LEX-LUMIS

The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019

On 15 November 2019, the Central Government notified the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (FSP Rules). The FSP Rules aim to provide a framework for insolvency and liquidation of systemically important financial service providers (FSPs) other than banks and are currently applicable to non-banking financial companies (NBFCs) with an asset size of INR 500 Crores (approx. USD 70 million) or more, as per a notification issued by the

Government Slashes Corporate Tax Rates

On 20 September, 2019, the Finance Minister announced a reduction in corporate tax rates estimated to provide cumulative tax relief of INR 1,45,000 Crore (approx. USD 21 billion) to corporate tax-payers. A Press Note issued by the Ministry of Finance on 20 September 2019 (Press Note) highlights the key amendments to the corporate tax regime introduced by the Taxation Laws (Amendment) Ordinance, 2019 (Ordinance) and further proposes increased avenues for corporate social responsibility spending. Some of the key features of the

GOVERNMENT COMMITTEE RECOMMENDS IMPORTANT AMENDMENTS TO INDIAN ANTI-TRUST LAW

The Indian Government had constituted the Competition Law Review Committee on 1 October 2018, with members from the Competition Commission of India (CCI) and the Insolvency and Bankruptcy Board of India and headed by the Corporate Affairs Secretary (Committee). The Committee was tasked with reviewing the competition regulations and suggesting necessary changes to re-calibrate and strengthen the existing legal framework in order to promote best practices. The Committee submitted its report to the Indian Finance Minister on 14 August 2019 (Report),

MOST PRODUCTIVE INDIAN PARLIAMENT SESSION IN LAST SIX DECADES CONCLUDES

The first session of the Indian Parliament after re-election of Prime Minister Narendra Modi concluded on 7 August 2019 (Session). The Session witnessed passage of more than 30 bills with the Lower House of the Indian Parliament (Lok Sabha) sitting for 281 hours in 37 days (approx. 135% of its scheduled hours) and the Upper House of the Indian Parliament (Rajya Sabha) sitting for 195 hours (approx. 103% of its scheduled hours) in 35 days – significantly higher than their respective

Relaxation of end-use provisions under the External Commercial Borrowings (ECB) Policy

Based on the recommendations of stakeholders, the Reserve Bank of India (RBI) has liberalised end-use provisions for external commercial borrowings (ECBs) through a circular dated 30 July 2019 (Circular). Per the Circular, eligible borrowers are now permitted to raise ECBs from recognised lenders, except foreign branches/ overseas subsidiaries of Indian banks, for the following purposes: Working capital purposes and general corporate purposes, with a Minimum Average Maturity Period (MAMP) of 10 years. Non-Banking Financial Companies (NBFCs) can also raise ECBs for

Key Highlights of the Union Budget 2019-2020

The Finance Minister of India presented the Union Budget for India for the financial year 2019-2020 on 5 July 2019 (Budget), which aims to bolster several sectors such as infrastructure, roads, railways, agriculture, education, rural development, banking and finance thereby increasing jobs and bringing rural and urban India closer together to make India a USD 5 Trillion economy by 2024, as it moves towards becoming a USD 3 Trillion economy this year with the focus being on promoting ease of living

Reserve Bank of India relaxes norms for stressed assets

On 7 June 2019, the Reserve Bank of India (RBI) issued the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 (Directions), with the intent of ‘providing a framework for early recognition, reporting and time bound resolution of stressed assets.’ The Directions replace the Resolution of Stressed Assets – Revised Framework Circular (2018 Circular) issued by the RBI on 12 February 2018 which was struck down by the Supreme Court  of India in the case of Dharani

Indian Commercial Courts Act Amended

The President of India on 3 May 2018 gave his assent to the ordinance (Ordinance) amending the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (Act). By way of background, the Act was enacted with an intention of faster resolution of matters in relation to commercial disputes thereby creating a positive outlook for foreign investors. Key changes introduced by the Ordinance are as follows: The Act has been renamed to ‘Commercial Courts Act, 2015’. The scope

Reserve Bank of India liberalizes External Commercial Borrowing norms

The Reserve Bank of India (RBI), through a circular dated 27 April 2018 (Circular) has further liberalized the External Commercial Borrowing (ECB) norms in light of requests received from corporates and other entities. The Circular simplifies ECB norms with a view to provide access of cheaper funds to corporate borrowers to meet their capital requirements. Key highlights of the Circular are as follows: Expansion of Eligible Borrower’s list The Eligible Borrower’s list has been expanded and now includes the following: Housing

Reserve Bank of India notifies Cross Border Merger Regulations

The Reserve Bank of India (RBI), through a notification dated 20 March 2018, notified the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 (Regulations). The Regulations are intended to facilitate ‘cross border mergers’ i.e., any merger, amalgamation or arrangement between an Indian company and a foreign company in accordance with the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 (Companies Rules) issued under the Companies Act, 2013. Key features and implications of the Regulations are as follows: Inbound Merger: An ‘inbound merger’

Minimum Capital Requirements set for FDI into Unregulated Financial Entities

The Indian Ministry of Finance vide a press release issued on 16 April 2018, has finalised the minimum capital requirements for all such activities falling under ‘Other Financial Services’, and those that are unregulated by any financial sector regulator. As per the extant Foreign Direct Investment Policy, 2017 (FDI Policy) 100% FDI under the ‘automatic’ route is allowed for financial services activities that are regulated by a financial sector regulator inter-alia the Reserve Bank of India (RBI), Securities and Exchange Board

