Legal & Industry Updates - April 2021
SPECIAL EVENTS
Internal Complaints Committee Training Conducted by Ivy Law, April 16, 2021
Ivy Law conducted an Internal Complaints Committee (IC) training session under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Kaveri Kumar, Founder and Head of Corporate Practice, Ivy Law was the keynote speaker. The training focused on the interpretation of the term "sexual harassment" at a workplace, including incidents amounting to harassment in the work from home digital environment, initiatives taken by the government for providing platforms to employees for filing a complaint, qualifications and disqualifications associated with the members of the IC, statutory, preventive and disciplinary obligations applicable to the IC, important attributes to be kept in mind while handling a complaint, and in addition to the above recent data and case developments were also analyzed.
Panel Discussion on Arbitration and Conciliation (Amendment) Act, 2021 - A Hasty Step or an Urgent Requirement? April 24, 2021
The team at Ivy Law attended a panel discussion on “Arbitration and Conciliation (Amendment) Act, 2021, conducted by the Indian Journal of Arbitration (IJAL) and the Centre for Advanced Research and Training in Arbitration Law (CARTAL). The discussion highlighted the key changes introduced by the Arbitration and Conciliation (Amendment) Act, 2021. A new proviso to Sub-Section 36(3) (Enforcement) was introduced in the principal act, relating to the grant of an unconditional stay by the court, pending disposal of a challenge, in the event the arbitral award was challenged on account of fraud or corruption. On the other hand, parties misusing the plea of fraud or corruption with a mala fide intent was also taken into consideration. Further, substitution of Section 43(J) (Norms for Accreditation of Arbitrators) were also deliberated upon.
LEGAL & INDUSTRY UPDATES
Clarification on Spending of CSR Funds for Setting-up Makeshift Hospitals and Temporary COVID Care Facilities (source)
The Ministry of Corporate Affairs (“MCA”) vide General Circular No. 05/2021 dated April 22, 2021 (“CSR Circular) has clarified that in continuation to the MCA’s prior General Circular (No. 10/2020) dated 23.03.2020, which stipulated that spending of CSR funds for COVID-19 is an eligible CSR activity, now additionally spending of CSR funds for ‘setting up makeshift hospitals and temporary COVID care facilities’ will also be an eligible CSR activity under item no. (i) and (xii) of schedule VII of the Companies Act, 2013 relating to promotion of health care, including preventive health care, and, disaster management respectively. Further, the CSR Circular states that the companies may undertake the aforesaid activities in consultation with state governments subject to fulfillment of Companies (CSR Policy) Rules, 2014 and the circulars related to CSR issued by the MCA from time to time.
Indian Parties can Choose a Foreign Seat for Arbitration (source)
In the matter of PASL Wind Solutions Private Limited v. GE Power Conversion India Private Limited, the Hon’ble Supreme Court of India dealt with the question, as to whether two companies incorporated in India can choose a forum for arbitration outside India and whether an award made at such forum outside India, to which the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 (New York Convention) applies, can be said to be a "foreign award" under Part II of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and be enforceable. The Hon’ble Court held that Section 28(1)(a) (Rules Applicable to Substance of Dispute) of the Arbitration Act makes no reference to an arbitration being conducted between two Indian parties in a country other than India, and cannot be held, by some tortuous process of reasoning, to interdict two Indian parties from resolving their disputes at a neutral forum in a country other than India. The court further, went on to observe, the balancing act between freedom of contract and clear and undeniable harm to the public must be resolved in favour of freedom of contract as there is no clear and undeniable harm caused to the public in permitting two Indian nationals to avail of a challenge procedure of a foreign county when, after a foreign award passes muster under that procedure, its enforcement can be resisted in India on the grounds contained in Section 48 (Conditions for the Enforcement of Foreign Awards) of the Arbitration Act, which includes the foreign award being contrary to the public policy of India.
Comprehensive Clarifications on Insider Trading (source)
The Securities Exchange Board of India on April 29, 2021 issued clarifications through FAQs, with an objective to provide greater clarity on several concepts related to the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”). The FAQs elucidated that trading in ADRs and GDRs of listed companies are covered under relevant provisions of PIT Regulations. Employees of such companies, including foreign nationals, who are designated persons, shall be required to follow the code of conduct for trading in ADRs and GDRs. The clarification also stated, Regulation 2(1) (g) of the PIT Regulations, defines ‘insider’ as any person who is: i) a connected person; or ii) in possession of or having access to unpublished price sensitive information (UPSI). Therefore, even if a person is not classified as a designated person, having access to UPSI would make such a person an ‘insider. As per Regulation 4(1) of PIT Regulations, an insider is prohibited to trade while in possession of UPSI. Further, it was also clarified if a nominee director falls under the list of designated persons or as an insider, then sharing of UPSI by the nominee director for legitimate purpose with the Bank/FIs, would be considered as communication of UPSI. Accordingly, the same would be recorded in the System Driven Disclosure of the company.
