Legal & Industry Updates - January 2020
SPECIAL EVENTS
Seminar Conducted by Ivy Law on ‘The Personal Data Protection Bill, 2019’ & ‘Fundamentals of Commercial Contracts’, January 17, 2020
Kaveri Kumar, Founder and Head of Corporate Practice, conducted a seminar on ‘The Personal Data Protection Bill, 2019’ and the ‘Fundamentals of Commercial Contracts’ for Jubilant Foodworks Limited. Kaveri was the key note speaker at the seminar. Some of the key focus points addressed in the seminar were the existing legal framework for data protection, requirement for a robust data protection regime, key aspects and provisions of the Personal Data Protection Bill, 2019 and the fundamentals of commercial contracts.
LEGAL & INDUSTRY UPDATES
Foreign Direct Investment (“FDI”) Elevated to $26 Billion in the First Half of Current Financial Year
As reported, the period of April – September of the current fiscal year has witnessed a growth of 15 % in inflow of FDI in the sectors of services ($4.5 billion), telecommunications ($4.3 billion), computer software and hardware ($4 billion), automobile ($2.1 billion) and trading ($2.1 billion), the largest investors being Singapore ($ 8 billion), Mauritius ($6.4 billion), Netherlands ($2.3 billion), US ($2.2 billion) and Japan ($1.8 billion).
Amendment to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (“Managerial Personnel Original Rules”)
The Ministry of Corporate Affairs (“MCA”), on 3rd January 2020, notified the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020 (“Managerial Personnel Amendment Rules”) to be applied from the financial year commencing from 1st April 2020. The amendments are as follows:
Insertion of new Rule 8A in the Managerial Personnel Original Rules, provides that every private company whose paid up share capital is ten crore rupees or more, is required to have a whole time company secretary. Prior to the insertion of Rule 8A of the Managerial Personnel Amendment Rules, only a listed company and public company, having a paid-up share capital of ten crore rupees or more were required to have whole-time key managerial personnel which includes a company secretary.
In Rule 9 of the Managerial Personnel Original Rules a new sub-clause ( c ) was inserted by the Managerial Personnel Amendment Rules, providing that every company having an outstanding loan or borrowing of INR 100 crores or more from a bank or public financial institution is required to annex a Secretarial Audit Report along with the Board Report as required under Section 204(1) of the Companies Act, 2013. Prior to the amendment of Rule 9 of the Managerial Personnel Original Rules, only public companies having a paid-up share capital of fifty crore rupees or more. or every public company having a turnover of two hundred fifty crore rupees or more were required to submit a secretarial audit report.
Further, an explanation to Rule 9 of the Managerial Personnel Original Rules was inserted by the Managerial Personnel Amendment Rules providing that, paid up share capital, turnover or outstanding loans or borrowings shall pertain to the last date of the latest audited financial statement.
Amendment to the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016
The MCA, on 7th January 2020, notified the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2020. The amendments relate to the following:
Person who is not eligible to submit a resolution plan for insolvency resolution of the corporate debtor under the Insolvency and Bankruptcy Code, 2016 (“Code”), shall not be a party to a compromise or arrangement of a corporate debtor under Section 230 of the Companies Act, 2013, that provides for a mechanism to ensure institutional settlement of disputes between creditors and the company.
Secured Creditor – (i) Not to sell or transfer security interest asset to a person who is not eligible to submit a resolution plan under the Code (ii) while realising security interest, creditor shall contribute to insolvency resolution process cost, liquidation process cost and workmen’s dues within 90 days from the commencement of the liquidation, and shall further contribute excess of realised value of the asset over the amount of its claims admitted within 180 days of the commencement of liquidation date, failing any, the asset would become a part of the Liquidation Estate.
The Liquidator before submitting an application for dissolution of corporate debtor shall deposit an amount of unclaimed dividends and undistributed proceeds in a liquidation process, along with any income earned to the Corporate Liquidation Account.
Paperless Licensing Process for Promoting Ease of Doing Business
The Ministry of Commerce and Industry, on 10 January, 2020, notified the launch of paperless licensing process, where filing and processing application for licenses of road tankers for transportation of Petroleum under the Petroleum Rules, 2002 will be made online. This step aims to provide simple mechanism for moving towards digitisation, thereby, promoting the ease of doing business. The new process involves updating the applicant through e-mail and SMS and dispatching the license electronically.
