Legal & Industry Updates - September 2020
SPECIAL EVENTS
Webinar on Corporate Fraud Control Through Various Investigation Methodologies, September 11, 2020
The team at Ivy Law participated in a webinar, conducted by the PHD Chamber of Commerce and Industry, focusing on ‘Corporate Fraud Control through Various Investigation Methodologies’. The webinar gave insights on the evolution of techniques used in fraud investigation. The conventional methodologies of investigation and the approach followed were discussed.
E-Conclave on My India My Startup - 100 Unicorns by 2025, September 17, 2020
The team at Ivy Law participated in an e-Conclave 'My India My Startup: 100 Unicorns by 2025', organised by PHD Chamber of Commerce and Industry. The e-Conclave focused on the incubation and mentorship support models for start-ups and provided insight on a start-ups' journey to become a unicorn. The highlight was a discussion on attaining funding from venture capitalists, leading to the growth and expansion of a start-up with the said funding. The recent pattern of agri-tech start-ups attracting huge investments was also emphasized.
LEGAL & INDUSTRY UPDATES
Cabinet Approves New Labour Codes (source)
The Rajya Sabha on September 23, 2020 passed three labour codes namely, Industrial Relations Code, 2020 (IR Code) (ii) Code on Occupational Safety, Health & Working Conditions Code, 2020 (OSH Code) and (iii) Social Security Code, 2020 (SC Code), completing the government’s codification of 29 labour laws.
The IR Code:
The IR Code is expected to consolidate and amend the laws relating to trade unions, conditions of employment in industrial establishment or undertaking, investigation and settlement of industrial disputes. The IR Code has introduced more conditions for workers to strike. More flexibility is provided to employers for hiring and firing workers without government permission. An effective dispute resolution mechanism is being ensured, providing for a time-bound dispute resolution system in every institution.
The OSH Code:
The OSH Code envisages safe working environment for workers especially women. The OSH Code consolidates 13 existing acts regulating health, safety and working conditions. It empowers the state government to exempt any new factory from the provisions of the code in order to create more economic activity and employment. It regulates the wages, working hours, licences, duties of employers etc.
The SC Code:
The SC Code provides a framework to include organized and unorganized sector workers under the ambit of comprehensive social security. The SC Code contains provisions relating to EPFO, ESIC, building construction workers, maternity benefits, gratuity and social security fund for unorganized sector workers. Provision has been made to formulate various schemes for providing comprehensive social security to workers in the unorganised sector. Provision for gratuity has been made for fixed term employees and there would not be any condition for minimum service period. In a move aimed at linking gratuity payment to the mode of work, the new SC Code has introduced different ceilings for different categories of workers. This will help address the often raised issue of employees not meeting the mandatory ceiling of five years of work for being entitled to their gratuity contribution.
Amendments in Public Procurement (Preference to Make in India) Order, 2017 (source)
As per the press release issued by Ministry of Commerce & Industry on September 18th, 2020, the Government of India has amended the Public Procurement (Preference to Make in India) Order, 2017 on September 16, 2020 (Order). The Order enables nodal Ministries/ Departments to notify higher minimum local content requirement for Class-I & Class-II local suppliers which was earlier fixed at 50% and 20% respectively. As per the Order, entities of countries which do not allow Indian companies to participate in their government procurement for any item, will not be allowed to participate in government procurement in India for all items related to that nodal Ministry/ Department, except for the list of items published by the Ministry/ Department permitting their participation. An upper threshold value of procurement beyond which foreign companies can enter into a joint venture with an Indian company to participate in government tenders will be notified.
The Essential Commodities (Amendment) Bill, 2020 (source)
As per the press release issued by the Ministry of Consumer Affairs, Food & Public Distribution on September 22nd, 2020, the Essential Commodities (Amendment) Bill 2020 (EC Bill) with provisions to remove commodities like cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities was passed by the Rajya Sabha. The EC Bill aims to remove the fear of the private investors of excessive regulatory interference in their business operations. The freedom to produce, hold, move, distribute and supply will lead to harnessing of economies of scale and attract private sector/foreign direct investment into the agriculture sector and help drive up investment in cold storages and modernization of food supply chain. The government, while liberalizing the regulatory environment, has also ensured that interests of consumers are safeguarded. It has been provided in the EC Bill, that in situations such as war, famine, extraordinary price rise and natural calamity, such agricultural foodstuff can be regulated.
