CHAIRMAN OR MANAGING DIRECTOR SEBI Regulation

Section 203(1) of the Companies Act states that an individual shall not be appointed or reappointed as the chairperson, of the company as well as the managing director (MD) or the chief executive officer (CEO) at the same time, unless the articles of the company provides otherwise or the company does not carry on multiple businesses. Further, this restriction is not applicable to certain specified class of companies engaged in multiple businesses and which have appointed one or more CEOs for each such business. Continue Reading Chairman or Managing Director? – Eenie Meenie Miney Mo

Indian Labour Laws Recap 2019 and Outlook 2020

The year 2019 can be said to be a watershed year in relation to the employment law regime in India. The Indian government took various steps to simplify and streamline the dated employment legislations, veritably in a bid to rise up in the index of Ease of Doing Business in India. The courts in India too played their part in interpretation of the existing legal regime. Here, we not only look at some of the key, impactful developments, but also look forward to what 2020 may have in store for India Inc., in relation to the same: Continue Reading Recap of Key Labour Law Developments of 2019 & Looking Forward to 2020

Cross-border demergers – lack of legislative intent?

In the matter of Sun Pharmaceuticals Industries Limited, the Ahmedabad bench of the NCLT has ruled that Section 234 of the Companies Act, 2013 and the FEMA Cross Border Merger Regulations, 2018, do not permit cross-border demergers. Sun Pharma sought to demerge two of its investment undertakings in India into two overseas resulting companies, based in the Netherlands and the US. Being a listed entity, it obtained prior approval of SEBI through the relevant stock exchanges and the requisite corporate consents of its shareholders and creditors. The RBI granted its implied deemed approval by stating that the demerged company is required to abide by the applicable rules and regulations, which it had undertaken that it would. None of the other stakeholders to whom notices were issued by the tribunal, including the Registrar of Companies (ROC), objected to the demerger on the ground that it was not permitted by law. Continue Reading Cross-border Demergers – Lack of Legislative Intent?

Mutual Funds and Alternative Investments - Stewardship Code

Introduction

On December 24, 2019, Securities and Exchange Board of India (“SEBI”) released a circular setting up a stewardship code for Asset Management Companies (“AMCs”), Mutual Funds (“MFs”) and all the categories of Alternative Investment Funds (“AIFs”) investing in listed Indian companies (“Stewardship Code” or “Code”). In keeping with global trends, SEBI has made it necessary for the power wielding cash-rich institutional investors, to act in accordance with the responsibilities that invariably accompany and behoove such powers and formulate a policy adopting the principles enshrined in the Code.

The Stewardship Code prescribes certain principles which, aim at enhancing the responsibilities of the AMCs/ AIFs to protect the interests of their investors/beneficiaries. The requirements pertaining to the Stewardship Code shall come into effect on April 1, 2020. Continue Reading Being Responsible Corporate Citizens – How Mutual Funds and Alternative Investment Funds will Rise Up to the Stewardship code

Evolving Private Equity Trends in India – Buyout Transactions

INTRODUCTION

Private equity (PE) transactions in India conventionally comprised minority investments in Indian companies. However, maturing market conditions and an increasingly favourable regulatory landscape have been providing tailwinds to PE firms to undertake buyout transactions. Many PE firms investing in India have gained significant experience to deal with the governance and regulatory risks that Indian markets pose. This enables them to leverage their expertise from running businesses globally to managing businesses in India. Continue Reading Evolving Private Equity Trends in India – Buyout Transactions

Control deals Tender offers 2019 - Takeover regulations

Control deals are gaining popularity because of the ability of the incoming controlling shareholder to control the ‘when’ and ‘how’ of the functioning of the business that is housed in the company. Additionally, the stigma associated with promoter’s relinquishing control of their companies is on the wane in India. Despite the market conditions, 2019 saw a fair deal of control transactions in the country. For such category of deals, calendar year 2019 was comparable to calendar year 2018 in number and value terms.

