Registrar of Companies Current Affairs - 2019

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Parliament passes Companies (Amendment) Bill, 2019

Parliament passed Companies (Amendment) Bill, 2019 aimed at tightening Corporate Social Responsibility (CSR) compliance and ensuring stricter action for non-compliance of the company law regulations. It amends the Companies Act, 2013. It was first passed by Lok Sabha on July 26, 2019 and then by Rajya Sabha by July 30, 2019.

Salient Features of Bill

  • It aims to ensure greater accountability and better enforcement of the corporate governance norms.
  • Corporate Social Responsibility (CSR): It brings key change related to CSR spending, wherein companies would have to mandatorily keep unspent money into a special account. The companies will have one year to firm up CSR proposal and another three years to spend funds. In case money remains unspent for one plus three years, then the money will have to be moved to an escrow account, could even be Prime Minister’s Relief Fund.
  • Registrar of Companies (RoCs): It empowers RoC to initiate action for removal of name of a company from Register of Companies if it is not carrying on any business or operation in according with Company Law.
  • Re-categorisation of 16 minor offences: It re-categories 16 out 81 compoundable offences mentioned in the parent Act as civil defaults, where adjudicating officers (appointed by the central government) may now levy penalties instead. These offences include: (i) failure to file annual return (ii) issuance of shares at a discount. Further, it also amends the penalties for some other offences.
  • Change in approving authority: It shifts powers for conversion from public to private companies from National Companies Law Tribunal to central government.

 Induslnd Bank- BFIL merger to be effective from July

The merger of Induslnd Bank and Bharat Financial Inclusion Ltd (BFIL) will be effective from 4 July 2019. This decision to file National Company Law Tribunal (NCLT) Order on 4 July, by lender IndusInd , BFIL and IFIL with Registrar of Companies was taken by the boards of IndusInd and BFIL.

Key Highlights

Background: In October 2018, IndusInd Bank decided to acquire India’s leading micro-finance player BFIL, earlier known as SKS Microfinance. On 10 June 2019, National Company Law Tribunal (NCLT), a quasi-judicial body in India that adjudicates issues relating to Indian companies, sanctioned Scheme of Arrangement among BFIL, IndusInd and IFIL and their respective shareholders and creditors.

Key Changes:

After the merger current CEO of BFIL, M R Rao, will become the CEO of IndusInd Financial Inclusion Ltd (IFIL) and all employees of BFIL will become part of Induslnd family.

The Business Correspondent (BCs) network of BFIL will operate under IFIL.

All Assets and liabilities of BFIL will be merged with IndusInd’s balance sheet.

The consolidated financial results for 1st quarter of FY19 will be published on 12 July 2019.

In accordance with Scheme of Arrangement, BFIL’s shareholders will get 639 shares of bank for every 1,000 they held. The scheme also contemplates a preferential allotment of share warrants to promoters of bank in accordance with scheme, which says that each share warrant, upon exercise, shall entitle Promoters to one Equity share.

Importance:

Financial Inclusion: This merger of IndusInd Bank Limited and BFIL will enable 8.8 million microfinance customers of BFIL to access savings, deposits and other banking products. Thus the merger will help in boosting financial inclusion in its truest form.

Increase Banking Reach: Also talent, capabilities and distribution of BFIL will enable IndusInd Bank to play a more meaningful role in rural India and will fulfill ambition of building financial inclusiveness and sustainability in large swathes of unbanked and underbanked India.