November 2024

The Importer Exporter Code (IEC) is a crucial 10-digit identification number issued by India’s Directorate General of Foreign Trade (DGFT). It is mandatory for businesses engaged in importing and exporting goods, serving as a gateway for accessing global markets and facilitating various international trade processes. The IEC is recognized by customs, the Export Promotion Council, and other trade authorities, making it essential for Indian companies to have an IEC to participate in global trade. IEC(Import Export Code) is a mandatory identification document for carrying out any import/export activity in the Country. A business cannot make any import/export supply until and unless IEC has been obtained except under expressly provided exemptions. Earlier after making an application for IEC, a separate identification number used to be issued by the department. But after the introduction of GST, the PAN of an individual or a business entity acts as his IEC number after making an application with DGFT(Directorate General of Foreign Trade). The application is approved on a self-certification basis using the authorised representative’s digital signature or using aadhar based KYC. Benefits of IEC 1.Facilitates Global Trade: Essential for importing and exporting goods. 2. Customs Clearance: Simplifies the process of clearing shipments. 3. Government Schemes: Enables businesses to benefit from export-promotion schemes. 4. No Filing of Returns: No need to file returns once obtained. 5. Lifetime Validity: Remains valid for the lifetime of the entity. 6. Bank Transactions: Necessary for foreign trade transactions with banks. 7. Easy Processing: Straightforward digital application process. 8. Recognition: Adds credibility and recognition by trade and export bodies. What Is an IEC Modification? ll holders of the Importer Exporter Code (IEC) are now mandated to update and verify their IEC details annually, regardless of whether there have been changes. The online system must complete this process between April and June each year. Non-compliance will result in the deactivation of the IEC, consequently blocking any import or export activities. Following Notification No. 58/2015-2020, the Directorate General of Foreign Trade made significant amendments to the Importer Exporter Code (IEC) provisions in chapters 1 and 2 of the Foreign Trade Policy (FTP). These amendments include the following key points: Mandatory Annual Update: Every IEC holder must ensure their IEC details are updated electronically annually during April-June. Confirmation of Unchanged Details: In cases with no changes to the IEC details, this status must be confirmed online within the same period. Deactivation for Non-Update: An IEC will be de-activated if it is not updated within the stipulated timeframe. Reactivation Post Deactivation: A de-activated IEC can be reactivated upon successful updating. However, this reactivation is subject to compliance with other FTP provisions, and non-compliance may invite additional actions. Scrutiny and Compliance: IECs may be flagged for scrutiny. The IEC holder is responsible for promptly addressing any risks or issues flagged by the system. Failure to do so will result in the deactivation of the IEC. Details That Can Be Modified During the IEC renewal process, businesses can update: – Registered and branch addresses – Contact information (mobile numbers and email IDs) – Bank account details – Directors or partners in the business – Nature of business activities Deadline for IEC Modification The update must be completed annually between April and June, with the final deadline being June 30th. Required Documents for IEC Modification A recent photograph of the applicant – Self-attested PAN card of the entity – Proof of address (Sale Deed, Rent Agreement, latest utility bills) – Pre-printed cancelled cheque or bank certificate Procedure to Update IEC 1.Access the DGFT official website and select the IEC profile management option. 2. Click on the “update IEC” option and log in. 3. If not registered, complete the registration process. 4. Link the IEC using the OTP sent to the registered email ID. 5. Update details or confirm unchanged details and save each section. 6. Submit the application summary with the Digital Signature Certificate (DSC) of the registered person. 7. The updated IEC will be reactivated and submitted to the Customs system. FAQs What is IEC modification? IEC modification refers to updating or making changes to the Importer Exporter Code (IEC), a unique 10-digit code issued to businesses involved in import and export in India. This update could include changes to business details, such as the address, contact information, or bank details linked with the IEC. Why is it necessary to update the IEC yearly? As per recent regulations by the Directorate General of Foreign Trade (DGFT), IEC holders must review and confirm their IEC details yearly, even if there are no changes. This mandatory update ensures that the IEC details are current and correct in DGFT’s records.

