Legal & Industry Updates - January 2022
SPECIAL EVENTS
Corporate Governance Symposium – Series 4 – Effective CSR and Sustainability Committee, January 27, 2022
The team at Ivy Law participated in a “Corporate Governance Symposium” organized by ASSOCHAM. The key highlights of the symposium focused on the impact of the recent amendments related to corporate social responsibility under the Companies Act, 2013, while keeping in mind emerging themes such as sustainable development goals, social enterprises, business and human rights, as well as business responsibility and sustainability report. The issues and challenges faced by corporate boards including non-compliances such as (i) the constitution of committees not being reported; (ii) high transaction costs faced by companies with low prescribed budgets; (iii) disclosure of information; (iv) effectiveness of committees on achieving compliance with standards; (v) issues related to formulation and monitoring of the corporate social responsibility policy were also addressed.
Webinar on Environment, Social & Governance, January 28, 2022
The team at Ivy Law participated in a webinar on Environment, Social & Governance (ESG) organized by eMinds Legal. The key highlights of the webinar focused on the meaning of ESG and implications, identifying and understanding drivers for ESG strategy, understanding best practices, prioritizing ESG focus areas, committing appropriate investments, creating a framework for implementing ESG strategies, regular monitoring of the ESG plan, and ESG reporting standards and guidelines. The panel discussion also focused on the seven steps to develop and implement an ESG strategy comprising of (i) conducting materiality assessment, (ii) assessing current state baseline, (iii) setting objectives and goals, (iv) analysing gaps to achieve a future state, (v) developing a strategic ESG roadmap and framework, (vi) setting action plans and measuring key performance indicators, and (vii) reporting progress.
LEGAL & INDUSTRY UPDATES
Ministry of Road Transport and Highways Forms Panel to Examine Court Orders (source)
As reported by the Times of India, the Ministry of Road Transport and Highways has constituted a committee to examine all arbitral awards or court orders where the settlement amount is more than Rs 100 crores, for expeditious dispute resolution. The committee will additionally exhort the National Highways Authority of India whether to go for conciliation or settlement or to file any appeal against arbitral awards or court orders. According to an office order, the panel will look into pending appeals in sundry courts and will exhort the highways ascendancy on whether it should perpetuate these court cases or go for conciliation before the Conciliation Committee of independent experts which has been set up by the National Highway Authority of India for settlement of claims. The incipiently composed panel has been set up following the Ministry of Finance direction to all ministries and regime entities to put a system in place to evade the propensity of challenging all arbitral awards.
Companies (Registration Offices and Fees) Amendment Rules, 2022 (source)
The Ministry of Corporate Affairs (MCA) as per a notification dated 11th January, 2021 has amended the “Companies (Registration Offices and Fees) Rules, 2014 through the Companies (Registration Offices and Fees) Amendment Rules, 2022 (“Amended Regulations”). The Amended Regulations will come into effect from July 1, 2022. The amended norms prescribe a higher additional fee and an additional fee in the time multiple of the normal fee for the period of delay. For delay of up to 30 days in filing of forms i.e. PAS-3 (Private Placement of Securities) and INC-22 (Notice of Situation or Change of Situation of Registered Office) an additional fee in the multiple of two times of normal filing fees or a higher additional fee of three times of typical filing fees will be levied. For delay of more than thirty days to sixty days, an extra fee of four times of the usual filing fees will be charged for each delay of that period. An additional fee of six times of the ordinary filing fees for delays of between sixty and ninety days and up to eighteen times for delays beyond one eighty days.
Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2022 (source)
SEBI has notified the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2022 dated January 24, 2022. A new proviso is inserted in Regulation 17 (Board of Directors) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Original Regulations”) to deal with the situation where a proposal for an appointment or a re-appointment of a person, including as a managing director or a whole-time director or a manager, who was earlier rejected by the shareholders at a general meeting. The amendment provides that such appointment shall be done only with the prior approval of the shareholders. It is further provided that the explanatory statement, annexed to the notice to the shareholders, for considering the appointment or re-appointment of such a person earlier rejected by the shareholders shall contain a detailed explanation and justification by the Nomination and Remuneration Committee and the board of directors for recommending such a person for appointment or re-appointment. Further, where the listed entity has appointed a monitoring agency under Regulation 32(7) (Statement of deviation(s) or variation(s)) to monitor the utilisation of proceeds of a public or rights issue, the monitoring report of such agency shall now be placed before the audit committee on a quarterly basis instead of an annual basis. Regulation 40 (Transfer or transmission or transposition of securities) of the Original Regulations is also amended to provide that transmission or transposition of securities held in the physical or dematerialised form shall be effected only in dematerialised form.
