March 18, 2024 | CA B K Goyal & Co LLP

GOVERNMENT OF INDIAMINISTRY OF CORPORATE AFFAIRSNOTIFICATIONNew Delhi, the 30th March, 2019 G.S.R………. (E).— In exercise of the powers conferred by section 133 read with section 469 of theCompanies Act, 2013 (18 of 2013), the Central Government, in consultation with the NationalFinancial Reporting Authority, hereby makes the following rules further to amend the Companies(Indian Accounting Standards) Rules, 2015, namely:—1. Short title and commencement.-(1) These rules may be called the Companies (Indian AccountingStandards) Amendment Rules, 2019.(2) They shall come into force on 1st day of April, 2019.2. In the Companies (Indian Accounting Standards) Rules, 2015 (hereinafter referred to as theprincipal rules), in the “Annexure”, under the heading “B. Indian Accounting Standards (Ind AS)”,-I. in “Indian Accounting Standard (Ind AS) 101”, –(i) for paragraph 30, the following paragraph shall be substituted, namely:-“30 If an entity uses fair value in its opening Ind AS Balance Sheet as deemed cost for anitem of property, plant and equipment, an intangible asset or a right-of-use asset (seeparagraphs D5 and D7), the entity’s first Ind AS financial statements shall disclose, foreach line item in the opening Ind AS Balance Sheet:(a)the aggregate of those fair values; and(b)the aggregate adjustment to the carrying amounts reported under previous GAAP.”;(ii)for paragraph 39AB, the following paragraph shall be substituted, namely:-“39AB Ind AS 116, Leases, amended paragraphs 30, C4, D1, D7, D8B, D9 and D9AA,deleted paragraph D9A and added paragraphs D9B–D9E. An entity shall apply thoseamendments when it applies Ind AS 116.”(iii) in Appendix C, in paragraph C4, for item (f), the following item shall be substituted,namely:-“(f) If an asset acquired, or liability assumed, in a past business combination was notrecognised in accordance with previous GAAP, it does not have a deemed cost ofzero in the opening Ind AS Balance Sheet. Instead, the acquirer shall recognise andmeasure it in its consolidated Balance Sheet on the basis that Ind ASs would requirein the Balance Sheet of the acquiree. To illustrate: if the acquirer had not, inaccordance with its previous GAAP, capitalised leases acquired in a past businesscombination in which acquiree was a lessee, it shall capitalise those leases in itsconsolidated financial statements, as Ind AS 116, Leases, would require the acquireeto do in its Ind AS Balance Sheet. Similarly, if the acquirer had not, in accordancewith its previous GAAP, recognised a contingent liability that still exists at the dateof transition to Ind ASs, the acquirer shall recognise that contingent liability at thatdate unless Ind AS 37, Provisions, Contingent Liabilities and Contingent Assets,would prohibit its recognition in the financial statements of the acquiree. Conversely,if an asset or liability was subsumed in goodwill/capital reserve in accordance with2previous GAAP but would have been recognised separately under Ind AS 103, thatasset or liability remains in goodwill/capital reserve unless Ind ASs would require itsrecognition in the financial statements of the acquiree. ”;(iv) In Appendix D,(a)in paragraph D1, for item (d), the following item shall be substituted, namely:-“(d) leases (paragraphs D9, D9AA and D9B-D9E);”(b) in paragraphs D7, after item (a), the following item shall be inserted, namely:-“ (aa) right-of-use assets (Ind AS 116, Leases); and”;(c)for paragraph D8B, the following paragraph shall be substituted, namely:-“D8B Some entities hold items of property, plant and equipment, right-of-use assetsor intangible assets that are used, or were previously used, in operations subject torate regulation. The carrying amount of such items might include amounts thatwere determined under previous GAAP but do not qualify for capitalisation inaccordance with Ind ASs. If this is the case, a first-time adopter may elect to usethe previous GAAP carrying amount of such an item at the date of transition to IndASs as deemed cost. If an entity applies this exemption to an item, it need notapply it to all items. At the date of transition to Ind ASs, an entity shall test forimpairment in accordance with Ind AS 36 each item for which this exemption isused. For the purposes of this paragraph, operations are subject to rate regulation ifthey are governed by a framework for establishing the prices that can be chargedto customers for goods or services and that framework is subject to oversightand/or approval by a rate regulator (as defined in Ind AS 114, Regulatory DeferralAccounts).”;(d)for paragraph D9, the following paragraph shall be substituted, namely:-“D9 A first-time adopter may assess whether a contract existing at the date oftransition to Ind ASs contains a lease by applying paragraphs 9-11 of Ind AS 116to those contracts on the basis of facts and circumstances existing at that date.”;(e)paragraph D9A shall be omitted;(f) for paragraph D9AA, the following paragraph shall be substituted, namely:-“D9AA When a lease includes both land and building elements, a first time adopterlessor may assess the classification of each element as finance or an operatinglease at the date of transition to Ind ASs on the basis of the facts andcircumstances existing as at that date.”;(g)after paragraph D9AA, the following paragraph shall be inserted, namely:-“D9B When a first-time adopter that is a lessee recognises lease liabilities andright-of-use assets, it may apply the following approach to all of its leases (subjectto the practical expedients described in paragraph D9D):-(a) measure a lease liability at the date of transition to Ind AS. A lessee followingthis approach shall measure that lease liability at the present value of theremaining lease payments (see paragraph D9E), discounted using the lessee’s3incremental borrowing rate (see paragraph D9E) at the date of transition to IndAS.;(b) measure a right-of-use asset at the date of transition to Ind AS. The lesseeshall choose, on a lease-by-lease basis, to measure that right-of-use asset ateither:-(i) its carrying amount as if Ind AS 116 had been applied since thecommencement date of the lease (see paragraph D9E), but discountedusing the lessee’s incremental borrowing rate at the date of transition toInd AS; or(ii) an amount equal to the lease liability, adjusted by the amount of anyprepaid or accrued lease payments relating to that lease recognised in theBalance Sheet immediately before the date of transition to Ind AS.(c) apply Ind AS 36 to right-of-use assets at the date of transition to Ind AS.D9C Omitted*D9D A first-time adopter that is a lessee

