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

India is the world’s fastest growing energy market. An expanding economy and a growing population have resulted in increased consumption of primary energy resources such as coal, crude oil and natural gas in India. However, as Russia – key supplier of natural gas to a host of nations– faced several sanctions following its war with Ukraine, global oil prices saw a steep increase. Pursuant to the imposition of these sanctions, most of the exports from Russia were redirected to Asian countries, including India. India, having not imposed sanctions, continues to import oil from Russia, which is now available at lower prices. Taking advantage of discounted prices, India raised its imports of Russian crude from 950,000 b/d in June 2022 to around 1.96 million b/d in May 2023.Continue Reading Oil is Well for India

Overriding the IBC’s over-rider

Insolvency resolution regimes, globally, function as an exception to otherwise accepted norms of commercial law.[1] The Indian Insolvency and Bankruptcy Code, 2016 (“Code”), is no exception: a mere glance at the Code will display how it has a liberal sprinkling of non-obstante clauses.[2] From a specific dispute resolution mechanism, to an overarching carve out for insolvency resolution mechanism, the legislature has inserted non-obstante clauses in the Code as guidance of its intent. One would imagine that this would have ensured sufficient clarity for all stakeholders, avoided disputes and ensured timely insolvency resolution. Yet, as market participants try to understand the scope and intent of non-obstante clauses in the Code, such clauses continue to generate legal debate and litigation[3]. Perhaps, the stakes are too high for the parties to resist litigating. And some would argue not without good legal reason: after all, the Hon’ble Supreme Court has over the years identified exceptions[4] to the Latin maxim ‘leges posteriores priores contraries abrogant’ i.e. in the event two special statutes contain non obstante clauses, the non-obstante clause in the chronologically later special statute shall prevail[5].
Continue Reading Overriding the IBC’s Over-Rider?

Fractional Deregulation - Spurring The Nuclear Doctrinaire

India is yet to come of age as far as the nuclear sector is concerned due to sustained lack of support from the International Atomic Energy Agency (“IAEA”), and exclusion from the Nuclear Non-Proliferation Treaty (“NPT”) and Nuclear Suppliers Group (“NSG”). In 2014, a few nuclear reactors like Narora, Kudankulam and Kakrapar were brought under the IAEA safeguards. However, the Additional Protocol of 2014 allowed the IAEA enhanced access to India’s facilities, but this was limited to only the reactors included under the safeguards. As a result, a majority of nuclear power plants in the country are still untapped, which has led to a bearish curve in the investment inflows in the country, on account of lack of both financial commitments and savvy technology.

Globally, the United States of America (“US”), France, Russia, South Korea and China are also among the biggest nuclear power generating countries[1]. Out of their energy pool, nuclear energy comprises of one-fifth of the energy usage for US and Russia, seventy five percent for France, thirty percent for South Korea and four percent for China.[2] For India, nuclear energy consists of three percent of its energy pool, and is predicted to rise to six percent by 2030[3].
Continue Reading Fractional Deregulation: Spurring The Nuclear Doctrinaire

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

 Group Insolvency Norms

The recognition of a company’s separate juristic personality by the UK’s House of Lords in its landmark ruling in Salomon v. Salomon A Company Ltd.,[1] remains the basis for modern corporate law.[2] The ruling in effect drew a corporate veil around the legal personality of the company thereby establishing the separate legal identity of a corporate.

While India also follows the separate juristic personality of corporates as a general principle, exceptions have been incorporated over the years by way of legislative action[3] and juridical pronouncements.[4] In the context of insolvency law, the corporate veil is typically lifted in instances where a group company could be held liable for the debts of its associate and subsidiary companies, or if a group of companies functioned as a collective.
Continue Reading Staggered Lifting of the Corporate Veil: A Case for Group Insolvency Norms

Prevention of Air Pollution from Ships

The International Maritime Organization (IMO) developed the International Convention for the Prevention of Pollution from Ships (MARPOL Convention) with the aim of preventing pollution of the marine environment by ships. Regulations for the Prevention of Air Pollution from Ships are provided for in Annexure VI to the MARPOL Convention and they seek to control airborne emissions from ships by prescribing limits on emissions.

