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CAM Corporate Team

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

Indian Aerospace & Defence Sector Recent Changes and their Impact - Part 1

Part 1 of our blog post in this series discussed the evolution of the Aerospace and Defence (A&D) sector in India over the years and certain recent policy changes introduced by the Government during the Covid era, focused on making the A&D sector one of the major pillars of the Atmanirbhar Bharat Abhiyan.  In this second part, we analyse how these policy changes will impact various players in the A&D sector in India going forward.  
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Indian Aerospace & Defence Sector Recent Changes and their Impact - Part 1

The Indian military aerospace and defence (A&D) industry has seen a slew of policy decisions being taken and implemented during the Covid era. From increasing the automatic route limit for foreign investment in the sector, to imposing a ban on import of various defence items, it is clear that the Government is focused on the growth and development of the sector. This two-part post analyses the various policy decisions taken recently and their impact on the various players in the A&D ecosystem. In the first part, we analyse the existing A&D sector landscape and its evolution so far. In part two, we analyse the impact of the various recent policy changes and the changing role of the players in the sector.
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Dispute mechanism available under a lease

How it started:

It started with the case of Booz-Allen & Hamilton Inc v. SBI Home Finance Ltd & Others (“Booz-Allen”), wherein the Supreme Court, after hearing the matter, held that the disputes relating to eviction and tenancy were not arbitrable. Leases are governed under the Transfer of Property Act, 1882 (“TOPA”). The court discussed the nature and scope of issues arising for consideration in an application under Section 8 of the Arbitration and Conciliation Act (“Act”) wherein “even if there is an arbitration agreement between the parties, and even if the dispute is covered by the arbitration agreement, the court where the civil suit is pending, will refuse an application under Section 8 of the Act, to refer the parties to arbitration, if the subject matter of the suit is capable of adjudication only by a public forum or the relief claimed can only be granted by a special court or Tribunal”.
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RBI Payment Regulations - 2009 to 2021 - Bank nodals to PA PG licenses

Introduction:

In early March 2020, a regulatory moratorium imposed on a private bank in India froze the country’s digital payments ecosystem. Many payment aggregators (“PA”) and payment gateways (“PG”) had set up nodal accounts with this bank, including others, and it raised a question on whether the customer funds pooled in those accounts were bankruptcy ‘remote’. Within 10 days, the Reserve Bank of India (“RBI”) issued the payment aggregator and gateway guidelines (“PA/PG Guidelines”) on March 17, 2020, under the Payment and Settlement Systems Act, 2007 (“PSSA”), to regulate PAs and prescribe baseline technology standards for PAs and PGs.
Continue Reading FIG Papers (No. 5 : Series -1) : RBI Payment Regulations – 2009 to 2021: Bank ‘nodals’ to PA/PG licenses! 

Vocal for Local - Overview of the Haryana State Employment of Local Candidates Act 2020

Introduction

The Haryana State Employment of Local Candidates Bill, 2020 (“Bill”), which was passed by the Legislative Assembly of Haryana on November 5, 2020, received the assent of the Governor of Haryana on February 26, 2021. The Haryana State Employment of Local Candidates Act, 2020 (“Act”), has been published for general information in the extraordinary gazette of Haryana on March 2, 2021, and will come into force, once it is notified by the Government of Haryana (“Haryana Government”). The Act is applicable to (i) all companies, societies, trusts, limited liability partnerships, partnership firms, (ii) persons employing 10 (ten) or more persons and (iii) any entity as may be notified by the Haryana Government and will be operational for a period of 10 (ten) years from the date of its commencement. The Act does not apply to the Central or the State Government or any organisation owned by either of them. The draft rules under the Act are currently awaited.
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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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Cross-border ESOP Structures

Employee stock options (“ESOPs”) have been used as an effective retention tool globally. Cross-border ESOP structures can be considered by a variety of global businesses with existing Indian presence and by investors that propose to set up greenfield presence or acquire operating businesses in India. Moreover, Indian companies can also issue ESOPs to employees of their foreign holding, subsidiary or joint venture companies. This article discusses various cross-border ESOP structures and identifies key considerations arising under Indian corporate, foreign exchange and taxation laws. 
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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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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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Time is of the essence for registration of a lease

INTRODUCTION

More often than not, the central procedural question on the minds of parties entering into a lease deed is whether the registration thereof is mandatory. This central query pervades the gamut of situations ranging from lease of residential to commercial properties, and from short-term to long-term leases.

The law governing registration of lease deeds is primarily contained in the Registration Act, 1908 (“Registration Act”) and the Transfer of Property Act, 1882 (“TOPA”). A lease of an immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised or of money, a share of crops, service or any other thing of value to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms as defined in Section 105 of TOPA. According to the Registration Act, ‘lease includes a counterpart, kabuliyat, an undertaking to cultivate or occupy, and an agreement to lease[1]’.
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