Legal & Industry Updates - January 2023
SPECIAL EVENTS
Pitch Presentation by Startups on Innovative Solutions in Deep Tech and Cyber Security, January 27, 2023
The team at Ivy Law participated in a webinar on "Pitch Presentation by Startups on Innovative Solutions in Deep Tech and Cyber Security" organized by Confederation of Indian Industry. The key highlights of the webinar were participation of various renowned deep technology and cyber security startups focusing predominantly on the application of latest technologies for a better understanding of how to scale up their businesses while suggesting multiple opportunities to invest in other startups. Further, the importance of the right to data privacy and how the same can be guaranteed while employing new technologies were discussed exhaustively.
LEGAL & INDUSTRY UPDATES
Draft Amendments to the Information Technology (Intermediary Guidelines & Digital Media Ethics Code) Rules, 2023 (“IT Rules, 2023”) (source)
The Ministry of Electronics and Information Technology (“MeitY”), on 2nd January, 2023, has notified draft amendments to the IT Rules, 2023 pertaining to online gaming with the aim to ensure that online games be offered in conformity with Indian laws and that the users of such games be safeguarded against potential harm. As per the proposed amendments, online gaming platforms are required to follow due diligence by self-regulation and mandatory player verification by forcing online gaming intermediary to inform its users regarding its policy related to withdrawal or refund of deposit, manner of determination and distribution of winnings, fees and other charges payable and Know Your Customer procedure for user account registration. Further, wagering and betting to be strictly prohibited in the proposed IT Rules, 2023.
MeitY Invites Public Inputs on Draft Amendments to Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules, 2021”) (source)
MeitY, through a press release issued on 19th January, 2023, has invited feedback from stakeholders and general public on a proposed amendment to rule 3(1)(b)(v) (Due diligence by an intermediary) of IT Rules, 2021 regarding social media and other intermediaries' responsibilities in observing due diligence by making reasonable efforts to not upload, publish, transmit or share information which is patently false, untrue or misleading in nature as identified by the fact check unit of the Press Information Bureau that takes cognizance of fake information both suo motu and by way of queries sent by citizens on its portal. The proposed amendment aims to ensure an open, safe, trusted and accountable internet for digital users.
Notices Issued to Top Electronic-Commerce (“E-Commerce”) Entities for Alleged Sale of Toys Violating Compulsory Bureau of Indian Standards (“BIS”) (source)
The Central Consumer Protection Authority, on 12th January, 2023, has issued notices to top e-commerce entities for alleged sale of toys without BIS quality mark. Since the Central Government (“CG”) has made it mandatory for toys to conform to safety norms specified by BIS, it was observed that some of the e-commerce entities failed to comply with the said norms and therefore a raid was conducted after complaints were received from domestic manufacturers of toys. A legal action will thus be taken against such retailers as per the provisions under the BIS Act, 2016.
BIS to Examine the Need for Regulating Live Commerce in India (source)
As reported by the Economic Times, BIS has begun to assess the need for guidelines for the new form of e-commerce and has sought comments from members of its retail, e-commerce and e-payment services sectional committee after the International Organization for Standardization (“ISO”) floated a ballot to register a new proposal on live commerce. Live commerce is a technique used by brands to sell products through live streams on digital platforms with the aim to provide the consumers with an interactive session along with click-to-buy functionality. The idea behind the new ISO norms is whether to follow the ISO guidelines or to customise them as per the market needs. Live commerce can be completed through multiple routes, which include social media platforms as well as short-video applications, where influencers, in partnership with brands, showcase the products.
Expectations from Budget 2023 (source)
As reported by Economic Times, some key takeaways from the upcoming Budget, 2023 are as follows:
Deduction for crèche expenses - The Maternity Benefit (Amendment) Act, 2017 mandates employers to impart varied support to mothers including providing creche facility in the vicinity of the office, however, as it is a benefit mandated to be provided by CG, it should not be taxable for the employee. Hence, CG is considering exempting the creche facility benefit either by way of an employer-maintained facility or under the employer's arrangement with the provider or by way of a reimbursement/allowance for such expenses.
Deduction for work from home (“WFH”) expenses - In the post Covid era, many organisations have adopted alternate working models such as WFH, remote working, hybrid working instead of the traditional work from office model. However, when an employee WFH, he incurs the cost of basic amenities himself such as desk, chair, tea, lighting etc. without any tax breaks in respect of the same. CG is therefore considering providing relief to such employees by way of introducing deductions for some eligible expenses incurred due to WFH and/or exemption of any WFH allowance paid by employers to employees who WFH.