MGT 14 is obliged to be furnished through the firm within the registrar of companies (ROC) under sections 94(1) and 117(1) of the companies act 2013 and the rules built in it. But the private companies get privileged from furnishing the board resolutions. The private organizations do not need to furnish MGT 14 for the concerns shown under section 179(3) of the companies act 2013 read with rule 8 of the firm’s meetings of the board and its powers rule 2014. Hence the private organizations do not have to furnish the e-form MGT 14 within ROC on practising the powers of the board beneath the law of section 179(3) of the companies act 2013 Purpose of Filing A company holds various meetings during the year, such as meetings of the Board of Directors, Shareholders or Creditors, and resolutions are passed at the said meetings. The particulars of these resolutions must be filed with the ROC by the company or liquidator, as the case may be, within 30 days of passing them in Form MGT-14. MGT 14 Board Resolutions to be Filed Under Section 117(3) Special Resolutions Resolutions have been accepted to get passed as special resolutions through all the members of the organizations. Any resolutions have been passed through the BOD with respect to the appointment /reappointment/renewal/distinction of the appointment courses of the managing director. The resolutions have been accepted to get passed through the particular majority or through a specific way via a class of members. The resolutions needed to fold up of the firms as provided beneath section 59 of the insolvency and bankruptcy code 2016. Resolutions are declared beneath section 179(3) MGT 14 Form List of Board Resolutions Annexure A Board Resolutions- Beneath Annexure A the mentioned way deal through the board resolutions requirement to furnished: Investigation of the books of accounts and the other records of the subsidiary. Permission of building political enrichment. Doing investments or providing the loan or guarantee or security through the firm. Relevant party transaction contract/agreement. Appointment of a whole-time key managerial personnel of a corporation. Appointment of an individual as managing director if he is the manager/managing director of another company. Permission of self prospectus. Appointing/ re-appointing/renewing of appointment/variation of the terms of appointment of a managing director. Calling of the unpaid amount on the shares via shareholders. Permission of buy-back of securities as given beneath Section 68. Providing the securities (engaging debentures) in India/outside India. To borrow money. Permission of the Board’s report and financial statements. Extension of the business of the organization. To accept amalgamation, alliance, or reconstruction. Taking a stake in the company or obtaining the controlling stake in a different firm. Annexure B Special Resolutions- Beneath Annexure B the mentioned objectives deal through the appropriate resolutions required to get furnished: Addition of law of entrenchment in Articles of Association through the firms. Revisions of an enrolled office from one city to different in the same state. Change of Memorandum of Association. Revolution in the thing towards the money borrowed is unutilized. Change of Articles of Association. Change towards the contract or things in the prospectus. Providing the depository receipts to outside nations. Modification of shareholder rights. Providing the sweat equity shares. Issuance of employee stock options. A private offer of securities. Issuance of debentures or loans holding an option for conversion to shares. Decrease of share capital. Buying or subscribing to the fully paid shares for the advantage of employees. Buyback of shares. Excluding the registered offices maintaining the registers at different locations in India. Elimination of auditor prior to the expiry of the term. Appointment of exceeding the 15 directors. Reappointment of Independent Director. Limiting the number of directorships of a director. Selling, leasing or otherwise disposing of the whole or substantially the whole of the undertaking of the firm or towards the firm owns exceeding the one undertaking of complete or substantially the complete of any of these undertakings. Investing differently in trust securities, the amount of compensation received through the result of an amalgamation or alliance. Borrowing the money in which the money is to be borrowed and the money previously borrowed through the firm shall be more than the average of its paid-up capital along with the free reserves other than the temporary loans received from the firm’s bankers in the normal business. Give the time for the repayment of the debt left from the director. Scheme for furnishing the loans to directors. Loan and investment through the firm who have more than 60% of the paid-up share capital, free reserves, and securities premium account or 100% of the free reserves and securities premium account whichever is higher. Appointment of a director, i.e. a managing director/whole-time director/manager exceeding the age of 70 years. Company operations needed to get examined. Application to the registrar for the prevention of the name from the registrar. Scheme concerning the amalgamation of the sick organizations through the other firms. Winding up of the company through the bench. Voluntary winding up of the company. To furnish the liquidator through the powers to accept the shares etc as per the acknowledgement of the property sale. Permission for the arrangement amid the firm that seems to be wound up and its creditors to be binding. Sanctioning the firm liquidator to practice the specific powers. Disposal of the books and paper of the firm when the organization gets fully wound up and is directed to get dissolved. Annexure C Ordinary Resolutions- Beneath Annexure C the mentioned things deal through the normal resolutions required to furnish: The company can amend its name post to obtain the objectives from the registrar if it revealed that the name was applied to or by filing the wrong details. The company revised its name post to obtain the commands from the central governments if the name or trademark is similar to the previous name of the organization or enrolled trademark. Receiving deposits from the public. Representation of Corporations at the meeting of organizations. Representation at any