The Payment of Gratuity Act, 1972 amended – Gratuity limit raised to Rupees two million

The President of India on 28 March 2018 gave his assent to the Payment of Gratuity (Amendment) Act, 2018 (Amendment Act), thereby amending the Payment of Gratuity Act, 1972 (Act) and which was brought into effect on 29 March 2018 through a notification issued by the Ministry of Labour and Employment, Government of India (MoLE). Through the Amendment Act the Indian government aims to revise the gratuity limit for the employees engaged in private sector and public sector undertakings/ autonomous organizations

SEBI accepts several recommendations of the Kotak Committee on Corporate Governance for listed companies

Securities and Exchange Board of India (SEBI), in its board meeting held on 28 March 2018 in Mumbai accepted several recommendations (with and without modifications) given by the Kotak Committee relating to corporate governance. By way of background, the Kotak Committee was constituted under the chairmanship of Mr. Uday Kotak with a view of enhancing standards of corporate governance of listed entities in India. The Kotak Committee had accordingly submitted its report to SEBI on 5 October 2017.   SEBI accepted the

Key Highlights of the Union Budget 2018-2019

On 1 February 2018, the Indian Finance Minister presented the Union Budget for the financial year 2018 – 2019 (Budget 2018) in the Parliament and consequently the Finance Bill, 2018 has also been introduced in the Lower House for approval. The focus of Budget 2018 was to strengthen sectors such as agriculture, rural development, health, education, employment and infrastructure.  Some of the key highlights of the Budget 2018 are: Focus on improving and developing the food and agriculture sector by introducing

No fees for Company Incorporation in India

The Ministry of Corporate Affairs (MCA), vide two notifications issued on 20 January 2018, revised the Companies (Incorporation) Rules, 2014 and the Companies (Registration Offices and Fees) Rules, 2014 (together, “Amendments”). The Amendments, effective from 26 January 2018, revise the procedure in relation to incorporation of a company in India and the associated fee. The Amendments further promote India’s continuing efforts in Ease of Doing Business as the revised process is intended to be simpler and quicker. Key features of the

India approves further liberalization of Foreign Direct Investment Policy

The Union Cabinet has approved amendments to the Foreign Direct Investment (FDI) Policy with an aim to further liberalise the FDI regime in India. The steps have been undertaken as a continuing efforts of Indian Government in ease of doing business and in order to stimulate a more investor-friendly environment for the foreign players which will boost economic growth and create jobs.   Key highlights of the amendments are:   FDI Policy in Single Brand Retail Trading   100% FDI under

India notifies the Companies (Amendment) Act, 2017

The President of India and the Indian Parliament have approved the Companies (Amendment) Act, 2017 (Amendment Act), which amends the Companies Act, 2013 (Act). However, provisions of the Amendment Act shall come into force on such date as would be notified by the Central Government in the Official Gazette of India. The amendments to the Act are brought in with an aim to strengthen the corporate governance and enhance the ease of doing business in India. Some of the key highlights

President assents Ordinance amending Insolvency and Bankruptcy Code, 2016

The President of India on 23 November 2017 gave his assent to the ordinance (Ordinance) which amends the Insolvency and Bankruptcy Code, 2016 (Code), which was then published in the Gazette of India. The Ministry of Corporate Affairs of the Government of India, in a press release, stated that the Ordinance aims at putting in place safeguards to prevent unscrupulous, undesirable persons from misusing or vitiating the provisions of the Code and aims to keep out persons who have wilfully defaulted,

Logistics sector gets Infrastructure status

In a move to help the logistics industry raise funds at competitive rates and to boost India’s trade, the Ministry of Finance (MoF) widened the category of infrastructure sub-sectors to “transport and logistics” from the earlier sub-head of “transport“. The inclusion of “Logistics Sector” in the harmonized master list of infrastructure sub-sectors was considered in the 14th Institutional Mechanism meeting held on 10 November 2017. The term “Logistics Infrastructure” would mean and include multi-modal logistics park comprising inland container depot with

SEBI committee makes recommendations on Corporate Governance in India

With a view to enhance the standards of corporate governance of listed entities in India, the Securities and Exchange Board of India (SEBI) constituted the Committee on Corporate Governance (Committee) in June 2017 under the chairmanship of Mr. Uday Kotak. The Committee submitted its report (Report) to SEBI on 05 October 2017 recommending various revisions to the existing corporate governance regime and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR). Some of the key recommendations of the Committee

Masala Bonds excluded from the limit for investments by FPIs in corporate bonds

The Reserve Bank of India (RBI) on 22 September 2017 released 2 (two) circulars in relation to “Investment by Foreign Portfolio Investors in Corporate Debt Securities – Review” and “Issuance of Rupee Denominated Bonds (RDBs) Overseas” (collectively, “Circulars”), thereby: excluding the Masala Bonds (rupee denominated bonds issued by Indian corporates overseas) from the limit for investments by Foreign Portfolio Investors (FPIs) in corporate bonds with effect from 03 October 2017. Prior to the Circulars, the Masala Bonds were included both in

