Photo of Utkarsh Bhatnagar

Senior Associate in the corporate and financial regulatory practice at the Mumbai office of Cyril Amarchand Mangaldas. Utkarsh has represented various Indian and multinational fintech, information/ emerging technology companies, and also pharmaceutical, and healthcare companies on transactional, enforcement and regulatory matters. His transactional practice focus is on public & private M&A, commercial agreements and regulatory matters. He can be reached at utkarsh.bhatnagar@cyrilshroff.com

FIG Paper 8

Introduction:

With the pandemic acting as a tailwind for the digital payments industry in India, the fintech industry represents a key opportunity for the Reserve Bank of India (“RBI”) for its financial inclusion push in the country. A key driver in this regard is the burgeoning prepaid payment instruments (“PPI”) industry. PPIs have been widely used in the country for many years, but have seen significant commercial changes in recent times to reach a wider consumer base, given the high market penetration of mobile internet in India.


Continue Reading FIG Paper (No. 8) – New Master Directions for PPI – A Fresh Look at Prepaid Payment Instruments!

Indian Mutual Funds – New M&A Rules! Anu Tiwari (Partner), Ritu Sajnani (Senior Associate), Utkarsh Bhatnagar (Senior Associate) and Karthik Koragal (Associate) The Securities Exchange Board of India (“SEBI”) carried out a regulatory revamp exercise of SEBI (Mutual Funds) Regulations, 1996 (“MF Regulations”) and various circulars issued under it by way of a circular on mutual fund(s) (“MF”) issued on March 4, 2021 (“MF Circular”), effective from March 5, 2021, thereby streamlining a robust regime governing the reporting, compliance and disclosure requirements applicable to asset management company(ies) (“AMC”) and the trustee(s) of such AMCs. Reporting requirements strengthened Currently, the MF Circular requires an AMC to furnish the complete details of any indirect change in its control/ promoters of the sponsor(s) to SEBI and also notify details of a proposed change in control (whether direct or indirect) to the unitholders, by way of an email (in addition to publishing the same in newspapers. Similarly, in case of any proposed change to the fundamental attributes of a MF scheme, trustees are now mandated to obtain comments from SEBI, prior to effectuating such change. With an intent to ensure better compliance, SEBI has also expanded the scope of ‘key personnel’ of an AMC to include chief investment officer, chief risk officer, chief information security officer, chief operation officer, compliance officer, sales head, investor relation officer(s), etc. in addition to the erstwhile list of key personnel, which included the chief executive officer, fund manager(s), dealer(s) and head of other departments of the AMC. Hence, inter alia these new key personnel who are also now prohibited from carrying on self-dealing or front running activities, in addition to meeting the prescribed eligibility criteria. The revised reporting requirements extends SEBI’s regulatory prowess to monitor and bring more transparency in relation to the indirect change in control of the AMCs’ process. Relaxations and scrutiny go hand-in-hand In order to facilitate innovation in the MF space, SEBI has introduced certain relaxations like permitting employees of AMCs to participate in private placement of equity by any company, has allowed trustees to delegate its function(s) to declare/ fix a record date and decide the quantum of dividend, etc. to AMC officials. Further, trustees are now mandated to report to SEBI the MF securities dealt by them, only if a transaction exceeds INR 5 lakhs (vis-a-vis the previous threshold of INR 1 lakh). The regulator has also classified investment in non-convertible preference shares (“NCPSs”) as a ‘debt instrument’ and accordingly, limitation of a MF scheme to invest not more than 10% of its net asset value in debt instruments will also include NCPSs. The trustees now being required to obtain SEBI comments before effecting a ‘change in in the fundamental attributes of a MF scheme’ seems burden-some, as the regulator’s role, and oversight, already guarantees for the requisite checks and balances to govern the MF scheme, including for MF scheme transfers, through separate regulations and circulars in this behalf. Above is likely to add another layer to M&A deal-making, with already many layers involved, impacting deal costs and timelines, especially if a ‘new sponsor’ application may be involved, from a process, governance and unit holders’ standpoint. Albeit above ties into SEBI’s increasing focus on MF trustee’s accountability, which has hitherto been an overlooked area, given the nature and composition of MF trustee boards. Though, done with noble regulatory intent, one would have to see whether the above changes, including expansion of key personnel, further ‘spook’ trustee directors, especially independents - already an onerous position, with few upsides, especially after Calcutta High Court’s Order in the ITC / JPMorgan MF Trustees case, and SEBI’s approach qua Franklin Templeton trustees in 2020, expand the scope of potential SEBI show-cause ‘noticees’ from the current list of 7 (!), and shoot MF M&A in the knees, which was given a new lease of life recently via SEBI dropping the ‘3/ 5’ profitability criterion in Regulation 7, MF Regulations.

