Alert

SEBI
July 2019
Executive Summary
This Alert highlights the key features of the framework for the issue of shares with Differential
Voting Rights (DVRs). The Securities Exchange Board of India (SEBI) in March 2109 had issued
a consultation paper inviting public opinion on DVRs. Further, SEBI in its board meeting on 27th
of June 2109 approved the framework for issuance of DVRs. This Alert throws light upon issuance
and framework governing DVRs.
Differential Voting Rights Shares
In Union Budget 2019, the Finance Minister announced some major changes in labour laws. The
Government proposes to combine 44 labour statutes into four codes on: (1) Wages, (2) Social
Security, (3) Industrial Relations, and (4) Occupational Safety, Health and Working Conditions.
These Codes are expected to bring about efficiency in conducting business and simplify the
prevalent complicated labour law system.
The Code on Wages Bill, which was first introduced on 10th August 2017,1 is now approved by the
Union Cabinet and is expected to be introduced in this session of Parliament. Key features of the
Bill are:
1. Application: The Code will apply to establishments where any industry, trade, business,
manufacturing or occupation is carried out and will include government establishments.

2. Repeal: The Code proposes to replace the following Acts: (a) Payment of Wages Act, 1936, (b)
Minimum Wages Act, 1948, (c) Payment of Bonus Act, 1965 and (d) Equal Remuneration Act,
1976.

3. Minimum Wage: The Code proposes a National Minimum Wage (“NMW”) to be set up by
the Central Government for various sectors including railways, mines and oil fields while the
States will fix the minimum wages for other categories of employment. The Centre will fix
different minimum wages for different states. States while fixing minimum wages should
ensure that the value of these wages are not below the NMW. In case the existing minimum
wages in a State is higher than the NMW, then the States cannot reduce the existing minimum
wages. Thus, the minimum wages can only be increased and not decreased in a State to match
the NMW rate. Currently, the Minimum Wages Act, 1948 does not provide for fixing of NMW.

1 The 2017 Bill that was introduced in the Parliament in August 2017 (but lapsed due to dissolution of 16th Lok Sabha)
is available at: https://www.prsindia.org/sites/default/files/bill_files/Code%20on%20Wages%2C%202017.pdf.
The new Bill of 2019 is yet not made public.

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 The Code also makes it compulsory for the minimum wages to be revised every five years. By
doing so, the current system providing for flexibility of the States to revise minimum wages as
long as it is not more than five years is no longer applicable.
Currently, minimum wages are fixed only for scheduled employments with more than 1000
employees. There exist over 2000 different minimum wage prescriptions. The Code makes
provision for payment of minimum wages for all employees.
4. Payment of Wages: Wages can be paid in cash, cheque or digital mode. Wage period can be
fixed by employer on a daily, weekly, fortnightly or monthly basis. Deductions are permissible
in case of fines, absence from duty, towards accommodation provided by employer and
recovery of advances. The total deduction cannot exceed 50% of employee’s total wages. There
is no express provision in the Payment of Wages Act, 1936 on this aspect.

5. Overtime Wages: The Code proposes that overtime wage for employees be paid at a mimimum
of twice the normal rate of wages. Currently, the Minimum Wages Act, 1948 allows the Central
or State governments to set the rate of overtime wages.

6. Bonus: The Code proposes bonus (minimum 8.33% and maximum 20%) payable to all
employees whose wages do not exceed a monthly amount notified by Central/ state
governments. The Payment of Bonus Act, 1965 applies to only employment sectors with 20
or more persons and for employees whose wages do not exceed Rs. 21,000 per month.

7. Equal Remuneration: The Code expressly prohibits gender discrimination in wage payment.
The Equal Remuneration Act, 1976 prohibits gender discrimination in wage payments,
recruitments, transfers and promotions.

8. Facilitator: The Code proposes appointment of ‘Facilitator’ to carry out inspections as per the
inspection scheme devised by the Central/ state governments. The current laws only provide
for appointment of inspectors to carry out surprise checks and examine persons.

9. Penalties: The Code proposes to penalise employers who pay less than what is due under the
Code with a fine of up to Rs. 50,000. Where offence is repeated within five years, penalties
include imprisonment up to three months or a fine of up to Rs. 1 lakh or both.

In case of non-compliance with any other provision of the Code, fine proposed is up to Rs
20,000 and for repeat offence within five years, penalties include imprisonment up to one
month or a fine of up to Rs. 40,000 or both.

Currently, under the Minimum Wages Act, an employer paying less than the minimum wages
prescribed is liable to pay fine of Rs. 500 and under the Payment of Bonus Act, 1965 to fine
of up to Rs. 1000 for non-compliance.
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This alert contains brief information regarding recent changes in law. This is not legal
advice and must not be treated as such. For more information/advice, please contact
us at info@counsepro.com.

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