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CAM Corporate Team

The CAM Corporate Team can be reached at cam.mumbai@cyrilshroff.com

The Empire Strikes Back Strict Compliance with SEBI AIF Regulations

Taking cue from Yoda, the adjudication officer of Securities and Exchange Board of India (SEBI) has ordained “Do or do not, there is no try”. This means there can be no halfway compliance with SEBI (Alternative Investment Funds) Regulations, 2012 and circulars issued therein (the AIF Regulations).

The November-end order of the SEBI Adjudicating officer (AO) in the case of the SREI Multiple Investment Trust (the Fund) not only provides an insight into the regulator’s interpretation of the AIF Regulations but it is also the first case of imposition of a monetary penalty for breach of the AIF Regulations. This article critically analyses the AO’s order and summarises the learnings from the same.Continue Reading The Empire Strikes Back: Strict Compliance with SEBI AIF Regulations

It’s a Yes – for Banks!

The RBI has amended the Master Directions on Financial Services provided by Banks. This is a significant move permitting Banks to invest in Category II Alternative Investment Funds.

As of June 30, 2017, Alternative Investment Funds (AIFs) had raised the cumulative figure of Rs. 48, 129 crores, against aggregate capital commitments of Rs 96,000 crores. The AIF industry is thus growing at an exponential rate, raising monies from domestic and offshore investors.

Unfortunately, however, the Indian AIF industry, lags behind its western counterparts in terms of participation by domestic pools of capital. In western countries, long term or patient capital, such as pension funds, contributes nearly 40% of the capital raised by AIFs. In the Indian context, restrictions prescribed by sector regulators have inhibited fund managers from raising capital from the domestic financial services sector.

Hence, it was no surprise that one of the key themes in the 2016 reports of the Alternative Investment Policy Advisory Committee (AIPAC), chaired by Mr Narayan Murthy, was “unlocking domestic pools of capital”. The committee’s recommendation was premised on the argument that the domestic capital pools – pensions, insurance, domestic financial institutions, banks, and charitable institutions – need access to appropriate investment opportunities to earn risk-adjusted returns.Continue Reading It’s a Yes – for Banks!

Mergers are compared to marriages. As a union of companies, they require patience and understanding, but they also involve a large amount of paperwork. Mergers, like marriages, can flourish with the right synergies, but if there are differences between the entities, the arrangement can often collapse. The recent breakdown of the Snapdeal – Flipkart transaction, can provide a useful context to understand the reasons for the success/failure of M&A transactions.

The success of a deal depends on the companies, the individuals, the business climate, as well as the different regulators involved in the transaction. A few common reasons for deals breaking down are – valuation differences, different expectations between the parties involved, regulatory roadblocks or a lack of consensus regarding the exit horizons.

While these are reasons general to any corporate transaction, there are some requirements specific to M&A deals that must be met in order for the deal to survive.Continue Reading When the Engagement Ring Doesn’t Fit – Why M&A Deals Fall Apart

Second in our series of Employment Law blogs on the Maternity Benefit Act. The earlier piece was published here.

The Maternity Benefit Act, 1961 (MB Act) was amended by the Maternity Benefit (Amendment) Act, 2016 (MB Amendment Act) which became effective on April 1st, 2017 (except for the provision that required a crèche facility to be provided by the employer, which came into effect on July 1st, 2017). Questions have now been raised about whether the provisions of the MB Amendment Act apply to employees covered under the Employees’ State Insurance Act, 1948 (ESI Act).

The purpose of this note is to provide an insight into the applicability of the MB Act and the ESI Act and benefits available therein, especially provided under the MB Amendment Act, to a woman employee, etc.Continue Reading What is Relevant to Know about the Maternity Benefits Act and the Employees’ State Insurance Act

“The foundation of every state is the education of its youth,” said Diogenes, the ancient Greek philosopher.

Herein lies the crux of why education remains vital for any government across the world, often as a charitable and social responsibility.

This piece intends to provide an overview of the education sector in India; to highlight some of the key legislations and regulatory regimes that govern education in the country; shed light on some of the recent government initiatives in the sector; and, in conclusion, make a case for increased private participation in Indian education.Continue Reading Regulatory Hot Broth: Why Private Participation Would Add to the Flavour of the Indian Education Sector

First in our series of Employment Law blogs on the Maternity Benefit Act.

The Maternity Benefit (Amendment) Act, 2016 (“Amendment Act”), which was passed by Parliament on March 9th, 2017, introduced certain significant changes to the Maternity Benefit Act, 1961 (“MB Act”). The Amendment Act received Presidential assent on March 27th, 2017 and came into effect from April 1st, 2017 except for the provisions, that require an employer to provide a creche facility. These are scheduled to become effective from July 1st, 2017.

Subsequent to the introduction of the Amendment Act and clarifications issued by the Ministry of Labour and Employment on April 12th, 2017 (“Clarification”), several questions have been raised by companies with respect to their obligations as employers under certain aspects of the Amendment Act.Continue Reading Analysis of Certain Aspects of the Maternity Benefit (Amendment) Act, 2016

Intellectual property (IP) forms part of our overall growth strategy. This is the message that the Indian government is sending out like never before, as is evident from a number of measures that have been put in place in recent times. The trends show that the government is keen not just to augment efficiency at the Controller’s office, but also to make an effort from a regulatory and legislative perspective. Some of the changes strongly reflect the government’s resolve to push for massive digitisation to strengthen transparency and bring uniformity and consistency into the way the Intellectual Property Office (IPO) functions. The changes are aimed at boosting investor confidence in the long term and signal that India is a pro-IP destination with a conducive environment for innovation and the protection of IP.

