India: IBBI notifies the IBBI (Fast Track Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2017
The Insolvency and Bankruptcy Board of India (IBBI) notified the “Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2017”
India: IBBI notifies the IBBI (Fast Track Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2017
The Insolvency and Bankruptcy Board of India (IBBI), through Notification No. IBBI/2017-18/GN/REG23, on December 31, 2017, has notified the“Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Fourth
Amendment) Regulations, 2017”. This notification was made in exercise of its powers conferred by Clause (t) of Sub-Section (1) of Section 196 read with Section 240 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as the Code).
Amendments in the regulation–
- (1) These regulations may be called the Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Fourth Amendment) Regulations, 2017.
(2) The amended regulations shall come into force on the date of their publication in the Official Gazette.
- In light of the amendment, the following clause shall be substituted, namely: –
“(e) “dissenting financial creditor” means a financial creditor who voted against the resolution plan or abstained from voting for the resolution plan, approved by the committee”.
- With regards to regulation 34 –>
(a) for sub-regulation (3), the following sub-regulation shall be substituted, namely: –
“(3) After the receipt of resolution plans in accordance with the Code and these regulations, the resolution professional shall provide the liquidation value to every member of the committee in electronic form, on receiving an undertaking from the member to the effect that such member shall maintain confidentiality of the liquidation value and shall not use such value to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of section 29”.
- (b) after sub-regulation (3), the following sub-regulation shall be inserted, namely: –>
“(4) Subject to sub-regulation (3), the interim resolution professional or the resolution professional, as the case may be, shall maintain the confidentiality of the liquidation value.”
- In the principal regulations, in regulation 35, in sub-regulation (2), clauses (j) and (k) shall be omitted.
- In the principal regulations, in regulation 38, for sub-regulation (1), the following
sub-regulation shall be substituted, namely: – “(1) A resolution applicant shall submit resolution plan(s) prepared in accordance with the Code and these regulations to the resolution professional within the time given in the invitation made under clause (h) of sub-section (2) of section 25”.
The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) Regulations, 2017 were published in the Gazette of India, vide notification No. IBBI/2017-18/GN/REG012 dated the June 14, 2017. Thereafter, the following amendments have been made –
(1) The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Amendment) Regulations, 2017, vide notification No. IBBI/2017- 18/GN/REG014, dated the August 16, 2017.
(2) The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Second Amendment) Regulations, 2017 vide notification No. IBBI/2017- 18/GN/REG017, dated the October 5, 2017.
(3) The Insolvency and Bankruptcy Board of India (Fast Track Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2017 vide notification No. IBBI/2017- 18/GN/REG020, dated the November 7, 2017.
India: Government seeks strict compliance to CSR
In a recent move, the Ministry of Corporate Affairs (hereinafter referred to as the “Ministry”) intends to take stringent action against the companies violating the provisions of the Companies Act, 2013 (hereinafter referred to as the “Act”) with respect to compliances of their Corporate Social Responsibility (hereinafter referred to as ‘CSR’). The permission for penal action against 196 companies who have failed to comply with the regulations for corporate social responsibility in 2014-15, has been given by the Ministry.
Introduced under the Act, Corporate Social Responsibility is one of the methods whereby the companies pay back to the society by making their contribution for the welfare of mankind. As per the European Union, it “is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis”. Corporate Social Responsibility ensures the socio-economic and environmental welfare of the society while balancing the interests of the corporates.
Projects included under Corporate Social Responsibility are working towards eradicating poverty, promoting healthcare, education, gender equality, environmental sustainability, natural heritage, rural sports to name a few. It also encourages funding
As per Section 135 of the Act, the following companies are required to constitute a Corporate Social Responsibility Committee for the enforcement of the Corporate Social responsibility Policy:
having net worth of rupees five hundred crore or more, or
having turnover of rupees one thousand crore or more or;
having a net profit of rupees five crore or more
The Corporate Social Responsibility Committee is required to ensure that the company spends, in every financial year, at least 2 % of its average net profits made during the three immediately preceding financial years, in pursuance to its Corporate Social Responsibility Policy.
As per the Act, in the event of failure of the company to spend the specified amount towards its Corporate Social Responsibility, its board is required to provide the specific reasons for the same in the board report.
By the new approach, the Government seeks effective enforcement of Corporate Social Responsibility, which is a statutory obligation for the corporates to take initiatives towards Social, Environmental and Economic Responsibilities.
India: The Union Cabinet approves the Consumer Protection Bill, 2017
The Union Cabinet on December 20, 2017, has given its approval for the introduction of the new Consumer Protection Bill, 2017, to amend the Consumer Protection Act, 1986. The amendment seeks to bring an overhauling change in the domain of consumer law along with the rights of the consumers.
The Bill has been introduced with the aim to ensure swift redressal of the grievances of the consumers and stringent action is taken against unfair trade practices. The Bill seeks to enlarge the scope of the existing Act and proposes stricter actions against misleading advertisements and food adulteration. The Bill also introduces provisions for penalty and jail terms in case of adulteration and misleading advertisements by companies.
