Legal & Industry Updates - October 2022
SPECIAL EVENTS
Social Stock Exchange (“SSE”) in India, October 7, 2022
The team at Ivy Law participated in a webinar on the “Social Stock Exchange in India'' organized by ASSOCHAM. The key highlights of the webinar included the recent regulatory frameworks and guidelines for SSE issued by the Securities and Exchange Board of India (“SEBI”) which aims to be a catapult to the much needed evolving socio-economic environment. The webinar emphasized on the immensely growing importance for sustenance of social enterprises and to familiarize the promoters and their teams in social enterprises about regulation of SSEs, instruments for fundraising, international practices and eligibility for listing. Further, significant amendments to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 were also discussed exhaustively.
Entertainment Law - Key Takeaways, October 31, 2022
The team at Ivy Law participated in a webinar on the "Entertainment Law – Key Takeaways" organized by IMS Law College, Noida. The key highlights of the webinar were discussion on what constitutes defamation and the first amendment rights on a global scale, freedom of speech and legal perspectives in relation to free speech. Various general topics including copyright, trademark and the various customs and practices to be followed in operation of the entertainment industry were also deliberated upon. Furthermore, a case analysis of a landmark judgement, Depp v. Heard, 2020 in the UK Trial, was also the center of discussion.
LEGAL & INDUSTRY UPDATES
Insolvency and Bankruptcy Board of India (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) (Amendment) Regulations, 2022 (“IP Regulations, 2022”) (source)
The Insolvency and Bankruptcy Board of India (“IBBI”), on 3rd October, 2022, has notified the IP Regulations, 2022 amending the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 (“IP Regulations, 2016”). The amendment provides that no insolvency professional entity shall be enrolled as a professional member unless it is recognized by IBBI under the IP Regulations, 2016 or is eligible to be registered as an insolvency professional with IBBI. The aim is to efficiently facilitate insolvency professionals to take on the task of administering companies that are going through the bankruptcy process.
Credit Guarantee Scheme for Startups (“CGSS”) (source)
The Department for Promotion of Industry and Internal Trade (“DPIIT”) and Ministry of Commerce and Industry, on 7th October, 2022, has notified the establishment of CGSS for startups to provide them collateral-free loans extended by scheduled commercial banks, non-banking financial companies and SEBI registered alternative investment funds. However, the maximum guarantee cover per borrower is capped at INR 10 crore or the actual outstanding credit amount, whichever is less. For the purpose of CGSS, a trust or fund will be set up by the Central Government (“CG”) with the purpose of guaranteeing payment against default in loans or debt extended to eligible borrowers. Further, a management committee will also be constituted by DPIIT to oversee the affairs of the trust.
The Competition Commission of India (“CCI”) Issues Cease and Desist Order Against Eight Firms Found Guilty of Bid Rigging and Cartelization (source)
The CCI, on 11th October, 2022, has issued a cease and desist order against eight firms which were found to have contravened sections 3(3)(a) and 3(3)(d) (Anti-competitive agreements) of the Competition Act, 2002 by indulging in cartelization in the supply of axle bearings to Eastern Railway by directly or indirectly determining prices, allocating tenders, coordinating bid prices, and manipulating the bidding process. The firms were further perceived to be discussing amongst themselves the quantity allocation with respect to the tenders of Indian Railways for the procurement of the said axle bearings and also the compensation mechanism in the event that some of them did not win the agreed quantities.
Project Imports (Amendment) Regulations, 2022 (“PI Regulations, 2022”) (source)
The Central Board of Indirect Taxes and Customs (“CBIC”), on 19th October, 2022, has notified the PI Regulations, 2022 amending the Project Imports Regulations, 1986 wherein the CBIC has excluded solar power projects from the list of goods eligible for a concessional 7.5% import duty under the project imports scheme thereby closing a loophole that allowed solar power developers to avoid the 40% import duty on imported solar modules and cells with the aim to encourage local manufacturing. However, according to solar power developers, the decision has come as a major setback to the country's solar power capacity addition plan and they are considering taking up legal action to oppose the differential treatment towards solar power plants.
