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I am a Cable operator and apply for MSO registration, My file is pending form 6month approx due to security clearance. I invest the money of 1lakh and submitting all required documents. Need MIB department received required documents and payment the issue MSo registartion. Government delay, it is not good for cable operator, Very big loss in this situation. The draft guidelines are also quiet on the time to be taken by the government to issue a licence to a private satellite television channel, leaving the decision to the political dispensation of the day. The objective of national security clearance is to evaluate potential security threats, including economic threats, and provide risk assessment before clearing investment and project proposals in key sectors.
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SEBI Relaxes Delisting Norms to Encourage Mergers and Acquisitions SEBI’s relaxation of delisting rules for acquirers of a company streamlines the M&A process in India. Mr Gauba said the Ministry of Home Affairs has recently streamlined the Security Clearance procedures and issued a fresh set of guidelines. A Committee of Officers meets every week in MHA for timely decision on security clearance proposals. Hi Mona, No procedure has been prescribed neither in the Companies Act, 2013 nor in the rules for obtaining security clearance from the Ministry of Home Affairs. As per Rule 8 of the Companies Rules, 2014 every person who has been appointed to hold the office of a director shall on or before the appointment furnish to the company a consent in writing to act as such in Form DIR-2.
“The Ministry of Home Affairs has given security clearance to Air India CEO-designate Campbell Wilson,” a senior government official told ANI. Under civil aviation rules, MHA clearance is mandatory for the appointment of key personnel at airlines, especially foreigners. The Department for Promotion of Industry & Internal Trade , in April 2020, issued a notice – PN-3 – regarding Foreign Direct Investment . With this notification, the Government made its approval for foreign investments mandatory from any country that shares a land border with India to discourage takeovers and other unfair activities influenced from such countries seeking to take advantage of the Pandemic, which was at its peak in 2020. Therefore, FDI proposals from China, Bangladesh, Pakistan, Bhutan, Nepal, Myanmar, and Afghanistan require Government approval.
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A third industry source gave the example of how Quintillion Business Media, which had plans to operate a business news channel in a joint venture with Bloomberg, had to drop its plans because it failed to procure a licence from the I&B ministry for three years, while fairly newer channels like Republic TV got a licence within months. “Once security clearance is granted to an entity by MHA, it will be valid for a period of 10 years… Provided that if at any time the MHA withdraws security clearance to a permission holder, the permission of the company/LLP shall be forthwith terminated, after giving an opportunity of being heard,” the clause states. The I&B ministry has released draft amendments to guidelines for private satellite TV channels, and sought suggestions from stakeholders within 15 days.
In this blog post, we analyse the key implications of this amendment. Indian Government has recently mandated that foreign nationals from a few countries, before they are confirmed as directors on boards of Indian companies, need to go through security clearance. In case the person seeking appointment is a national of a country which shares land border with India, necessary security clearance from the Ministry of Home Affairs, Government of India shall also be attached along with the consent. As per the Companies Act, private and public companies must have a minimum of two and three directors, respectively. Further, as per Section 149 of the Companies Act, every company must have at least one resident director who has stayed in India for a total period of at least 182 days during the financial year. Hence, Indian companies can have numerous foreign nationals as directors on their Board, which indicates that they can play a crucial role in the functioning and management of a company and can assert significant influence on the decisions of the company.
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The Mission should scrutinize the background of the NGO/ private institution and, on being satisfied, may grant visa to the participants. If the Mission concerned has any doubt about the background of the sponsoring NGO/ private institution, the matter should be referred to MEA and MHA for verification of the background of the NGO/ private institution concerned. Accordingly, form DIR -3 has also been amended to include a declaration from the applicant that he/she is not required to obtain the security clearance from the Ministry of Home Affairs, Government of India under sub-rule of rule 10 before applying for a director identification number. List of countries sharing a land border with India are – China, Pakistan, Bhutan, Myanmar, Afghanistan, Nepal, and Bangladesh. The Ministry of Home Affairs has formulated a policy for national security clearance for certain sensitive sectors of the economy by codifying all existing practices. In addition, the policy has also liberalized certain investment restrictions existing earlier.
