Legal & Industry Updates - July 2021
SPECIAL EVENTS
Webinar on Introduction to Various Delay Analysis Methodology in Construction Disputes, July 30, 2021
The team at Ivy Law participated in a webinar on the “Introduction to various delay analysis methodology in construction disputes”, conducted by the Western India Chapter of the Society of Construction Law-India. The discussion highlighted crucial topics in the field of construction disputes such as the delay analysis methodology, the need for delay analysis in construction disputes, and the importance of having a sound schedule while entering into a construction contract. The impact of Covid-19 pandemic on delay analysis in construction disputes was also emphasized upon.
LEGAL & INDUSTRY UPDATES
Draft Consumer Protection (Direct Selling) Rules, 2021 (source)
The Ministry of Consumer Affairs, Food and Public Distribution (Department of Consumer Affairs) through a notification dated June 30th 2021, has sought comments and suggestions on the draft Consumer Protection (Direct Selling) Rules, 2021 (“Direct Selling Rules”). The Direct Selling Rules as proposed by the government restrict any “direct selling entity” (i.e. an entity, not engaged in a pyramid scheme, and/or money circulation scheme, which sells or offers to sell goods or services through direct sellers [Section 3(f) of the Direct Selling Rules]) from engaging in any kind of pyramid scheme or in any kind of money circulation scheme. The direct selling entities are required to be incorporated under the Companies Act, 2013 or as per the provisions of the Limited Liability Partnership Act, 2008 or as a partnership firm registered under the Partnership Act, 1932. All direct selling entities are mandated to have at least one head office registered in India and also be registered with the Department for Promotion of Industry and Internal Trade (DPIIT). In a move to protect the interest of consumers direct selling entities are required appoint a chief compliance officer, along with a nodal contact person who shall be responsible for ensuring that the direct selling entities are complying with the provisions of the act and the Direct Selling Rules, and a grievance redressal officer. The entities are also mandated to set customer care offices to address the grievances of customers. The entities under the Direct Selling Rules are also mandated to maintain an updated website with all the relevant details. It is further proposed that once the Direct Selling Rules are formally enforced and implemented all entities will have a period of 90 days to comply with all the norms as laid down by the rules.
Creation of New Ministry for Co-operation (source)
As per a press release issued by the Press Information Bureau dated July 6th, 2021, a new “Ministry of Co-operation” has been created. The Ministry of Co-operation will have separate administrative power, it will have the power to make new laws in order to strengthen the co-operative movement in the country. The Ministry of Co-operation will also be responsible for streamlining the process for ‘ease of doing business’ for co-operatives and will enable the development of multi-state co-operatives.
Notices Over Non-compliance with the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“Intermediary Guidelines Rules”) (source)
As reported by Economic Times, the government is in process of issuing fresh notices to those companies who are yet to comply with the Intermediary Guidelines Rules. Additionally, the Ministry of Electronics and IT (Meity) will also be issuing letters to companies who are yet to reply to the government’s queries regarding their compliance status. WhatsApp has challenged the Intermediary Guidelines Rules on the grounds that the rules mandating tracing of the first originator of a message will require the app to break its end-to-end encryption which would compromise the privacy of a user. Further, as reported Apple is exempted from complying with the Intermediary Guidelines Rules. In a clarification issued by the government, it was stated that Apple had been asked to comply with the overall Intermediary Guidelines Rules and an exemption was only provided in the case of compliance for significant social media intermediaries.
