LEX-LUMIS

Nationals from Countries sharing Land-Border with India considering appointment as Directors in Indian Companies now to obtain prior Security Clearance from the Government of India

The Ministry of Corporate Affairs (MCA), Government of India (GoI) through its notification dated 01 June 2022 (Notification), notified the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 (Amendment Rules) to further amend the Companies (Appointment and Qualification of Directors) Rules, 2014 (Rules). Pursuant to the Rules, every person

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SEBI tightens rules pertaining to Related Party Transactions

The Securities and Exchange Board of India (SEBI), the Indian securities market regulator, notified through a press release (Press Release), amendments to the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 relating to related parties (RP) and related party transactions (RPT) (Amendments). The Amendments will come into effect

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India scraps retrospective tax on indirect transfer of Indian assets

In a major development providing significant relief to the foreign investors, the Taxation Laws (Amendment) Act, 2021 (“Amendment Act”) was enacted on 13 August 2021, amending the contentious retrospective tax provisions under section 9 of the Income Tax Act, 1961 (“IT Act”) and section 119 of the Finance Act, 2012

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SUPREME COURT OF INDIA UPHOLDS ENFORCEMENT OF ARBITRAL AWARD

On 6 August 2021, in Amazon.Com NV Investment Holdings LLC Versus Future Retail Limited & Ors. the Supreme Court of India decided two important questions of law: whether an emergency award under the Arbitration Rules of the Singapore International Arbitration Centre (“SIAC Rules”) can be said to be an order

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SEBI notifies amendments pertaining to Independent Directors

The Indian securities market regulator, the Securities and Exchange Board of India (SEBI), in its Board Meeting held on 29 June 2021 took various significant decisions, including approving certain amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR) pertaining to Independent Directors (IDs), based on which, on

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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 GST Bill provides for levying GST on all transactions involving supply of goods and services, except those specifically excluded, by conferring concurrent taxing powers to both the Government of India (GoI) and the State Governments.

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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.

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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.

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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;

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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 Business-to-Business (“B2B”) e-commerce, the same is prohibited in Business-to-Consumer (“B2C”) e-commerce. However, FDI in B2C e-commerce is permitted in the following circumstances:

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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”) e-commerce.

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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, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied.

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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 transaction and introduced provision stipulating punishment for contravention for acceptance of deposit from public.

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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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