India: Insolvency Regulator signs MoU with RBI for Effective Implementation of Insolvency and Bankruptcy Code
The Insolvency and Bankruptcy Board of India signed a Memorandum of Understanding with Reserve Bank of India to assist and cooperate with each other for effective implementation of The Insolvency and Bankruptcy Code, 2016.
India: Insolvency Regulator signs MoU with RBI for Effective Implementation of Insolvency and Bankruptcy Code
Source : www.ibbi.gov.in
Introduction The Insolvency and Bankruptcy Board of India (hereinafter referred to as “IBBI”) signed a Memorandum of Understanding with the Reserve Bank of India (hereinafter referred to as “RBI”) on March 12, 2018. The purpose of the MoU is to assist and cooperate with each other for effective implementation of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “Code”).
Need of MOU between IBBI and RBI
IBBI, set up on October 1, 2016 under the Code, is responsible for making and enforcing laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals. The IBBI enforces procedures of corporate insolvency resolution, corporate liquidation and individual insolvency resolution under the Code. IBBI ensures the implementation of the processes in a time bound manner to promote entrepreneurship and balance the interests of all stakeholders. The IBBI also exercises regulatory oversight over the adjudicating authorities under the Code, i.e., Insolvency Professionals, Insolvency Professional Agencies and Information Utilities.
In view thereof, IBBI has signed a Memorandum of Understanding (hereinafter referred to as “MoU”) with RBI which is the central bank in India and seeks to secure monetary stability in India. By virtue of the MoU, the IBBI and the RBI envisage to effectively implement the Code and its rules and regulations.
About the MoU
The MoU signed between IBBI and RBI consists of various provisions including the following-
- Sharing of information between the two parties, subject to the limitations imposed by the applicable laws
- Sharing of resources available with each other to the extent feasible and legally permissible
- Periodic meetings to discuss matters of mutual interest, including regulatory requirements that impact each party’s responsibilities, enforcement cases, research and data analysis, information technology and data sharing, or any other matter that the parties believe would be of interest to each other in fulfilling their respective statutory obligations
- Cross-training of staff in order to enhance each party’s understanding of the other’s mission for effective utilization of collective resources
- Capacity building of insolvency professionals and financial creditors
- Joint efforts towards enhancing the level of awareness among financial creditors about the importance and necessity of swift insolvency resolution process of various types of borrowers in distress under the provisions of the Code
The MoU between the insolvency regulator and the banking regulator is envisaged to strengthen the efficiency of insolvency and bankruptcy processes. Efforts to increase awareness among financial creditors, emphasizing on swift insolvency resolution process and capacity building of insolvency professionals and financial creditors is a way forward to effective implementation of the Code. However, with respect to sharing of resources between the authorities, such process should be monitored in order to avoid misuse of resources which may adversely affect interest of stakeholders involved in insolvency and bankruptcy proceedings.
Bird’s eye view of General Data Protection Regulation
The General Data Protection Regulation  (hereinafter referred as ‘GDPR’) aimed at the protection of the personal data of the persons residing in the European Union (hereinafter referred as ‘EU’). This regulation is being brought into force for superseding the Data Protection Directive.
The GDPR shall be effectively implemented from May 25, 2018.
What is personal data?
Article 4 of the GDPR defines Personal Data as ‘any information relating to an identified or identifiable natural person. The definition broadly covers everything small detail through which a person can be identified like: name, address, telephone number, photos, email id, IP addresses, cookies, genetic data, and biometric data (hereinafter referred as ‘personal data’).
Scope of GDPR:
GDPR will have a wider reach as compared to any other data protection regulations around the world. Article 3 specifies that ‘the regulation applies to the processing of personal data in the context of the activities of an establishment of a controller or a processor in the Union, regardless of whether the processing takes place in the Union or not’.
In simple words, the scope of GDPR would include every company, public organization and charity, existing in European Union, irrespective of nationality. If any of the above organization is collecting storing or processing personal data of any individual residing on European soils, both citizens and non-citizens, will come under the ambit of GDPR. Even the service data providers, from example Cloud Service providers, who store or process data for any of the above mentioned organizations will also have to follow specific compliance obligations mentioned under GDPR.
Consent cannot be assumed. Under this regulation it is mandatory to take consent in specific manner and cannot be obtained in manner which is inexplicable to a person not proficient in the field of law or technology for example, in case of click wrap agreements.
The individual/ organization collecting data (hereinafter referred as ‘data controller’) should:
- Establish that the consent to obtain the personal data was provided by the concerned person.
- Such data controller shall also provide the opportunity to withdraw consent so obtained should also be easily accessible.
- Even if a data controller has obtained such express consent prior to implementation of GDPR it would be required to ensure compliance to GDPR. It is expected that express GDPR consent forms are likely to be signed with the companies with its clients so that express consent compliance can be made.
Personal data of children can prove to be more sensitive in nature in certain circumstances especially when they interact over the internet. Therefore, the parent or guardian or such other person that holds “parental responsibility” of a child below the age of 16 years, shall act on behalf of the child for the purpose of providing or withdrawing the consent. The GDPR also provides that the age limit of 16 years may be lowered by the member state however, it must be noted that such a limit cannot be lower to 13 years. 
