Legal & Industry Updates - May 2024
SPECIAL EVENTS
New Opportunities in Data Protection and Privacy Laws for Indian Lawyers, May 25, 2024
The team at Ivy Law participated in a webinar on “New Opportunities in Data Protection and Privacy Laws for Indian Lawyers” organized by LawSikho. Along with various tactics to aid Indian clients in implementing the Digital Personal Data Protection Act, 2023, the webinar also provided meaningful insights to understand privacy management and data protection. It further emphasized on how gaining an awareness of the subtleties of international data protection laws, such the California Consumer Privacy Act, 2018 and the General Data Protection Regulation, 2018 would be essential in the long run for all the Indian lawyers who aim to increase their clientele and area of competence. Further, the challenges and opportunities like growth of data and data privacy maintenance, which could be faced by the professionals in this sector, was also deliberated upon.
LEGAL & INDUSTRY UPDATES
The Ministry of Corporate Affairs (“MCA”) Deliberates Faster Transfer of Unclaimed Shares to Beneficiaries (source)
The MCA is contemplating a faster way of transferring to beneficiaries, shares, dividends and matured debentures in inactive accounts that have not been claimed for years. Currently, shares and dividends are transferred to the Investor Education and Protection Fund (“IEPF”), if investors fail to collect dividends on their shares for 7 consecutive years. Investors then file their claim forms with nodal officers, who must verify and approve or reject a claim within 30 days. Upon approval, the company would send the claim information and accompanying documents to the IEPF, based on which, the IEPF would release the shares to the company, which would then be transferred to the investors. This significant change to be brought in by MCA would reduce the time to reclaim shares from the current duration of up to a year to just 60 days.
MCA Fines Various Renowned Companies for Violation of the Companies Act, 2013 (“CA, 2013”) (source)
The MCA has imposed penalties on renowned companies as per an order by the Registrar of Companies (“RoC”) – Delhi and Haryana citing that the companies have failed to report their Significant Beneficial Owner (“SBO”) status as mandated under section 90 (1) (Register of significant beneficial owners in a company) of the CA, 2013. It further noted that the companies failed to issue necessary notices required under the Companies (Significant Beneficial Owners) Rules, 2018. However, one of the company maintained that no individual held a majority stake in the ultimate holding company and therefore the company does not have any SBO. To this, the RoC asserted that the law does not require an SBO to necessarily participate in the day-to-day operations of a company or have direct control over its affairs.
The Securities and Exchange Board of India (“SEBI”) Revamps Market Cap Computation Basis for Listing Obligations and Disclosure Requirements (“LODR”) Compliance (source)
SEBI, on 17th May, 2024, has notified the revised method for calculating market capitalization of listed companies under its LODR regulations. Previously, the applicability of provisions tied to market capitalization was determined based on a single day's market cap, typically calculated on 31st March every year. However, SEBI has now introduced the concept of 'average market capitalization' for a six month period. This modification aims to provide a more accurate representation of a company's market value by considering its market cap over a specified duration, rather than relying solely on a snapshot from a single day. Further, SEBI seeks to smooth out short-term fluctuations in market value and thereby offer a more stable basis for regulatory compliance while providing companies with a more balanced assessment of their market standing.
SEBI Tightens Regulations for Foreign Portfolio Investors (“FPIs”) Regarding Relief From Full Disclosure of Their Investors (source)
SEBI has tightened regulations for FPIs with substantial exposures, making it challenging for them to avoid full disclosure of their investors. This move aims to enhance transparency and accountability in the Indian capital markets while ensuring that FPIs adhere to stringent disclosure requirements, thereby promoting investor confidence and market integrity. The decision may impact FPIs with significant investments in India as they would now be required to provide detailed information about their investors to regulatory authorities. Further, this initiative aligns with SEBI’s efforts to strengthen regulatory oversight and mitigate risks associated with foreign investments in the Indian securities market.
The Department for Promotion of Industry and Internal Trade (“DPIIT”) Secretary: Foreign Direct Investment (“FDI”) Norms Likely to be Eased Under New Government (source)
India has recently taken steps to liberalize FDI regulations in the space sector, and as per the DPIIT Secretary, there is a possibility of further FDI liberalization in certain other areas as and when the new government would come to power. The liberalized FDI regulations in space sector came as part of CG's efforts to encourage private sector participation and attract foreign investment to bolster India's space capabilities. The relaxation of FDI norms allows for increased foreign ownership in Indian space ventures, facilitating partnerships, technology transfer, and capital infusion from international players. The Secretary also highlighting improvements in patent examination times and approvals, thereby bringing the system closer to global benchmarks and also how the number of patents have seen a significant rise in recent years.
The Ministry of New and Renewable Energy (“MNRE”) Secretary: India Leader in Green Energy Affordability (source)
The MNRE Secretary has declared India as a leader in green energy affordability, highlighting India's progress in promoting renewable energy sources such as solar and wind power, thereby making them economically viable alternatives to conventional fossil fuels. India's commitment to green energy affordability aligns with its broader sustainability goals and efforts to reduce carbon emissions. The MNRE Secretary also underscored India's potential to emerge as a global leader in renewable energy adoption, while also asserting how India’s integrated grid infrastructure is a key enabler for the seamless integration of renewable energy sources into the national energy mix. Also, the availability of skilled personnel at a reasonable cost further enhances India’s competitiveness in the global market for green hydrogen production.
