As anticipated in our last blog on this subject , solar cells continue to be at the heart of to-and-fro trade remedy measures being undertaken by various countries. The Government of India has fired the most recent salvo by notifying the imposition of safeguard duty on solar cells through the Department of Revenue, Ministry of Finance.

The termination of the anti-dumping investigation by the Directorate General of Anti-dumping and Allied Duties (DGAD) may have allowed a temporary sigh of relief to those rooting for exports. But that has been largely offset because of the safeguard duty investigation by the Directorate General of Safeguards (DGS).

The safeguard duty investigation was initiated based on a petition filed by the Indian Solar Manufacturers Association (ISMA) with the DGS requesting imposition of a safeguard duty on imported solar cells from China, Malaysia, Singapore and Taiwan.

Continue Reading Trade Remedy Measures Against Solar Cells: An Update

On April 21, 2018 the Fugitive Economic Offenders Ordinance, 2018 (FEO Ordinance) was promulgated to immediately bring into effect the provisions contained in the Fugitive Economic Offenders Bill, 2018 (FEO Bill)[1]. The Union Finance Minister Mr. Arun Jaitley, in his Budget speech, had announced that Central Government was considering the introduction of legislative changes to confiscate the assets of ‘big time offenders’, including economic offenders, who flee the country to escape the Indian legal system.

As the process of extradition has often been challenging and ineffective, the Ordinance seeks to compel the fugitive offender to face trial in India through severe deterrents. Care will need to be taken, however, to ensure that the Ordinance does not adversely impact creditor rights. The deterrents and their impact on insolvency resolution are discussed below.

Continue Reading Fugitive Economic Offenders Ordinance, 2018: Impact on Creditor Rights

Last month, the Securities Appellate Tribunal (SAT) passed an order in favour of Factorial Master Fund[1] (Factorial). This overturned the order of the SEBI Whole Time Member who had held that Factorial had contravened the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 (PIT Regulations) by trading in the securities of L&T Finance Holdings Limited (LTFH), while in possession of unpublished price sensitive information (UPSI).
Continue Reading The Sound of SEBI’s Silence: Will the Factorial Order Change the Rules of the Game?

On June 6, 2018, the Government once again amended certain provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), by promulgating an ordinance[1] (the 2018 Ordinance) which introduces sweeping changes to the both substantive as well as procedural aspects relating to the insolvency process. Some of the key changes are analysed below.

Homebuyers – A New Class of ‘Financial Creditors’

The 2018 Ordinance has amended the definition of ‘financial debt’ to include amounts raised from ‘allottees’ in respect of a real estate project (as defined under the Real Estate (Regulations and Development) Act, 2016 (RERA)). Accordingly, homebuyers will now be entitled to a seat on the ‘committee of creditors’ (CoC) of the corporate debtor. However, given the large number of homebuyers for a project, they will be treated as a class of creditors and be represented in the CoC by an ‘authorised representative’ to be appointed by the National Company Law Tribunal (NCLT).

Continue Reading 2018 IBC Ordinance: Impact of Changes

On June 7th, 2018, the Reserve Bank of India (RBI) had introduced two new forms (namely Single Master Form and Entity Master Form) vide a circular[1] (RBI Circular), with the aim of simplifying reporting under the Foreign Exchange and Management Act, 1999 (FEMA). Our earlier blog post contained details of the two forms and our in-depth analysis of the same. On June 27th, 2018, RBI released a User Manual for Entity Master – FIRMS[2] (User Manual) which provides detailed instructions and the process for filing the Entity Master Form. Continue Reading India Simplifies Foreign Investment Reporting Process: Update

In alignment with the Indian Government’s continuing efforts to bolster foreign investment and ease of doing business in India, the Reserve Bank of India (RBI) has issued two important circulars in June 2018 with the aim of simplifying reporting under the Foreign Exchange and Management Act, 1999 (FEMA). The circulars are as follows:

Simplifying reporting under FEMA - RBI Circular

Currently all foreign investment transactions are reported in a complicated, disintegrated manner across various platforms/modes. The Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 (FEMA 20) provide for exhaustive reporting requirements for any foreign investment in India through 12 different forms[1]. Meeting these requirements had become a cumbersome process for foreign investors as well as Indian entities. 

