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 transaction and introduced provision stipulating punishment for contravention for acceptance of deposit from public.
- The Negotiable Instruments (Amendment) Act 2015 was enacted which replaced the Negotiable Instrument (Amendment) Ordinance which was re-promulgated on 25 September 2015. The Amendment makes changes in provisions relating to the territorial jurisdiction for filing cheque dishonour cases under the Negotiable Instrument Act, 1881.
- The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, and The Arbitration and Conciliation Act (Amendment) Act, 2015 were enacted. As per the Arbitration and Conciliation (Amendment) Act, 2015, an arbitrator will have to settle a case within 18 months. After the completion of 12 months, certain restrictions will be put in place to ensure that the arbitration case does not linger. The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act is aimed at creating commercial benches in select high courts.
- an Integrated Incorporation Form which consolidates multiple forms required for the incorporation process into a single online application form i.e. eForm INC-29.
- notifications relaxing norms for four categories of companies: (i) private companies; (ii) government companies; (iii) nidhi companies; and (iv) not-for profit companies, relating to acceptance of deposit, related party transactions, interested directors participating in board meeting and section related to loan to directors, purchase of company and giving of loan for purchase of company.
- The Payment of Bonus (Amendment) Act, 2015 was enacted which provides for enhancing (i) monthly bonus calculation ceiling to Rs 7,000 per month from the existing Rs 3,500, and (ii) the eligibility limit for payment of bonus from Rs 10,000 per month to Rs 21,000 per month.
- Department of Industrial Policy and Promotion (“DIPP”) amended the foreign direct investment (“FDI”) Policy to permit:
- 100% FDI in manufacturing of medical devices;
49% FDI in the pension sector;
- 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); and
- issuance of share warrants and partly paid equity shares by Indian companies to persons resident outside India in accordance with the Companies Act 2013 and applicable regulations/ guidelines issued by the Reserve Bank of India (“RBI”) from time to time.
- DIPP increased the period of validity for industrial licenses in the defence sector from seven years to fifteen years and the term up to which such validity may be extended was also revised from ten years to eighteen years, for existing as well as future licenses but not for licenses which have expired.