The Income Tax Appellate Tribunal, New Delhi, India (ITAT) on 6 July 2020, in DDIT, Circle-2(2), New Delhi v M/s. Yum! Restaurants (Asia) Pte. Ltd, decided on whether a seconded employee of a non-resident entity amounted to the creation of a permanent establishment (PE) as per the India-Singapore Agreement For
On 5 June 2020, the President of India issued the Insolvency and Bankruptcy Code (‘Code’) (Amendment) Ordinance, 2020 (‘Ordinance’) due to the uncertainty caused by the Covid-19 pandemic and the related economic fallout. The Ordinance puts a permanent bar on the initiation of corporate insolvency resolution proceedings for any defaults
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.
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
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
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),
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.
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
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.
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
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).
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).
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).
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.
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).
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.
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
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).
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, as its underlying.
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 Regulations also provide for composition of such committees, rules of procedure for their meetings, fee payable to their members and so on.
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.
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.
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.
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).
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.
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.
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).
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.
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.
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).