Competition Commission of India’s (“CCI”) Report on Market Study of E-Commerce
MCA, on 8th January, 2020, notified the release of ‘Market Study on E-Commerce in India: Key Findings and Observations’ (“Report”) by CCI. The Report involved a study of the functioning of the e-commerce sector in India focussing on 3 categories of e-commerce, namely, consumer goods, accommodation services and food services of 16 online platforms, 164 business entities, 7 payment system provider, 11 industry associations across India. The report confirmed the growing importance of e-commerce helping increase price transparency and price competition, further showcasing the issues of e-commerce such as lack of platform neutrality, unfair contract terms, etc. that hinders realising the full potential of e-commerce. Following the report, CCI has initiated transparency measures for collection, use and sharing of data, user review and rating mechanism for fair competition, revision in contract terms and discount policy.
Delhi HC Issues Notice to Enforcement Directorate (“ED”) in Subramanian Swamy's Plea Challenging FIPB Clearance Given to Air Asia
As reported, the Hon’ble Delhi High Court has impleaded the ED as a party in Subramanian Swamy's plea challenging the FIPB clearance granted by the centre to Air Asia Private Limited. The Division Bench of Chief Justice DN Patel and Justice Hari Shankar has directed ED to file a status report on the next date of hearing. The court had asked CBI to file a report relating to alleged lobbying by AirAsia India while trying to get international flying rights in violation of foreign investment norms.
MCA to Deploy New Integrated Form for Incorporation of Companies
The Ministry of Corporate Affairs, on 24th January, 2020, notified that there will be an important update regarding proposed changes in procedure for Name Reservation and Incorporation of a new Company:
MCA would be shortly notifying and deploying a new Web Form ‘SPICe+’ replacing the existing SPICe form as a part of Government of India’s Ease of Doing Business (EODB) initiatives.
SPICe would be an integrated Web form offering multiple services.
MCA notifies Companies (Winding Up) Rules, 2020 effective from 1st April, 2020 (“Winding Up Rules 2020”)
The MCA, on 24th January, 2020, notified the Winding Up Rules, 2020 for laying down the procedure for winding up by the National Company Law Tribunal (“Tribunal”) under section 272 of the Companies Act, 2013. The Winding Up Rules 2020, will be effective from 1st April, 2020 and introduce the following winding up process:
A petition for Winding Up shall be presented in Form Win 1 or Form Win 2 and every petition shall be verified by an affidavit.
Statement of affairs shall contain information up to the date, which shall not be more than thirty days prior to the date of filling the petition or filling the objection as applicable and the statement of affairs shall be made in duplicate, duly verified by an affidavit.
Upon filing the petition, it shall be posted before the Tribunal for admission upon which the Tribunal shall give directions for publishing advertisements.
Every contributory of the company shall be entitled to be furnished by the petitioner with a copy of the petition within twenty-four hours of his requiring the same on payment of five rupees per page.
Notice of the petition shall be advertised not less than fourteen days before the date fixed for hearing, in any daily newspaper in English and vernacular language in which the registered office of the company is situated.
A petition for winding up shall not be withdrawn after presentation without the leave of the Tribunal subject to compliance with any order of the Tribunal, including as to costs.
The Tribunal may in its opinion substitute as petitioner any other person who, would have a right to present a petition, and who is desirous of prosecuting the petition.
Where a contributory is substituted as the petitioner in a winding up petition, it shall adjourn the hearing of the petition to a date to be fixed by the Bench and such contributory shall, within seven days from the making of the order, amend the petition accordingly.
Affidavit in objection shall be filed within thirty days from the date of the order issued by the Tribunal.
Affidavit in reply shall be filed within seven days from the date of order issued by the Tribunal.
Cabinet approves Proposal for Official Amendments in the National Commission for Indian System of Medicine (“Medical Commission”) Bill, 2019 (“Amendment Proposal”)
The Cabinet, on 29th January, 2020, notified that the Union Cabinet, has given its approval for the Amendment Proposal which is pending in the Rajya Sabha.
The Amendment Proposal will ensure necessary regulatory reforms in the field of Indian System of Medicine Education. The proposed regulatory structure will enable transparency and accountability for protecting the interest of the general public. The Medical Commission will promote availability of affordable healthcare services in all parts of the country.
Further, the Medical Commission has been structured to streamline the functions related to academic standards, evaluation, assessment and accreditation of educational institutions pertaining to the Indian system of medicine. The main objective of introducing the Amendment Proposal is to promote equity by ensuring adequate supply of quality medical professionals and enforce high ethical standards in all aspects of medical services in the Indian system of medicine.
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.