Legal & Industry Updates - April 2019
SPECIAL EVENT: The Analysis Company (TAC) Academy's Fundamentals of Lean Management Graduation Ceremony
Kaveri Kumar, Founder and Head of Corporate Practice, was a special invitee for The Analysis Company (TAC) Academy's prestigious Lean Management program’s graduation ceremony. She presented her views on the importance of well drafted contracts for business operations and engaged with the audience in a discussion on issues and remedies for contractual disputes.
Other dignitaries at the event included:
Kamakshi Kumar - Lean Six Sigma Consultant and Trainer, The Analysis Company (TAC) (Kolkata, India)
Dr. Aviral Roy - Consultant Intensivist, Medica Superspeciality Hospital (Kolkata, India)
Moritz Von Der Linden - Vice President of Marketing Asia Pacific / Global Media Strategic Leader, Mars (Singapore)
Jing Jin Liu, Founder and Managing Director, ASBO Drives Technology Comp. GmbH (Singapore and Germany)
The Companies (Incorporation) Third Amendment Rules, 2019
The Ministry of Corporate Affairs ("MCA"), on 1st April, 2019, has notified the amendments to the Companies (Incorporation) Rules, 2014, with an objective of promotion of ease of doing business. Post amendment, companies can file an application for registration of the Goods and Service Tax Identification Number ("GSTIN"), Employees’ State Insurance Corporation ("ESIC") registration and Employees’ Provident Fund Organisation ("EPFO") registration at the time of incorporation of a company itself by filing e- form AGILE [Application for Goods and Services Tax Identification Number, Employees State Insurance Corporation Registration Plus Employees Provident Fund organisation registration (INC-35)]. By filing e-form AGILE at the time of registration, the company would be automatically enrolled for GST, ESIC and EPFO.
Petroliam Nasional Berhad ("Petronas") acquires Amplus Energy Solutions Pte. Ltd. ("Amplus")
Petronas, a Malaysian oil and gas company, have entered into an agreement with I Squared Capital, an independent global infrastructure investment manager, for the purpose of acquiring 100% interest in Amplus, a leading Singapore-based company with a portfolio of distributing and providing renewable energy assets in Asia. The acquisition, marks Petronas' foray into renewable energy sector with a view to step out beyond oil and gas into new energy business and provide their customers desired energy solutions. Ms. Mayuri Vats, Head Legal and Compliance - Amplus Solar, India, lead the complex phases of the transaction through the in-house teams for the Indian leg of the transaction. The acquisition is expected to be completed by the end of April 2019.
Rules for differential voting rights ("DVRs") proposed to be made easier
MCA has requested SEBI to introduce new rules with regard to issuing shares with DVRs which will enable founders of various startups as well as other Indian companies to toughen the grip over their entities. As per Companies (Share Capital and Debentures) Rules, 2014, such shares with DVRs cannot exceed 26% of the total paid-up equity share capital. MCA has proposed to remove the ceiling altogether.
MCA has also suggested SEBI to remove the requirement that fractional voting right shares that carry lower rights be issued only by listed entities as MCA is of the view that unlisted companies should also be allowed as these shares can only be issued after an approval from shareholders, including the minority shareholders at a general meeting.
SEBI has made it mandatory to have a sunset clause of five years after listing and treating DVR shares as ordinary shares on crucial matters such as appointment and removal of independent directors and auditors, change in management control or winding up of the company etc., as it will ensure that the corporate governance remains in check and has also proposed extension of this sunset clause of five years by another five years through a special resolution. MCA views SEBI's proposal of extension as "too restrictive" and has sought a removal of this limit also.
Rs. 5 crore penalty for IPR Infringement on a petition filed by Nippon Steel and Sumitomo Metal Corporation ("Nippon")
The Bombay High Court, on 24th April, 2019, imposed a record Rs. 5 crore penalty for IPR infringement breaking the earlier record of Rs. 1.5 crore for the same violation. The penalty has been inflicted on three individuals after a petition was filed by Nippon stating that the accused bought pipes from local manufacturers, imprinted Nippon's logo on it, attached an "inspection report" confirming the quality of the pipes supposedly issued by Nippon itself and then exporting it. It was observed that they were not only infringing the trademark but were also involved in forgery and therefore should be punished severely. By imposition of a record penalty, the High Court sent out a clear message that IPR violation will not be tolerated and will be taken in all seriousness.