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Franchise business

learn / CA Bhuvnesh Goyal / March 18, 2024

When a business wants to increase its market share or geographical reach at a low cost, it may franchise its product and brand name. A franchise is a joint venture between a franchisor and a franchisee. The franchisor is the original business. It sells the right to use its name and idea. The franchisee buys this right to sell the franchisor’s goods or services under an existing business model and trademark.Franchises are a popular way for entrepreneurs to start a business, especially when entering a highly competitive industry such as fast food. One big advantage to purchasing a franchise is you have access to an established company’s brand name. You won’t need to spend resources getting your name and product out to customers. WHAT IS A FRANCHISE? A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system. Technically, the contract binding the two parties is the “franchise,” but that term more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising. There are two different types of franchising relationships. Business Format Franchising is the type most identifiable. In a business format franchise, the franchisor provides to the franchisee not just its trade name, products and services, but an entire system for operating the business. The franchisee generally receives site selection and development support, operating manuals, training, brand standards, quality control, a marketing strategy and business advisory support from the franchisor. While less identified with franchising, traditional or product distribution franchising is larger in total sales than business format franchising. Examples of traditional or product distribution franchising can be found in the bottling, gasoline, automotive and other manufacturing industries. The Franchisee/Franchisor Relationship The relationship between a franchisee and a franchisor is inherently one of advisee and advisor. The franchisor provides guidance and support on hiring and training staff, setting up shop, advertising its products or services, sourcing its supply, and so on.In return for the franchisor’s advisory role, use of intellectual property, and experience, the franchisee generally pays a startup fee plus an ongoing percentage of gross revenues to the franchisor.At the start, the franchisor assigns the franchisee an exclusive location far enough from its other franchises to avoid competition. Franchisee Benefits The costs of opening a franchise can be lower compared to starting a company from the ground up. The business has immediate brand recognition, a ready-built supply system, and a professional marketing campaign already in place. Franchisees adopt the business practices of their franchisors rather than create them from scratch. The franchisor is invested in the success of its franchisees and will take an active advisory role. Franchisee Responsibilities A franchisee must follow the proven business model that is already in place, down to its choice of location, furnishings, products, and decor. Franchisors require this to maintain consistent quality among all of the locations using its brand name.The franchisee is responsible for growing the franchise via the usual means of advertising and marketing within its exclusive area of operation. However, all marketing campaigns must be approved by the original establishment before their release.As the manager of the franchise, the franchisee is expected to protect the brand name by offering only approved products and services that are created by or sourced by the original company. FAQs Does a Franchisee Own a Business? Yes, a franchisee is the owner of the business. The owner is licensed to use products supplied by the franchisor. The franchisee is contractually obligated to use only products and services supplied by or authorized by the franchisor. This limits the business owner’s scope and autonomy. A McDonald’s franchisee cannot sell a peanut butter and jelly sandwich or even hang a picture on the wall that isn’t issued by McDonald’s. Is a Franchisee the Same As a Franchisor? No. The franchisor is the entity that owns the intellectual property, patents, and trademarks of the brand or business being franchised. A franchisee buys the right to operate a location of the franchisor. Can a Franchisee Be Fired or Removed? A franchisee can effectively be fired. The franchisor can shut down one of its licensed operators that breaks the rules. Those rules allow the franchisor to act quickly if a franchisee is discovered to be running a location that fails to meet health and safety guidelines, among other infractions. 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SEBI Settlement Scheme 2022

