The judgments of the Delhi HC in Cruz City and SRM Exploration, discussed in Part 1, appears to ignore the earlier decision of the SC in Dropti Devi v Union of India[1], where the SC held (in the context of prosecution under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act) that the legislative objectives of FERA and FEMA are identical, namely, preservation of the foreign exchange resources of the country.
India is one of the few countries that still has exchange controls and does not have full capital account convertibility.
The Foreign Exchange Management Act, 1999 (“FEMA”), empowers the Reserve Bank of India (“RBI”) to frame regulations, master directions and issue circulars for the enforcement of the FEMA (“FEMA Regulatory Regime”). The FEMA Regulatory Regime contemplates prior RBI approval for certain categories of capital account transactions between residents and non-residents.
The enforcement of international arbitration awards in India, where there is going to be a remittance of foreign exchange from a resident to a non-resident, would invariably have FEMA implications. FEMA implications may also arise in situations where the foreign award provides for transfer of shares between residents and non-residents. If the foreign award is not in conformity with the FEMA Regulatory Regime, in such a situation, can the court, where the enforcement action is filed, decline enforcement on the ground that the foreign award would be contrary to the country’s ‘public policy’.
The Ministry of Finance (“MoF”) and Reserve Bank of India (“RBI”) notified the new overseas investment (“OI”) regime on August 22, 2022 (“New Regime”).
The New Regime inter alia comprises the OI Rules, 2022[1] notified by the MoF (“Rules”), the OI Regulations, 2022[2] notified by the RBI and the Master Directions issued by the RBI to authorised persons. It supersedes FEMA 120[3] and the circulars and directions issued thereunder (“Old Regime”).
The Supreme Court of India has in its recent landmark judgment in Satender Kumar Antil[1] laid down guidelines on the grant of bail to an accused and while doing so, it has reiterated aspects of personal liberty and constitutional guarantees available to an accused under criminal jurisprudence. The Court observed that while its discussion and findings are meant to operate as guidelines, each case pertaining to a bail application is to be decided on its own merits.[2] This article seeks to analyse these guidelines and evaluate their consequences and operation in practice.
Continue Reading Bail or Jail – The Supreme Court clarifies the law and lays down the guidelines
The offence of money laundering, as per the definition in Black’s Law Dictionary is “the act of transferring illegally obtained money through legitimate people or accounts so that its original source cannot be traced”. Further to this definition, it is only but natural to assume that the money, if illegally obtained, must be obtained in relation to the commission of an underlying criminal offence. The commission and requirement of this underlying offence, commonly known as a predicate offence, has been a point of debate since the introduction of the Prevention and Money Laundering Act, 2002 (“the Act”), which provides a list of offences in the Schedule appended thereto as ‘scheduled offences’.
Continue Reading The Concept of Predicate Offence: The Supreme Court Clarifies
SEBI’s amendments to the regulatory architecture for related party transactions (“RPTs”) under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR”) came into force from April 1, 2022[1] (“RPT Regulations”), bringing about a paradigm shift in the RPT approval and disclosure requirements applicable to listed companies in India.[2]
Continue Reading RPT Regulations – Some Suggestions for SEBI’s consideration
The regulatory architecture under the Companies Act, 2013 (“Act”), and the SEBI (LODR) Regulations, 2015 (“LODR”) places significant emphasis on the functioning of various committees of the Board of Directors (“Board”) of a listed company. While all Board committees have been entrusted with important responsibilities, a disproportionate amount of the regulatory burden has been placed on the Audit Committee. The Audit Committee has multifarious responsibilities under Section 177 and various other provisions of the Act, the LODR, and the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”).
International Monetary Fund (“IMF”) was founded in the aftermath of World War-II at the Bretton Woods Conference in 1944 to establish a post-war financial order that would facilitate economic cooperation.[1] The IMF has the mandate of providing financial support mechanisms such as bailouts to member countries that are experiencing actual or potential macroeconomic problems. A balance of payments crisis is a huge macroeconomic imbalance. It is also called currency crisis. It occurs when a nation is unable to pay for essential imports or service its external debt payments. Since 2010, world financial markets have expressed recurrent concerns about risks to debt sustainability. This was fuelled by the COVID-19 pandemic wherein most stressed economies got pushed into a pandemic induced financial crisis, making IMF bailouts the go to short-term ‘solution’ for failing balance of payments.
Continue Reading International Monetary Fund Bailouts: The Sri Lankan Bankruptcy Battle
SEBI[1] has recently revised the materiality threshold for obtaining shareholder approval for related party transactions (“RPTs”) under Regulation 23(1) of the SEBI (LODR) Regulations, 2015 (“LODR”), to cover RPTs that exceed INR 1000 crore or 10% of a listed entity’s annual consolidated turnover (as per the last audited financial statements), whichever is lower.
The revised materiality threshold has come into effect on April 1, 2022, and this change assumes significance, as prior to April 1, 2022, there was no absolute numerical threshold for RPTs that require shareholders’ approval.
This also raises the question as to whether an absolute numerical threshold of INR 1000 crore could potentially be considered as violative of Article 14 of the Indian Constitution.
In this post, the authors aim to probe deeper into this constitutional aspect and examine some of the arguments that can be made from both sides of the spectrum.
In a recent judgment pronounced in Invesco Developing Markets Fund v. Zee Entertainment Enterprises Limited[1] (“Judgment”), on March 22, 2022, a Division Bench of the Bombay High Court (“BHC”) allowed Invesco’s appeal against a judgment dated October 26, 2021[2]. The October 26 judgment was passed by a Single Judge of the BHC (referred to hereinafter as the “Impugned Order”), which had granted an injunction restraining Invesco from calling for and holding an extraordinary general meeting (“EGM”) of Zee.