The IP regime has been on course to harmonise with internationally accepted jurisprudence ever since India signed up for the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) with new laws, regulations and authorities set up one after the other in compliance with the international obligations. Amendments in patent and copyright laws, new laws on trademarks, design, geographical indications, semiconductor topographies, plant variety and biodiversity marked the beginning of this century. Coupled with these legislative changes, there were also steady changes in the administration with new IP offices and infrastructure set up.Continue Reading Intellectual Property: On the Path to Reformation

This blog piece is excerpted from a previously published article in the Express Pharma, April 16-30 Issue and addresses the patent jurisprudence and issues in the pharmaceutical industry in India.

Innovation is the root of success in the competitive world of today. Creativity manifests in new ideas and technologies. New technologies when adopted make life easy. This could not be more true than for the pharmaceutical industry. With the Indian pharmaceutical industry en route to becoming a major player in the global market by 2020, there is increased activity in terms of investments in research and development, access to world class healthcare at affordable rates for the public at large and a renewed focus on development in rural markets.

Though patent law in India has existed over the years, jurisprudence related to pharmaceutical patents is still developing. From granting product patents, to specifically identifying patentable subject matter and incorporation of provisions for compulsory licensing, the law has come a long way since its inception. A conscious effort has been made to ensure that our laws are Trade-Related Aspects of Intellectual Property Rights (TRIPS) compliant while supporting a larger initiative to ensure that life saving medicines are available at affordable prices (compulsory licensing, price control etc.).

Courts in India are getting increasingly sensitive to the complex and technical issues that form the pith and substance of complex pharmaceutical patent litigation. Patent litigation turns on opinion of experts and evidence, which are often absent at the preliminary stages of litigation especially the interim injunction stage. As such the practice of passing ex-parte interim injunctions has given way to a more rational and balanced approach, wherein questions of prima facie infringement, balance of convenience and irreparable injury of the parties are weighed, analysed and rationalised along with a larger public interest perspective. The Supreme Court has time and again insisted that patent matters should be handled on an expedited basis especially where issues of public health, access to life saving drugs and commercial interests are involved and that matters should expeditiously head to trial. Courts are thankfully paying heed to this. Times are changing.Continue Reading Intellectual Property Rights: Building or Stumbling Blocks? – On The Right Track

2017 is upon us, but many readers seem to have missed some very important and progressive changes to the Maharashtra Tenancy and Agricultural Lands Act, 1948 (Act) made last year on 1 January 2016! Two sections (63, and 63-1A) of the Act govern the ability to sell and buy agricultural lands (AL) for non-agricultural (NA) use.

Here is a comparative note on the pre-amendment and post-amendment law under Section 63-1A affecting AL bought for NA bona fide industrial use.
Continue Reading Using Agricultural Lands for Non-Agricultural Purposes in Maharashtra – Important 2016 Amendments

“Raindrops on roses and whiskers on kittens
Bright copper kettles and warm woollen mittens
Brown paper packages tied up with strings
These are a few of my favourite things…”

Hearing my niece practice this iconic song made me introspect on the year gone by. So, here are select highlights of 2016 from the Alternative Investment Funds (AIFs) industry perspective.

  1. Regulatory developments
  • 2016 started with Report 1 of the Alternative Investment Policy Advisory Committee (AIPAC), and drew to a close with Report 2 of the AIPAC in December 2016. SEBI amended the AIF regulations in November 2016 to implement recommendations relating to Angel Funds. Our last post covers key recommendations made by AIPAC in Report 2. AIPAC has rightly focussed on structural and evolutionary changes needed for the AIF industry and thus 2017 will be the year to implement or build on these recommendations.
  • In February 2016, subject to certain conditions, RBI permitted NRIs to invest in AIFs on a non-repatriation basis and for investments to be treated at par with investments by residents.
  • In April 2016, the Pension Fund Regulatory and Development Authority permitted pension funds to invest in Category I and Category II AIFs subject to various conditions. However, these conditions have effectively stymied pension fund investing in Category II AIFs. AIPAC reports recommend the liberalisation of regulations to allow investments in AIFs by pension funds, insurance companies, banks and others.
  • In April 2016, RBI amended the Foreign Venture Capital Investor (FVCI) regime under FEMA 20 to provide, inter alia, that FVCIs registered under the SEBI (FVCI) Regulations will not require RBI approval for investments as per amended Schedule 6. The RBI notification also stipulated that FVCIs can receive the proceeds on liquidation of venture capital funds (VCFs) or Category I AIFs. However, RBI’s October 2016 circular was a sting in the tail. That circular stated that downstream investment by VCFs / Category I AIFs that have been invested into by FVCIs will need to comply with Schedule 11 of FEMA 20 i.e. such downstream investments shall be subject to the sectoral caps and conditions under the foreign direct investment (FDI) policy.
  • In September 2016, RBI amended FEMA 20 to permit 100% FDI in ‘other financial services’ industry subject to conditions prescribed by the relevant regulator and FDI in entities conducting unregulated or partially regulated financial services (FS) activities with the prior approval of the Foreign Investment Promotion Board (FIPB). While this liberalisation was eagerly awaited, the language of the notification stirred up concerns surrounding the interpretation of ‘regulated FS activities’. For example, would FDI in an AIF manager which is exempt from registration under SEBI (Investment Advisers) Regulations require FIPB approval? Or would FDI in an Indian advisor to an offshore PE fund or Foreign Portfolio Investment (FPI) manager qualify for the automatic route?

Continue Reading 2016, The AIF Industry In Retrospect