Indian companies restricted to have more than two layers of subsidiaries

The Ministry of Corporate Affairs, Government of India notified the Companies (Restriction on number of layers) Rules, 2017 (Rules) on 20 September 2017. The Rules, from the date of their notification, prohibit a company, other than the classes of companies specified in paragraph (c) below, from having more than 2 (two) layers of subsidiaries (Restriction). The Rules assume importance in the backdrop of concerns around incorporating shell companies to channelize illicit funding activities and curbing black money. Some of the key

Maharashtra notifies new Shops and Establishments Law

The Government of Maharashtra (Government) has notified the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (New Act), through a notification dated 7 September 2017. The New Act would come into effect from the date to be appointed by the Government in the official gazette and would repeal the Bombay Shops and Establishments Act, 1948 (Old Act). Some of the key highlights of the New Act are: The provisions of the New Act apply only in

Siphoning off money from accounts of struck off companies to invite jail time

In a meeting chaired by the Minister of State for Corporate Affairs on 6 September 2017 (Meeting), the Government of India (GoI) has decided that in the event a director or authorised signatory of any struck off company (i.e. a company whose name has been struck off the registers of the registrar of companies in India) tries to siphon off money from its bank account without authorisation, such a person may be punished with imprisonment for a term ranging from 6

DIPP releases new Consolidated FDI Policy

The Department of Industrial Policy and Promotion (DIPP) of the Government of India’s Ministry of Commerce and Industry released the consolidated foreign direct investment (FDI) policy circular of 2017 (New FDI Policy), on 28 August 2017 effective immediately. The New FDI Policy has been released in wake of the abolition of the Foreign Investment Promotion Board (FIPB) and puts in place a transparent, predictable, and easily comprehensible policy framework on FDI in India. The New FDI Policy consolidates, subsumes, and supersedes

Supreme Court of India rules that privacy is a fundamental right

A nine-judge bench of the Supreme Court of India (SC) on 24 August 2017 in K S Puttuswamy (Retd) and Anr. v. Union of India and Ors. (Privacy Case) unanimously held that privacy is a fundamental right, and that the ‘right to privacy is an integral part of both life and personal liberty under Article 21’ of the Constitution of India. The SC also overruled several cases including M P Sharma v. Satish Chandra, District Magistrate, Delhi (1954) SCR 1077 and

SEBI temporarily suspends issuance of the popular ‘masala bonds’

The Securities and Exchange Board of India (SEBI) issued a circular dated 20 July 2017 (July 2017 Circular), temporarily suspending the issuance of rupee denominated bonds, i.e. ‘masala bonds’, by Indian corporates overseas until the limit utilisation of foreign portfolio investors (FPIs) falls below 92% (ninety two per cent). The July 2017 Circular is addressed to FPIs, the National Securities Depository Limited and the Central Depository Services (India) Limited (Depositories), and the Bombay Stock Exchange and the National Stock Exchange (Exchanges)

REITs and InvITs required to be exclusively registered on new SEBI portal

The Securities and Exchange Board of India (SEBI) issued a circular on 24 July 2017 (Circular) which requires that all new applications for registration of real estate investment trusts (REITs) and infrastructure investment trusts (InvITs) be mandatorily and exclusively registered on the SEBI intermediary portal i.e. https://siportal.sebi.gov.in (Portal). The Circular states that the Portal may be used for application for registration, reporting and filing under the provisions of the SEBI (Real Estate Investment Trusts) Regulations, 2014 and the SEBI (Infrastructure Investment

Government of India amends Code for Independent Directors

The Ministry of Corporate Affairs of the Government of India vide a notification on 5 July 2017 that was published in the Official Gazette of India on 6 July 2017 (Notification) amended Schedule IV of the Companies Act, 2013 which sets out the ‘Code for Independent Directors’ (Code). Pursuant to the Notification, inter-alia, the following key changes have been made to the Code: 1. In the event of resignation or removal of an independent director (ID) from the board of directors

Post FIPB: DIPP releases Standard Operating Procedure for processing FDI proposals

Less than a month after the Foreign Investment Promotion Board (FIPB) published an office memorandum setting out the roadmap for the post-FIPB abolishment period, the Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industry has on 29 June 2017 published a standard operating procedure (SOP) for processing foreign direct investment (FDI) proposals in India. The SOP, inter-alia, sets out the process for online filing of applications for the FDI proposal, the procedure for processing the application,

Enterprises exempted from mandatory 30 day notice to CCI for combinations

The Ministry of Corporate Affairs of the Government of India by way of a notification in the Official Gazette on 29 June 2017 exempted every person or enterprise that is a party to a combination under section 5 of the Competition Act, 2002 (Act) from providing a mandatory notice to the Competition Commission of India (CCI) within 30 (thirty) days of either approval of the proposal relating to merger or amalgamation set out in section 5 (c) of the Act by

Establishments now required to publish an equal opportunity policy for persons with disabilities

The Government of India recently notified the Rights of Persons with Disabilities Rules, 2017 (Rules) in the Official Gazette. The Rules are issued under the Rights of Persons with Disabilities Act, 2016 (Act), and were enacted to give effect to the United Nations Convention on the Rights of Persons with Disabilities and for related matters. The Act and the Rules are applicable to every establishment including Government establishments and private establishments. The Act defines certain key terms as follows: (i) A

