Compliance News

published on 30 April 2024 I reading time approx. 7 minutes

Company Secretarial (CS) compliance for Private Limited Companies
Below is a summary of the compliances that need to be adhered to in the next quarter (April – June 2024):

Particulars	Due Date
Hold at least one Board Meeting in the quarter 01 April 2024- 30 June 2024	30 June 2024
Disclosure of interest in Form MBP-1	To be placed in the first board meeting of the financial year 2024-25
Form MSME- I: (Form for furnishing outstanding payments to Micro or Small Enterprises with the Registrar for the period 01 October 2023 to 31 March 2024)	30 April 2024
Form DPT-3 (Return of Deposits)	30 June 2024
Form ECB-2 Returns	In case External Commercial Borrowings (ECB), that is, commercial loans are availed by eligible resident entities from recognized non-resident lenders, such resident entities are required to file Form ECB-2 return within seven (7) working days from the closing date of each month.

Environmental Law Updates

1. The Water (Prevention and Control of Pollution) Amendment Act, 2024

The Ministry of Environment, Forests & Climate Change has introduced a crucial amendment under the Water (Prevention & Control of Pollution) Amendment Act, 2024 which received the Presidential assent as on 15 February, 2024. The said amendment will be immediately enforceable in the states of Rajasthan, Himachal Pradesh, and Union Territories, and it shall apply to such other State which adopts this Water (Prevention & Control of Pollution) Amendment Act, 2024 by resolution.

As per this amendment, section 27-A is newly inserted whereby the Central Government, in consultation with the Central Pollution Control Board (CPCB), is authorized to issue guidelines to State Pollution Control Boards (SPCBs) concerning matters such as exemptions for certain categories of industrial plants, the granting, refusal, or revocation of consent for any industrial operation or process related to wastewater treatment and disposal systems, as well as to bringing into use of a new or altered outlet. These guidelines shall also encompass the mechanism for timely disposal of applications submitted under Section 25 of the Water (Prevention and Control of Pollution) Act, 1974, as well as the duration of consent validity. SPCBs are required to adhere to these guidelines when carrying out their functions regarding the granting, refusal, or revocation of consent under Sections 25 or 27 of the Water Act.

Section 25 of the Water Act states that conditional to the provisions of this section, no person shall, without the previous consent of the State Board- (a) establish any industry, operation or process, or any treatment and disposal system or, any extension or addition thereto, which is likely to discharge sewage or trade effluent into a stream or well or sewer or on land or (b) bring into use any new or altered outlet for the discharge of sewage; or begin to make any new discharge of sewage. Section 27 of the Water Act stipulates that SPCB shall not grant its consent under section 25 of the Water Act for the establishment of any industry, operation or process, or treatment and disposal system or extension or addition thereto, or to the bringing into use of a new or altered outlet unless the industry, operation or process, or treatment and disposal system or extension or addition thereto, or the outlet is so established as to comply with any conditions imposed by the Board to enable it to exercise its right to take samples of the effluent. The existing provision under section 44 of the Water Act is retained by the Water (Prevention & Control of Pollution) Amendment Act, 2024 which stipulates that contravention of Section 25 is punishable with imprisonment for a term not less than 1 year and 6 months but which may extend to 6 years and with fine.

It is pertinent to note that except for violation in terms of section 25 and 26 of Water Act, the Water (Prevention & Control of Pollution) Amendment Act, 2024 has to a certain extent decriminalized certain penal provisions and have replaced with financial penalty between INR 10,000 up to INR 1,500,000.

Further in case such offences continue, the penalty shall be INR 10,000 for each day of subsistence of the offence. The non-payment of penalties may result in imprisonment of up to 3 years or a fine double the penalty amount.

If the defaulting entity prosecuted by the National Green Tribunal and held guilty it is liable to pay penalty in addition to any relief or compensation imposed on it by the tribunal. Such amount of penalty is to be credited to the Environment Protection Fund.

Labour Law Updates

1. Maharashtra Labour Welfare Fund (Amendment) Act, 2024

The Maharashtra Labour Welfare Fund (Amendment) Act, 2024 which came into effect on 18 March 2024, introduces revisions in the rate of contributions to be made by the employers and employee towards the Maharashtra Labour Welfare Fund.

In alignment with the same, all the establishments employing 5(five) or more employees are bound to make the revised contributions towards the Maharashtra Labor Welfare Fund. As per the revised rates every employee except those working in the managerial or supervisory capacity shall make half yearly contributions of INR 25 by 15th of July and January every year. The amendment further states that the employer shall pay thrice to the employee’s contribution. In other words, for every INR 25 contributed by the employee, the employer shall contribute INR 75 for such employee.