Public Sector Banks (“PSBs”) Proposes to Setup ‘Green Cells’ for Climate Funding (source)
As a part of the Enhanced Access and Service Excellence reforms, PSBs have proposed to set up specialised ‘green cells’ with dedicated employees for climate-specific initiatives, with the primary objective to develop capabilities for raising green funds and increasing their green lending portfolios. These efforts would further include setting up specialised units to address both physical and transition risks within existing and potential loan portfolios, as well as assessing environmental, social, and governance related risks using data analysis. PSBs also emphasised on the importance of incorporating such measures into the regulatory policy framework in order to support green initiatives in the banking sector.
The Central Government (“CG”) Mulls Separate Semiconductor Research and Development (“R&D”) Wing With Short Project Timelines (source)
CG is on the verge of building a dedicated R&D unit under the proposed India Semiconductor Research Centre which will focus on semiconductor research that can quickly go into industrial production. The primary objective is to foster an ecosystem driven by intellectual property rights in manufacturing, while also prioritizing public-private partnerships. The proposed R&D wing will operate separately from other research activities that have long project timelines with the focus on developing the next generation of semiconductors, alongside advancements in packaging, systems technologies, processes and materials.
Supreme Court (“SC”): Suit For Recovery Against 'Sick Company' Not Barred if it Does Not Affect Company's Properties or Revival Scheme (source)
In a recent ruling, the SC has observed that if the recovery proceedings which are initiated against the sick company do not pose a threat to its properties or have adversely impacted the scheme of the revival of the sick company, then there would not be a bar for filing a suit for the recovery of the dues against the sick company. SC held that the said suit was a simple suit for recovery of money towards the dues arising under the alleged illegal deductions under the contract and was not of a nature which could have proved to be a threat to the properties of the sick company or adversely impacted the scheme of revival and thus it is not hit by section 22(1) (Suspension of legal proceedings, contracts, etc.) of the Sick Industrial Companies (Special Provision) Act, 1985, which bars institution of suit against sick company.
SC: Services Rendered by Advocates Would Not Fall Under Consumer Protection Act, 2019 (“CP Act”) (source)
SC, on 14th May, 2024, held that any complaint filed against lawyers under the CP Act would not be maintainable, as services rendered by professionals would not come within the purview of the law since they would be considered “contract of personal service”. The SC bench further contended that having regard to the role, status and duties of the advocates as the professionals, legal profession cannot be treated as business or trade, nor the services provided by the professionals could be treated at par with the services provided by the businessmen or the traders, so as to bring them within the purview of the CP Act as the purpose and object of the CP Act is to provide protection to the consumers from unfair trade practices and unethical business practices only, without intending to include professionals or their services.
The Central Drugs Standard Control Organisation (“CDSCO”) Forms Panel to Revise Guidelines for Over the Counter (“OTC”) Drugs (source)
As per the reports, CDSCO has formed an expert panel to evaluate several prescription drugs that can be sold OTC after various pharmaceutical companies lobbied the regulator to make their drugs an OTC product. The proposed panel will examine the matter concerning various conditions based on which the status of a drug as an OTC would be decided, along with coming up with new and detailed mechanism for the drugs to be considered as OTC, while taking reference from international guidelines. OTC drugs are those that can be sold at retail outlets and chemists without any prescription from a registered medical practitioner.
The Central Drugs Standard Control Organisation (“CDSCO”) Forms Panel to Revise Guidelines for Over the Counter (“OTC”) Drugs (source)
As per the reports, CDSCO has formed an expert panel to evaluate several prescription drugs that can be sold OTC after various pharmaceutical companies lobbied the regulator to make their drugs an OTC product. The proposed panel will examine the matter concerning various conditions based on which the status of a drug as an OTC would be decided, along with coming up with new and detailed mechanism for the drugs to be considered as OTC, while taking reference from international guidelines. OTC drugs are those that can be sold at retail outlets and chemists without any prescription from a registered medical practitioner.
As Per Reserve Bank Innovation Hub (“RBIH”), Only Three Percent Women Have Access to External Funding in Small Cities (source)
According to a white paper on Women Entrepreneurs Transforming Middle India by RBIH, only 3% women entrepreneurs in tier 2 and 3 cities in India have access to external funding like bank loans or equity investments for starting or growing their businesses. Also, only 20% of India's 61 million micro, small, and medium enterprises are led by women, with almost half of them located in rural areas. The report highlighted the need to make the financial system responsive to care gaps, or pauses in women’s careers, as closing the gender gap in employment could lead to a 35% increase in global GDP, emphasising the significance of enhancing women's participation in India's workforce. The report further suggested providing more grants and venture capital funds to women entrepreneurs and female-focused incubators.
Companies Commence Diversification at Campus Level to Get More Women On Board (source)
Various renowned companies are intensifying efforts to enhance diversity by actively recruiting more women from college campuses i.e. right from the entry level. This proactive approach reflects a growing recognition of the benefits of diverse talent pools in driving innovation and fostering a dynamic work environment. Further, by prioritizing gender diversity in recruitment strategies, companies aim to create inclusive workplaces that empower women and promote equal opportunities for career advancement. This initiative not only contributes to addressing gender imbalances in the workforce but also enhances organizational performance by harnessing the unique perspectives and capabilities of female professionals.
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.