Big Basket-Tata Digital Deal Gets Competition Commission of India’s Approval (source)
As reported by Business World, Tata Digital had filed an application in March 2021 at Competition Commission of India (CCI) to acquire 64.3% of the total share capital in the parent company of Big Basket called Supermarket Grocery Supplies Private Limited. The transaction will be a combination of primary and secondary shares. CCI has given a nod to the deal wherein Tata Digital Limited will acquire a majority stake in the grocery e-marketplace Big Basket. Tata Digital is a wholly-owned daughter company of Tata Sons, while Innovative Retail Concepts Private Limited operates Bengaluru-based bigbasket.com, a business to consumer portal. While CCI has not commented on the deal size, it is speculated that Tata Digital will shell out more than $1 billion for a majority stake in the company. The deal is also likely to give full exit to one of its earliest backers, the e-commerce platform called Alibaba, which holds a 27.58% stake in the door-step grocery company.
SEBI to Consider Rolling Back Proposed Relaxations for Listing Startups (source)
As reported by Economic Times, the MCA has nudged the market regulator SEBI to partially roll back a relaxation proposed for listing of startups in India. A startup that has listed on the Innovators Growth Platform can migrate to the mainboard provided the company meets several conditions, including a profit of at least Rs 15 crore in the last three years. However, if the startup does not have a profit track record, it can still migrate to the mainboard provided 75% of the shareholders of the company are institutional investors. Several startups and VC firms made representations to SEBI seeking relaxation to this rule since it was difficult to achieve 75% institutional holding. Based on industry feedback, SEBI proposed to lower the threshold to 40%.
Startup India Seed Fund Scheme to Support Domestic Entrepreneurs (source)
The Startup India Seed Fund Scheme (“Scheme”), as notified by the Ministry of Commerce and Industry, Department for Promotion of Industry and Internal Trade (Startup India Section) is implemented from April 1, 2021. The objective behind the Scheme is to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. The Scheme shall provide financial assistance to startups via corpus of Rs. 945 Crore that will be disbursed through selected incubators across India in 2021-25. The Scheme is sector-agnostic and will support startups across all sectors. The scheme shall have a central common application on Startup India portal for startups and incubators on an ongoing basis. The Scheme provides for the constitution of an Experts Advisory Committee which will be responsible for the overall execution and monitoring of the scheme.
Copyright (Amendment) Rules, 2021 (source)
As per a press release issued by the Ministry of Commerce and Industry on April 8, 2021, the Copyright (Amendment) Rules, 2021 (“Copyright Rules”) have been notified, which amend the Copyright Rules, 2013 (“Existing Rules”). In India, the copyright regime is governed by the Copyright Act, 1957 and the Copyright Rules, 2013. The amendments have been introduced with the objective of bringing the Existing Rules in parity with other relevant legislations. The Copyright Rules aims to ensure smooth and flawless compliance in the light of the technological advancement in digital era by adopting electronic means as primary mode of communication. A new provision regarding publication of a copyrights journal has been incorporated, thereby eliminating the requirement of publication in the Official Gazette. The said journal would be available at the website of the Copyright Office. In order to encourage accountability and transparency, new provisions have been introduced, to deal with the undistributed royalty amounts and use of electronic and traceable payment methods while collection and distribution of royalties. To reinforce transparency in working of copyright societies a new rule has been introduced, whereby the copyright societies will be required to draw up and make public an Annual Transparency Report for each financial year. The amendments introduced by the Copyright Rules have harmonised the Copyright Rules with the provisions of Finance Act, 2017 whereby the Copyright Board has been merged with Appellate Board. The compliance requirements for registration of software works have been largely reduced, as now the applicant has the liberty to file the first 10 and last 10 pages of source code, or the entire source code if less than 20 pages, with no blocked out or redacted portions. The time limit for the Central Government to respond to an application made before it for registration as a copyright society is extended to one hundred and eighty days, so that the application can be more comprehensively examined.
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.