LEX-LUMIS

India releases Consolidated FDI Policy, 2020

The Department for Promotion of Industry and Internal Trade (DPIIT) has on 28 October 2020 released the “Consolidated Foreign Direct Investment Policy 2020” (FDI Policy 2020) that has come into effect from 15 October 2020. The FDI Policy 2020 subsumes and supersedes all previous Press Notes/ Press Releases/Clarifications issued prior

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The Foreign Contribution (Regulation) Amendment Act, 2020

The Foreign Contribution (Regulation) Amendment Act, 2020 (FCRA Amendment Act) which has come into force on 29 September 2020  amends the Foreign Contribution (Regulation) Act, 2010 (FCRA) and in order to enhance transparency and accountability in the receipt and utilisation of foreign contribution and facilitate genuine non-governmental organisations or associations

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India amends Companies Act to further promote Ease of Doing Business

The Indian Parliament has recently passed the Companies (Amendment) Act, 2020 (Amendment Act), which has also been notified, to further amend the Companies Act, 2013 (Act) in another attempt to further decriminalize and rationalize certain offences under the Act, in case of defaults which can be determined objectively and which

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Government revises Foreign Direct Investment in the Defence Sector

The foreign direct investment (FDI) policy earlier permitted investment in the defence sector  through the automatic route up to 49% (forty nine percent) and FDI beyond 49% (forty nine percent)  through the government (approval) route. However, the  press note issued by the Department for Promotion of Industry and Internal Trade,

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40 under 40 Best Lawyers and Legal Influencers in India

The 40 Under 40 is a National Award recognizing and celebrating the fortitude of the top legal minds and best talent under the age of 40 years in India, who have shown unprecedented legal acumen, grit, leadership, achievement and dedication in their young career spans, driving the Indian Legal Industry

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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.

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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

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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

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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),

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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 average in past decades.

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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

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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 for its citizens and ease of doing business in India and with India maintaining a 7% GDP growth in 2019-2020 as per the Economic Survey presented by the Government prior to the Budget.

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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

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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 Kharak Singh v. State of Uttar Pradesh (1964) 1 SCR 332, where the right to privacy was not considered as a fundamental right.

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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

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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.

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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.

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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.

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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).

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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.

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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.

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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.

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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.

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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.

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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.

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