Lex-Lumis

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.

April 27, 2018

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 of India (SEBI) and Insurance Regulatory and Development Authority of India (IRDA).

April 20, 2018

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 under the government, to be at par with their counterparts employed in the government sector, thus ensuring harmony.

April 5, 2018

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.

March 29, 2018

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.

February 2, 2018

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.

January 11, 2018

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.

January 5, 2018

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, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company.

November 24, 2017

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.

November 22, 2017

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).

October 11, 2017

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.

September 27, 2017

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.

September 25, 2017

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).

September 19, 2017

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 months to a maximum of 10 years. In the event the siphoning involves public interest, the minimum jail time for such a person upon conviction shall be a minimum term of 3 years along with fine amounting to three times the money siphoned off.

September 7, 2017

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 the press notes/ releases/ clarifications/ circulars issued by the DIPP in relation to the FDI, which were in force as on 27 August 2017.

August 30, 2017

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).

July 27, 2017

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).

July 25, 2017

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

July 10, 2017

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.

July 6, 2017

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 the board of directors of the merging or amalgamating enterprise, or execution of any agreement or document for acquisition referred to in section 5 (a) of the Act or of acquiring control referred to in section 5 (b) of the same for a period of 5 years commencing from 29 June 2017 onwards (Exemption Notification).

July 3, 2017

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.

June 21, 2017

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.

June 8, 2017

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 regard.

May 31, 2017

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.

May 5, 2017

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 the form of the Real Estate Regulatory Authority (RERA) (as adopted by various States), with appeals from decisions, directions or orders of the RERA and/ or the adjudicating officer being made to the appellate tribunal under the Act (Appellate Tribunal).

May 2, 2017

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).

April 24, 2017

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 force from the date of its publication in the Official Gazette of India (Merger or Amalgamation Rule).

April 17, 2017

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 (Rescinding Notification).

March 31, 2017

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 by a government resolution dated 13 October 2016 (Resolution).

March 30, 2017

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.

March 21, 2017

LEX-LUMIS