Legal & Industry Updates - June 2022
SPECIAL EVENTS
Webinar on Environmental Governance - The Legal Logjam, June 5, 2022
The team at Ivy Law participated in a webinar on ‘Environmental Governance: The Legal Logjam’ organized by the Centre for Environmental Law, Policy and Research (CELPR), National Law University, Delhi. The webinar focused on transformative sustainable development, reconnecting Mother Earth with the community and the legal mechanism related to the environment. The two case studies related to water management that were discussed were, Water Rich Puducherry by Dr. Kiran Bedi and Citizen’s Model of Navjyoti Foundation in Rural Areas of Gurugram for Water Management. The key for dealing with modern day environmental challenges, not just in the international arena but also at the domestic level were also deliberated upon.
Webinar on Contracts, Legal Services & the Gig Economy, June 7, 2022
The team at Ivy Law participated in a webinar on ‘Contracts, Legal Services & the Gig Economy’ organized by TiE Bangalore. The panel emphasized on why managing contracts efficiently is an absolute requirement for startups. The key highlights of the webinar were requirement of a contract in a startup, the various types of contracts needed, embracing contractual disputes, mediation as a medium for resolving contractual disputes, role of a mediator and dispute resolution clause. How startups can get time critical and cost efficient legal help was also emphasized upon.
Webinar on How to Successfully Conduct an ICC Arbitration, June 17, 2022
The team at Ivy Law participated in a webinar on ‘How to successfully conduct an ICC Arbitration’ organized by the International Chamber of Commerce: Young Arbitrators Forum (“ICC: - YAF”). The webinar focused on advantages of arbitration over litigation, ICC’s perspective on arbitration, procedure of an ICC arbitration and appointment of an arbitrator. The role of an arbitrator and the ICC Courts in maximizing the efficiency of an arbitration process were also emphasized upon.
Webinar on English as the Contractual Language in Commercial and Corporate Law, June 21, 2022
The team at Ivy Law participated in a webinar on ‘English as a contractual language in commercial and corporate law’ organized by 10times. The webinar focused on the notable demand of contractual agreements, purchase agreements and other business contracts that are negotiated and formulated in English language. The highlight of the webinar was the discrepancy faced by lawyers while translating any language to English which may not always be convenient and may lead to errors or ambiguities in a contract that can have damaging consequences and might eventually be declared void. Thus, the emphasis was on the correct use of the English language while drafting various agreements.
LEGAL & INDUSTRY UPDATES
Amendment to the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Directors Rules, 2014”) (source)
The Ministry of Corporate Affairs (“MCA”) through a notification dated 1st June, 2022, has notified the Companies (Appointment and Qualification of Directors) Amendment Rules, 2022 (“AQD Rules 2022”). Pursuant to the amendment, under Rule 8 (Consent to act as director), a new proviso has been inserted stipulating that if a person seeking appointment as a director, is a national of a country which shares land border with India, in that case necessary security clearance from the Ministry of Home Affairs (“MHA”), and the Government of India (“GoI”) shall be attached along with his consent to act as a director. Further, as per Rule 10(1) (Allotment of DIN), an application number shall not be generated to any person applying for Director Identification Number (“DIN”) who is a national of a country that shares land borders with India, unless the person has obtained necessary security clearance from the MHA and GoI and has attached the same with the application for DIN.
Amendment to the Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) Regulations, 2017 (“IBBI Regulations, 2017”) (source)
The Insolvency and Bankruptcy Board of India (“IBBI”), on 1st June, 2022, notified the Insolvency and Bankruptcy Board of India (Engagement of Research Associates and Consultants) (Amendment) Regulations, 2022 (“IBBI Regulations, 2022”). Prior to the amendment, the Research Associates and Consultants (“RA&C”) were paid a consolidated remuneration in accordance with Schedule II (Qualifications, experience and remuneration) of the IBBI Regulations, 2017. However, subsequent to the amendment, the Chairperson has been bestowed with the right to amend the said consolidated remuneration given in Schedule II with reasons to be recorded in writing. Further, as per regulation 8(1) (Terms and conditions of engagement), the period of appointment of a selected candidate as RA&C on contractual basis has been substituted from a period of six months to 2 years to a period not less than one year and up to three years. However, the Chairperson may extend the term of such engagement, one year at a time, up to a maximum of total five years.
