This March newsletter covers categories of relevant updates notified by the Ministry of Corporate Affairs ("MCA") and India's central bank and regulatory body responsible for regulation of the Indian banking system (i.e., the Reserve Bank of India ("RBI") and MCA.
MCA
The Ministry of Corporate Affairs ("MCA") has extended the deadline for dematerialization of shares for private companies to June 30, 2025.
February 12, 2025: Vide Notification G.S.R. 131(E), the MCA has notified the Companies (Prospectus and Allotment of Securities) Amendment Rules, 2025 to further amend the Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014 ("2014 Rules").
By this amendment, MCA has extended the deadline for dematerialization of shares for private companies (other than a producer company, which is not a small company on March 31, 2023) to June 30, 2025. The amendment has been added as a proviso to the Rule 9B(2) of the 2014 Rules. Rule 9B(2) of the 2014 Rules states that a private company, which as on last day of a financial year, ending on or after 31st March, 2023, is not a small company as per audited financial statements for such financial year, shall, within 18 (eighteen) months of closure of such financial year, comply with the provisions of the dematerialization of its securities.
RBI
Reserve Bank of India ("RBI") amends the regulations for manner of receipt and payment from person resident outside India.
February 10, 2025: The Reserve Bank of India ("RBI") vide Circular No. FEMA 14(R)(1)/2025-RB, issued the Foreign Exchange Management (Manner of Receipt and Payment) (Amendment) Regulations, 2025 (the "Amended Regulations").
The Amended Regulations revises the provisions pertaining to the payments between the member countries of Asian Clearing Union ("ACU") other than Nepal and Bhutan. Regulation 3(2)(I)(a)(ii) of the Amended Regulations specifies that payments between residents of ACU member countries, excluding Nepal and Bhutan, may be made through the ACU mechanism or as per the directions issued by the RBI to authorized dealers, from time to time. For all other transactions, receipts and payments shall be made in Indian Rupees or in any foreign currency.
Prior to this amendment, the Regulation 3(2)(I)(a)(ii) had a proviso which stated that in case of imports where the goods are shipped to India from an ACU member country (other than Nepal and Bhutan) but the supplier is resident of a country other than an ACU member country, the payment shall be made in Indian Rupees or in any foreign currency.
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