Government releases office memorandum setting out roadmap post-FIPB abolishment

The Foreign Investment Promotion Board (FIPB) Section of the Department of Economic Affairs (DoEA) of the Government of India’s (GoI) Union Ministry of Finance (MoF) published an office memorandum dated 5 June 2017 (OM) setting out the roadmap in relation to the post-FIPB abolishment period. The OM comes in the backdrop of the Union Cabinet of the Government of India chaired by Prime Minister Narendra Modi giving its approval for phasing out of the FIPB on 24 May 2017, pursuant to

Union Cabinet approves FIPB phase out; ministries empowered to process FDI applications

Continuing its stance of promoting ‘maximum governance and minimum government’, the Union Cabinet of the Government of India chaired by Prime Minister Narendra Modi on 24 May 2017 gave its approval for phasing out the Foreign Investment Promotion Board (FIPB) and empowered individual government ministries/ departments to process applications for foreign direct investment (FDI) requiring government approval. A press release was issued on 24 May 2017 itself by the Press Information Bureau of the Government of India (Press Release) in this

Government of India amends Banking Regulation Act, 1949; authorises RBI to tackle bad loans

The Government of India (GOI) amended the Banking Regulation Act, 1949 (Act) vide a notification in the Official Gazette on 4 May 2017 by means of a presidential ordinance (Amendment Ordinance). The Amendment Ordinance has given the Reserve Bank of India (RBI) powers to tackle bad loans by issuing directions to any banking company to initiate insolvency proceedings for any default in debts, and also for issuing directions to banking companies for resolution of stressed assets. As a background to the

Real Estate (Regulation and Development) Act, 2016 comes into full effect from 1 May 2017

The Ministry of Housing and Urban Poverty Alleviation on 19 April 2017 notified in the Official Gazette of India, the remaining sections (i.e. 3-19, section 40, sections 59-70 and sections 79-80) of the Real Estate (Regulation and Development) Act, 2016 (Act) with effect from 1 May 2017 thereby protecting the interests of real estate buyers in India. The Act aims to promote transparency and accountability in the real estate sector and provides for an adjudicating mechanism for speedy dispute redressal in

Intention is the primary test to penalise any act as outraging religious beliefs under section 295A of the Indian Penal Code

The Supreme Court of India (SC) on 20 April 2017 in the case of Mahendra Singh Dhoni v. Yerraguntla Shyamsundar and Anr. held that only malicious or deliberate acts, or attempts, undertaken with the intention of outraging the religious beliefs of a class of citizens would be penalized under Section 295A of the Indian Penal Code (IPC). The complaint petition was initiated at a trial court in Anantapur, Andhra Pradesh against cricketer Mahindra Singh Dhoni (Petitioner) when he was portrayed as

Indian and foreign companies now permitted to merge or amalgamate with each other

The Ministry of Corporate Affairs of the Government of India (MCA) on 13 April 2017 notified section 234 of the Companies Act, 2013 (Act) that provides for mergers or amalgamations of an Indian company with a foreign company and vice versa (Commencement Notification). The MCA vide a separate notification dated the same day also inserted a new rule, i.e. Rule 25A in the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (Rules) to regulate such mergers or amalgamations, which shall come into

Government of India clarifies threshold exemptions for combinations under Competition Act

The Ministry of Corporate Affairs of the Government of India (MCA) has clarified on the exemptions provided to enterprises from application of section 5 that regulates combinations under the Competition Act, 2002 (Act) vide  notification dated 27 March 2017 that was published in the official gazette on 29 March 2017 (Exemption Notification). The MCA also rescinded an earlier notification dated 4 March 2016 (Earlier Notification) that exempted an enterprise fulfilling certain criteria from the applicability of section 5 of the Act

Government of Maharashtra grants approval to MCIA under Institutional Arbitration Policy

In a bid to ensure that arbitration is the preferred means of dispute resolution for government entities, and in an effort to portray Mumbai as a proposed hub for international commercial arbitration, the Department of Law and Judiciary of the Government of Maharashtra (GoM) has vide circular dated 28 February 2017 certified the Mumbai Centre for International Arbitration (MCIA) as recognised arbitral institute for the purposes of its ‘Policy for Arbitration as a preferred mode of dispute resolution’ that was released

Determination of well-known trade marks made easier in India

Pursuant to several ease of doing business initiatives of the Government of India, the Department of Industrial Policy and Promotion on 6 March 2017 notified the Trade Mark Rules, 2017 (Rules) thereby repealing the erstwhile Trade Mark Rules, 2002. While making the filing procedure for new trade marks simpler by, inter-alia, reducing the total number of forms, the Rules have also provided for a new procedure for determination of well-known trade marks in India. Prior to the Rules, trade marks were

RBI allows 100% FDI in Market Place Model of E-commerce under Automatic Route

The Reserve Bank of India (RBI) has on 9 March 2017 permitted 100% (one hundred per cent) foreign direct investment (FDI) in ‘market place model of e-commerce’ sector under automatic route and subject to certain conditions. However, the RBI has prohibited FDI in ‘inventory based model of e-commerce’. In this regard, the RBI issued the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Fourth Amendment) Regulations, 2017 (Amendment Regulations). Salient features under the Amendment Regulations,

