Photo of Bharat Vasani

Partner in the  General Corporate and TMT Practice at the Mumbai office of Cyril Amarchand Managaldas. Bharat has over 30 years of experience at senior management level. His areas of specialization includes company law, corporate and commercial laws, securities law, capital market, mergers and acquisitions, joint ventures, media & entertainment law, competition law, employment law and property matters. He heads firm’s media and entertainment law practice.  He is highly regarded in Government circles and in various industry organizations for his proactive approach on public policy issues. Bharat was a member of the Expert Committee appointed by the Government of India to revise the Companies Act, 2013.

Prior to joining the Firm, Bharat was the Group General Counsel of the Tata Group.  He has been at the helm of and steered several large key M&A transactions pursued by the Tata Group in the last 17 years.

Bharat’s contribution to the legal fraternity has been recognized by the Harvard Law School’s Award for Professional Excellence in 2016. Bharat has won several other national and international awards for his various achievements. He had a brilliant academic record in law and first rank holder in all India company secretary examination. He can be reached at bharat.vasani@cyrilshroff.com

New CSR Regime – Is it a philanthropy or a tax levy?

The Ministry of Corporate Affairs (“MCA”), Govt of India, notified the amendments to Section 135 of the Companies Act, 2013 (“the Act”), (dealing with CSR contribution), by the Companies (Amendment) Act, 2019 (“2019 Amendment”), and the Companies (Amendment) Act, 2020 (“2020 Amendment”), on January 22, 2021. The MCA has also notified the Companies (CSR Policy) Amendment Rules, 2021 (“new CSR Rules”), which has made some fundamental changes to the CSR Rules, 2014.
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New disclosure obligation in Financial Statements for companies holding cryptocurrencies - Are Regulators testing waters?

Context

India is witnessing a rapid increase in the number of crypto exchanges as well as cryptocurrency transactions. As per publicly available data, the average daily cryptocurrency trading volumes across the top Indian exchanges have grown nearly 500% from March 2020 to December 2020. Globally, countries such as Switzerland, Singapore and the US have been pro-active in undertaking cryptocurrency transactions, and simultaneously creating a robust regulatory framework for the same. In fact, investors from these countries have also been investing in Indian cryptocurrency exchanges.
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Supreme Court on Section 482 CrPC - Have the inherent powers of High Courts been diluted

Recently, in Neeharika Infrastructure Private Limited v. State of Maharashtra[1] (“Neeharika Infrastructure”) a three-judge bench of the Supreme Court (“SC”) pronounced a detailed judgment on the powers of the High Court (“HC”), while adjudicating a petition for quashing of the FIR – filed under Section 482 of the Criminal Procedure Code, 1973 (“Section 482 CrPC”) and Article 226 of the Constitution of India.


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New Remuneration Regime for Independent Directors - Will It help in attracting better talent on the boards of India Inc

Recently, the Ministry of Corporate Affairs (‘MCA’) has notified the amendments made to Sections 149(9) and 197(3) of the Companies Act, 2013 (‘2013 Act’) by the Companies (Amendment) Act, 2020 (‘2020 Amendment’) -to enable companies faced with absence or inadequacy of profits to pay certain minimum guaranteed remuneration to Non-Executive Directors (‘NEDs’) and Independent Directors (‘IDs’), as may be prescribed. On the same day, the MCA also issued a Notification to amend Schedule V of the 2013 Act to prescribe the scale of remuneration which can be paid to NEDs and IDs, depending on the effective capital of the company.
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Computation of ‘net profits’ for Managerial Remuneration – Has this provision outlived its utility

Introduction

Section 198 of the Companies Act, 2013 (‘2013 Act’), prescribes a special method for computation of ‘net profits’ of a company in a financial year — which has different rules for arriving at net profit than the one prescribed under Accounting Standards.

