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SEBI

In October 2022, the Securities and Exchange Board of India (“SEBI”) introduced several amendments to various chapters of its Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper, dated August 10, 2021 (“Operational Circular”), in response to certain representations received by it from various market participants. These modifications appear to be in line with SEBI’s continued efforts to improve the accessibility, fairness, and transparency of the debt securities market.

Continue Reading Changes to SEBI’s framework on non-convertible debt securities: A Snapshot

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Startup

Introduction

With nearly 82,000 start-ups and 107 unicorns, India is a significant player in the start-up ecosystem, putting it on the third spot globally.[1] In recognition of the value such start-ups add to a nation’s economy in terms of capital formation and employment opportunities, the Government of India (“GoI”) has launched multiple schemes such as Fund of Funds for Start-ups[2], Start-up India Seed Fund Scheme[3], etc. The GoI has committed funds to the extent of INR 7,385 crore for the start-ups at various stages under these schemes.

Continue Reading Incentives for Start-Ups in Gujarat

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Mediation in India

Introduction:

As per the latest statistics available on the National Judicial Data Grid, impending cases before the District & Taluka Courts[1] stand at over 40 million, the backlog waiting to be heard at various High Courts[2] is close to 5.9 million, and the pending case inventory before the Hon’ble Supreme Court of India[3] totals approximately 71,000.

Continue Reading Analysis: Mediation in India

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Legal Regime of Negotiable Instruments

Introduction

Section 138 of the Negotiable Instruments Act, 1881 (“NI Act”), ascribes criminal liability for dishonour of a cheque. The purpose of the provision has been held by the Hon’ble Supreme Court to be the promotion of efficacy of banking operations and to ensure credibility in transacting business through cheques.[i] Since a large number of such transactions and cheque payments are done by companies, the very same intent appears to be captured in Section 141 of the NI Act, which extends vicarious criminal liability on officers associated with the company or firm. The law on Section 141 of the NI Act has been clarified and elaborated upon from time to time. However, the broad principle guiding the extent of liability remains the involvement of the director concerned in the day-to-day business affairs of the company. This is, however, not a straight-jacket formula, and the nuances determining the extent of liability need to be examined closely.

Continue Reading Directors’ Vicarious Liability under Current Legal Regime of Negotiable Instruments Act: An Analysis of Evolving Judicial Precedents

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Companies Act

Background

Key Managerial Personnel (“KMP”) play an integral role in the management and functioning of a company. Earlier, the Companies Act, 1956 under Section 269, provided for the appointment of managing or whole-time director or manager in certain cases. However, the Dr. J.J. Irani Report[1], recognized that the board of directors (“Board”) typically look towards KMP for formulation and execution of policies and recognized their role in conducting the affairs of the company. The Committee highlighted the need to recognise the concept of KMP, govern such appointments and identify them as officers responsible for certain functions of the company, along with making them liable for any related non-compliances. Further, the Parliamentary Standing Committees on the Companies Bill in 2009 and 2011[2] also discussed the necessity for the concept of KMP to be included in the Companies Act, 2013 (“Companies Act”). Accordingly, the Companies Act, re-envisioned the importance of KMP and for the first time provided for a detailed definition of KMP along with the provisions governing their appointment.

Continue Reading Key Managerial Personnel Appointments: Applicability of Section 203 of the Companies Act, 2013 to private companies: does the NCLAT order cast the net too wide?

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Compulsory Pre-Litigation Mediation for Commercial Suits – A Boon or a Bane

Introduction

The increased sophistication with which mammoth corporates, mid-segment businesses and even small & gig economy players conduct their businesses today has bred a trusting atmosphere in which entities are willing to accept amicable forms of dispute resolution, such as mediation, instead of turning to traditional litigation. Commercial entities are benefited from this shift since it helps them to maintain a healthy business relationship with their contemporaries even in the face of commercial disputes that may arise in the course of business, without having to compromise on confidentiality or reputation.

Continue Reading Compulsory Pre-Litigation Mediation for Commercial Suits – A Boon or a Bane?

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Moonlighting

Introduction

Moonlighting is the colloquial term used to refer to the practice of employees working a second job, in addition to their primary job. The last few weeks saw myriad news reports on this practice in start-ups and the IT/ITES industry. Most companies have released statements opposing the practice and some have even taken action against moonlighting employees. Some companies have, however, indicated that they are open to allowing employees to moonlight within a defined framework.

Continue Reading Moonlighting – Legal Considerations and Contractual Regulation

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New ODI Regime

Background

The Ministry of Finance (“MoF”) and Reserve Bank of India (“RBI”) notified the new overseas investment (“OI”) regime on August 22, 2022 (“New Regime”).

The New Regime inter alia comprises the OI Rules, 2022[1] notified by the MoF (“Rules”), the OI Regulations, 2022[2] notified by the RBI and the Master Directions issued by the RBI to authorised persons. It supersedes FEMA 120[3] and the circulars and directions issued thereunder (“Old Regime”).

Continue Reading New ODI Regime: What RBI needs to clarify?