Three Judge committee to probe sexual harassment plaint against the Chief Justice of India ("CJI")
The Supreme Court, on 23rd April, 2019, has constituted a 3 judge panel headed by Justice SA Bobde, to inquire into the sexual harassment complaint leveled by a former junior court assistant against the CJI. This is the first in-house enquiry on a sexual harassment complaint conducted in the Supreme Court and it is the first time ever such an inquiry is being conducted against the CJI, who has strongly refuted the claims and suggested that a bigger force was behind the charges.
The panel is expected to hear the complainant in person and investigate the evidence put forward by her. It will then solicit the version of the CJI against whom the allegation is made and then reach its conclusion.
India to stop importing crude oil from Iran after United States of America ("US") ends sanction waiver
The US, in 2018, withdrew from the 2015 nuclear deal between Iran and world powers, and revived a range of sanctions against the Persian Gulf nations which include Saudi Arabia, United Arab Emirates, Oman, Yemen, Kuwait, Qatar and Bahrain among others. It, however, granted a six-month waiver from sanctions to eight countries including China, India, Japan, South Korea, Taiwan, Turkey, Italy and Greece with a condition that they would reduce their purchases of Iranian oil. The waiver began in November 2018 and is to expire on 2nd May, 2019. As a result, the Ministry of Petroleum and Natural Gas has taken necessary steps to end the crude oil import from Iran and any shortfall will be met through alternate supply sources available in Saudi Arabia, Kuwait, UAE and Mexico.
Fast-Moving Consumer Goods ("FMCG") sector to be worth over $100 billion by 2020
FMCG sector is the 4th largest sector in the Indian economy with household and personal care accounting for 50 per cent of FMCG sales in India. Growing awareness, easier access and changing lifestyles have been the key growth drivers for the sector. Presently, the sector is worth $53 billion which is expected to become more than $100 billion by 2020 growing at a Compound Annual Growth Rate ("CAGR") of 28%. It is believed that FMCG has outstanding prospects as prosperity escalates in the country.
Securities and Exchange Board of India ("SEBI") bars Hotel Leelaventure Ltd. ("Leela") from selling hotels to Brookfield Asset Management Inc. ("Brookfield") as minority shareholder ITC Limited ("ITC") moves National Company Law Tribunal ("NCLT")
SEBI, on 24th April, 2019 has barred Leela from selling their hotels to Brookfield after ITC, who owns 7.92% stake in Leela challenged the sale before NCLT claiming oppression of shareholders' rights and mismanagement by the promoters. On 18th March, 2019, Leela had announced sale of its 4 hotels located in Bengaluru, Chennai, Delhi and Udaipur, and a property to Brookfield for Rs 3,950 crore. However, ITC, in its petition, states that the proposed transaction creates a preference in favour of the promoters and the lender JM Financial Asset Reconstruction Company Limited as opposed to the other shareholders of Leela and that it is also opposed to interests of Leela and its shareholders.
ITC is also seeking a waiver of the minimum threshold of 10% stake that the Companies Act, 2013 requires minority shareholders to hold in a company for being eligible to file a petition alleging oppression of their rights.
Justdial Private Limited ("Justdial") restrained from using PVR Limited ("PVR") trademark on its application ("App") and website
The Delhi High Court, on 10th April, 2019, has passed an order restraining Justdial from using the registered mark PVR or any deceptive variant identical or similar to PVR. Justdial App used a web development standard to display the booking page from PVR website which resulted in Justdial users booking tickets without leaving the App and completely bypassing the PVR website. This act of infringement and passing off was not only in violation of the Trade Marks Act, 1999 but also the Copyright Act, 1957.
Disclaimer: The updates provided in this document is not a legal opinion and does not claim to capture all legal developments related to the subject matter stated herein. It is advisable to seek legal advice for accurate applicability, prior to relying on the updates for any legal matter.