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SEBI Adjudicates on Pledging of Securities held by Category I AIFs

Background

In a recent order[1] (“Order”), the Securities and Exchange Board of India (“SEBI”) held that a category I alternative investment fund registered with it (“Fund”); its investment manager (“Manager”); and its trustee (“Trustee”), were in violation of certain SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”). Specifically, these violations were with respect to provisions associated with (i) the code of conduct applicable to the Fund, Manager and Trustee; and (ii) provisions related to leverage and borrowings applicable to the Fund.

Continue Reading SEBI Adjudicates on Pledging of Securities held by Category I AIFs
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SEBI’s MUTUAL FUND EXPENSE RATIO CONSULTATION PAPER

BACKGROUND

On May 18, 2023, the Securities and Exchange Board of India [“SEBI”] had placed a consultation paper related to the total expense ratio charged by Asset Management Companies [“AMC”] to unitholders of mutual funds. June 8, 2023 was set as the deadline for submission of public comments. The due date, however, was extended to June 8, 2023.

The proposal is aimed at curbing distributor practices such as unnecessary switching of schemes and pushing new fund offerings for higher commissions. SEBI in its consultation paper proposed to introduce performance fees for funds. It proposed two approaches, but also suggested testing the models under the Regulatory Sandbox.

Continue Reading FIG Paper (No. 21 – Series 1): SEBI’s Mutual Fund Expense Ratio Consultation Paper: Impact Analysis
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Medical Devices Policy, 2023

                                                                                                                                               

In a bid to reduce import dependency and boost domestic production of medical devices, the Union Cabinet recently approved the National Medical Devices Policy, 2023 (“Policy”)[1]. The broad contours of the Policy were earlier notified vide a press release issued by the Press Information Bureau (“Press Release”).[2] The Policy aims to reduce India’s import reliance and has a stated goal to establish India as a global manufacturing hub for medical devices. This announcement comes at a time when the Government is actively promoting the ‘Atmanirbhar Bharat’ and ‘Make in India’ initiatives.

Continue Reading Medical Devices Policy, 2023 – A Vision to Streamline Regulation, Incentivise Domestic Manufacturing and Facilitate R&D
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Context

The Prevention of Money Laundering Act, 2002 (“PMLA”), which came into force w.e.f. July 01, 2005, was enacted pursuant to India’s international obligations inter alia under the Vienna[1] and Palermo[2] Conventions, the Political Declaration and Global Programme of Action (1990)[3] adopted by the UN General Assembly, and to give effect to the recommendations made by the Financial Action Task Force (FATF) for combating money laundering (popularly known as the “Forty Recommendations”)[4].

Continue Reading Spotlight: Why PMLA Scheduled Offences need a fresh look?
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Highlights of the Master Circular on IRDAI (Registration of Indian Insurance Companies) Regulations, 2022

Introduction

Four months after the Insurance Regulatory and Development Authority of India (“IRDAI”) notified 2022 Regulations that streamline registration and share transfer requirements of Indian insurance companies, the IRDAI has issued a master circular titled ‘Master Circular on Registration of Indian Insurance Company, 2023’ dated April 24, 2023 (“Master Circular”) to supplement the procedural aspects of 2022 Regulations.

Continue Reading Highlights of the Master Circular on IRDAI (Registration of Indian Insurance Companies) Regulations, 2022
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Cosmetics Regulation in India

Customised cosmetics have recently grown in popularity, with customers increasingly appreciating the value of personalised rather than off-the-shelf products. Customers often prefer to pick ingredients which suit their skin/ hair characteristics, and associate such unique products with greater effectiveness and functionality. Several cosmetics manufacturers and retailers are already in the race to capture this growing demand in India. However, little attention has been paid to the legal implications and regulatory risks which arise from the import, production, storage, mixing and/ or retail of such customised cosmetics. It is therefore essential for players in this emerging market to be mindful of certain important legal questions and considerations to ensure proper compliance. This is especially in light of the new regulatory landscape, which has been laid down through the Cosmetics Rules, 2020 (“Cosmetics Rules” / “Rules”) and has been rapidly evolving over the past few years.

Continue Reading Concept to Compliance: Unveiling the Untapped Realm of Customised Cosmetics Regulation in India
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FIG Paper

BACKGROUND

While the Reserve Bank of India (“RBI”) had in its August 10, 2022 press release stated that it is examining the First Loss Default Guarantee (“FLDG”) structures, the Digital Lending Guidelines issued by the RBI on September 2, 2022 neither permitted nor expressly prohibited loss sharing arrangements such as FLDGs, but recommended that provisions of paragraph 6(c) of the Reserve Bank of India (Securitisation of Standard Assets) Directions, 2021 dated September 24, 2021 (“Securitisation MD”) be adhered to for financial products involving contractual agreements such as FLDG. Paragraph 6(c) of Securitisation MD prohibits Regulated Entities (“RE”) from undertaking or assuming exposure under “synthetic securitisation” structures. This led to industry-wide confusion regarding the permissibility of loss sharing arrangements such as FLDG.

Continue Reading FIG Paper (No.18 – Series 2) RBI’s New Default Loss Guarantee Guidelines: Late but Not lost
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ECO-SENSITIVE ZONES

Introduction

‘Eco-Sensitive Zones’ (“ESZ”) or ‘Ecologically Fragile Areas’ are notified by the Ministry of Environment, Forests and Climate Change (“MoEF”) under the provisions of the Environment Protection Act, 1986 around the boundary of a ‘protected area’ (i.e. national park, sanctuary, conservation reserve or community reserve)[1] (“Protected Area(s)”) to create a “shock absorber/ transition zone” in the Protected Areas and to preserve the areas outside such areas, which are often considered as vital ecological corridor links, by regulating and managing the activities around such Protected Areas[2].  

Continue Reading Supreme Court Relaxes Directions Concerning Eco-Sensitive Zones
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Arbitration Law

Recently, the Delhi High Court refused to hold a third-party funder liable for furnishing security in enforcement of a foreign award, ruling that the funder — not being either a party to the arbitration agreement, the arbitration, or the eventual award — could not be “mulcted with liability, which they have neither undertaken nor are aware of”. 

Continue Reading Third party Funding – A funder remains a ‘Third Party” and not a ‘Party’ to the arbitration or award
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Disputes

Introduction

The Government of India (“Government”) had announced a one-time voluntary settlement scheme through the Union Budget 2023-24 to settle contractual disputes involving the Government of India or its undertakings. This voluntary settlement process would also be applicable to disputes that have resulted in arbitral awards or court decrees or court orders upholding arbitral awards (hereinafter collectively referred to as “Award”) under challenge. The scheme is called Vivad se Vishwas II (Contractual Disputes). A draft scheme was published for circulation and was open for public comments till March 8, 2023.

Continue Reading Execution meeting spirit of the text will determine success of Vivad se Vishwas II