With regards to misleading and inappropriate advertisements, the bill provides for both fine and ban on celebrities. In case of first offence, the fine will be up to INR 10,00,000 and a one-year ban on any endorsement. For the second offence, the fine will be up to INR 50,00,000 and up to three years’ ban.
On the other hand, the penalty is slightly higher for manufacturers and companies. The penalty is up to INR 10,00,000 and up to two years’ jail for the first offence. The fine will be up to INR 50,00,000 and five years’ jail for the second offence.
One of the most noteworthy amendment in the bill provides for penalty up to life term jail sentence in case of adulteration. Further, the Bill seeks to establish a Central Consumer Protection Authority (CCPA) to protect consumer rights. It has provisions for post-litigation stage mediation as an alternate dispute resolution mechanism. The bill also provides for product liability action.
India: Liberalization of FDI caps
The Union cabinet has approved  major amendments in the Foreign Direct Investment (hereinafter referred to as ‘FDI’) policy on 10 January 2018 which have been introduced with the intention of liberalizing and simplifying the extant policy on FDI for offering ease of doing business in the country. The government has stated that the country had potential to attract far more foreign investment, which could have been achieved only through further liberalizing and simplifying the FDI regime. In furtherance of the same, these amendments are aimed at yielding larger FDI inflows to increase investment, income and employment. Note that during the year 2014-15, total FDI inflows received were US $ 45.15 billion as against a total FDI of US $ 60.08 billion in the financial year 2016-17, which is an all-time high.
Changes introduced in key sectors:
- Single Brand Retail Trading
100% FDI under automatic route is now permitted for Single Brand Retail Trading as it has been decided by the government to permit single brand retail trading entity to set off its incremental sourcing of goods from India for global operations during initial 5 years which would begin from 1st of April of the year in which the first store is opened against the mandatory sourcing requirement of 30% of purchases from India.
In this regard, note that after completion of this 5 year period, the Single Brand Retail Trading entity shall be required to meet the 30% sourcing norms directly towards its Indian operation, on an annual basis.
- Civil Aviation
Foreign airlines have now been permitted to invest up to 49% in the capital of Indian companies under approval route in Air India subject to the following two conditions:
i. FDI in Air India including that of foreign airlines shall not exceed 49% either directly or indirectly
ii. Substantial ownership and effective control of Air India shall continue to be vested in Indian National.
- Construction Development:
Townships, Housing, Built-up Infrastructure and Real Estate Broking Services
Government has now permitted 100% FDI under automatic route. Further, the government has also clarified that that the real-estate broking service does not amount to real estate business.
Earlier, the FDI policy on Pharmaceuticals sector provided that definition of medical device as contained in the FDI Policy was subject to amendment in the Drugs and Cosmetics Act. In furtherance of the same,
- the government has now stated that the definition of medical devices as contained in the FDI Policy was complete in itself and thus, the reference has now been dropped. It has
also been decided to amend the definition of ‘medical devices’ as contained in the FDI Policy.
- Power Exchanges
The government has now permitted 49% FDI under automatic route in Power Exchanges registered under the Central Electricity Regulatory Commission (Power Market) Regulations, 2010.
Foreign Portfolio Investors /Foreign Institutional Investors were earlier restricted for investing in Power Exchanges engaged in secondary market only. However, the government has now allowed them to invest in secondary as well as primary market.
Other approval requirements under FDI Policy:
- The government has now permitted the issue of shares against non-cash considerations like pre-incorporation expenses, import of machinery etc. in case of sectors under automatic route.
- FDI in an Indian company that is engaged solely in the activity of investing in the capital of other Indian companies or LLPs and in the Core Investing Companies regulated by a financial sector regulator, would now be allowed for foreign investment up to 100% under automatic route; and, if they are not regulated by any Financial Sector Regulator or where only part is regulated or where there is doubt regarding the regulatory oversight, foreign investment up to 100% will be allowed under Government approval route, subject to conditions including minimum capitalization requirement, as may be decided by the Government.
Competent Authority for examining FDI proposals from countries of concern:
For FDI in automatic route sectors which require approval only on the matter of investment being from country of concern, FDI applications would be processed by Department of Industrial Policy & Promotion (DIPP) for Government approval. Cases under the government approval route, also requiring security clearance with respect to countries of concern, will continue to be processed by concerned Administrative Department/Ministry.
Prohibition of restrictive conditions regarding audit firms:
FDI with the fresh amendments has set a policy stating that wherever the foreign investor wishes to specify a particular auditor or audit firm having international network for the Indian investee company, then the audit of such investee companies should be carried out as joint audit wherein one of the auditors should not be part of the same network.
Positive steps have been taken by the government to allow more investment into the country. This liberalization of FDI norms by the government seeks to enable international investor companies to invest in India and bring along with them latest technologies and business practices into India.