Revised Personal Data Protection Bill (“PDP Bill”) May Relax Provisions on Data Localization (source)
As reported by the Economic Times, the revised version of the PDP Bill is expected to contain relaxed provisions on data localization or cross-border data flow, however, it will be ensured that all the data belonging to Indian citizens shall at all times remain available for law enforcement agencies or any other government organization that is legally entitled to access such data. The PDP Bill will be going through extensive consultations with academia, subject and legal expects before being presented to the Parliament.
SEBI Questions Venture Capitals (“VCs”) and Private Equities (“PEs”) on Dispute Resolution Process (source)
As reported by the Economic Times, SEBI has questioned several PEs and VCs regarding the number of complaints received by them in the last two financial years, the number of complaints that have been directed to the resolution mechanism, their dispute resolution process and whether they have spelt out the resolution framework in the private placement memorandum which is a key document containing information on the investment strategy and risk management tools, among other things, that investors review before investing in an alternative investment fund.
Over-The-Top (“OTT”) Communication Players to be Regulated Under the Indian Communication Bill, 2022 (“ ICB, 2022”) (source)
As reported by the Economic Times, the Department of Telecommunications intends to regulate only the OTT communications applications such as WhatsApp Messenger, Google Meet, Facetime, and Telegram, rather than those that offer electronic-commerce services or content such as Netflix, Inc and Amazon Prime Video under the proposed ICB, 2022. Therefore, any two-way communication between OTT communications applications and its users will be considered as telecommunication services and may be regulated. Further, the regulation will focus on the security perspective rather than the revenue-generating measures such as license fees, as the goal is not to hinder the sector's growth.
CCI Imposes Heavy Penalty on Google LLC (“Google”) for Adhering to Anti-Competitive Practices (source)
As reported by the Economic Times, CCI has imposed a penalty of INR 1337.76 crores on Google for abusing its dominant position in multiple markets with its android mobile operating system. CCI asserted that the makers of devices that run on android should not be forced to pre-install Google services on their devices and has asked Google to provide fair access to all stakeholders. CCI has also imposed a further penalty of INR 936.44 crores and issued a cease and desist order against Google for abusing its dominant position with respect to its Play Store policies. Apart from a series of measures to modify their payment policies within three months, CCI has directed Google to not restrict app developers from using any third-party billing or payment processing services to purchase apps or for in-app billing on Google Play Store.
Technology Giants to Pay Penalty for Breach of Digital Market Rules (source)
As reported by the Business Standard, technology giants may risk penalty for violating the digital market rules intended to ensure that digital markets remain competitive and established businesses do not abuse their position. Further, discussions for a Digital Markets Act are in progress which will prescribe the behavioral norms and forbid actions like "self-preferencing" by electronic-commerce platforms. The penalty is likely to be based on how much money the defaulting business made during the years in which they were at fault. Currently, CCI has the authority to fine a company found guilty of anti-competitive agreements or abuse of dominance up to 10% of its annual sales.
CCI May Adopt Organization for Economic Co-operation and Development (“OECD”) Standards for Digital Companies (source)
As reported by the Economic Times, CCI is considering adopting some of the guidelines set forth by OECD for the regulation of digital companies by planning to keep a closer eye on digital businesses and thereby take preventative measures to stop abuse of market dominance. The OECD guidelines for multinational enterprises are recommendations from governments to multinationals on responsible business conduct across a range of issues such as human rights, labor rights and the environment.
Legal Review of Content of Films and Brands (source)
As reported by the Economic Times, varied brands from several sectors are seeking brand strategy and legal review pertaining to their promotion, marketing and advertising content as there has been a surge in boycotts. The brands have requested their creatives and marketers to steer clear from sensitive topics such as religion, politics or anything that can offend a class of people or society. Brand strategists are now engaged on promotional and trailer-level edits exploring varied present trending subjects on the web to evaluate what might go in favour of the film or advert marketing campaign. Also, legal professionals are being appointed by the brands to regularly advise them on whether any dialogue or a scene could potentially violate Indian laws.
‘Foreign-Return’ Startups Eyeing Local Public Offers (source)
As reported by the Economic Times, numerous Indian startups who had planned to get listed overseas are considering a return as they attempt to bring their ownership back to India and list locally. Over 20% correction in the tech-heavy Nasdaq and the rapid loss of interest in special purpose acquisition vehicles this year along with the recent relaxations in the round-tripping rules by the Reserve Bank of India and the CG policy support for startups have dimmed the allure of foreign listing.
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.