Reserves can be classified based on the source of earnings. A revenue reserve is created out of profits generated from the trading activities of a company and a capital reserve is created out of the profits which are capital in nature such as revaluation of assets, write-back of depreciation and amalgamation etc. When a company incurs capital losses, the fund from the capital reserve is used to write-off the same. A ‘free reserve’ is defined under the Companies Act, 2013 (“Companies Act”) as any reserve available for distribution of dividends as per the last audited balance sheet. The definition excludes any amount earned from unrealized gains, notional gains or revaluation of assets from being treated as a free reserve. Similarly, any change in carrying the amount of an asset or liability in equity will not be a part of a free reserve. What is Reserve Capital The Companies Act mandates a Capital Redemption Reserve (CRR) for companies repurchasing or redeeming their own shares. This safeguards the company’s financial stability in two key scenarios: Buy-Backs: When a company buys back its own shares, the paid-up capital shrinks. To counteract this, a portion of reserves is allocated to the CRR, ensuring a buffer against future capital depletion. Preference Capital Redemption: Redeeming preference shares can also weaken the capital base. The Capital Redemption Reserve requirement mitigates this by capturing a portion of distributable profits, providing security for lenders who may have concerns about the company’s financial health after the redemption. Meaning of Surplus Unlike free reserve, the surplus from the profits earned by a company is not included while calculating the net worth of the company. The surplus has not been specifically defined under the Companies Act.  However, for the purposes of preparing balance sheet the following accounting explanation has been provided under Schedule III of the Companies Act: “Surplus i.e., balance in Statement of Profit and Loss disclosing allocations and appropriations such as dividend, bonus shares and transfer to/ from reserves, etc:…” Further, “Debit balance of statement of profit and loss shall be shown as a negative figure under the head “Surplus”…” What is a Capital Redemption Reserve Account and why is it maintained? Capital redemption reserve account is a type of reserve maintained by a company limited by shares and as the name suggests this reserve deals with shares which are redeemable. The shares which are purported to be redeemed are paid out of the profits of a company. For this purpose, out of the profits, an amount equivalent to the nominal value of the share supposed to be redeemed is transferred to a reserve. This reserve is called a capital redemption reserve account. A company may issue preference shares which can be redeemed within a period of twenty years from the date of issue. However, it is subject to the following conditions as prescribed in the Companies Act: The Articles  of Association of the company must permit the same; The redemption must be out of the profits of the company which would otherwise be distributed as dividends or out of the earnings of a fresh issue of shares (made for the purposes of such redemption); Only fully paid-up shares can be redeemed; The company has to maintain a capital redemption reserve account (the provisions relating to the reduction of the share capital of a company will apply as if the Capital Redemption Reserve Account is paid-up share capital of the company); In case the premium is payable at the time of redemption for certain class of companies (as prescribed) which complies with the accounting standards under Section 133 of the Companies Act, it must be paid out of the profits of the company before the shares are redeemed: If the premium is payable for preference shares issued on or before the commencement of the Companies Act, before such shares are redeemed, the premium must be paid out of profits of the company or out of the securities premium account maintained by the company. Why Do Lenders Benefit? Maintaining a healthy Capital Redemption Reserve benefits lenders in several ways: Increased Confidence: A strong CRR demonstrates the company’s commitment to maintaining its financial strength, bolstering lender confidence and potentially improving borrowing terms. Enhanced Security: The CRR acts as a safety net, protecting lenders from potential losses if the company’s capital base is eroded due to future redemptions or buy-backs. Transparency and Stability: The CRR requirement promotes transparency in the company’s financial practices, further stabilizing the relationship with lenders. Impact of Mergers and Acquisitions on Reserves The Accounting Standards 14 has laid the treatment of reserve(s) in case of Mergers and Acquisitions. In a merger, the identity of the reserve(s) is preserved and is shown in the financial statements of the transferee company. They retain their nature and value. Thus, for instance, the capital redemption reserve account of the transferor company becomes the capital redemption reserve account of the transferee company. However, in case of an acquisition (amalgamation by purchase), the identity of reserves is not preserved except for the statutory reserves. Further, with respect to the reserves created by the transferor company for the purposes of the Income Tax Act, 1961, the identity of such reserves should be preserved for a specified period. Tax Benefit for Special Reserve which are allowed as a deduction when computing the income from a business and profession under Section 36 of the Income Tax Act, 1961. When a special reserve is created and maintained by certain specified entities including a financial corporation, a banking company, a housing finance company, and a portion from the profits earned from an eligible business is transferred to this reserve, the aforementioned entities are entitled to claim a deduction. This deduction has been capped at a maximum of twenty percent of the profits earned and should not be more than twice the amount of paid-up share capital and general reserves of the entity specified. The eligible business includes providing long-term finance for the development of industry, agriculture, infrastructure, and housing. Redemption of Preference Capital Redemption of

