Latest Blogs from SBS and Company LLP


    Corporate Governance is a multi-faceted subject and trying to comprehend in a concise definition. The central theme of corporate governance is to integrate sound management policies in the corporate framework in such a manner to bring economic efficiency in the organization in order to achieve twin goals of profit maximization and shareholder welfare. Few comprehensive definitions on Corporate Governance are discussed below.

    “Corporate Governance is the way a company is organized and managed to ensure that all financial stakeholders receive a fair share of the company’s earnings and assets.” - Standard and Poor

    "It is a system by which companies are directed & controlled." - The Cadbury Committee U.K.  


    Since the Real Estate (Regulation & Development) Act, 2016 (colloquially referred as ‘RERA law’) picking its heat in the state of Telangana, we thought of writing an article on certain issues which were examined by our office in last few months pertaining to the applicability of RERA provisions and found to be interesting.

    Before dwelling into such issues, it is to be noted that projects which have obtained approval post 01.01.2017 are treated as ‘on-going projects’ as defined vide Rule 2(j) of Telangana State Real Estate (Regulation and Development) Rules, 17. Vide Order No 04 dated 28th December 2018, TS RERA has communicated that there will be a penalty amounting to Rs 2 lakhs if the project has received approval between 01.01.2017 to 31.08.2018 and registers prior to 15.01.2019. Hence, it is urged that all projects which have received approval between 01.01.2017 to 31.08.2018 should be register prior to 15.01.2019.


    In this edition, we bring to you certain important articles. The article on ‘Foreign Portfolio Investors – SEBI and FEMA Perspective’ will throw light on the regulations concerned with investments by personswho are residents outside India, where the investment size is less than 10% of the post issue share capital. The article on ‘Re-Initiation of Proceedings by IO – Validity’ under the Prohibition of Benami Transactions Act deals with analysis of recent High Court judgment of Delhi High Court, wherein the IO is allowed to issue a fresh notice in a situation where the earlier notice was quashed in light of certain technical gaps. The journal also covers an article on ‘TReDS for MSMEs – Treading the path to quick payments’, which is going to make MSME space more vibrant.

    The article on ‘Gift of Immovable Property which is not a Capital Asset - Taxability Thereof’ deals with question of chargeability of tax under Section 56 in case where an immovable property is not a capital asset’. The article on ‘Corporate Governance and Role of Internal Audit’ places emphasis on the role of internal audit in improving the corporate governance by companies. The presentation on ‘CGST Amendment (Act) 2018’ deals with the various amendments brought to Central Goods & Services Tax Act, 2017 which is going to be effective from 01.02.2019 subject to notification being issued.


    • As discussed in my previous article, currently there are 18 Standards on Internal Audit (SIA’s) issued by Institute of Chartered Accountants of India (ICAI). One among these standards is SIA 220 “Conducting overall Internal Audit Planning”. It is rightly said that “By failing to prepare, you are preparing to fail”, hence planning plays an important role in accomplishing the audit. 
    • SIA 220 is not yet notified by Institute of Chartered Accountants of India (ICAI), hence it is voluntary in nature. 
    • Before going into SIA 220 let’s learn the definition of Internal Audit which forms the crux of the standard. The definition is defined by ICAI in framework governing internal Audit. 
    • “Internal Audit” provides independent assurance on the effectiveness of internal controls and risk management processes to enhance governance and achieve organizational objectives. 
    • Institute of Internal Auditors (IIA) also defined Internal Audit”. According to IIA Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. 
    • To conduct an Internal Audit, a plan is to be formulated. Internal audit planning is conducted at two levels:
      • An overall internal audit plan for the entire entity is prepared for a given period (usually a year) and presented to the highest governing body responsible for internal audits, normally, the Board of Directors, or the Audit Committee.
      • Several specific internal audit plans are prepared for individual assignments to be undertaken covering some part of the entity and presented to the Chief Internal Auditor. Planning of the same is covered under SIA 310.
    • In the case of Companies under Companies Act, 2013, which are subject to internal Audit as per section 138. it is a legal requirement for the Audit Committee or its Board of Directors to formulate the overall internal audit plan of the company. 


    1. Background:

    India was one among the foremost Asian countries who have considered the idea of setting up an Export Processing Zone (EPZ) model to promote country’s exports in early 1970’s. In order to attract more foreign investment and provide an internationally competitive and hassle-free environment for export promotion in India, the concept of Special Economic Zone (SEZ) was introduced to replace EPZ.

    In the year 2000, the SEZ policy was initially introduced under Foreign Trade Policy 2000. The policy was implemented through piecemeal and ad hoc amendments to different laws, besides executive orders from time to time. In order to overcome these drawbacks and to give a stable long-term policy framework with minimum regulation, the Special Economic Zone Act, 2005 (hereby referred to be” Act”) was introduced. The Act provided broad legal framework, covering all important legal and regulatory aspects of SEZ development as well as for Units operating in SEZs.

    SEZ is a specific duty-free enclave and shall be deemed to be foreign territory for the purposes of trade operations, duties and tariffs. In other words, SEZ is a geographical region that has economic laws different from the country’s economic laws.