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).
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
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.
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).
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.
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.
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.
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.
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).
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).
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 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.
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.
The Government of India (GOI) has, with the objective of providing major impetus to the growth of investment and employment creation in India, further liberalized the Foreign Direct Investment (FDI) regime on 20 June 2016 pursuant to a high-level meeting chaired by the Prime Minister.
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.
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;
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:
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.
In order to promote the ease of reporting of FDI transactions, the Reserve Bank of India (“RBI”) has issued a circular making it mandatory for online filing of the following forms on the e-Biz Portal :
(i) Advance Remittance Form (“ARF”) which is used by companies to report FDI inflows to the RBI;
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.
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.