Haryana State Employment of Local Candidates Act, 2020 and Exemptions (source 1, source 2)
The Haryana State Legislative Assembly passed the Haryana State Employment of Local Candidates Act, 2020 (“Act”), to provide 75% employment to local candidates in new employments in various companies, societies, trusts, and limited liability partnership firms situated in the state of Haryana (any person / employer employing 10 or more employees in any trade /business/ manufacturing / enterprises). This provision will be for local candidates for all jobs with a monthly gross salary or wages not more than Rs 30,000/-. The Act applies to new recruitments only i.e. not with retrospective effect. All the concerned employers are required to register their existing employees on the designated portal within a period of three months commencing from January 15, 2022. Further, in an order dated January 17, 2022 issued by the Labour Department, Haryana certain categories of employers are exempted from the Act, which includes (i) vacancies in start-ups and information technology companies of new employers for a period of two years from the date of commencement of work/manufacturing process; (ii) short-term employment for a duration less than forty five days; (iii) employer who primarily engages in agricultural activities; (iv) employer providing services for domestic work or services for residential homes; (v) vacancies being filled up by promotion, transfer or absorption of surplus staff of any unit of the same employer in the State; (vii) any class as notified by the state government where candidates of required qualification are not available. Further, every employer is required to furnish a quarterly report on the designated portal and mention details about local candidates employed and appointed during that period.
University Grants Commission and the All India Council for Technical Education’s Warning to Universities and Higher Educational Institutes (source)
As reported by the Economic Times, the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE) have warned higher educational institutes and universities (HEI’s) partnering with edtech firms offering online or conventional programmes, to face derecognition. The issue pertains to HEI’s outsourcing content creation to edtech firms and such edtech firms awarding degrees. It has come into the authorities notice that some HEI’s are outsourcing their programmes and courses through such edtech companies. Such outsourcing or franchising is not permissible. However; the use of a particular platform or a learning management system being provided by an edtech firm; has not been brought under the scanner. The said statutory bodies have issued notices to HEI’s to annul their franchise agreements with edtech companies, in light of HEI’s offering educational degrees through edtech firms and also warned against action in case of default. The notice also cautioned students against getting into such arrangements while checking the recognition/entitlement status of a programme before enrolling in it. Further, it has also been reported that top edtech firms have proposed a self regulatory code on how to do business in India. They are seeking to address two core issues misleading advertisements and unscrupulous business practices.
Data Protection Bill 2019 and its Impact on Enterprise Operations (source)
The economic times reported the concerns being faced by corporates regarding the implementation of the Data Protection Bill, 2019 (“Bill”). Suggested fines of Rs 15 crores or as much as 4% of annual revenues and lack of compliance could have an extensive financial impact on companies. The Bill proposes a series of new provisions (such as the data principal rights) for which companies are required to set up the requisite infrastructure. A considerable amount of regulatory and operational emphasis will also have to be given on consent as it forms a major part of the Bill’s framework, including but not limited to disclosing the purpose for which the said data is being collected and as well as the processes for erasing the data. Obtaining consent is required to be clear and concise, with platforms providing systems which are easy for end-users to understand and to give consent. Important focus areas for corporates should be data governance and data being shared with third parties or data processors. Amongst processes to technologies, the crucial aspects that will also have to be covered by companies will be the legal framework involving contracts with third parties, vendor contracts, to confidentiality and data protection clauses in employment offer letters.
Legislative Intent of Trademark Act to be Upheld while Deciding Against Misuse of Trademark (source)
In Renaissance Hotel Holdings Inc. v. B. Vijaya Sai, the Hon’ble Supreme Court of India held that the use of an identical (registered) mark has to necessarily be restrained through an injunction and that no further inquiry is required regarding reputation of the mark in India, likelihood of confusion or honesty of adoption by the infringer. The Supreme Court was hearing an appeal moved by Renaissance Holding Inc, a company registered in Delware, USA against the Karnataka High Court’s decision of 2019. The high court had reversed the injunction granted by a Bengaluru court in favour of Renaissance Holdings in 2012. Renaissance Holdings’, the proprietor of trademark ‘Renaissance’ in relation to hotels, spa, clubs etc., had challenged the use of mark ‘Sai Renaissance’ for similar services in parts of South India. While the trial court had ruled in its favour, the high court reversed the findings while holding that there was no infringement as the plaintiff had failed to establish its reputation in India and therefore, the use of the mark by Sai Renaissance was honest and there was no likelihood of any confusion amongst the consumers. It was this order which was successfully challenged in the appeal. This is the first decision from the Apex Court distinguishing between section 29 (2) (Infringement of Registered Trademarks) and section 29 (4) of the Trade Marks Act, 1999. Most importantly, the court stressed on the need to honour the intention of the Indian Parliament behind enacting the Trade Marks Act, 1999, which was to increase globalisation, encourage foreign investment, harmonize trademark systems and prohibit trademark misuse.
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.