Indian Parliament amends Maternity Benefit Act, 1961; increases maternity leaves

The lower house of Indian Parliament (Lok Sabha) on 9 March 2017 passed the Maternity Benefit (Amendment) Act, 2016 (Amendment Act) which was already passed by the upper house (Rajya Sabha) in August 2016. The Amendment Act amends the Maternity Benefit Act, 1961 (Act) and now only requires the assent of the President of India before it is published in the Official Gazette, post which it shall become the law. The Amendment Act revamps the maternity benefits under the Act, and

Government of India revises Trade Mark Rules; simplifies trade mark application process

Keeping in line with the ease of doing business initiatives of the Government of India, the Department of Industrial Policy and Promotion on 6 March 2017 notified the Trade Mark Rules, 2017 (Rules) which repeal the erstwhile Trade Mark Rules, 2002 (Erstwhile Rules). Some of the salient features of the Rules are as follows: • The total number of TM forms have been reduced to 8 (eight) as against 74 (seventy four) under the Erstwhile Rules; • The Rules now classify

SEBI caps FPI investments in unlisted corporate debt securities and securitised debt instruments

Less than two days after the Securities and Exchange Board of India (SEBI) amended the SEBI (Foreign Portfolio Investors) Regulations, 2014 (Regulations) by way of an amendment notification dated 27 February 2017 (Amendment Notification), SEBI issued a fresh circular making further changes to the norms laid down for investments by foreign portfolio investors (FPIs) in unlisted corporate debt securities and securitised debt instruments vide a circular dated 28 February 2017 (Circular). In addition to the Amendment Notification, the Circular provides for

SEBI amends FPI Regulations; expands investment avenues for FPIs

The Securities and Exchange Board of India (SEBI) amended the SEBI (Foreign Portfolio Investors) Regulations, 2014 by way of an amendment notification dated 27 February 2017 (Amendment Notification). The Amendment Notification now defines ‘offshore derivative instrument’ as any instrument, by whatever name called, which is issued overseas by a foreign portfolio investor (FPI) against securities held by it that are listed or proposed to be listed on any recognised stock exchange in India, or unlisted debt securities or securitised debt instruments,

India’s FDI Policy revised for Infrastructure Company in the Securities Market

The Department of Industrial Policy and Promotion of the Government of India (GoI) amended the Consolidated Foreign Direct Investment Policy Circular of 2016 (FDI Policy) and revised the guidelines in relation to investments made into infrastructure company in the securities market vide a notification dated 20 February 2017 (Revised Policy). While the erstwhile guidelines (i) allowed investments by foreign institutional investors and foreign portfolio investors (FPI) only through purchases in the secondary market; (ii) did not permit any non-resident entity/ investor,

Regulations issued by Insolvency and Bankruptcy Board of India under the Insolvency Code

The Insolvency and Bankruptcy Board of India (IBBI) has through 3 (three) notifications dated 30 January 2017 issued following regulations under the Insolvency and Bankruptcy Code, 2016: (i) IBBI (Advisory Committee) Regulations, 2017 (AC Regulations): AC Regulations provide for IBBI’s power to constitute advisory committees to obtain expert advice for efficient discharge of its functions. IBBI may constitute advisory committees on service providers; corporate insolvency and liquidation; individual insolvency and bankruptcy; and such other subjects as IBBI may consider expedient. AC

Key highlights of India’s Union Budget for the financial year 2017-2018

India’s Union Finance Minister Arun Jaitley presented the Union Budget for the financial year (FY) 2017-2018 (Budget) before the Lok Sabha today. The key highlights of the Budget are set-out below: 1. Abolition of the Foreign Investment Promotion Board (FIPB): The FIPB will be abolished in FY 2017-2018. A roadmap is likely to be introduced in relation to the same. Further liberalisation of the foreign direct investment policy is being considered by the Government of India. 2. Resolution of disputes in

Indian Government relaxes norms under the Companies Act for IFSC Companies

The Ministry of Corporate Affairs, Government of India has vide 2 (two) notifications, both dated 4 January 2017, exempted the following companies from complying with certain provisions of the Companies Act, 2013: (a) Specified IFSC public companies: Unlisted public companies which are licensed to operate bythe    Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI), or the Insurance Regulatory and Development Authority of India (IRDAI) from the International Financial Services Centre (IFSC) located in an approved multi

Major Reforms & Legal Developments in India: Year 2016 at a Glance

First & foremost we wish all our readers a happy & healthy 2017! Below are some key reforms & legal developments in India during 2016 which we thought would be of interest: • The Insolvency and Bankruptcy Code, 2016 (Code) was enacted as a unified legal framework governing the bankruptcy & insolvency regime for all companies, partnerships & individuals in a time bound manner. Per the Code, the National Company Law Tribunal (NCLT) would adjudicate insolvency resolution for companies & the

Corporate restructuring provisions under the Companies Act, 2013 notified and effective from today

Corporate restructuring provisions under the Companies Act, 2013 notified and effective from todayThe Ministry of Corporate Affairs has, vide a notification dated 7 December 2016 (Commencement Notification), notified certain provisions of the Companies Act, 2013 (Act) and has appointed 15 December 2016 as the effective date. Set out below is a summary of some of the provisions notified vide the Commencement Notification: Compromises, Arrangements and Amalgamations While most of the provisions under Chapter XV of the Act (Compromises, Arrangements and Amalgamations)

