Karnataka Government eliminates renewal of registration under Shops and Commercial Establishment Act

The Government of Karnataka, through an order, has eliminated the existing system of renewal of registration under the Karnataka Shops and Commercial Establishments Act, 1961 (“Act”). Henceforth, the registration of establishments under the Act shall be auto renewed after submission of self certification and payment of renewal fees though the department online portal.

The Department for Promotion of Industry and Internal Trade (“DPIIT”) released a Business Reform Action Plan (“BRAP”) 2019 which consisted of 80 recommendations for reforms on policies, procedures, practices and regulatory processes across 12 reform areas. Implementation of Action Point 42 was proposed, in relation to the Labour Department, to ensure compliance with BRAP 2018 and as part of the Ease of Doing Business in Karnataka.

Consequently, a review meeting was held for implementation of reforms under Ease of Doing Business – BRAP 2019 where the elimination of the renewal requirement under the Act was proposed via the issuance of a Government order so that the reforms could be implemented promptly. The Government accordingly eliminated the renewal requirement under the Act on June 11th, 2019.

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There is no Central Government Act which comprehensively regulates the payment of wages, hours of work, safety and health in commercial establishments, therefore state governments have enacted the Shops and Establishment Act to govern the conduct of these establishments. 

The respective Acts allow for the effective conduct of business in these establishments but due to procedural difficulties and inconvenience, the existing system was done away with to give way for an easier form of renewal in favour of the relevant stakeholders.


CCI will conduct a study on E-commerce market

The Competition Commission of India (“CCI”) has begun a study of the ecommerce market and its business practices, in order to identify the potential obstacles to competition in this fast-growing sector and subsequently, ascertain its advocacy and enforcement priorities. This move of the CCI will allay concerns regarding alleged unfair trade practices engaged in by online entities.

The study will focus on the market trends, particularly the emerging distribution strategies and methods in ecommerce, in order to understand the contractual provisions, business practices and the underlying implications for competition. It will cover areas where the growth of online commerce is most apparent, including goods (such as lifestyle, electronics) and services (food delivery, travel and hospitality).The major enterprises covered will include ecommerce platforms, hotels, restaurants, manufacturers etc.  In August 2019, the preliminary findings will be presented in a workshop and the release of the final study report is expected in the third quarter of 2019-2020.

It is reported that quantitative and qualitative information is being collected for the study from primary and secondary sources and the study itself will be a combination of market survey, desk research and stakeholder consultation. It is designed by the market study team at CCI and is being implemented by an external agency, hired for this very purpose.

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The ecommerce market is rapidly growing, with an increase in the online trade of goods and services in the country. There would be several opportunities for violation of the laws unless the CCI steps in to understand the novel issues the digital market faces and enact rules to effectively regulate the market.

To prevent hasty decision making, the move taken by the CCI to study the market first will provide the CCI with clarity, and enable it to specifically deal with instances of unfair trade practices, thereby doing away with the dangers of potential over-regulation.


MCA: E-ACTIVE temporarily suspended for tagging non-compliant Companies

The Ministry of Corporate Affairs (“MCA”) in a statement said that the facility to file the E-ACTIVE form has been temporarily suspended owing to the tagging of non-compliant directors and companies, who have not filed e-Form Active (INC-22A), being in progress. However, the facility would soon be restored for filing purposes with fee, once the tagging activity is completed.

According to Company law rules, every company that has been incorporated on or before 31st December, 2017 has to file the particulars of the Company as well as its registered office in form E-ACTIVE.  The company shall be restricted from filing e-ACTIVE form if its financial statements or annual returns have not been filed with the Registrar, unless the company is under management dispute and the same is recorded with the Registrar.

If these particulars are not filed before the due date, the Company shall be tagged as “ACTIVE – non-compliant” and shall be liable for action under the Companies Act, 2013.

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The Company has a responsibility to ensure that the relevant documents are filed with the Registrar in due time, to avoid penalties under the law.

In this instance, the suspension of the facility to file E-ACTIVE may cause temporary inconvenience, but it is soon expected to be up and running again, therefore relevant stakeholders are informed to take note and plan accordingly.



Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.