Legal & Industry Updates - February 2025
SPECIAL EVENTS
The DPDP Dialogues, February 25, 2025
The team at Ivy Law participated in a webinar on the “DPDP Dialogues” organized by the Dharmashastra National Law University, Jabalpur. The webinar primarily facilitated in-depth discussions on the Draft Digital Personal Data Protection Rules, 2025, covering its various aspects such as consent management, compliance obligations, data security, and governance requirements and how these rules play a crucial role in ensuring that the organizations adhere to the regulatory framework. It also focused on the roles and responsibilities of the consent managers under the Digital Personal Data Protection Act, 2023 (“DPDPA”) as well as the protocols that need to be followed in case of a data breach. The transfer of personal data across borders under the DPDPA, including sector specific localization, was also deliberated upon.
LEGAL & INDUSTRY UPDATES
Budget 2025: Central Government (“CG”) Announces INR 10,000 Crore for Fund of Funds for Startups (“FFS”) Scheme to Spur Startup Investments (source)
CG has announced INR 10,000 crore corpus for the FFS scheme, with the aim to promote early-stage startup investments while fostering innovation and entrepreneurship. The move comes as India continues to expand its startup ecosystem, with over 1.5 lakhs startups recognized by the Department for Promotion of Industry and Internal Trade (“DPIIT”). The FFS scheme, which was launched in 2016, is administered by the DPIIT and operated by the Small Industries Development Bank of India. The new round of funds would not only support emerging entrepreneurs but also catalyse domestic capital infusion.
Budget 2025: CG Enhances Credit Guarantee Thresholds for Micro, Small and Medium Enterprises (“MSMEs”), Startups (source)
CG has announced to expand the credit guarantee scheme for MSMEs and startups, with the aim to bolster financial support for these sectors. For MSMEs, the credit guarantee cover has been doubled from INR 5 crore to INR 10 crore and for well-run exporter MSMEs, the credit guarantee would be provided upto INR 20 crore. However, only startups and MSMEs that are registered with the DPIIT are eligible for this scheme. Further, the companies must demonstrate a consistent revenue stream during the preceding year in order to be eligible. The scheme also introduces Ru-pay powered credit cards for micro enterprises, thereby enhancing funding avenues.
Budget 2025: CG to Rationalise Procedures for Speedy Company Mergers (source)
CG has planned to simplify the merger requirements for companies, speed up the company mergers process and widen the scope of fast track mergers with the primary objective to further improve the ease of doing business. Further, CG has also proposed to introduce the Jan Vishwas Bill 2.0, which aims to reduce penalties for over 100 legal rules. Also, the revamped Central Know Your Customer Registry would be rolled out in 2025.
Budget 2025: Finance Minister (“FM”) Proposes to Rationalize Transfer Pricing (source)
The FM has proposed to provide transfer pricing provisions for arm’s length price determination in relation to similar transactions to be applicable for a period of 3 years, with the aim to boost global capability centres and multinational companies’ service providers. Transfer pricing refers to the pricing of cross-border transactions between two related entities. Additionally, the FM also spoke about safe harbour rules to minimise transfer pricing disputes. Further, a Block Transfer Pricing Assessment option has been introduced to reduce compliance burden for both transfer pricing officers and taxpayers, thereby eliminating the need for annual arm's length price determination for similar international transactions.
Other Important Highlights of Union Budget, 2025 (source)
The other important highlights of Union Budget, 2025 are:
The CG has proposed an initiative to review existing regulators and establish a principle-based framework, demonstrating its commitment to fostering more investment via a friendly environment. This new approach encourages trust-based regulatory oversight while reducing complexity, avoiding multiple amendments, and enabling greater flexibility to accommodate technological developments.
The CG has introduced Insurance Laws (Amendment) Bills, 2024, which raises the FDI limit in insurance sector from 74% to 100%. This change aims to strengthen the financial sector by attracting more foreign investments and making the sector globally competitive.
The Budget 2025 also introduces a new manufacturing initiative under 'Make in India' focusing on solar PV cells, electronics, and grid-scale batteries.
Securities and Exchange Board of India (“SEBI”) Proposes Stricter Governance Rules for Listed Companies to Strengthen Corporate Governance (source)
SEBI, on 7th February, 2025, has proposed various rules for listed companies with the aim to improve their corporate governance, including revising the format of the Annual Secretarial Compliance Report and making them a mandatory part of the annual reports for better accountability, setting eligibility criteria for appointing auditors, and introducing monetary limits for approval of Related Party Transactions (“RPTs”), which is set by subsidiaries at 10% of turnover or INR 1,000 crore for main board companies and INR 50 crore for Small and Medium Enterprises. For subsidiaries without a financial track record, the threshold is 10% of their net worth. Further, SEBI also seeks to get clarity on the RPTs’ definition.