Amendment to the Companies (Removal of Names of Companies from the Register of Companies) Rules, 2016 (“Companies Rules 2016”) (source)
The MCA, through a notification dated 9th June, 2022, has notified the Companies (Removal of Names of Companies from the Register of Companies) Amendment Rules, 2022 (“Amendment Rules 2022”). Pursuant to the amendment, the fee to be paid for the removal of the name of a company has been increased from INR 5,000 to INR 10,000. Also, no application shall be filed by a company in Form No. STK-2 (Application by company to Registrar of Companies {“ROC”} for removing its name from register of companies) unless it has filed overdue returns in Form No. AOC-4 (Financial Statement), AOC-4 XBRL (XBRL document in respect of financial statement and other documents with the Registrar), and Form No. MGT-7 (Annual Returns), up to the end of the financial year in which the company ceased to carry its business operations. Further, in Rule 4 (Application for removal of name of company) of Companies Rules, 2016, sub-rule 4 has been inserted stipulating that on examination of the application made in Form STK-2, if the ROC opines that any further information is required or if there is any defect in the form, the ROC will ask the applicant to remove the defects and submit the form again within 15 days and if any defects are found even after re-submitting the form, further 15 days will be granted to remove the defects after which the ROC will consider the form invalid.
Amendment to the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Companies Rules, 2014”) (source)
The MCA, through a notification dated 10th June, 2022, has notified the Companies (Appointment and Qualification of Directors), Second Amendment, Rules 2022 (“AQD Amendment Rules 2022”). Pursuant to the amendment, under Rule 6 (Creation and maintenance of databank of persons), a new proviso is inserted stipulating that any individual whose name is removed from the databank, may apply for restoration of his name by paying INR 1,000 subject to certain conditions i.e., his name shall be mentioned in a separate restored category for a period of one year from the date of restoration and within that time period, the person has to pass the online proficiency self-assessment test after which his name shall be included in the databank. However, if he fails to pass the test within one year from such date of restoration, his name shall be removed from the databank and he will have to apply afresh for inclusion of his name.
Amendment to Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (“IBBI (CIRP) Regulations, 2016”) (source)
The IBBI, on 14th June, 2022, has notified the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2022. Pursuant to the amendment, for initiation of Corporate Insolvency Resolution Process (“CIRP”) by an operational creditor, the operational creditors are required to furnish extracts of Form GSTR-1 and Form GSTR-3B relating to Goods and Services Tax and a copy of e-way bills, along with the application filed under section 9 (claims by workmen and employees) of the IBBI (CIRP) Regulations, 2016 mentioning the requisites of the application. These set of documents can be used as evidence of transaction with the corporate debtor (“CD”), and easing the process of admission of claims under section 9. Moreover, the amendment places a duty on CD, its promoters or any other person associated with the management of CD to provide all the information in such format and time as sought by the resolution professional.
Amendment to Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 and Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulation, 2017 (“Regulations, 2017”) (source)
The MCA, on 15th June, 2022, has notified the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) (Amendment) Regulations, 2022 and the Insolvency and Bankruptcy Board of India (Inspection and Investigation) (Amendment) Regulations, 2022 (“Amendment Regulations, 2022”) to provide a mechanism for expeditious redressal of complaints against Insolvency Professionals (“IPs”), Insolvency Professional Agencies (“IPAs”) and information utilities by providing for the following:
Revisions in various timelines related to enforcement process provided in Regulations, 2017 for addressing the issue of delay in present mechanism.
Effective participation of IPAs in regulating the IPs through examination of grievances received against IPs.
Intimation to Committee of Creditor (“CoC”)/ Adjudicating Authority about the outcome of Disciplinary Committee order.
Amendment to the Investor Grievance Redressal Mechanism (“IGRM”) (source)
The Securities and Exchange Board of India (“SEBI”), through a circular dated 3rd June, 2022, has amended the IGRM, with an aim to protect the interest of investors in securities and to promote, develop and regulate the securities market. Subsequent to the amendment to Clause 4 (Arbitration) of IGMR, the time period within which a complainant/member can avail the arbitration mechanism of the stock exchange for settlement of complaints in case he is not satisfied with the recommendation of the Investor Grievance Redressal Committee (“IGRC”) has been decreased from six months to three months from the date of IGRC recommendation. However, the time period of three months shall be applicable only for the cases where the IGRC recommendation is being challenged. For any arbitration application received without going through IGRC mechanism, the limitation period for filing arbitration shall be governed by the law of limitation i.e. the Limitation Act, 1963.