The Securities Exchange Board of India (“SEBI”) carried out a regulatory revamp exercise of SEBI (Mutual Funds) Regulations, 1996 (“MF Regulations”) and various circulars issued under it by way of a circular on mutual fund(s) (“MF”) issued on March 4, 2021 (“MF Circular”), effective from March 5, 2021, thereby streamlining a robust regime governing the reporting, compliance and disclosure requirements applicable to asset management company(ies) (“AMC”) and the trustee(s) of such AMCs.
Continue Reading FIG Papers (No.4 : Series – 2): Indian Mutual Funds – New M&A Rules!

In Search of a Vaccine for Covid-19 - A Race to The Finish

The Covid-19 pandemic has wreaked havoc on mankind, infecting well over 13 million, and claiming over half a million lives. It has also severely impacted economies across the world. Our healthcare infrastructure has been pushed to its limits and our frontline healthcare professionals are working to the brink of exhaustion, risking their own lives to save others. We bow to them.

In the midst of all this, scientists across the world are working feverishly to find a vaccine for this disease. The hopes of billions rest on this. The World Health Organization (“WHO”) has (as of July 15, 2020) declared that there are about 23 potential vaccine candidates that are currently in various stages of clinical trials[1]. Out of these 23 vaccines, vaccines being developed by: (a) Sinovac (inactivated +alum); and (b) University of Oxford / AstraZeneca has entered into the Phase-III of its clinical trials[2]. In addition, as of July 15, 2020, there are around 140 vaccine candidates in preclinical evaluation (trials not commenced).
Continue Reading In Search of a Vaccine for Covid-19: A Race to The Finish

COVID-19 TEST KITS. A CHEAT SHEET

The COVID-19 pandemic has literally brought the world to a standstill. Large scale infections have resulted in lockdowns across the globe. At this critical juncture, testing continues to remain the most important step to get a grip over the situation. The situation in India is no different. With an upsurge in the number of COVID-19 cases in India, the need for largesse testing has become paramount. Low availability of test kits remains a cause of great concern to the government and healthcare practitioners. This is compounded by our massive populace, given the quantity that is required in the current scenario. This lack of availability of test kits is primarily because India does not have adequate indigenous manufacturing units of COVID-19 test kits and relies heavily on imported kits.

From a regulatory standpoint, such kits fall under the category of ‘in-vitro diagnostic’ kits under the Drugs and Cosmetics Act, 1940 (D&C Act) read with the Medical Devices Rules, 2017 (MD Rules) and are regulated as ‘medical devices’[1].
Continue Reading COVID-19 Test Kits. A Cheat Sheet

Oxytocin Ban in India

Oxytocin is life-saving drug that is used for the induction and assistance of labour in women during childbirth. It is also used to stop postpartum haemorrhage (excessive bleeding). The drug also aids milk secretion during the lactation process. Because of its inherent lifesaving properties in humans and cattle, Oxytocin is identified as an essential medicine in the 20th World Health Organization (WHO) Model List of Essential Medicines, March, 2017[i]. It also continues to be included as an essential medicine in the National List of Essential Medicines (NLEM), 2015[ii].
Continue Reading The Oxytocin Ban Story

The Healthcare Service Personnel and Clinical Establishments Bill, 2019

In the backdrop of recent attacks and acts of violence against medical practitioners and a growing demand for protection in this regard, the Central Government is considering steps to ensure protection is granted to healthcare professionals and clinical establishments, by making such acts punishable offences under law. After numerous meetings with doctors and other stakeholders, the Department of Health and Family Welfare (Medical Services Division), of the Ministry of Health and Family Welfare, Government of India, vide notification dated September 2, 2019,  proposed a draft legislation titled ‘The Healthcare Service Personnel and Clinical Establishments (Prohibition of Violence and Damage To Property) Bill, 2019’ (the “Bill”).
Continue Reading The Healthcare Service Personnel and Clinical Establishments (Prohibition of Violence and Damage to Property) Bill, 2019