have also asked the government to not make public the audited reports; most entities are private limited ones.
“There is no specified format for the (compliance) report but an auditor may be held liable for a wrong report if the company is later found non-compliant.
One confusion is the period for which Press Note 2 (PN2) has to be complied with, since it came into effect only on February 1. The issue is whether the report is for the months of February-March 2019 or from the date when PN2 was issued,” said Atul Pandey, partner at law firm Khaitan & Co.
In December 2018, the government had announced tighter FDI guidelines for e-commerce firms
through PN2. It directed all e-marketplaces to furnish a certificate, along with a report of statutory auditor, to the Reserve Bank of India by September 30 of every year for the preceding financial year. This report confirms compliance with the government's guidelines on a list of complex matters.
Among these, companies have had the most difficulty in adhering to the rules that restrict e-commerce marketplaces from controlling inventory. Current rules stipulate that inventory of a vendor will be deemed to be controlled by the e-commerce marketplace if more than 25 per cent of purchases of such vendor are from the marketplace entity or its group companies.
An entity having equity participation by an e-commerce marketplace entity or its group companies, or having control on its inventory by an e-commerce marketplace entity or its group companies, will not be permitted to sell its products on the platform run by such a marketplace entity.