The special methodology for computation of net profits prescribed under Section 198 is used for two purposes – (i) for determining managerial remuneration under Section 197 and Schedule V; and (ii) for determining the minimum CSR amount to be spent by the company in a financial year, under Section 135(5) of the 2013 Act.
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Evidentiary value of Parliamentary Committee Reports 

In Kalpana Mehta v Union of India (‘Kalpana Mehta judgment’)[1], a Constitution Bench of the Supreme Court (‘SC’) pronounced a detailed judgment on whether Courts can place reliance on the Report of a Parliamentary Standing Committee (‘PSC’). The SC also examined whether the factual observations made in a PSC Report can be contested or challenged by the parties, during a judicial proceeding.

This decision arose from a referral order issued by a two-judge bench of the SC. The two-judge bench took the view that this was a ‘substantial question of law’ – that should be adjudicated by a Constitution Bench in accordance with Article 145(3) of the Constitution. While the Constitution Bench took a unanimous view, three separate concurring opinions were issued by Justice Dipak Misra, Justice Dr. D Y Chandrachud and Justice Ashok Bhushan.
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Serious Fraud Investigation Office – Keeping a close watch on frauds in India Inc

The Serious Fraud Investigation Office (‘SFIO’) is an organisation established under the aegis of the Ministry of Corporate Affairs (‘MCA’) – for investigation and prosecution of white-collar crimes. The SFIO was constituted in July 2003 following the recommendations of the Naresh Chandra Committee. In 2002, the Naresh Chandra Committee had recommended setting up a ‘Corporate Serious Fraud Office’, to uncover corporate fraud, and supervise prosecutions under various economic legislations.
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Minimum Interest Rates on loans to foreign WOS – Need for Review

Inter-corporate loans granted by a company are regulated under Section 186 of the Companies Act, 2013 (‘2013 Act’). One important pre-condition relates to the interest rate thresholds prescribed under sub-section (7). Section 186(7) of the Act states that – “No loan shall be given under this Section at a rate of interest lower than the prevailing yield of one-year, three-year, five-year or ten-year Government Security closest to the tenor of the loan.

Section 186(7) effectively prevents a company from giving an inter-corporate loan at a rate of interest lower than the prescribed thresholds, i.e. the prevailing yield of one-year, three-year, five-year or ten-year government security closest to the tenor of the loan. This leads to multiple practical difficulties, especially in situations where a holding company wishes to provide funds to its foreign wholly owned subsidiaries (‘WOS’).
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New CSR Regime – Is it too prescriptive

The Ministry of Corporate Affairs (‘MCA’) notified the amendments made to Section 135 of the Companies Act, 2013 (‘the Act’) – via the Companies (Amendment) Act, 2019, and the Companies (Amendment) Act, 2020, on January 22, 2021.

On the same day, the MCA also notified the Companies (Corporate Social Responsibility) Amendment Rules, 2021 (‘new CSR Rules’). These Rules have made significant changes to the regulatory framework governing the monitoring and evaluation of CSR activities, and the utilisation of CSR expenditure.

In this blog, we shall focus on the new CSR Rules, and examine its implications for India Inc. The implications of the changes made by the new CSR Rules are analyzed below.
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The PMLA – is the net cast too wide

The Prevention of Money Laundering Act, 2002 (‘PMLA’) has undergone multiple amendments after it was brought into operation on July 1, 2005. Most recently, the PMLA was amended through the –

  • Finance Act, 2015 (‘2015 Amendment’)
  • Finance Act, 2018 (‘2018 Amendment’)
  • Finance Act, 2019 (‘2019 Amendment’)

These amendments aimed to plug loopholes in the operation of the PMLA – to strengthen the framework for tackling money laundering. In furtherance of this objective, the 2019 Amendment has clarified the definition of “proceeds of crime” under Section 2(1)(u). Amendments were also made to Section 45, following the Supreme Court’s decision in the Nikesh Tarachand Shah[1] case – which struck down the pre-conditions for bail prescribed under Section 45(1). Over the years, the list of “scheduled offences” under Schedule I of the PMLA has also been amended significantly. Another aspect that arises in many PMLA proceedings is the admissibility of statements made to investigating officers.
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