Government Schemes / CA Bhuvnesh Goyal / March 18, 2024

The Securities Exchange Board of India recently issued the SEBI Settlement Scheme 2022 in a public notification dated August 19, 2022. SEBI’s Settlement Scheme 2022 begins on August 22, 2022, and runs through November 21, 2022. Overview Following the expiration of the SEBI Settlement Scheme in 2020, a large number of organizations have filed an appeal with the Securities Appellate Tribunal (“SAT”) in Mumbai. In one instance, Shubham Singhal v. SEBI (SAT Appeal No. 191/2022, dated 13.05.2022), the Tribunal recently stated that the settlement program failed for two key reasons: The settlement terms may have been difficult, stringent, and unprofitable, and The strategy was implemented during the height of the Covid epidemic. In the aforementioned judgment, SAT directed SEBI to reconsider publishing a fresh plan. This gives rise to the need to bring a fresh Settlement Scheme which has come into existence in 2022, which is also known as SEBI’s Settlement Scheme, 2022. Purpose of SEBI Settlement Scheme 2022 he primary purpose of SEBI Settlement Scheme 2022 is to provide a settlement opportunity to the entity satisfying the following: The entity should have executed reversal trades in the illiquid stock options segment of BSE between the period 1st April 2014 to 30th September 2015 The entity against whom the proceedings have been initiated is pending before any forum or higher authority. Eligibility criteria under SEBI Settlement Scheme 2022 If an appeal has been filed and the case is still pending before the Securities Appellate Tribunal, the following entities are eligible to apply for the SEBI Settlement Scheme 2022: The company that executed reverse trades on the BSE’s illiquid stock options market between April 1st and September 30th, 2015 has been identified, processes have been initiated, and the matter is now being heard by one or more forums or authorities. Entity against which a penalty levying order was issued; however, the penalty was not paid, and hence recovery processes were initiated. SEBI Settlement Scheme, 2022 The Settlement Scheme, 2022 was announced in a public notice released by the Securities and Exchange Board of India on August 19, 2022. (“the Scheme”). The Scheme’s goal is to offer a settlement opportunity to entities who executed reversal trades in the BSE’s illiquid stock options segment between April 1, 2014, and September 30, 2015, and against whom proceedings have been initiated and are pending before any forum or authority, including courts, the Securities Appellate Tribunal (“SAT”), adjudicating officers, and recovery officers (provided an appeal has been filed and the same is pending before the SAT). An entity that wants to be settled under the Scheme must file a settlement application in the format required by the Scheme, which is available on the websites of SEBI and BSE. The application form must be submitted, and the supplied link must be used to pay the application fee and settlement sum online. There won’t be any tangible document that has to be produced. Applying under SEBI Settlement Scheme 2022 By following the below steps, the entity can apply under SEBI Settlement Scheme 2022 – STEP 1 – Go to https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html; STEP 2 – Under ‘Type of Category,’ select ‘Settlement Scheme’ by using the drop-down arrow; STEP 3 – Enter PAN and Captcha. Click ‘Go’; STEP 4 – Submit the following documents [scanned copy] – An application for settlement as per the format prescribed under Annexure-1; Copy of duly paid, notarized and stamped undertaking and waivers per the format specified under Annexure-2. It should be in non-judicial stamp paper; Self-attested copy of the PAN of the applicant. STEP 5 – Payment of settlement application registration fees. STEP 6 – Payment of settlement amount. Settlement application registration fees are payable under SEBI Settlement Scheme 2022 The entity applying under SEBI Settlement Scheme 2022 needs to pay applicable registration fees as under – INR 25,000 + GST @ 18% in case of body corporate; and INR 15,000 + GST @18% in case of individuals. The payment of such settlement application registration fees is to be paid using only payment mode as made available by the link https://siportal.sebi.gov.in/intermediary/AOPaymentGateway.html. Document Requirements for submitting a Settlement Application An entity must have the following documentation on hand before submitting a settlement application under the Scheme: Online submission of the following scanned documents: A replica of any waivers and commitments that have been duly notarized and rubber-stamped. A copy of the applicant’s PAN Card has also undergone self-attestation. Additionally, a settlement application copy has been confirmed as genuine. A certified true copy of each of the last three years Income Tax Returns. A functioning telephone number and email address If necessary, a certified copy of the order with the required documentation. The non-refundable registration cost for settlement applications is Rs. 15,000 for individuals and Rs. 25,000 for body corporations, plus GST at 18%. Lastly, the applicant must be paid the settlement amount specified. Important Points for Consideration A business does not have to resubmit an application fee if it had submitted a settlement application prior to the commencement of the SEBI Settlement Scheme 2022. The following steps should be taken by such an entity to resolve the conflict: Go to the official website. Additionally, choose “Settlement Scheme,” enter “PAN,” and Pay the compensation amount as agreed. If the designated entity does not utilize the SEBI Settlement Scheme, the securities legislation will still be implemented against it. After the settlement plan and record reconciliation are finished, the competent authority will finally issue a composite settlement order. Practice area’s of B K Goyal & Co LLP Income Tax Return Filing | Income Tax Appeal | Income Tax Notice | GST Registration | GST Return Filing | FSSAI Registration | Company Registration | Company Audit | Company Annual Compliance | Income Tax Audit | Nidhi Company Registration| LLP Registration | Accounting in India | NGO Registration | NGO Audit | ESG | BRSR | Private Security Agency | Udyam Registration | Trademark Registration | Copyright Registration | Patent Registration | Import Export Code | Forensic Accounting and Fraud Detection | Section 8 Company | Foreign Company | 80G and 12A

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