Continue Reading India Simplifies Foreign Investment Reporting Process

From January 1, 2017 to May 31, 2018, the open offers launched under the SEBI Takeover Regulations for listed non-banking financial companies (NBFCs) constitute approximately 23.7% out of the total open offers during this period. In the calendar year 2018 (to May 31, 2018), the percentage of open offers for NBFCs out of the total open offers launched in this period is 23%, demonstrating significant interest in one particular sector in the listed space as opposed to others. As per our study, the following diagram illustrates the open offer activity from January 1, 2018 to May 31, 2018:

Open Offer Activitiy , Indian Sector Specific


Attractiveness of NBFCs

NBFCs are an important alternative source of financing. Given that banks are prohibited from funding M&A transactions, NBFCs fit in perfectly. In addition to this, that there have been few positive developments in the past couple of years that have increased the attractiveness of NBFCs. In August 2016, the Government extended the applicability[1] of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 to 196 systemically-important NBFCs to enable them to enforce security interest in relation to secured debt of Indian Rupees one crore or more.

Continue Reading Takeover of Listed NBFCs: An Analysis of Current Trends

In its judgment pronounced on May 9, 2018, the National Company Law Tribunal (NCLT), Allahabad, in the case of ICICI Bank Limited v. Mr. Anuj Jain (Resolution Professional of Jaypee Infratech Limited), addressed the issue of the rights of third-party security holders of a corporate debtor under the Insolvency and Bankruptcy Code, 2016 (IBC).

The judgment negated ICICI Bank Limited’s contention that it should be considered a financial creditor of Jaypee Infratech Limited, the corporate debtor. ICICI Bank’s claim was based on the corporate debtor having created mortgages on its property to secure loans provided to Jaiprakash Associates Limited, the holding company of the corporate debtor. The NCLT concluded that there was no financial debt owed to ICICI Bank by the corporate debtor, and so it could not be considered a financial creditor of the corporate debtor.

We consider here the correctness of the judgment and whether the NCLT has considered all the implications of its finding.

Continue Reading Is a Third-Party Security Holder a Financial Creditor Under the Insolvency and Bankruptcy Code?

On 1 May 2018, the Department of Telecommunications (DoT) released the much-awaited Draft National Digital Communications Policy – 2018 (Draft Policy) for public comments. The Draft Policy aims to give direction not only to the telecom market but also to digital communications and prepares the country for the future. The policy, when finalised, will act as a framework for all future legal and regulatory changes/ development in Information and Communications Technology (ICT).

The Draft Policy proposes the restructuring of the legal, licensing and regulatory framework including amendments to the Indian Telegraph Act, 1885 and related legislation, so as to enable the utilisation of newer/ advanced technologies/ convergence. Many stakeholders would suspect the same shall result in unrestricted interconnection between the internet protocol (IP) and Public Switched Telephone (PSTN) networks. The Draft Policy intends introduction of a light touch regulatory regime for various services such as over-the-top (OTT) that allows providers to stream content via the internet, cloud computing, data centres, etc. The Draft Policy also makes clear the requirement to amend terms and conditions for other service providers (OSPs). It further suggests establishing a unified policy framework and spectrum management regime.

Continue Reading Draft National Digital Communications Policy 2018: Restructuring the Legal and Regulatory Regime

Most sectors of the economy have been completely liberalised for foreign direct investment (FDI) and the Foreign Investment Promotion Board (FIPB) was abolished in June 2017. Policy watchers in this space were, therefore, taken unawares by a cryptic announcement by the Ministry of Finance on 16 April, 2018, on the “Minimum capital requirements for ‘other financial service’ activities which are unregulated by any financial sector regulator and FDI is allowed under government route”.

Why the Press Release

To put it in perspective, this announcement has its genesis in the RBI’s FEMA Notification No. 375/2016-RB dated September 9, 2016, which was a big ticket change, doing away with the nearly two decades old stipulation of minimum capitalisation in the NBFC sector. The playing field was thus levelled and the financial sector regulations could prevail in an ownership agnostic fashion.

The formal Press Note announcing this change in fact came subsequently (see Press Note 6 of 2016 dated October 25, 2016). FEMA 375 firmly placed all regulated financial services activities in the fold of the respective financial regulators, instead of the latter having to concern themselves with the ownership pattern of the entity.

FEMA 375, however, laid down that activities that are not regulated by any regulator, or where only part of the activity is regulated, or where there is doubt regarding regulatory oversight, approval would need to be obtained from the Government with attendant minimum capitalisation requirements as may be decided by the Government. It is not known , in the public domain, as to how many approvals in the ‘unregulated financial services’ space have actually been accorded post issuance of FEMA 375. This information would have been useful. Be that as it may, what has been set out in the press release of April 16, 2018 is perhaps the way for the future.

Continue Reading FDI and Unregulated Financial Services