Amendment to Competition Law - In an effort to stop anti-competitive behaviour in the digital market, the Ministry of Corporate Affairs (“MCA”) is contemplating to amend the existing competition law and have a new digital competition law along with bringing cartels under the scope of settlements as a "pragmatic recourse".
CG Proposes Decriminalisation of Various Violations Under The Insolvency and Bankruptcy Code, 2016 (“IBC”) (source)
With the aim to increase business accessibility, hasten corporate failure resolution and improve ease of doing business, CG has proposed to decriminalise a number of IBC violations including violations falling under section 235A (Letter of request to a country outside India in certain cases) of the IBC, which states that criminal proceedings can be initiated against anyone over contraventions for which IBC doesn’t specify the penalty. Thus, in furtherance of CG’s policy to decriminalise offences in business law statutes wherever feasible, it is comprehended that section 235A should be converted into a civil penalty. MCA has proposed to empower National Company Law Tribunals and Debt Recovery Tribunals with powers to penalise anyone who violates IBC.
A Renowned Indian Pharmaceutical Company Announces 12-Week Paternity Leave Policy for Biological, Adoptive Fathers Within Workforce (source)
As part of its diversity and inclusion objectives, one of India’s renowned pharmaceutical company has announced a 12-week paternity leave policy for its employees, including both biological and adoptive fathers by giving them the option to take leaves over a period of two years. The minimum number of leaves that can be availed in a single tranche is two weeks and the maximum is six weeks. Further, in the event of any complication, the employees will be allowed to take further leaves as permitted by the company's leave policy. The goal of the policy is to leverage the power of equity in the workplace and give both men and women the opportunity to devote an equal amount of time in practising their parental roles and responsibilities.
CG to Employ Artificial Intelligence (“AI”) Matchmaking to Connect Startups with Investors and Mentors (source)
CG is on the verge of developing a data-driven, AI-enabled matchmaking network namely "Investor Connect" to aid Indian startups in obtaining funds via several fundraising options, both domestically and internationally. The Small Industries Development Bank of India and the Department for Promotion of Industry and Internal Trade have been collaborating closely to develop this platform wherein they will use the power of AI to match startups with all the funding stakeholders, be it angel investors, venture capital and private equity investors, corporate venture capital investment or government funds. This AI-based matchmaking function will also be used by the Mentorship, Advisory, Assistance, Resilience and Growth program by Startup India, to assist startups in finding the appropriate mentors and seeking their guidance and support for growing their firms and overcoming business difficulties.
Top Indian Telecommunication Companies Lobby for Personal Data Localization (source)
Various renowned Indian telecommunication companies have expressed opposition to CG’s decision to permit the transfer of user data to "trusted geographies” mooted in the latest draft of Digital Personal Data Protection Bill, 2022. The aforesaid companies claim that any data transfer will make it extremely difficult for Indian law enforcement officials to get data on citizens of India after it is processed by an offshore telephone or a technology company situated in a foreign nation and could potentially put Indians in danger, particularly if their information is compromised or utilised inappropriately in any foreign country.
Data Centre Companies Demand Requirement for Reciprocity in Data Flow (source)
Technology infrastructure companies (“Tech infra companies”) which are building digital storage facilities or data centres in India have requested CG to mandate local storage of user data as well as “reciprocity” in cross-border data flows. As per the aforesaid Tech infra companies, countries whose data from their residents is authorized to enter India should be allowed to receive data from Indian users and only those nations should receive data from India where Indian customers or court orders can be enforced without going via an international judicial system. Further, Tech infra companies have asserted that CG should retain a copy of any user data exported to other countries.
Notices Sent to Alternative Investment Funds (“AIF”) for Flouting Rules (source)
Securities and Exchange Board of India (“SEBI”) has sent notices to several AIFs, including both private equity investors and venture capitalists, for alleged violation of specified tenure rules on their investment vehicles. Regulation 13(4) (Tenure) of SEBI (Alternative Investment Funds) Regulations, 2012 states that a fund can extend its lifecycle by up to two years, but two-third of the investors in such funds must give their consent for tenure extension and once the life of a fund comes to an end, the AIF manager is required to liquidate all the holdings and distribute the proceeds among the investors within a year. However, SEBI observed that the concerned fund managers had unilaterally extended the tenure of the funds without informing SEBI.
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.