Corporate Professionals Blog

Employee Welfare Trust has emerged as an important nexus for rewarding the most valuable asset of the Organisation i.e. Employees for their association and performance. With the promulgation of the New Companies Act, the framework involving designing and functioning of Employee Welfare Trusts will undergo various modalties as Rule 16 of the Companies Act, 2013 casts certain stipulations for provisioning of money by the Company for purchase of its own shares for the benefits of the Employees. Ms. Mohini Varshney Assistant Vice President +919971673332 mohini@indiacp.com The gist of the stipulations imposed by the Companies Act, 2013 for provisioning of money for purchase/subscription of the shares via Trust Route are outlined as follows:

In a step towards ensuring lucidity in the regime, the Capital Market Regulator, SEBI, has floated new Corporate Governance Norms and revised Clause 35B with the basic premise of promoting interest of varied stakeholders on one hand and aligning the provisions of extant Clause 49 of the Listing Agreement with the Companies Act, 2013 on the other. The new norms aim to intensify the corporate governance framework for listed companies in India and are considered as a step forward to increment harmonisation in SEBI & MCA laws.

Central Board of Direct Tax (CBDT) vide its letter dated April 11th, 2014 addressed to all Chief Commissioner of Income Tax, noted that, recently, schemes of amalgamation, were designed, with retrospective dates, seeking set off of losses of loss making company with the Profits of the profit making company of the Groups and hence adversely impacting the public revenue. It further reiterated that, since the Income Tax Department has not been delegated power to scrutinize the documents, hence, its intervention in the Scheme, were rejected by the High Court as it has no locus standi to oppose such scheme.