The Foreign Contribution (Regulation) Amendment Bill 2020 (source)
The Foreign Contribution (Regulation) Amendment Bill 2020 was passed by the Lok Sabha on 20th September, 2020. The bill proposes a number of drastic changes to the law governing receipt of foreign contributions. The key changes include no-sub-granting of foreign contribution to any other organisation. The bill proposes to reduce admin expenditure from fifty percent to twenty percent. Ministry of Home Affairs (MHA) will have the power to freeze the FCRA Bank account in case of any contravention of the FCRA law. The bill empowers the MHA to suspend the FCRA registration of an organization for more than six months.
Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 (source)
The Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 was brought into force on September 23, 2020 (IBC Amendment Act). The IBC Amendment Act provides for the Suspension of initiation of corporate insolvency resolution process, by virtue of which no application for initiation of corporate insolvency resolution process (CIRP) of a corporate debtor will be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date. Further, no application will be filed for initiation of CIRP of a corporate debtor for the said default occurring during the period stated above. However, the IBC Amendment Act clarifies, CIRP can still be initiated for any defaults arising before March 25, 2020.
Amendment of Information Technology Rules for Intermediaries (source)
As reported by the Economic Times, Ministry of Electronics and Information Technology (MeitY) is in the process of amending the Information Technology (Intermediaries Guidelines) Rules, 2011 for intermediaries like Facebook and Google to make them more responsive and accountable. Section 79(1) (Exemption from liability of intermediary in certain cases) of the Information Technology Act, 2000, grants intermediaries a conditional immunity with regard to any third party content uploaded on their platforms. The intermediaries are expected to disable any unlawful content relatable to Article 19(2) of the Constitution of India as and when brought to their knowledge, either through a court order or through a notice by appropriate government or its agency.
Companies (Amendment) Act, 2020 (source)
The Companies (Amendment) Act, 2020 came into force on 28th September 2020. It has decriminalised 48 sections by removing or reducing penal provisions and omitting imprisonment for various offences that were considered procedural and technical in nature, a move that will help companies in ease of doing business. It has also removed the provision of imprisonment for nine offences, which relate to non-compliance with orders of the national company law tribunal (NCLT). These include matters relating to winding-up of companies, default in publication of NCLT order relating to reduction of share capital, rectification of registers of security holders, variation of rights of shareholders, and payment of interest and redemption of debentures. It has also removed the penalty for certain offences.
Revised Priority Sector Lending Guidelines (source)
As per the press release issued by the Reserve Bank of India (RBI) on September 4th, 2020, the Priority Sector Lending Guidelines (PSL Guidelines) are re-aligned with emerging national priorities and on bringing sharper focus on inclusive development. The revised PSL Guidelines will enable better credit penetration to credit deficient areas increase the lending to small and marginal farmers and weaker sections boost credit to renewable energy, and health infrastructure. Some of the salient features of revised PSL Guidelines are:
to address regional disparities in the flow of priority sector credit
targets prescribed for “small and marginal farmers” and “weaker sections” are being increased in a phased manner
higher credit limit has been specified for Farmers Producers Organisations and Farmers Producers Companies undertaking farming with assured marketing of their produce at a pre-determined price
loan limits for renewable energy have been increased (doubled)
credit limit for health infrastructure (including those under ‘Ayushman Bharat’) are doubled
bank finance to start-ups (up to Rs 50 crores), loans to farmers for installation of solar power plants for solarisation of grid connected agriculture pumps and loans for setting up compressed bio gas plants are included as fresh categories of eligible finance under the PSL Guidelines.
Competition Commission of India Approves Proposed Combination Involving Piramal Pharma Limited (Pharma Co.) and CA Clover Intermediate II Investments (Curie) (source)
As per the press release issued by the Ministry of Corporate Affairs (MCA) on September 12th, 2020, Competition Commission of India (CCI) approved the proposed combination involving acquisition of 20% of the issued and paid-up equity share capital of Pharma Co by Curie. The proposed combination relates to the transfer of global pharmaceutical business by Piramal Enterprises Limited (PEL) to a wholly owned subsidiary of PEL, i.e. Pharma Co., followed by, the acquisition of 20% of the issued and paid-up equity share capital of Pharma Co. by Curie.
