On July 11, 2016, the President of the Queen’s Bench accorded final approval to the second Deferred Prosecution Agreement (DPA) entered into by the Serious Fraud Office of the UK (SFO). Through this short post, we seek to examine the DPA, what such approval of the DPA means and its significance for UK owned/based companies in India (Indco) that are subject to the provisions of the UK Bribery Act, 2010 (UKBA).

Continue Reading UK SFO’s Second DPA: Implications for Indian Companies

The Law Commission of India’s report of August 2014 on the Indian Arbitration Act mentions that amendments are being suggested to the Arbitration Act to provide a “stable business environment and strong commitment to the rule of law, based on predictable and efficient systems of resolution of disputes.”

Amendments to the Indian Arbitration Act, 1996 were passed by both Houses of Parliament and assented to by the President on December 31, 2015. These amendments apply to all arbitral proceedings commenced on or after October 23, 2015 but parties can agree to even apply these amendments to proceedings commenced before the Amendment Act.

Continue Reading India and International Arbitration: Prospects

The regulatory regime governing the exploration and production of hydrocarbons in India is a complex one that has undergone a plethora of change in recent times. This post examines the many developments as well as the past discourse that has set the context for change. .

Brief Background of the Regulatory Regime Governing the Hydrocarbon Sector

In post-1991 India, regulatory reforms in the hydrocarbon sector were implemented through a royalty-cost recovery regime initially under a set of Production Sharing Contracts (PSCs) (Pre-NELP PSCs) and thereafter under the New Exploration Licensing Policy (NELP). Both regimes presented challenges for contractors as well as the Government. Cost recovery meant that the contractor would spend money upfront to explore and recover the same from the revenue generated from the block, then sharing any balance revenue, i.e. “profit”, with the Government.

Continue Reading The Search for Hydrocarbons – A Regulatory Conundrum

The Enforcement of Security Interest and Recovery of Debt Laws and Miscellaneous Provisions (Amendment) Act, 2016 (the Act) received assent of the President on August 12, 2016 and was  published in the Gazette on August 16, 2016. It will come into effect from such date(s) as may be notified by the Central Government. The Act makes far reaching changes to the way securitisation and reconstruction companies are regulated, as well as the category of financial assets and the secured creditors to whom non- judicial remedies and access to debt recovery tribunals are available. We try to examine this through this short post.

Continue Reading The Changing Landscape of Securitisation & Debt Recovery

The question of the enforceability of contractual restrictions on transfer of shares of Indian public limited companies (Companies) has been the subject matter of various decisions by Indian courts. The Indian legislature has also examined this aspect, which has resulted in a change in the relevant legislation. Through this post, we examine the position as it stands today.

The debate on the enforceability of shareholder agreements and joint venture agreements governing Companies garnered significant attention in early 2010 when a single judge of the Bombay High Court (Bombay HC) set aside an arbitral award in a 2010 decision in Western Maharashtra Development Corporation Ltd. v. Bajaj Auto Ltd. The judgment indicated that the shares of a Company could not be fettered, were freely transferable and as such, any restriction on free transferability would be a violation of section 111A of the erstwhile Companies Act, 1956 (1956 Act).

Continue Reading Enforceability of Contractual Restrictions on Transfer of Shares

A Brief Background

Sexual harassment at the workplace was first recognized as a violation of basic human rights by India’s apex court, the Supreme Court (SC) in Vishaka v. State of Rajasthan (Vishaka Judgment) in 1997. In its judgement, the SC opined that sexual harassment was violative of the fundamental rights of women guaranteed under the Constitution of India, 1950 including the constitutionally guaranteed rights to life, equality, dignity and to practice any profession/carry on any occupation, trade or business. Accordingly, and in the absence of specific legislation at that time, the SC had enunciated guidelines for the prevention of sexual harassment at the workplace.

Continue Reading Challenges Faced by Employers in Addressing Sexual Harassment Complaints

Amidst much anticipation, the Department of Industrial Policy and Promotion released Press Note 3 (PN3) in March of 2016 (now incorporated in the Consolidated FDI Policy dated June 7, 2016) to clarify its stand on the subject of foreign direct investment (FDI) in e-commerce. This post is an attempt to highlight certain issues arising out of PN3 in relation to the use of the term ‘services’, which may not only impact the e-commerce players but may also extend to other businesses which utilize electronic platforms.

Through the release of PN3, the Department clarified its stance on two key aspects: (a) FDI is permitted in the ‘marketplace model of e-commerce’ under the automatic route (i.e., without prior approval); and (b) FDI is prohibited in the ‘inventory based model of e-commerce.

Continue Reading The E-commerce Press Note – Some Unanswered Questions

From time to time, concerns have been raised by entrepreneurs and various Indian and international surveys about the challenges faced by start-ups and other companies doing business in India. India has also been rated very low on charts concerning ease of doing business.

India is a vast country with several states and union territories, which presents differences in culture, language, faith and food habits. But doing business in India also means complying with a long list of Central (Federal) and State statutes and their varied interpretations. In addition, judicial pronouncements of concerned High Courts and the Hon’ble Supreme Court of India must be taken into consideration.

Regulatory compliance with several laws is time consuming and complicated, adding to the financial and intellectual burden on start-ups. This, in turn, shifts their focus from development and growth of the core business to ensuring compliance with laws.

As a result, laws, rather than acting as a catapult and augmenting the growth of businesses, force several start-ups to reconsider their plans/strategies concerning doing business in India.

Continue Reading Employment Issues Faced by Start-Ups in India

The Indian banking system has been riddled with non performing assets (NPAs) for some time now. To help lenders, the Reserve Bank of India (RBI) has introduced a variety of debt restructuring policies, including the flexible structuring of project loans  and the strategic debt restructuring scheme. But these schemes have met with limited success, mostly due to the lack of funds available for promoters to invest, non-cooperation on the part of the borrowers and the sub-optimal levels of operations in the relevant companies.

The lukewarm economic environment has further amplified these woes. As such, ‘bad’ loans across 40 listed banks in India had increased to Rs. 5.8 trillion (approximately USD 85.9 billion) in March 2016 from Rs. 4.38 trillion (approximately USD 64.9 billion) in December 2015. Estimates show that weak assets in the Indian banking system will reach Rs. 8 trillion (approximately USD 118.5 billion) by March 2017.

Continue Reading Dealing with Stressed Assets in India – S4A, A Fresh Perspective

Earlier yesterday, the Prime Minister of India announced (Announcement) [1] a number of key changes to India’s foreign direct investment (FDI) policy, as set forth in Consolidated FDI Policy Circular of June 7, 2016 (Policy)[2]. Broadly, these changes pertain to enhancing the limits of foreign investment (FI) and easing of existing conditions regarding FI in some sectors. Through this short update post, we seek to highlight some prominent changes thus announced.

Continue Reading Key Changes to India’s FDI Regime Announced Yesterday