SEBI Tightens Algorithm (“Algo”) Trading Norms for Safer Participation of Retail Investors (source)
SEBI has introduced new regulations to oversee algo trading by retail investors, with the aim to enhance transparency and ensure safer participation of such investors. Algo trading refers to orders generated using automated execution logic. Such trading provides significant advantages of timed and programmed order execution. The framework included use of Application Programming Interface (“API”) wherein, brokers shall be the principal while any algo provider or vendor shall act as its agent, while using the API provided by the broker. Further, brokers are required to obtain approval from stock exchanges for each algo before offering algo trading services. Additionally, applications developed by retail investors must be registered if they exceed a specified order threshold.
SEBI Launches Industry Standards Recognition Manual (“ISRM”) to Enhance Regulatory Compliance (source)
SEBI, on 12th February, 2025, has released the ISRM to guide the formation and operation of Industry Standards Fora (“ISFs”), which was launched as a pilot program in July 2023. The primary objective of ISRM is to standardize procedures, promote good governance, and simplify compliance within the securities market. Initially targeting listed companies and stockbrokers, the program was later expanded to include other stakeholders as well. While market participants found these ISFs effective in facilitating good governance, the forums are currently operating as pilot programs without standardized norms for their formation and functioning. However, ISRM has now designated a member as its ‘point of contact’ who shall be responsible for the interactions of the ISF with SEBI to facilitate timely and seamless discussions with SEBI.
Insolvency and Bankruptcy Board of India (“IBBI”) Mandates Timely Reporting of Insolvency Assignments on Portal (source)
The IBBI, on 11th February, 2025, has updated its Assignment Module with new requirements for Insolvency Professionals (“IPs”) wherein, the IPs must submit their assignments to the IBBI electronic portal within three days of their appointment, with specific deadlines for both ongoing and closed cases. Once the assignment is added and approved by the IBBI, the IP will be required to fulfill subsequent compliances, including reporting requirements, such as public announcements, expressions of interests, and auction notices, as applicable under different processes requirements of the Insolvency and Bankruptcy Code, 2016 (“IBC”). This refinement of the Assignment Module aims to streamline the assignment process, improve record-keeping, reduce compliance burdens, and minimize delays.
Advocates (Amendment) Bill, 2025 (“Bill, 2025”) (source)
CG, on 13th February, 2025, has proposed the Bill, 2025, amending the current Advocates Act, 1961 (“Act, 1961”), with the aim to address contemporary challenges, enhance professional standards, and align the legal profession with global best practices. Some of the key aspects of the Bill, 2025 are:
It has broadened the definition of legal practitioners to include lawyers in private or public organizations and recognizes corporate lawyers and in-house counsel under the Act, 1961.
The amendment has proposed changing the definition of 'advocate' as the proposals no longer list the other specific roles (vakil, pleader, mukhtar, revenue agent). This primary objective is to simplify the definition and provide clarity to the terms by phasing out of older designations.
The Union Ministry of Law and Justice has, through section 49A (Power of CG to make rules) of the Act, 1961, empowered the CG to regulate the entry of foreign law firms and lawyers in India. This move shifts power from the Bar Council of India to the CG, aiming to align legal practices with global standards and attract foreign investment.
It has further repealed certain obsolete provisions of the Legal Practitioners Act, 1879 and notably made the offence of ‘touting’ punishable, thereby allowing judges to publish lists of people engaged in soliciting clients or procuring employment for practitioners in exchange for payment, with such individuals potentially being excluded from court premises.
Competition Commission of India (Determination of Cost of Production) Regulations, 2025 (“CCI Regulations”) (source)
The Competition Commission of India (“CCI”), on 17th February, 2025, has introduced the draft CCI Regulations with the aim to modernize the predatory pricing framework under the Competition Act, 2002 (“Act”) and align India’s competition laws with contemporary economic theories, evolved legal jurisprudence, and global competition standards. Some of the key highlights of CCI Regulations are:
Determination of Cost - Cost” under Section 4 of the Act, shall generally be taken as average variable cost, serving as a proxy for marginal cost. However, CCI may consider alternate cost measures, such as average total cost, average avoidable cost, or long-run average incremental cost based on industry characteristics, market structure, and technology.
Engagement of Experts - If an enterprise disputes CCI’s cost determination, it may request expert appointment, subject to written justification. However, CCI retains discretion to appoint experts at the cost of the requesting enterprise.
Procedural Clarity - If the Act, rules, or regulations do not explicitly address a specific situation, CCI shall determine the appropriate procedure for cost determination.
Supreme Court (“SC”) Rules Section 31(4) (Approval of Resolution Plan) of the IBC as Mandatory (source)
In a recent judgement, the SC held that Section 31(4) (Approval of Resolution Plan) of the IBC is mandatory and not directory and therefore made it obligatory to obtain CCI’s approval, thus causing the concerned party’s resolution plan to be invalidated without their approval. The SC further observed that objectives of IBC and the Act must be in harmony with one another and though significant delay in this case is unfortunate and regrettable, expeditious resolution cannot come at the cost of disregarding statutory provisions.
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.