Supreme Court Orders Telcos to Clear Outstanding AGR Dues in 10 years (source)
As reported by the Economic Times, the Hon’ble Supreme Court has ordered Vodafone Idea to pay their adjusted gross revenue (AGR) dues over the next 10 years till March 2031. The telcos though need to pay 10% of their AGR dues upfront by March 31, they have to pay the instalments by February 7 every year to meet March 31 deadlines annually, till 2031. The bench has asked the managing directors and chairmen of the telcos to submit affidavits, existing valid bank guarantees and ensure that annual instalments are paid, failing which contempt proceedings will be initiated.
Telecom Regulatory Authority of India to Reform Licensing Regime to Fuel Investments, Innovation in Telecom Sector (source)
As reported by Economic Times, India's telecom regulator, Telecom Regulatory Authority of India (TRAI) is aggressively working on reforming the licensing regime and will soon release a consultation paper to base its views on promoting innovation and attracting new investments, as part of ease of doing business in the sector. TRAI had earlier presented its views on rationalisation of AGR, reduction of license fee, spectrum usage charge, Universal Service Obligation Fund contribution, and flexible payment options for auctioned spectrum. TRAI is also currently working on promoting broadband connectivity and enhancing speed on the back of strategies recognised in the National Digital Communications Policy (NDCP) 2018, which it believes should be converted into the operational roadmap.
Single Window System Proposed by the Ministry of Commerce & Industry (source)
As per the press release issued by the Ministry of Commerce & Industry, on September 16th, 2020, the Central Government is working on setting up a single window system for clearances and approvals. Despite the presence of several IT platforms for investing in India such as in departments of the Government of India and State Single Window Clearances, investors need to visit multiple platforms to gather information and obtain clearances from different stakeholders. To address this aspect, the creation of a centralized Investment Clearance Cell which will provide end-to-end facilitation support, including pre-investment advisory, information related to land banks; and facilitating clearances at Central and State level is proposed. The creation of a centralised investment clearance cell will provide end-to-end facilitation support, including pre-investment advisory, information related to land banks and facilitating clearances at central and state level.
TRAI Rules Out Regulating OTT Players (source)
As reported by the Economic Times, TRAI, in its recommendations on regulating communication apps, has ruled out the need to regulate communication apps such as Facebook, WhatsApp, Viber and Google, popularly known as over-the-top (OTT) players, saying it isn’t the right time to come up with a comprehensive regulatory framework on this score. TRAI also rejected the need for any regulatory intervention relating to privacy and security of OTT services, though stating the requirement of monitoring market developments and with its right to intervene at a later stage if required.
Adjournment in Consumer Complaints (source)
As per the press release issued by the by Ministry of Consumer Affairs, Food & Public Distribution on September 20th, 2020, in order to ensure timely disposal of cases it has been provided that adjournment of cases shall be entertained in exceptional circumstances and the reason for the same is required to be recorded in writing. Further, in case of a prayer for adjournment under any other circumstances, the Consumer Commission may, unless sufficient cause is shown, impose such cost, as it deems necessary, for granting such adjournment. The Consumer Protection Act, 2019 and the Consumer Protection (Consumer Commission Procedure) Regulations, 2020 provide for expeditious disposal of cases.
Examination of Violations by E-Commerce Retail Companies (source)
As per the press release issued by Ministry of Commerce & Industry on September 16th, 2020, representations alleging violations of extant laws by e-commerce companies, have been received. In this regard, representations received are being examined by Department for Promotion of Industry and Internal Trade (DPIIT) and certain alleged contraventions under the FDI Policy, are also being investigated against certain e-commerce retail companies under provisions of Foreign Exchange Management Act, 1999 by the Directorate of Enforcement. Further, several complaints against e-commerce entities, including related associate/holding companies etc, which are operating as marketplace platforms, online sellers, service providers, search engines service providers operating in different verticals etc, regarding anti-competitive behavior, are being looked into by Competition Commission of India.
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.