It is often said that humans are social animals. Yet there are some aspects of human life that the individual wants to keep to himself or the selected person he wants to share them with. Privacy has been declared one of the essential facets of liberty guaranteed to an individual. The term privacy has been derived from ‘privatus‘, a Latin word meaning private, secret, or personal, different from what is public or does not belong to the state. Thus, the word ‘privacy’ entails the sense of something belonging to oneself, something that the individual would not want to share with others. What is the right to privacy Privacy means the state of being alone and keeping one’s personal matters and relationships secret. The Black’s Law Dictionary defines it as “the right that determines non-intervention in secret surveillance and protecting an individual’s information. It is of four categories. First, physical: an imposition whereby another individual is restricted from experiencing an individual or situation. Second, decisional: the imposition of an exclusive restriction on an entity. Third, informational: the prevention of searching for unknown information. Fourth, dispositional: the prevention of attempts made to know the minds of individuals.”  Constituent assembly on the right to privacy The Advisory Committee on Fundamental Rights was tasked with formulating a draft of the fundamental rights of the citizens. Eminent members, like Harman Singh, K. M. Munshi, and Dr. Ambedkar, staunchly advocated for the inclusion of privacy as a right. Inspired by the Czech Constitution, Harman Singh stated in his note on fundamental rights, “Every dwelling shall be inviolable”. Dr. Amedkar, in his note, mentioned the protection against unreasonable searches and seizures. The Sub-Committee on Fundamental Rights proposed two rights. First, the right to the inviolability of one’s home is protection against unreasonable searches and seizures; second, the secrecy of correspondence. However, Sir B.N. Rau, K.M. Pannikar, and A. K. Ayyer dissented against the proposals, citing that it could hinder the process of law enforcement. Finally, the Advisory Committee on Fundamental Rights did not approve, and the rights were not included in the report. In the Constituent Assembly, Mr. Kazi Syed Karimuddin moved an amendment to protect the privacy of individuals from unreasonable state interference, searches, and seizures along the lines of the American and Irish Constitutions. Dr. B.R. Ambedkar replied, accepting his amendment, that the Criminal Procedure Code has the provision to provide a safeguard against such interference. However, privacy was not given a mention in the Constitution. The amendment to include these rights was moved several times, but the moves could not gather consensus, and the assembly moved forward, leaving the provision undecided. Article 21 of the Constitution and the right to privacy Article 21 is the heart of the Constitution of India. It guarantees the right to life and personal liberty to every person, whether a citizen or non-citizen residing in India. It is the base of all other rights that are provided by the Constitution because life is an essential element for enjoying other rights such as freedom, equality, or religion. The Article includes in itself all other rights that are necessary for a human to live to its full potential, such as the right to health, the right to a clean environment, the right to sleep peacefully, the right to livelihood, the right to free legal aid and speedy trial, or the right to privacy. Previous Supreme Court Rulings Against the Right to Privacy A.K Gopalan v. The State (1950)- In this case, the petitioner argued that the search and seizure operation carried out in his property violated the provision of Right To Property, as mentioned in Article 19(1). However, the court rejected the argument regarding the right to privacy, saying that the act of police did not obstruct his right to utilise his property. The court also mentioned the caveat of ‘reasonable cause’, which gives police the power to search and seize.  Kharak Singh V. The State of UP- In this case, the petitioner argued that the nightly domiciliary visit to his home by the police violated his right to move freely across India, as enshrined by Article 19 of the Indian Constitution. The petitioner also objected to the police shadowing him. While the court agreed that the nightly domiciliary visits did violate the petitioner’s right to live a dignified and free life, it also agreed that the right to privacy was not a fundamental right, and hence surveillance of his movements did not violate the Constitution. Justice K.S. Puttaswamy (Retd) vs Union of India (2017)- During the hearing of a petition that challenged the constitutional validity of the Aadhar based biometric system, the Supreme Court of India unanimously agreed that the right to privacy is a fundamental right as enshrined by the Constitution. The court expanded the purview of Article 21 and said that the Right to Life and Liberty, as stated in Article 21, also included the right to privacy. Since Article 21 falls under Part III of the Indian Constitution, which deals with fundamental rights, the right to privacy thus automatically became a fundamental right after the judgement. Since then, the right to privacy has been a fundamental right in India.. The Digital Personal Data Protection Act, 2023 The enactment of the Data Protection Act for India has been long sought. The first draft data protection bill was tabled in Parliament in 2018 under the title Personal Data Protection Bill, 2018. The draft was prepared by the Justice Srikrishna Committee ( a committee formed by the Ministry of Electronics and Information Technology). The bill was sent for reconsideration as it mandated the data fiduciary to maintain at least one copy of serving copy of customers’ information in India so that it would be easy for law enforcement agencies to access the information. This mandatory requirement posed a serious threat to  privacy by allowing the state to process the personal data. The regulatory framework established by the bill was given minimal autonomy, and it would have worked largely under the central government.  Other two bills were also