behalf of the LLP by an Interim Resolution Professional or Resolution Professional, or Liquidator or LLP Administrator in the case where the Corporate Insolvency Resolution Process has been initiated against the LLP under the Insolvency & Bankruptcy Code, 2016 or the LLP Act, 2008. Prior to the Amendment, Rule 24(6) of the LLP Rules, 2009 prescribed that the 'Statement of Account and Solvency' of the LLP be signed by its designated partners. There were no provisions with regard to the signing of the Statement of Account and Solvency of the LLPs under insolvency.

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