Today, the shipping sector accounts for 12% of global sulphur dioxide emissions, 13% of global nitrogen oxide emissions and 3% of global carbon emissions.[1] Shipping fuel constitutes 7% of the global transport oil demand – however, global shipping emissions account for 90% of the transport sector’s sulphur emissions.
Continue Reading Laundered Air on the High Seas- IMO 2020

SEBI’s Framework for Innovation Sandbox - Fintech

Amidst the fast-paced growth of the fintech industry in India, financial regulators in the country have been swift to recognise each such development and keep pace with the market. One particularly interesting development is the global adoption of regulatory sandboxes.

From 2016, a range of committees constituted by different financial regulators began to advocate adoption of regulatory sandboxes, drawing from success stories in other jurisdictions.[1] But 2019 marks a significant moment, as three of India’s prominent financial regulators have rolled-out either draft or final frameworks on regulatory sandboxes for fintech.[2]

The frameworks seek to spur fintech innovation in India and have been welcomed by all stakeholders alike. The framework released by the Securities and Exchange Board of India (SEBI) adopts a particularly holistic approach towards regulation of many different aspects of a sandbox. In this post, we seek to critique the ‘Framework for Innovation Sandbox’, released by SEBI on May 20, 2019 (Sandbox Framework).
Continue Reading Innovation in the Sands of Time: A Critique of SEBI’s Framework for Innovation Sandbox

Foreign Portfolio Investor - Corporate Debt - Voluntary Retention Route

As the Indian economy has grown over the years, so have the means of raising foreign debt by Indian companies. What began with limited investment channels for foreign banks and certain qualified institutional investors, has now flourished into a robust foreign debt investment market. Based on the commercial considerations driving a deal, Indian corporates can now raise ECBs under multiple tracks, issue various kinds of rupee denominated bonds, or avail of monies through fund structures such as alternative investment funds (AIFs) and real estate investment trusts (REITs).

Added to this mix is the foreign portfolio investment (FPI) route. What sets FPI apart is the degree of commercial flexibility it accords to investors and companies. For example, end-use and pricing norms applicable to FPI investments are relatively relaxed. Because of this, FPI is often the preferred option for raising debt, particularly short-term debt and working capital funding requirements.[1]
Continue Reading Investment through the Voluntary Retention Route: Fresh Push for FPI in Corporate Debt?

stamp Act amendments 2019

The key amendments that the Finance Act, 2019 proposes to the Indian Stamp Act, 1899 have been examined in Decoding the Amendment to the Indian Stamp Act, 1899 for Debentures – Part I. The impact of the amendments on debentures have also been analysed against the prevailing stamping arrangement for debentures.

This second part deals with the interplay between the definitions of ‘debentures’ and ‘securities’ under the Amendment, and issues relating to the implementation of the Centralised Collection Mechanism (CCM).
Continue Reading Decoding the Amendments to the Indian Stamp Act, 1899, for Debentures – Part II

Amendments to the Indian Stamp Act, 1899 for Debentures

The Finance Act, 2019[1] (Amendment) proposes to make some significant amendments to the Indian Stamp Act, 1899 (Act). The primary objective of the Amendment is to set up a zero-evasion centralised collection mechanism under which stamp duty is collected through one agency, at one place and on one instrument for securities market transactions.

It also seeks to standardise the stamp duty payable on issuance, sale and transfer of securities market instruments. It does so by removing multiple instances of stamp duty, waiving stamp duty on certain instruments, and removing the ability of the State Governments to determine rates or levy stamp duty in addition to the Act[2].
Continue Reading Decoding the Amendments to Indian Stamp Act, 1899, for Debentures – Part I