2. Gujarat Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2019

The Labour, Skill Development & Employment Department of Gujarat passed a notification on 5 February 2024 in exercise of the powers conferred to it under the Gujarat Shops and Establishments (Regulation of Employment & Conditions of Service) Act, 2019. The said Act empowers the Gujarat State Government to declare that any provisions under this Act can be modified, altered, or exempted to any establishment or class of establishment or any class of workers.

Pursuant to the same, the Gujarat State Government has exempted the establishment of IT related services, IT enabled services and financial services from adhering to the provisions relating to fixed hours of work and spread over of working hours. The exemption granted to such establishments is valid for 2 years.

3. Karnataka Compulsory Gratuity Insurance Rules, 2024

On 10 January 2024, the Karnataka Government vide notification no. LD 397 LET 2023 had passed the Karnataka Compulsory Gratuity Rules, 2024 (“Gratuity Rules”) under section 4A of Payment of Gratuity Act, 1972 (“Gratuity Act”). The Gratuity Act is applicable to all business establishments ranging from factories, mines, oil fields, plantations, ports, railways, motor transport undertakings, companies, and shops and commercial establishments where ten or more persons or/were employed on any day in the preceding 12 months. Section 4-A of the Gratuity Act prescribes requirements on employers to obtain an insurance for their liability to pay gratuity to their employees, and to obtain a registration in this regard.

As per the new Gratuity Rules, all the existing employers falling within the purview of the Gratuity Act are mandated to obtain a valid Insurance Policy towards their gratuity liability within 60 days from the commencement of these rules i.e., 10 March 2024.

In case of new employers, such insurance is to be obtained within 30 days from the day the Payment of Gratuity Act,1972 becomes applicable to them. After procurement of gratuity insurance all the employers are required to submit an application to the authorized Labour Commissioner or Controlling Authority under the Payment of Gratuity Act within 30 days from obtaining such insurance, thereby intimating that compliance under the rules are carried out.

Under the Gratuity Act, the term “appropriate government” who is empowered to notify the Gratuity Rules is the Central Government for establishments:

(a) belonging to or under the control of the Central Government;

(b) having branches in more than 1 state;

(d) that are a major port, mine, oilfield or railway company.

In all other cases, the ‘appropriate government’ would be the State Government. Since the State of Karnataka is the ‘appropriate government’ empowered to notify the new Gratuity Rules under section 4-A of the Gratuity Act, it follows that establishments solely operating within Karnataka must comply with the new Insurance Rules. However, establishments in Karnataka with offices or branches in other states are presently exempt from fulfilling the requirements outlined in the Insurance Rules.

All the employers should ensure that the premiums are paid on time and policy is renewed on regular basis and intimate the Controlling Authority of the renewal within 15(fifteen) days from the date of renewal of the insurance policy.

The New Gratuity Rules exempt employers who are solely based in Karnataka:

who have established an approved Gratuity Fund and intend to continue with such arrangement or;
who have employed 500 or more persons and who establish an approved Gratuity Fund, from taking compulsory gratuity insurance provided that:

a. the exempt employers as referenced hereinabove, are required to submit an application in the prescribed form (Form II);

b. the existing approved Gratuity Fund shall cover the entire liability of all the employees of the establishment and

c. exempt employers as referenced hereinabove will be required to register a gratuity trust with five representatives, a mix of employers and employees, with the with the registration authority notified under the Indian Trust Act, 1882.

The Karnataka Compulsory Gratuity Insurance Rules, 2024, established on 10 January 2024, creates a robust mechanism for employers. In addition to obliging appropriate insurance coverage, these rules place a strong emphasis on accountability and transparency by requiring establishments to register and submit employee details.

Employers, both new and existing, must diligently manage premium payments, ensuring timely policy renewals, and promptly notifying the Controlling Authority of any changes. The authority, appointed under the Payment of Gratuity Act, also holds the power to recover gratuity from the insurance provider.

4. Tamil Nadu Labor and Skill Development Department on public utility service

The Labour Welfare and Skill Development Department of Tamil Nadu vide a notification G.O. (Rt) No. 36 on 6 March 2024 declared that the automobile manufacturing industry of Tamil Nadu to be a public utility service in exercise of the powers conferred under Section 2(n)(vi) of the Industrial Disputes Act, 1947. As per the said section the appropriate Government can declare any industry specified in the first schedule of the Act to be a public utility service for a period of 6 months, if in the opinion of such appropriate Government there is a public emergency or in public interest.

Pursuant to the same, the employers of all the automobile industries in Tamil Nadu are now required to provide their services without any kind discrimination and at a reasonable price. Further, they are prohibited from inflating their prices and indulging into unfair trade practices.