Transfer of Pending Legal Proceedings to National Company Law Tribunal

Transfer of Pending Legal Proceedings to National Company Law TribunalThe Ministry of Corporate Affairs, vide a notification dated 7 December 2016, has notified the Companies (Transfer of Pending Proceedings) Rules, 2016 (TPP Rules) which would become effective from 15 December 2016, except rule 4 (pertaining to pending voluntary winding up proceedings) which would come into effect from 1 April 2017. Set out below are salient features of the TPP Rules: 1. Transfer, fees and records Pending proceedings would be transferred to

Union Cabinet approves reforms to boost employment generation and exports in India

Union Cabinet approves reforms to boost employment generation and exports in IndiaThe Union Cabinet on 7 December 2016 approved a set of reforms, including simplification of labour laws, and providing production incentives through technology upgradation for the ‘Made-ups’ manufacturing sector. The key reforms are: Contribution to the Employees’ Provident Fund (EPF) has been made optional for employees earning less than INR 15,000 (Rupees fifteen thousand) per month. Permissible overtime in the ‘Made-ups’ manufacturing sector has been increased to 100 hours per

Maharashtra launches e-land management system for Aurangabad Industrial City

In order to promote ease of doing business and the “Make In India” Campaign, the Government of Maharashtra on 28 November 2016 launched the e-land management system for the Aurangabad Industrial City (AURIC) which enables businesses and individuals to apply for land in AURIC and also provides for online review and processing of applications filed in this regard, by the Aurangabad Industrial Township Limited. The newly launched system supports end-to-end functionality of land management by, inter alia, enabling the applicant to

India finally repeals SICA

Pursuant to a notification dated 25 November 2016, the Ministry of Finance (MoF), Government of India has appointed 1 December 2016 as the date on which the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 (SICA Repeal Act) would come into force. The SICA Repeal Act, inter-alia, provides for repealing the Sick Industrial Companies (Special Provisions) Act, 1985 and for the dissolution of the Board for Industrial and Financial Reconstruction (BIFR) as well as the Appellate Authority for Industrial and Financial

India passes the biggest tax reform in 70 years – Goods & Services Tax Bill

The Indian Parliament on 8 August 2016, passed the much awaited and widely discussed legislation over the past several years, the Constitution (One Hundred and Twenty Second Amendment) Bill (commonly known as the “GST Bill”) to introduce Goods & Services Tax (GST) intending to subsume all indirect taxes under a single indirect taxation regime. The GST Bill is the biggest tax reform by India since its independence in 1947 which will certainly ease doing business in India once fully implemented. The

India passes law for easier debt recovery – another significant step in ease of doing business

The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Act, 2016 (“Act”) was passed by the Indian Parliament on 9 August 2016 and was published in the Official Gazette on 16 August 2016 after receiving Presidential assent. The Act has amended 4 (four) legislations – the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”); the Recovery of Debts due to Banks and Financial Institutions Act, 1993 (“RDDBFI Act”); the

Union Cabinet approves the Model Shops & Establishments (Regulation of Employment and Conditions of Service) Bill, 2016

The Union Cabinet on 29 June 2016, approved the Model Shops & Establishments (Regulation of Employment and Conditions of Service) Bill, 2016 (“Model Bill”), which was introduced by the Ministry of Labour and Employment in January this year. The Model Bill seeks to ensure uniformity of the legislative provisions in various states to facilitate the ease of doing business and generate employment opportunities. States can adopt or carry out necessary amendments in their respective laws in accordance with the Model Bill.

Government of India further liberalizes the Foreign Direct Investment regime  

The Government of India (GOI) has, with the objective of providing major impetus to the growth of investment and employment creation in India, further liberalized the Foreign Direct Investment (FDI) regime on 20 June 2016 pursuant to a high-level meeting chaired by the Prime Minister. The liberalization includes increasing sectoral caps, bringing more activities under the automatic route and easing conditions for foreign investment. The key highlights of the updated FDI policy are: (i) FDI upto 100% has been permitted under

The Ministry of Corporate Affairs notifies the constitution of the National Company Law Tribunal and the National Company Law Appellate Tribunal

The Ministry of Corporate Affairs (MCA) has, with effect from 1 June 2016, notified the constitution of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT), pursuant to which 11 (eleven) NCLT benches have been constituted with each bench exercising different territorial jurisdiction i.e. 2 (two) at New Delhi and 1 (one) each at Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. The NCLAT will be situated in New Delhi. All cases, proceedings or

Reserve Bank of India permits deferred consideration in cross border share transfers

The Reserve Bank of India has on 20 May, 2016, notified the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) (Seventh Amendment) Regulations, 2016 (Amendment Regulations) pursuant to which: (i) a purchaser in a cross border share transfer is permitted to make payment of up to 25 per cent of the total consideration on a deferred basis within a period not exceeding 18 months from the date of the share transfer agreement; (ii) an escrow

Department of Industrial Policy and Promotion issues the ‘Guidelines for Foreign Direct Investment on E-commerce’