Expansion of Government e-Marketplace- Special Purpose Vehicles (“GeM-SPV”) by Allowing Procurement by Cooperative Societies (“CS”) as Buyers (source)
The Ministry of Commerce and Industry, through a press release dated 1st June, 2022, has stated that the Union Cabinet has approved to expand the mandate of the “GeM-SPV” to allow purchase by CS as buyers on the Government e-Marketplace (“GeM”). Subsequent to the press release, other than the central and state ministries, departments, public sector enterprises, autonomous institutions and local bodies, CS will also be allowed to purchase goods or procure services from GeM to help them secure competitive prices through an open and transparent process. This move is expected to enhance overall Ease of Doing Business for CS, while providing a larger buyer base to the GeM registered sellers.
Liability of the Corporate Debtor (“CD”) to be Included in the Information Memorandum (“IM”) (source)
The National Company Law Appellate Tribunal (“NCLAT”), through an order dated 1st June, 2022 has stated that irrespective of delay in filing claims by the homebuyers, the liability of the CD should be included in the IM. The NCLAT is of the view that when the allotment letters have been issued to the homebuyers and payments have been duly received, the liability of the CD towards those homebuyers exist even if they have not filed their claims and the same must be included in the IM.
Proposal to Make Changes to Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 (“IT Rules, 2021”) (source)
The Ministry of Electronics and Information Technology, on 6th June, 2022, has notified a draft of amendments to the IT Rules, 2021, claiming to provide a more effective grievance redressal mechanism and to plug infirmities and loopholes in the IT Rules, 2021 by proposing additional compliance requirements for social media intermediaries. Pursuant to the amendments draft, rules 3(1)(m) and 3(1)(n) (Due diligence by an intermediary) has been introduced which will require intermediaries to respect the rights guaranteed to internet users under the Constitution of India and the GoI shall ensure that the same is adhered to since GoI is the guarantor of such rights of the citizens of India. Further, it proposes to create a new appellate body namely Grievance Appellate Committee in order to provide a credible self-regulatory mechanism for the users to appeal the decisions of grievance officers.
Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“Guidelines 2022”) (source)
The Central Consumer Protection Authority (“CCPA”), through a notification dated 9th June, 2022, has notified the Guidelines 2022 with the aim to prevent false or misleading advertisements and to protect the consumers. The guidelines stipulate:
The conditions for valid and non-misleading advertisements- advertisements should exhibit truthful and honest representation; there should be no exaggeration on the accuracy, scientific validity, practical usefulness, capability or performance of any service, goods or product;
The conditions for bait advertisements- advertisements shall not seek to entice consumers to purchase goods, products or services without a reasonable prospect of selling such advertised goods, products or services at the price offered and that the advertiser is able to meet the foreseeable demand generated by such advertisement;
Children targeted advertisements- advertisement targeting children shall not feature any personalities from the field of sports, music or cinema for products which, under any law, requires a health warning for such advertisement or cannot be purchased by children.
Disclosure of material connection- This requirement under the new guidelines will require celebrities having equity stakes in brands to disclose their stakes, failing which, the advertisement will be considered to be misleading.
Further, CCPA can impose a penalty of up to INR 10 lakhs on manufacturers, advertisers and endorsers for any misleading advertisements and in case of subsequent contraventions, a penalty of up to INR 50 lakhs can be imposed.
Reserve Bank of India (“RBI”) Allows Linking of Credit Cards with the Unified Payments Interface (“UPI”) (source)
As reported by Economic Times, RBI has allowed to link credit cards with the UPI with the aim to boost digital payments. Currently, the UPI facilitates transaction by linking savings or current accounts through users’ debit cards. However, pursuant to the latest development, users can now link their credit cards as well with the UPI. The feature will be available for RuPay cards, to begin with. Further, the RBI also announced increase in the limit of the automatic transactions from INR 5,000 to INR 15,000 and the said transaction would no longer require manual authentication via one-time-password.
Google India Private Limited (“Google”) Launches Accelerator for Women-Led Startups in India (source)
As reported by the Economic Times, Google has launched a cohort-based accelerator programme for women led startups in India with the aim to boost female entrepreneurship in the country. The programme will offer courses in artificial intelligence, machine learning, product strategy and growth along with providing access to networks, funding, capital, hiring challenges and mentorship. The ultimate goal is to make technology universally relevant and helpful.
Startups Accelerate Hiring of Women in Product and Technology Roles (source)
As reported by the Economic Times, many startups have increased the hiring of women in product and technology industry with the aim to create a more inclusive culture so that the female talent is retained. Companies like Wakefit Innovations Private Limited, UrbanClap Technologies India Private Limited, MPOWER Financing, Simplilearn Solutions Private Limited, etc. have set up a taskforce in order to build better female representation.
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.