In this blog, we are sharing with you our analysis of control transactions in which exit was offered to public shareholders through the tender offer route in 2019[1], under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations). We will be sharing a detailed report on the 2019 activity of such transactions separately. Continue Reading Control Deals Involving Tender Offers: Flashback 2019

IBC Second Amendment Bill 2019

The edifice of the Insolvency and Bankruptcy Code, 2016 (“IBC”) was conceptualised on ideas such as promoting ‘maximisation of value of assets’, ‘a transparent and predictable insolvency law’,  ‘avoiding destruction of value of the debtor’ and recognising the difference between ‘malfeasance and business failure’.[1] In the three years since the enactment of the IBC, many areas in the insolvency resolution process  have required judicial and legislative interventions to enable the process to achieve the desired results.

Among others, the ongoing investigations against insolvent entities and the risk of cancellation of critical government contracts during the insolvency process, were identified as key impediments to strategic interest in the stressed market. The introduction of the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 (“Bill”), by the Government, is a step that will help overcome such ‘critical gaps in the corporate insolvency framework’.[2] Continue Reading IBC Second Amendment Bill, 2019: Finishing Touches to the Indian Restructuring Landscape

The National Medical Commission Act, 2019. Community Health Providers

This blog post is part of a multi-part series. Our previous posts 1, 2 covered the salient features of the National Medical Commission Act, 2019 (NMC Act) where we highlighted some issues arising out of the same.

The NMC Act has some interesting aspects that relate to Community Health Providers (CHPs). We attempt to shed some light on this proposal.

Community Health Providers

The NMC Act, under Section 32(1) provides for granting of a limited license, “to practice medicine at mid-level as Community Health Provider to such person connected with modern scientific medical profession who qualify such criteria as may be specified by the regulations”. However, it also clarifies that the limited license granted under Section 32(1) shall not exceed one-third of the total number of licensed medical practitioners. Secondly, the scope of practice of CHPs has been limited and they can prescribe specified medicine independently, only in primary and preventive healthcare[1]. It has been clarified that in any situation other than primary and preventive healthcare, they may provide medicines only under the supervision of medical practitioners. Continue Reading The National Medical Commission Act, 2019. Community Health Providers: Legitimate or Not

National Medical Commission Act 2019 - Part 2

This blog post is a part of a multi-part series. In the first part, we had written about the salient features of the National Medical Commission Act, 2019 (NMC Act) and the regime proposed by it. In this part, we will analyse some of the contentious issues in relation to the NMC Act.

Independence of Autonomous Boards:

The NMC Act has made provisions for the constitution of 4 (four) autonomous boards, namely, the Under-Graduate Medical Education Board; the Post-Graduate Medical Education Board; the Medical Assessment and Rating Board; and the Ethics and Medical Registration Board (Boards). However, in terms of Section 16(1) of the NMC Act, these “autonomous” Boards will remain under the overall supervision of the National Medical Commission (NMC). Section 16(2) of the NMC Act further provides that each of the abovementioned Boards shall be an autonomous body, however, in the same breath, it also dictates that these Boards shall carry out their functions subject to regulations made by the NMC. Furthermore, the Central Government has been entrusted with the responsibility of appointing the President and Members of these Boards on the recommendation of a ‘Search Committee’, which itself is comprised majorly of Central Government appointees. In terms of Section 23(1) of the NMC Act, the presidents of the Boards have been allowed only such administrative and financial powers, “as may be delegated” by the NMC. Continue Reading The National Medical Commission Act, 2019. A Look : Part 2

Personal Data Protection Bill 2019 - Analysis

A draft of the Personal Data Protection Bill, 2019 (“Bill”) has been introduced before the Lok Sabha on December 11, 2019.

The Bill is based, in large part, on the proposed draft of the Personal Data Protection Bill, 2018 (“Draft Bill”) which was attached to the report submitted to the Government by the Committee of Experts constituted under the Chairmanship of Justice Srikrishna (Retd.) (for details see our analysis[1] of the Draft Bill and its comparison with the European Union’s General Data Protection Regulation[2] (“GDPR”)[3] ).

That being said, the Bill also includes several modifications and changes in scope and intent. Continue Reading The Personal Data Protection Bill, 2019: An Analysis