Knowledge Partner – Economic Laws Practice
The dialogue & Economic law Practice
The authors would like to acknowledge and thank the experts who participated in the two focused group discussions* and provided their useful insights which have enriched our study and helped us to get a better direction in analyzing the issue.
ELP’s Corporate Law Compendium
India’s regulatory regime in the corporate sector has been witnessing swift changes. Especially in the times of COVID-19, the Government has been acting proactively to address the concerns and to meet the demands of the industry. The Government has been also working closely on its agenda of ‘Ease of Doing Business’ and ‘Make in India’, and has been taking measures to liberalize and simplify its policies.
Competition Law & Policy Newsletter
A recent workshop conducted by the CCI on ‘Competition Issues in the Pharmaceutical Sector in India’ shows that the CCI is again actively examining the pharmaceutical industry. The CCI had initiated a market study in October 2020 to assess the competitive landscape in the pharmaceutical sector.
Related party transactions put under tighter scrutiny | Co-investment through portfolio managers notified by SEBI
Certain key decisions with respect to regulatory framework for related party transactions (RPTs) and co-investment by investor of Alternative Investment Fund (AIF) through portfolio management route have been implemented.
FOREIGN UNIVERSITIES IN INDIA | FEE STRUCTURE UNDER THE IFSCA FUND MANAGEMENT REGULATIONS | FOREIGN EXCHANGE LAWS VIS-À-VIS DIRECTORS, SUBSCRIBERS, M&A | SEBI ISSUES GUIDELINES FOR SEEKING NOC TO SET UP WOS/SDS/JV IN GIFT IFSC | CERTAIN RELAXATIONS PROVIDED UNDER THE LODR REGULATIONS, TO LLP AND CSR REPORTINGS
Courses offered by foreign universities/institutions notified as a “financial service”: Ministry of Finance has notified certain courses offered by foreign universities or foreign institutions in the IFSC, as “financial service”, hence, opening the gates for foreign universities to set up their presence in GIFT City.
Transfer and issuance of securities by companies to comply with foreign exchange laws | India Inc. gets extension to hold AGM/EGM through VC/OAVM till December 31, 2022
Under Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 (Share Capital Rules), the instrument of transfer of securities held in physical form is required to be in Form No. SH-4 (Securities Transfer Form) and is required to be delivered to the company within 60 days from the date of such execution.
SEBI issues guidelines for calculation of concentration norms for Cat III AIFs | Product specifications issued for EGR segment/Gold Exchange
Calculation of investment concentration norm for Category III Alternative Investment Funds (Cat III AIFs): Pursuant to the recent amendments to the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations) providing flexibility to Category-III AIFs – to calculate investment concentration norms based either on investable funds or net asset value (NAV) while investing in listed equity of an investee company – SEBI has specified certain requirements for the calculation of investment norms.
RPTs falling within revised materiality threshold to take shareholders’ approval after April 1, 2022| Key decisions at SEBI board meeting – Simplification of procedure for transmission of securities, revision in regulatory framework for CISs, provision of custodial services in respect of silver ETFs
With the objective of providing a smooth implementation of the amended Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) relating to RPTs which is due to become effective from April 1, 2022 – SEBI has issued certain clarifications in respect of the requirement of shareholders’ approval.
CCI amends the Combination Regulations, 2011 to update and replace Form II for a combination filing
On March 31, 2022, the Competition Commission of India (CCI), in exercise of the powers conferred on it under Section 64 of the Competition Act, 2002 (Act), amended the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, (Combination Regulations) and substituted the existing Form II with an updated Form.
SEBI proposes changes in timelines of various activities involved in open offers and buy-back offers: Issues consultation paper
In a move to make the process of open offers and buy-back offers more efficient and investor-friendly, SEBI has released a consultation paper (Consultation Paper) proposing changes to the timelines related to various activities involved in open offers under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations) and buy-back offers under the SEBI (Buyback of Securities) Regulations, 2018 (Buyback Regulations).
SEBI | Separation of the role of Chairperson and MD/CEO of listed company made voluntary | Revised procedure for seeking SEBI approval for change in control of sponsor/manager of AIF involving NCLT | Flexibility to Category III AIFs in calculation of investment concentration norms for listed equity
The provision mandating separation of the role of Chairperson and MD/CEO of listed companies which was to become applicable for the top 500 companies from April 01, 2022, has been omitted. All listed companies may however choose to have separate roles of Chairperson and MD/CEO on a “voluntary” basis.
REGULATORY FRAMEWORK FOR INVESTMENT FUNDS IN IFSC (GIFT CITY) PROPOSED IN LINE WITH GLOBAL BEST PRACTICES | LISTED COMPANIES TO SEEK NOC FROM 75% OF SECURED CREDITORS IN VALUE FOR M&A SCHEMES
With a view to develop the framework for investment funds in IFSC, the International Financial Services Centre Authority (IFSCA) has proposed to issue IFSCA (Fund Management) Regulations, 2022 (Draft Fund Management Regulations/Draft Regulations), based on global best practices, focusing on the ease of doing business. A Committee of Experts on Investment Funds was set up by IFSCA to review global best practices and make recommendations to the IFSCA on the roadmap for the industry, and accordingly a committee report has been tabled before the IFSCA, and Draft Fund Management Regulations have been issued for public comments.
