CAIRR Update September 22,2022

September 22, 2022

Summary of the notifications issued by MCA and SEBI on 20/09/2022

MCA amends CSR rules

Key highlights of the amendment are:

1. Requirement to constitute a CSR Committee : MCA has done away with blanket relaxation from constituting a CSR committee for companies not falling under the prescribed CSR thresholds  for a consecutive period of 3 FYs. Instead, MCA now requires a company having any amount in its Unspent Corporate Social Responsibility Account as to constitute a CSR Committee and comply with the provisions contained in 135(2) to 135(6) of the Act, dealing with role of the CSR Committee, manner of utilisation of CSR amount and disclosure requirements.

2. Impact Assessment: A Company undertaking impact assessment may book the expenditure towards Corporate Social Responsibility for that financial year, which shall not exceed 2%(earlier, 5%) of the total CSR expenditure for that financial year or 50 lakh rupees, whichever is higher (earlier, lower of the two was the eligible expenditure).

3. Eligible entities through which CSR can be carried out is now extended to entities which fall under specified categories of trusts/institutions as mentioned under 10(23C) (iv) to 10(23C)(via) of IT Act, 1961.

4. Format for the Annual Report on CSR Activities to be included in the Board’s Report has been revised, whose format is enclosed in this circular.

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IBBI enhances Fees payable by an Information Utility (IU) w.e.f 01/10/2022

Fees payable by an IU is enhanced as indicated below:

1. Registration/Renewal Fee: Fee towards registration/renewal of registration as an IU by an eligible applicant has been increased to 10 Lakhs (from 5 Lakhs).

2. An amount of 1 Crore (earlier, 50 lakhs) shall be paid to the Board, within fifteen days of receipt of intimation of registration or renewal from the Board, as applicable

3. Annual Fee: As opposed to the existing norm of fixed fee of Rs. 50 lakhs payable every year following the year of registration, an IU is now required to pay to the Board, a fee calculated at the rate of 10% of the turnover from the services as an IU rendered in the preceding FY on or before 30th April every year, failing which a simple interest at 12% until payment shall be levied.

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IBBI enhances Fee payable by Insolvency Professional(IP)/ Insolvency Professional Entities(IPEs) w.e.f  01/10/2022

Fees payable by an IP is enhanced as follows:

1. Non-refundable Fee for registration as an IP: Increased to Rs. 20,000 from Rs. 10,000.

2. Application fee for Registration as an IPE: Increased to Rs 2 Lakhs from Rs.50,000.

3. Recurring Fee, which is payable every five years, on or before the 30th April of the year it falls due: The IP, if individual, shall pay a fee of Rs. 20,000 rupees, and in case where the IP is a an insolvency professional entity, a fee of Rs. 2 Lakhs is payable.

4. Fee as a percentage of Professional Service rendered by IP/IPE:  Increased to 1% from 0.25%.

5. Regulatory Fee: This is a new fee head that is payable where in CIRP, if the realisable value is more than liquidation value as per the approved resolution plan. In such cases, a regulatory fee of 0.25% of the realisable value shall be paid within a period of  30 days, after end of each quarter or upon closure of the processes whichever is earlier, along with a statement in the prescribed format (Form EA of the Second Schedule). This is applicable for resolution plans approved on or after 01/10/2022.

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Further, regulatory fee calculated at the 1% of the cost being booked in insolvency resolution process costs in respect of hiring any professional or other services by the interim resolution professional or resolution professional, as the case may be, for assistance in a CIRP, shall also be payable to the Board.

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