The GDPR provides that it shall be obligatory for any company collecting, storing or processing the data of residents of Europe to inform the concerned data protection authority regarding any kind of data breach within 72 hours of it being known. In such a circumstance where the information about the breach has not been duly informed to the data protection authority then a penalty of higher of
4% of global turnover or €20 million that be levied from such company.
- The GDPR will warrant that the companies collecting, storing or processing the data of residents of Europe shall be doing it only for the precise and legitimate purposes as conveyed.
- The GDPR shall lead the individuals to realize the importance of protecting their personal data. This is expected to ensure the protection of right to privacy of EU residents while interacting with such data controllers.
- The GDPR will also make the companies accountable to expressly convey why the personal data is being collected and how such collection is done.
- Apart from data collectors, service provider companies which process the data of clients will now be required to be GDPR complaint. Thus, such existing service provider companies who have been in the industry for long will also be required to obtain express consent from their clients.
- Since the penalty under GDPR for not informing about the breach can be levied on the global turnover, this is expected to influence the operation of companies with multi-national presence.
Article 4 of GDPR.
Article 3 of GDPR.
Article 8(1) of GDPR.
In accordance with Chapter 8 of the GDPR.
India: Draft Company Amendment Rules for conversion into companies
Source : www.mca.gov.in
The Companies Act, 2013 (hereinafter referred to as “Companies Act”) aims towards effective governing and managing of the affairs of the companies established in India. The Ministry of Corporate Affairs (hereinafter referred to as “MCA”) facilitates the enforcement the said Companies Act by incorporation of the Companies Rules.
The MCA issued draft Companies (Authorized to Register) Second Amendment Rules, 2018 (hereinafter referred to as “draft rules”). The said draft rules discuss about the requirements which requisite to accompany the application for conversion of entities such as limited liability partnerships, societies or trusts to a company in furtherance to the provisions for incorporation of a company according to Section 366 of the Companies Act. Under the said draft rules, following details are obligated for submission for the aforesaid purpose in addition to the application:
- List of the names, addresses and occupations of all the members along with their respective shareholding;
- Particulars of the persons proposed to be the first directors of the company, Director Identification Number, residential address, interests in other firms, etc. with their consent to act as directors of the company;
- Documents such as deeds of partnership, by laws, certification of registration or any other like instrument;
- Affidavit of each the persons proposed as the first directors, that such person is not disqualified to be a director as per Section 164(1) of the Companies Act and all the documents and information being filed with the Registrar for company registration are correct and complete;
- In case the company is intended to be registered as a company limited by guarantee, copy of the resolution declaring the amount of guarantee;
- No Objection Certificate from all secured creditors of the applicant;
- Written consent from majority of the members at a general meeting agreeing for registration;
- Undertaking of compliance by the proposed directors to the provisions of the Indian Stamp Act, 1899;
- Copy of the latest income tax return;
- In cases for conversion into company limited by guarantee from a society/ trust, undertaking from the members that upon such conversion no application for conversion into any other kind shall be made till the expiry of a period of 10 years.
The MCA has invited suggestions and comments to the said draft rules vide notice dated March 20, 2018. The draft rules enable the conversion of different entities into companies limited by shares or guarantee. In order to ensure proper compliance to the Companies Act, the rules mandate for the provision of true and complete information about the prospective directors of the company intended to be incorporated. Also, the draft rules safeguard the interests of the creditors of the applicant entities who may misuse such conversion of the entities into companies for any fraud or misrepresentation. Invitation for public suggestions is a pragmatic approach whereby the members of the public can take part by suggesting modification to the said rules with achieving the eventual motive of a favourable and just legislative framework, monitoring the regulation of companies in India.
India: Enforcement of the Payment of Gratuity (Amendment) Bill, 2018
Source : www.parliamentofindia.nic.in
Gratuity is the monetary reward received by the employee from his employer as a gratuitous reward for his loyalty towards the employer. This benefit is issued to the employees upon their retirement. In India, the regulation governing the scheme for the payment of gratuity to employees engaged in different establishments employing 10 or more persons are covered under the provisions of the Payment of Gratuity Act, 1972 (hereinafter referred to as “Act”). The Act has been incorporated with the objective of providing social security to the employees after retirement, whether retirement is a result of superannuation, or physical disablement or impairment of vital part of the body.
Both the houses of the Parliament have approved the Payment of Gratuity (Amendment) Bill, 2018 (hereinafter referred to as “bill”) and enforced on March 29, 2018. The bill has brought forth the following amendments:
- For the purpose of calculation of the period of continuous service in case of female employees the duration of maternity leaves is also included. The duration of the
maternity leaves has been extended from the ‘twelve weeks’ to ‘such period as may be notified by the Central Government from time to time’. This period has also been notified as twenty-six weeks.
- The maximum limit of gratuity which was earlier restricted to INR 1,000,000 has been extended to INR 2,000,000.
The Government has adopted a progressive approach by incorporating changes in the Payment of Gratuity Act, 1972 through the amended bill. In furtherance to the amended provisions of the Maternity Benefit (Amendment) Act, 2017, which extended the duration maternity leave, the bill also considers the said period as part of the continuous service while computation of gratuity. The modification to maximum limit of gratuity has been introduced taking into account the inflation and wage increase after the implementation of 7th Central Pay Commission.