Thereafter, the MCA also notified the Companies Amendment Rules, 2022, dated May 30, 2022, and inserted a new sub-rule to Companies Rules, 2016, and new Form No. CAA 16 related to declaration in terms of Rule 25A. Through this amendment, in case of a compromise or an arrangement or merger or demerger between an Indian company and a company/ body corporate, which has been incorporated in a country sharing land border with India, a declaration through Form No. CAA 16 would be required at the stage of submission of application under Section 230 of the Companies Act, 2013 (“Companies Act”), stating whether prior approval under the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, is required or not.
Thus, pursuant to Press Note 3 and the recurring theme of protecting Indian companies against opportunistic takeovers, the amendment is a strong move to ensure that countries that share land borders with India do not get a backdoor entry/ indirect control over the management of Indian companies by virtue of their nationals being on the Board. If the event includes participants from the countries for which prior ‘security clearance’ is required, the details should be sent to the Ministry of Home Affairs at least 30 days prior to the commencement of the event so as to enable adequate time to process the requisite security clearance. In the event of a foreign national availing short duration visas such as Conference Visa, Transit visa, e-Visa and Visa-on-Arrival while already having a long duration visa for India like multiple entry Tourist/ Business/ Employment/ Student/ Research Visas, the long duration visas will not get cancelled. In such cases, while granting the short duration visa like Conference Visa/ Transit Visa, the Indian Mission/ Post concerned may keep the long duration visa on hold for the period of the short duration visa. The status of holding of long duration visa of the foreigner shall be reflected in the Central Database of IVFRT. In case the foreigner is availing e-Visa or Visa-on-Arrival, the Immigration authorities may keep the long duration visa on hold for the period of the short duration visa, which shall be reflected in Central Database of IVFRT.
The aim is to strike a healthy balance between meeting the imperatives of national security and facilitating ease of doing business and promoting investment in the country. The Missions will process the cases for grant of visas and after satisfying themselves, grant visas to the participants of such events except in cases indicated in para below. Non-news channels can go for temporary live uplinking of events, provided they are not related to news or current affairs, by registering five days before an event. One of the clauses in the draft guidelines states that once a channel is granted security clearance, it will be valid for 10 years. But it adds that this can be terminated by the Union Ministry of Home Affairs any time within the period.
In such cases, visas will be issued after the Mission receives the requisite clarifications. Participants are from Afghanistan, Pakistan, Iraq, Sudan, foreigners of Pakistani origin and Stateless persons; and Participants of conferences /seminars/workshops who are required to visit 'Restricted' or 'Protected' areas in India, or areas affected by terrorism, militancy and extremism etc. viz. The Missions shall carefully examine the subject of the conferences/seminars/workshops and Visa shall not be issued for events which involve politically and/ or socially sensitive subjects.
Further, this change might deter Indian companies that urgently need to fill vacant directorship positions from appointing nationals from the countries that share a land border with India. In such instances, companies may be forced to choose Indian nationals/ nationals from other countries to fill these positions, given that security clearances might take time and may not be forthcoming. The Ministry of Corporate Affairs (“MCA”), vide notification dated June 1, 2022, notified theCompanies Amendment Rules, 2022 (“2022 Amendment Rules”), which amended the Companies Rules, 2014 (“Appointment and Qualification Rules”). This amendment states the security clearance requirements needed to hold directorship position in an Indian company, if an individual is a national of a country which shares land border with India. From a practical standpoint, it is essential for companies to recalibrate and review their existing Board composition, particularly those companies which have nationals from a country that shares land borders with India on their Board. In the event the directorship term of a person belonging to a country that shares land borders with India is nearing expiry, then such companies must act quickly to ensure that security clearance is obtained or find replacements.
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