Crackdown on shell companies MCA amends the Companies Incorporation Rules to provide for additional physical verification of registered offices

Background:

The Ministry of Corporate Affairs (“MCA”), vide notification dated August 18, 2022, notified the Companies (Incorporation) Third Amendment Rules, 2022, which further amended the Companies (Incorporation) Rules, 2014 (“Companies Incorporation Rules”), through the introduction of Rule 25B. This amendment sets out the process to be followed by the Registrar of Companies (“ROC”) to carry out physical verification of a registered office of a company.[1]

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Evolving Insurance Landscape in IFSC

The Gujarat International Financial Tec-City (“GIFT City”) in Gandhinagar, Gujarat, is India’s first operational greenfield smart city, housing a domestic tariff zone and an International Financial Services Centre (“IFSC”) in a Multi-service Special Economic Zone (“SEZ”). As part of developing India’s very own and first IFSC, both Indian and foreign entities are permitted to establish and operate IFSC Insurance Offices (“IIO”) from GIFT City, upon obtaining the requisite approvals. The IIOs have the advantage or the ability to transact in freely convertible foreign currencies in offshore markets, while being situated within the territorial borders of India. From 2015 to early 2020, the Insurance Regulatory and Development Authority of India (“IRDAI”) issued guidelines for IIOs (“IRDAI IIO Guidelines”). Thereafter, pursuant to the International Financial Services Centres Authority Act, 2019, the International Financial Services Centres Authority (“IFSCA”) was empowered on October 1, 2020 as the unified regulator with wide powers to develop and regulate financial products, financial services, and financial institutions in IFSCs, including IIOs.

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SEBI Updates Framework for Overseas Investments by Alternative Investment Funds and Venture Capital Funds

The Securities and Exchange Board of India (“SEBI”) has updated the regulatory framework applicable to AIFs/ VCFs, seeking to make portfolio investments in offshore companies vide SEBI Circular dated August 17, 2022, titled ‘Guidelines for overseas investment by Alternative Investment Funds (AIFs)/ Venture Capital Funds (VCFs)’ (“SEBI Circular”). AIFs/ VCFs are currently permitted to make portfolio investments in equity and equity linked instruments of offshore venture capital undertakings[1], subject to taking case by case approval of SEBI for each such investment. Such approval is granted by SEBI to AIFs/ VCFs on a ‘first come first serve basis’, within an overall limit of USD 1,500 million.

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FDI Liberalisation in Insurance Companies and Harmonisation of Insurance Regulations What Has Changed in the Year Gone By

The Union Budget 2021-22 announced the proposal to liberalise Foreign Direct Investment (“FDI”) in Indian insurance companies from the existing 49% to 74% with effect from August 2021. The aforesaid proposal was subsequently formalised by way of introduction of the Insurance (Amendment) Act, 2021 (“Amendment Act”), to amend the Insurance Act, 1938. Please click here to refer to our earlier blog for more details in this regard.

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Policyholder Data Sharing in India

Introduction

With a vision to transform India into a digitally empowered society and knowledge economy, the Indian government[1] launched the Digital India initiative and mindful of its impact, it has been taking several steps to ensure greater accessibility as well as greater safety around internet based services. This, coupled with heightened internet based services and digital connectivity,[2] led the government to launch several digital services[3] and some are remarkably successful – these range from unified payments interface (UPIs) to DigiLocker[4]. According to India Brand Equity Foundation, the rising use of UPIs strongly indicate that more and more people in India are adopting a digital lifestyle[5] – UPI saw its highest ever number of transactions in April 2022 at 5.58 billon, amounting to INR 9.83 trillion. DigiLocker hit the mark of 101 million users on March 19, 2022, evidencing the adoption and success of this initiative[6].

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The Supreme Court clarifies the law and lays down the guidelines

INTRODUCTION

 The Supreme Court of India has in its recent landmark judgment in Satender Kumar Antil[1] laid down guidelines on the grant of bail to an accused and while doing so, it has reiterated aspects of personal liberty and constitutional guarantees available to an accused under criminal jurisprudence. The Court observed that while its discussion and findings are meant to operate as guidelines, each case pertaining to a bail application is to be decided on its own merits.[2] This article seeks to analyse these guidelines and evaluate their consequences and operation in practice.

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FIG Paper

Background:

A Working Group on Digital Lending (“RBI WG”), constituted by the Reserve Bank of India (“RBI”), had published its Report in November 2021. It had made recommendations on (i) the legal and regulatory framework for digital lending; (ii) technology; and (iii) financial consumer protection, implementable over the near-term (up to one year) and medium-term (beyond one year).

Continue Reading FIG Paper (No. 16 – Series 1) – Impact Analysis of RBI’s Recommendations of the Working Group on Digital Lending – Implementation

The Concept of Predicate Offence The Supreme Court Clarifies

Introduction

The offence of money laundering, as per the definition in Black’s Law Dictionary is “the act of transferring illegally obtained money through legitimate people or accounts so that its original source cannot be traced”. Further to this definition, it is only but natural to assume that the money, if illegally obtained, must be obtained in relation to the commission of an underlying criminal offence. The commission and requirement of this underlying offence, commonly known as a predicate offence, has been a point of debate since the introduction of the Prevention and Money Laundering Act, 2002 (“the Act”), which provides a list of offences in the Schedule appended thereto as ‘scheduled offences’.

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Payment System Operators New M&A Implications

Background:

On July 4, 2022, the Reserve Bank of India (“RBI”) clarified to all banks and non-bank payment system operators (“PSOs”) that its prior approval would be required for any (a) takeover/ acquisition of control, which may or may not result in change of management; and (b) sale/ transfer of payment activity to an entity not authorised for undertaking similar activity (“Circular”).

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Subhkam Returns SAT Ruling in NDTV Case

The challenge in interpreting ‘control’ under the SEBI takeover regime is hardly a new one. The current definition of ‘control’ under the Takeover Regulations, 2011, similar to the one under the Takeover Code, 1997, consists of two parts. Firstly, the right to appoint a majority of the directors on the board of a company, which is fairly straightforward to determine; and secondly, the right to control the management and policy decisions of a company, which is where things tend to become slightly murky specially in the context of a minority shareholder exercising veto or affirmative vote rights.

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