With the view of liberalizing and providing clarity to Foreign Direct Investment (“FDI”) in e-commerce sector in India, the Department of Industrial Policy and Promotion (“DIPP”) has issued the “Guidelines for Foreign Direct Investment on E-commerce” vide a press note (2016 Series) on 29 March 2016 (“Guidelines”). Under the Guidelines, DIPP has reiterated that while FDI is permitted up to a 100% under the automatic route in Business to Business e-commerce (“B2B”), the same is prohibited in Business to Consumer (“B2C”)

India allows 100% FDI in E-commerce Marketplace Model

In yet another step towards pushing growth in the IT and service sector, the Government of India through the Department of Industrial Policy and Promotion (“DIPP”) has issued the “Guidelines for Foreign Direct Investment on E-commerce” vide a press note (2016 Series) on 29 March 2016 (“Guidelines”) thereby liberalizing and providing clarity to Foreign Direct Investment (“FDI”) in e-commerce sector in India. Under the Guidelines, DIPP has reiterated that while FDI is permitted up to 100% under the automatic route in

Mandatory filing of Foreign Direct Investment (FDI) related forms online

In order to promote the ease of reporting of FDI transactions, the Reserve Bank of India (“RBI”) has issued a circular making it mandatory for online filing of the following forms on the e-Biz Portal : (i) Advance Remittance Form (“ARF”) which is used by companies to report FDI inflows to the RBI; (ii) Form FC-GPR which a company submits to the RBI for reporting the issue of eligible instruments   to an  overseas investor against the above mentioned FDI inflow; and

The Payment of Bonus (Amendment) Act, 2015

The Payment of Bonus (Amendment) Act, 2015 (Act) received the assent of the President of India on 31 December 2015 and is deemed to have come into force on 01 April 2014. Some salient features of the Act are: The definition of “employee” has been amended to mean any person (other than an apprentice) employed on a salary/ wage not exceeding INR 21,000 (Rupees twenty one thousand) per month in any industry to do any skilled or unskilled manual, supervisory, managerial,

The year That was 2015: Major Reforms and Legal Developments

The year of 2015 can be recognised as the year for commencement of legal reforms in India. Some of the key legal developments during the year 2015 are as follows: As a measure to improve the ease of doing business in India, the Ministry of Corporate Affairs (“MCA”) issued: The Companies (Amendment) Act, 2015 was enacted which removed the requirement of a minimum paid up share capital amount for private and public companies and requirement of special resolution for related party

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015India has recently enacted a new legislation viz. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (“Act”) which is deemed to have come into force from 23 October 2015. Some salient features of the Act are: · “Commercial dispute” has been defined to include, inter-alia, any dispute related to transactions between merchants, bankers, financiers and traders such as those relating to mercantile

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015

The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015 (“Bill”) was passed by the Indian Parliament on 23 December 2015 and is deemed to have come into force on 23 October 2015. Some salient features of the Bill are: “Commercial dispute” has been defined to include, inter-alia, any dispute related to transactions between merchants, bankers, financiers and traders such as those relating to mercantile documents including enforcement and interpretation of such documents, construction and infrastructure contracts,

India relaxes Foreign Direct Investment Norms and Promotes Ease of Doing Business

The Government of India has vide Press Note No. 12 dated 24 November 2015 introduced a number of amendments to the Foreign Direct Investment (FDI) Policy across various sectors, which include enhancing sectoral caps, opening sectors for foreign investment, bringing additional activities under the automatic investment route and generally easing conditions for foreign investment and doing business in India. Set out below in brief, are some of the reforms introduced by the aforesaid Press Note: Construction development sector Conditions on restriction

Negotiable Instruments (Amendment) Ordinance, 2015

The Supreme Court in the case of Dashrath Rupsingh Rathod v. State of Maharashtra and another ((2014) 9 SCC 129) held that “the territorial jurisdiction is restricted to the Court within whose local jurisdiction the offence was committed, which in the present context is where the cheque is dishonoured by the bank on which it is drawn” as against the then prevalent practice of filing complaints under section 138 of the Negotiable Instruments Act, 1881 (“Act”) before the court in whose

Compliance Window and the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Rules, 2015

The Department of Revenue, Ministry of Finance has: vide a press release dated 1 July 2015 notified the compliance window under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. In this regard, all declarations in respect of undisclosed assets located outside India must be made on or before 30 September 2015 in order to avail the benefits of the compliance window. Once declared, tax and penalty in respect of the foreign assets so declared must

RBI issues fresh Master Circulars

The Reserve Bank of India (“RBI”), in line with its annual practice, has issued updated sets of Master Circulars on 01 July 2015 under various heads including banking regulation, co-operative banking, currency, financial markets, foreign exchange and payment systems which can be accessed on https://rbi.org.in/Scripts/BS_ViewMasterCirculardetails.aspx

Clarification on repayment of deposits accepted before the commencement of the Companies Act, 2013

The Ministry of Corporate Affairs (“MCA”) vide a clarification dated 18 June 2015 has stipulated that in cases where a company has committed default in repayment of deposits which were accepted by such company before the commencement of the Companies Act, 2013 (the “Act”) (i.e. 1 April 2014), the depositors may seek remedy by filing an application (in accordance with section 73 (4) of the Act) with the Company Law Board. An application seeking an extension to repay such deposits (accepted