The Insolvency and Bankruptcy Code (Amendment) Bill, 2021 (source)
As per the press release issued by the Press Information Bureau dated July 21, 2021 the Insolvency and Bankruptcy Code (Amendment) Bill, 2021 (“Amendment Bill”) was introduced to further amend the Insolvency and Bankruptcy Code, 2016. The Amendment Bill requires an insolvency professional (IP) conducting Corporate Insolvency Resolution Process (CIRP) to disclose all former names and registered office address(es) so changed in the two years preceding the commencement of insolvency along with the current name and registered office address of the corporate debtor (CD), in all its communications and records. This requirement will assist stakeholders to have easier access and clarity on the CD’s identification and their involvement in the CIRP. The Amendment Bill provides that the interim resolution professional (IRP)/resolution professional (RP) may appoint a professional, other than registered valuers, if he/she is of the opinion that the services of such a professional are required and such services are not available with the CD. Such appointments shall be made on an arm’s length basis. Further, the RP is duty bound to find out if a CD has been subject to avoidance transactions, namely, preferential transactions, undervalued transactions, extortionate credit transactions, fraudulent trading and wrongful trading, and file applications with the adjudicating authority seeking appropriate relief.
Review of Foreign Direct Investment (FDI) policy on Petroleum & Natural Gas Sector (source)
As per Press Note No. 3, dated July 29, 2021, issued by DPIIT the Government of India has reviewed the extant FDI policy on Petroleum & Natural Gas sector and has made an amendment in the Consolidated FDI Policy Circular of 2020. A new Para 5.2.4.3 is inserted under Para 5.2.4 of the FDI Policy through which foreign investment up to 100% under the automatic route is allowed in case an 'in-principle' approval for strategic disinvestment of a PSU has been granted by the Government.
Government Likely to Issue Clarification on the Intermediary Guideline Rules (source)
As reported by Economic Times, the government is likely to release detailed guidelines on the procedure to be followed by various law enforcement agencies who intend to seek information or seek to takedown content from various social media platforms like Instagram, Facebook, Twitter etc. The detailed guidelines would be a part of the clarification to the Intermediary Guidelines Rules. The union ministry is working on formulating the standard operating procedures (SOP) that will lay down the details for the law enforcement agencies to follow, while issuing notices, identifying the concerned recipients of such notices, implementing the SOP and procedures for collecting information from the intermediary.
Limited Liability Partnership Amendment Bill, 2021 (source)
The Union Cabinet has approved certain amendments to the Limited Liability Partnership Act, 2008 (“LLP Act”) as of July 28, 2021. The main highlights of the amendments include (i) decriminalizing twelve offences as stipulated under the LLP Act and to shift to an In-House Adjudication Mechanism; (ii) introducing new concepts such as creating a separate class of limited liability partnership called a small LLP. A small LLP will be subject to lesser compliances and lesser compliance fees. (iii) issuance of non-convertible debentures by a limited liability partnership; and (iii) relaxing provisions relating to the payment of additional fee under Section 69 of the LLP Act.
Various Measures Taken by Ministry of Corporate Affairs to Fight Covid-19 Pandemic (source)
As per the press release dated July 21, 2021 issued by the Press Information Bureau the Ministry of Corporate Affairs has highlighted various measures taken to fight the Covid-19 pandemic. The illustrative list issued by MCA has 23 entries and covers almost all benefits and relaxations extended due to Covid-19 pandemic, which includes the Companies Fresh Start Scheme, 2020 (CFSS), LLP Settlement Scheme, 2020, relaxation on levy of additional fees for companies / LLPs in filing Charge Related Forms, Condonation of Delay Scheme for Companies restored by NCLT between December 1, 2020 to December 31, 2020, conduct of Board Meetings through Video Conference (VC) or other audio-visual means for passing resolutions in respect of the restricted matters, conduct of Extraordinary General Meetings (EGMs) through VC, conduct of Annual General Meetings (AGMs) by VC, extension of time in the holding of Annual General Meeting for the financial year ended on March 31, 2020 till December 31, 2020, enhancing the period to thirteen months from December 1, 2019 within which existing independent directors could apply online for inclusion of their names in the databank for independent directors, independent directors given relaxation from holding at least one mandatory meeting, mandatory requirement of holding meetings of the Board of the companies within the intervals provided in section 173 of the Companies Act, 2013 (120 days) were extended by a period of 60 days, non-compliance of minimum residency in India for a period of at least 182 days by at least one director of every company, under Section 149 of the Companies Act, 2013 shall not be treated as a non-compliance for the financial year 2019-20 and 2020-21.
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.