Legal & Industry Updates - March 2022
LEGAL & INDUSTRY UPDATES
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2022 (source)
Securities and Exchange Board of India (“SEBI”) through a notification dated March 22, 2022 notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2022 (“LODR Amendment Regulations”). The LODR Amendment Regulations amend the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The LODR Amendment Regulations amend Schedule II, Part E (Discretionary Requirements) by introducing a new Clause D. The new Clause D provides separate posts of Chairperson and the Managing Director or the Chief Executive Officer in a listed company. The listed entity can appoint separate persons to the post of the Chairperson and the Managing Director or the Chief Executive Officer, such that the Chairperson shall be a non-executive director; and not be related to the Managing Director or the Chief Executive Officer as per the definition of the term “relative” defined under the Companies Act, 2013.
Limited Liability Partnership (Second Amendment) Rules, 2022 (source)
The Ministry of Corporate Affairs (“MCA”) on March 4th, 2022 issued the Limited Liability Partnership (Second Amendment) Rules, 2022 (“LLP Amendment Rules”) to further amend the existing Limited Liability Partnership Rules, 2009. The LLP Amendment Rules will come into force on the date of their publication in the official gazette. The amendments proposed by the LLP Amendment Rules include (i) a new Limited Liability Partnership (“LLP”) under incorporation, can now file a Designated Partner Identification Number application for upto five designated partners instead of two in Form FiLLiP; (ii) the Certificate of Incorporation of a LLP will be issued by the Registrar in Form 16 and will also mention the Permanent Account Number and the Tax Deduction Account Number, issued by the Income Tax Department. Thus, LLPs will not have to apply for PAN and TAN separately as it will be included in the process of incorporation of an LLP itself, (iii) the Statement of Account and Solvency are now to be signed on behalf of the LLP by its an interim resolution professional or resolution professional, or liquidator or limited liability partnership administrator in case of a bankrupt entity, and no certification by a designated partner will be required as was the case earlier (“Liquidation Officials”). A Certificate of Truthfulness and Correctness of Annual Returns of LLPs with sales up to INR 5 Crore or Partner’s Contribution up to INR 50 Lakhs, which have come under liquidation under the Insolvency and Bankruptcy Code, 2016, may be signed on behalf of the LLP by the Liquidation Officials, and (iv) several statutory forms have also been amended.
Review of Foreign Direct Investment (“FDI”) Policy for Permitting Foreign Investment in Life Insurance Corporation of India (“LIC”) and Other Modifications (source)
The Department for Promotion of Industry and Internal Trade (“DPIIT”) vide Press Note 1 of 2022, dated March 14, 2022 (“Press Note”) amended the existing Foreign Direct Investment Policy (“FDI Policy”) to allow 20 percent FDI in LIC under the automatic route. Foreign investment in LIC will be guided by the Life Insurance Act, 1956 and such provisions of the Insurance Act, 1938. LIC will be allowed aggregate holdings by way of total foreign investment in its equity shares by foreign investors, including portfolio investors, not exceeding 74 percent of the paid-up equity capital. Further, the Press Note introduced the concept of share-based employee benefits issued to non-resident employees or directors. The Press Note has also clarified that FDI is not permitted in an entity which is engaged or proposes to engage in real estate business, construction of farm houses and trading in transferable development rights, earning of rent/income on lease of a property, not amounting to transfer, will not amount to real estate business. Further, the Press Note has also made changes in the norms pertaining to acquisition of shares under scheme of merger/demerger/amalgamation. The merged or new entity may issue capital instruments to the existing shareholders of the transferor company resident outside India.
Bureau of Indian Standards (Conformity Assessment) Amendment Regulations, 2022 (source)
The Department of Consumer Affairs, Bureau of Indian Standards (“BIS”) has published the BIS (Conformity Assessment) Amendment Regulations, 2022 to further amend the BIS (Conformity Assessment) Amendment Regulations, 2018. Through this amendment, a new scheme called as ‘Conformity Assessment Scheme’ (“Scheme”) for grant of licence to use or apply standard mark for goods and articles as per the specified requirements has been inserted. Under this Scheme, the manufacturer may be granted a licence for demonstration of conformity of goods or articles, to the specified requirements and the specified requirements may be given in the relevant standard or essential requirements specified for the product or both. Further, BIS may grant a certificate of conformity instead of a licence in case the product is not desired to be manufactured on a continuous basis and in such a case, the manufacturer will not be authorised to use the standard mark. The standard mark will carry the licence number and any other reference to the specified requirement in a visible manner and will be as specified in the licence. The licence will be granted initially for not less than three years and up to six years.
Draft Policy for Micro, Small and Medium Enterprises in India (source)
The Ministry of Micro, Small & Medium Enterprises, has issued the Draft National Policy for Micro, Small and Medium Enterprises (MSME) (“Draft Policy”) dated March 22, 2002 for comments. The Draft Policy seeks to stimulate the efficiency and productivity of the MSME sector to generate income, employment and become part of domestic and global value chains taking into account structural transformation, competitive edge, demographic dividend and regional balance. The Draft Policy is issued with an intent to facilitate building a vibrant eco-system for the rapid growth of the MSME sector; identify and sensitize stakeholders to promote MSMEs to the best of their potential; create physical infrastructure and linkages (backward & forward), amenable to MSMEs; ensure access to credit, risk capital, raw material and marketing facilities for MSMEs, develop a framework for accessible and affordable technology up-gradation and capacity building for MSMEs as well as harnessing the potential of technological advancement to deliver services to stakeholders, especially MSMEs; promote a conducive business environment covering ease of doing business and suitable exit code and develop appropriate dispute resolution mechanism.
E-commerce Company Served Notice on Non-Compliance with Metrology Rules (source)
As reported by Economic Times, an e-commerce firm has not been in compliance with rules that require ecommerce entities to ensure the display of mandatory declarations on products, including the country of origin, on their platforms. The government had in 2020 mandated e-tailers to show the country of origin for products and other information such as the MRP and seller details on their platforms. Amazon India in 2020, was fined in one of the first such instances of non-compliance of the rule. The notice sent to the e-commerce companies had screenshots of some of the product listings on the platform to show that they had inadequate details. To be sure, bigger e-tailers like Amazon India and Walmart-owned Flipkart had also faced the task of updating their existing listings as well as ensuring new products are listed with adequate information, especially on country of origin. The government had held several meetings with top e-tailers to inform them of its stand, which also included that this rule will give a boost to home-grown products instead of goods fully made abroad.
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.