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Updates

Events & Legal Updates

Legal & Industry Updates - June 2021


SPECIAL EVENTS


Training Session for Employees under Prevention of Sexual Harassment Laws, June 23, 2021

Ivy Law conducted a training session for employees under the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Kaveri Kumar, Founder and Head Corporate Practice, Ivy Law was the keynote speaker. The training focused on the interpretation of the term "sexual harassment" at a workplace, including incidents amounting to harassment in the work from home digital environment, internal company and legal platforms that can be availed by employees for addressing concerns regarding harassment, procedure for filing a complaint and the contemplated recourses, importance of confidentiality and case analysis.


Discussion on Production Linked Incentive Scheme 2.0 (PLI 2.0) for Pharma and Medical Devices, June 17, 2021

The team at Ivy Law participated in a discussion organised by Invest India on PLI 2.0 for Pharma and Medical Devices. The discussion emphasised on the initiatives taken by the government through PLI 2.0, to encourage the pharmaceutical industry to enhance its manufacturing capabilities, to diversify the product mix to complex generics, to increase patented drugs, boost the value chain, and create additional opportunities for foreign investment. Expenditures by companies for eligible investments under PLI 2.0 were also deliberated. Vibrant views were exchanged amongst representatives from the pharmaceutical industry and the concerned government officials.


LEGAL & INDUSTRY UPDATES


Proposed Amendments to Consumer Protection (E-Commerce) Rules, 2020 (source)

The Ministry of Consumer Affairs, Food and Public Distribution has issued proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020 and has sought comments on the proposed amendments by July 6, 2021. The proposed amendments (i) elaborate the definition of an “e-commerce entity” to include any entity engaged by an e-commerce entity for fulfilment of orders and a related party as defined under Section 2(76) of the Companies Act, 2013, (ii) require e-commerce entities offering imported goods or services to identify goods based on their country of origin and also suggest alternatives for domestic goods. Further, marketplace e-commerce entities and the sellers on the marketplace are also required to display the country of origin of the goods and services being offered, (iii) require e-commerce entities not to organise flash sale of goods or services offered on its platform. The definition of “flash sale” is introduced to mean a sale organized by an e-commerce entity at significantly reduced prices for a predetermined period of time on selective goods and services with an intent to draw large number of consumers, provided that such sales are organised fraudulently by intercepting the ordinary course of business using technological means with an intent to enable only a specified seller or group of sellers managed by such entity to sell goods or services on its platform, (iv) require the appointment of a chief compliance officer, a 24x7 nodal contact officer for coordination with law enforcement agencies and a resident grievance officer to address consumer complaints, (v) require the registration of every e-commerce entity with the Department for Promotion of Industry and Internal Trade for allotment of a registration number, (vi) prohibit mis-selling i.e. selling goods and services by deliberate misrepresentation of information, and (vii) require fall-back liability of marketplace e-commerce entity, in the event a seller fails to deliver the goods or services due to negligent conduct by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity.


The Companies (Meetings of Board and its Powers) Amendment Rules, 2021 (source)

The Ministry of Corporate Affairs (“MCA”) vide a notification dated June 15, 2021 has notified the Companies (Meetings of Board and its Powers) Amendment Rules, 2021 (“Meetings Amendment Rules”). The Meetings Amendment Rules omit Rule 4 of the Companies (Meetings of Board and its Powers) Rules, 2014 (“Original Rules). Rule 4 of the Original Rules was related to matters not to be dealt with in a meeting through video conferencing or other audio visual means which comprised of (i) the approval of the annual financial statements; (ii) the approval of the board’s report; (iii) the approval of the prospectus; (iv) the audit committee meetings for consideration of accounts; and (v) approval of the matter relating to amalgamation, merger, demerger, acquisition and takeover. The above matters can now be discussed and approved through video conferencing or other audio-visual means.


Automation of Continual Disclosures as per SEBI (Prohibition of Insider Trading) Regulations, 2015 to Include Listed Debt Securities (source)

SEBI vide a circular dated June 16, 2021included listed debt securities in the System Driven Disclosures (“Disclosures”). The Disclosures were implemented by SEBI in phases, under SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”). The Disclosures were implemented for member (s) of promoter group and designated person(s) in addition to the promoter(s) and director(s) of a company (“Entities”) under Regulation 7(2) of PIT Regulations, pertaining to trading in equity shares and equity derivative instruments i.e. futures and options of the listed company (wherever applicable) by the entities. Through the present circular listed debt securities of equity listed companies are also included in the Disclosures for the Entities.


The Companies (Creation and Maintenance of Databank of Independent Directors) Amendment Rules, 2021 (source)

MCA vide a notification dated June 18, 2021, notified the Companies (Creation and Maintenance of Databank of Independent Directors) Amendment Rules, 2021 (“Independent Director Rules”). The Independent Director Rules insert a new sub-rule (8) in Rule 3 of the Companies (Creation and Maintenance of Databank of Independent Directors) Rules, 2019, which stipulates, in case of delay on the part of a professional in applying to the Indian Institute of Corporate Affairs (“Institute”) for inclusion of his/her name in the data bank of independent directors or in case of delay in filing an application for renewal, the Institute will allow such inclusion or renewal, under Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, after charging a further fees of one thousand rupees on account of such delay. This amendment will provide relaxation to those professionals who had missed the deadline of having their name included or renewed within the prescribed timeline.


The Companies (Accounting Standards) Rules, 2021 (source)

MCA on June 23, 2021 has issued the draft Companies (Accounting Standard) Rules, 2021. The said rules propose to amend the definition of Small and Medium-Sized Companies (SMCs). The turnover limit has been increased from Rs 50 crore to not exceeding Rs 250 crore and with enhanced borrowing limits. This is in addition to the requirements that such entities should be a company (i) whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India; (ii) which is not a bank, financial institution or an insurance company; (iii) which does not have borrowings (including public deposits) in excess of fifty crore rupees at any time during the immediately preceding accounting year; and (iv) which is not a holding or subsidiary company of a company which is not a SMC. Every company, other than companies on which Indian Accounting Standards as notified under Companies (Indian Accounting Standards) Rules, 2015 are applicable, and its auditor(s) shall comply with the Accounting Standards at the time of preparation of financial statements. An existing company, which was not previously a SMC and subsequently becomes a SMC, is not qualified for exemption or relaxation in respect of accounting standards available to a SMC until the company remains a SMC for two consecutive accounting periods.


Declaration of Dividends by NBFC’s (source)

The Reserve Bank of India (“RBI”) vide a notification dated June 24, 2021, has prescribed guidelines on distribution of dividend by NBFCs to infuse greater transparency and uniformity in practice. These guidelines shall be applicable on all NBFC’s as stipulated by RBI. The guidelines shall be effective for declaration of dividend from the profits of the financial year ending March 31, 2022 and onwards. All NBFCs eligible to declare dividend may pay a dividend, subject to the Dividend Payout Ratio. Dividend Payout Ratio is the ratio between the amount of the dividend payable in a year and the net profit as per the audited financial statements for the financial year for which the dividend is proposed. The proposed dividend shall include both dividend on equity shares and compulsorily convertible preference shares eligible for inclusion in Tier 1 Capital. Further, in case the net profit for the relevant period includes any exceptional and/or extraordinary profits/ income or the financial statements are qualified (including ‘emphasis of matter’) by the statutory auditor that indicates an overstatement of net profit, the same shall be reduced from net profits while determining the Dividend Payout Ratio. It has also made clear that the Reserve Bank shall not entertain any request for ad-hoc dispensation on the declaration of dividend.



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.