MCA NOTIFIES LEVY OF ADDITIONAL FEES NORMS | SEBI RECOGNIZES ACCREDITATION AGENCY
The Ministry of Corporate Affairs (MCA) has notified certain important changes in relation to payment of additional fees for delay in submitting, filing, registering or recording, of certain documents, fact or information under the provisions of the Companies Act, 2013 (CA2013). The changes are set to take effect from July 1, 2022.
Framework for operationalizing Gold Exchange – Stock exchanges allowed to apply for trading in EGR | EGR and BDR notified as “securities” | Special Situation Funds (SSF) launched by SEBI for distressed assets | Other changes by SEBI for debt listed companies, IPO, preferential issue, and MCA relaxation
EGR, bullion spot delivery contract and bullion depository receipt specified as “securities” under SCRA | Paving the way for gold / bullion exchange: In respect of bullion depository receipts, Ministry of Finance (MoF) has notified “Electronic Gold Receipt” (EGR), bullion spot delivery contract and bullion depository receipt with underlying bullion as “securities” under the Securities Contracts (Regulation) Act, 1956 (SCRA). Further to this, on January 10, 2022, SEBI has allowed stock exchange/s desirous of trading in EGRs to apply to SEBI for approval of trading of EGRs in new segment.
Virtual AGM/EGM extension | AIF Investor Charter & Grievance Mechanism | SEBI details delisting process through open offer | AIF co-investment norms clarified
MCA has now permitted companies whose AGMs are due in the year 2021, to conduct their AGMs before June 30, 2022, through VC/OAVM. It has been clarified that this relaxation should not be construed as conferring any extension of time for holding of AGMs by the companies under Companies Act, 2013 (CA2013).
The taxpayer, an individual, earned long term capital gains (LTCG) from the sale of certain shares of Kappac Pharma Ltd. and claimed exemption under Section 10(38) of the Income-tax Act, 1961 (IT Act). These shares were purchased from a private party in cash and not from a recognized stock exchange and were subsequently declared under the Income-tax Disclosure Scheme-2016 (IDS).
Gift of Brand to corpus of a private irrevocable trust is a non-taxable capital receipt
The Group Holding Company (HCo) was holding the brand including all registered and unregistered trademarks, copyrights, service marks, certification marks, design, trade names relating to the logo and slogans (hereinafter referred to as ‘Brand’) since 1996. HCo had contributed the Brand to the corpus of the taxpayer as a voluntary gift without any consideration. As the Brand was settled without any consideration, it was not recognized in the financials of the taxpayer.
Approval of RPTs made subject to detailed disclosures and justifications | M&A Schemes by Listed Companies to fulfil additional compliances
In continuation of the recent changes that were introduced by SEBI in relation to RPTs under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (LODR Regulations) vide notification dated November 9, 2021 (available here), SEBI has now prescribed the information to be placed before the audit committee and the shareholders for consideration of RPTs.
New Delisting Regulation Notified
SEBI has notified the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021, on June 10, 2021 (New Delisting Regulations). The New Delisting Regulations have repealed the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009.
Corporate Update – MCA’s breather
In an important move and as a relief to the industry in transacting matters, MCA has allowed certain restricted board agenda items to be conducted by virtual means.
ELP Corporate Update
SEBI has introduced class of accredited investors (AIs) in the SEBI (Alternative Investment Funds) Regulations, 2012 (AIF Regulations). The move is aimed to give flexibility to high value investors and fund managers, and may also promote different investment structures. To provide certain flexibility to AIs, a new class of AIF or scheme of AIF is introduced which is referred to as “large value fund for accredited investors” (AI Fund). Such fund means an AIF or scheme of an AIF in which each investor (other than the Manager, Sponsor, employees or directors of the AIF or employees or directors of the Manager) is an AI and invests not less than INR 70 crore.
Corporate Update – MCA issues comprehensive CSR FAQs
MCA has issued a comprehensive set of seventy two (72) FAQs in supersession of its earlier FAQs and has also issued certain clarifications.
Corporate Update – MCA amends norms for IDs
With the view to boost foreign investments in the insurance sector, Ministry of Finance (MoF) has notified changes to the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (NDI Rules) increasing the sectoral cap of foreign investment in the insurance company to 74% under the automatic route. MoF has also notified the revised conditionalities to be complied by the companies with foreign investment.
45th GST Council Meeting – Key Highlights
Per Section 8(1) of Goods and Services Tax (Compensation to States) Act, 2017, the GST Compensation cess was expected to be levied over a period of 5 years from implementation of GST unless extended on recommendation of GST Council.
Corporate Update – SEBI issues the modalities for implementation of Accredited Investors’ framework
SEBI had recently introduced the concept of accredited investors (AIs) in the securities market, and accordingly, carried out certain changes to SEBI (Alternative Investment Funds) Regulations, 2012, SEBI (Portfolio Managers) Regulations, 2020 and SEBI (Investment Advisers) Regulations, 2013.