Foreign Investments by Non-Resident Indians, Persons of Indian Origin and Overseas Citizens of India

Department of Industrial Policy and Promotion (“DIPP“) has issued Press Note No. 7 (2015 Series) dated 3 June 2015 (“Press Note 7“) pursuant to which the ‘Consolidated Foreign Direct Investment Policy Circular of 2015′ dated 12 May 2015 (“FDI Policy”) relating to investments by Non-Resident Indians (“NRIs“), Overseas Citizen of India (“OCIs“) and Persons of Indian Origin (“PIOs“) has been amended. The amendments are as follows: The definition of NRI has been expanded to include OCI as well as PIO cardholders

Government issues Integrated Companies Incorporation eForm to ease the incorporation process

As a measure to improve the ease of doing business in India, the Ministry of Corporate Affairs (“MCA”) has issued an Integrated Incorporation Form which consolidates multiple forms required for the incorporation process into a single online application form – eForm INC-29. Consequently, with effect from 1 May 2015, persons looking to incorporate any class of companies (including public/ private limited companies, one person company but not including companies with charitable objects) may make an application to the concerned registrar of

Amendment to Foreign Direct Investment Policy

The Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India has issued Press Note 4 of 2015 on 24 March 2015 amending the Consolidated Foreign Direct Investment (FDI) Policy Circular of 2014 with immediate effect to permit 49% FDI in the pension sector. Within this limit FDI up to 26% is under the automatic route and above that up to 49% is under the Government route. FDI in pension funds is allowed as per the Pension

Fine structure for failure to comply with composition of Board of Directors by listed companies

The Securities Exchange Board of India (“SEBI”) on 17 April 2014 had amended clause 49 of the Equity Listing Agreement relating to corporate governance mandating that listed entities should have an optimum combination of executive and non-executive directors with at least one woman director on their board. The timeline to comply with the aforementioned requirement was extended from 15 September 2014 to 31 March 2015. As several listed companies failed to comply with the aforesaid requirement, SEBI has, vide its circular

Setting up International Financial Services Centre (IFSC) Banking Units

The Reserve Bank of India (“RBI”) on 1 April 2015 issued a notification with respect to schemes for setting up IFSC Banking Units with its prior permission by Indian banks as well as foreign banks which already have a presence in India. Some of the key features of the schemes are: the parent bank will be required to provide a minimum capital of US$ 20 million or equivalent in any foreign currency to its IFSC Banking Unit; the liabilities of the

Amendment to Foreign Direct Investment Policy

The Department of Industrial Policy and Promotion, Ministry of Commerce & Industry, Government of India has issued Press Note 3 of 2015 yesterday amending the Consolidated Foreign Direct Investment (FDI) Policy Circular of 2014 with immediate effect to permit 49% FDI in the insurance sector under the Government route subject to certain conditions, thereby enhancing the earlier cap of 26% (which was permitted and continues to be permitted under the automatic route).

Highlights of the Union Budget 2015-16

Following are a few highlights of the Union Budget 2015-2016 as tabled by finance minister Mr. Arun Jaitley: Non-Banking Financial Companies registered with the Reserve Bank of India and having asset size of INR 500 crores and above may be considered for notifications as ‘Financial Institution’ in terms of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; foreign investments in Alternate Investment Funds to be allowed; tax free infrastructure bonds for the projects in the

Supreme Court clarifies the narrow scope of ‘public policy’ for challenge of Indian Award

The Supreme Court of India recently in Associate Builders v. Delhi Development Authority (2014 (4) ARBLR 307(SC)) dealt with some of the key issues involving challenge of an arbitral award in an arbitration seated in India and clarified the scope of ‘public policy’ under Section 34 of the Arbitration and Conciliation Act, 1996 (“Act”). The Supreme Court, while looking into the scope of ‘public policy’ as a ground for setting aside an arbitral award under Section 34(2)(b)(ii) of the Act relied

RBI permits Tata Group to pay NTT DOCOMO price above fair market value

NTT DOCOMO had a 26% stake in Tata Teleservices, a joint venture with the Tata Group. According to the initial agreement, NTT DOCOMO was entitled to receive the higher of half the amount it invested in the joint venture or the market price of the shares. Prior to a notification issued on 15 July 2014 by the Reserve Bank of India (“RBI”), the pricing guidelines for exit from foreign direct investment with optionality clauses for unlisted companies mandated that the non-resident

SEBI (Prohibition of Insider Trading) Regulations, 2015

On 15 January 2015, the Securities and Exchange Board of India (“SEBI”) notified the SEBI (Prohibition of Insider Trading) Regulations, 2015. Some of the key features of the said regulations are:- the term “insider” has been defined as a ‘connected person’ or any person who is in possession of or has access to ‘unpublished price sensitive information’ (“UPSI”); in the case of connected persons the onus of establishing that they were not in possession of UPSI shall be on such connected

Amendment to Foreign Direct Investment (FDI) Policy

The Department of Industrial Policy and Promotion (DIPP) has vide Press Note 2 of 2015 dated 06 January 2015, amended and revised the FDI Policy, with effect from 21 January 2014 with respect to the pharmaceutical sector pursuant to which DIPP has permitted investment in manufacturing of medical devices as defined in the said Press Note to 100 %.