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EPFO tightens norms around Provident Fund inquiries under Section 7A

The Employees Provident Fund Organisation (EPFO) has recently issued Guidelines for Initiation of Inquiries under Section 7A (“Guidelines”) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (“EPF Act”)[1]. Section 7A is the provision under which PF commissioners (who are vested with the powers of a civil court), can initiate an inquiry, by order, to determine (i) the applicability of the EPF Act to an establishment in case of a dispute; and (ii) to determine amounts due from any employer under the EPF Act and its schemes.

The EPFO has recognised that currently, assessing officers are following different yardsticks for initiating inquiries under Section 7A, which often leads to inquiries being initiated for wholly insufficient and untenable grounds, causing general resentment among the employers on one hand and prolonged pendency of inquiries on the other. The Guidelines have been issued to prevent such deleterious effect. Continue Reading EPFO tightens norms around Provident Fund inquiries under Section 7A

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India’s Foreign Investment Policy on E-commerce Retail

The Indian government has been striving to effectively regulate India’s e-commerce retail market, since its first attempt in 2000. The regulations have been a by-product of the fear of organised global retail with deep pockets adversely affecting scores of unorganised “mom-and-pop shops” and retailers. The Indian foreign direct investment policy on e-commerce retail has been amended several times, and the e-commerce business houses operating in India have restructured themselves to fall in line with every such change in policy without significantly altering their operations.

In the latest episode of this ongoing saga, the Government of India issued a Press Note No. 2 (2018 Series) on December 28, 2018, to effectively legislate against e-commerce entities that disguise their inventory-based business models[1] as marketplaces[2]. Reportedly[3], Walmart-backed Flipkart and Amazon India are undergoing complex structuring and restructuring to align themselves with the amended policy. This to and fro between the Government and e-commerce players has not only been unproductive for the country’s economy, but is also against this Government’s stated objective of certainty and Ease of Doing Business in India. While the effective implementation of the regulations governing e-commerce retail continues to be a significant issue, there are certain other fundamental concerns relating to the approach of the Indian government towards e-commerce retail, which require immediate consideration.     Continue Reading India’s Foreign Investment Policy on E-commerce Retail: Is the time ripe for a reworking?

Interplay of Data Analytics, AI and Infrastructure Investment

Artificial Intelligence and Data Analytics

The global race to augment capabilities of artificial intelligence (AI) is intensifying in both advanced and emerging economies. From optimising power generation and transmission, diagnosis and drug discovery, improving learning environment, enhancing design and functionality, to automation in logistics, AI will not only continue to evolve but possibly surpass human intelligence in the near future. Today’s digital age is overflowing with valuable data which if appropriately analyzed can predict results, making data analytics an indispensable tool for any corporate to sustain in the economy. Continue Reading Tomorrow’s Technology in Today’s Infrastructure: Interplay of Data Analytics, AI and Infrastructure Investment

mplications of the Finance Bill, 2020, on INVITs, REITs and its Unitholders

The Finance Minister, Nirmala Sitharaman, presented the Union Budget 2020-2021 on February 1, 2020 and consequently, introduced the Finance Bill, 2020 (“Bill”) in the Lok Sabha. The Bill comprises the financial proposals, including taxation related proposals, to amend the provisions of the Income-tax Act, 1961 (“Income-tax Act”) for the financial year 2021.

The Income-tax Act comprised provisions in relation to the taxability of, and exemptions available to, infrastructure investment trusts (“InvITs”) and real estate investment trusts (“REITs”, together with “InvITs”, referred to as “business trusts”) registered with the Securities and Exchange Board of India under the Securities Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 (“InvIT Regulations”) or the Securities Exchange Board of India (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”), respectively. Continue Reading Implications of the Finance Bill, 2020 on INVITs, REITs and its Unitholders

Continuous disclosure obligations - Indian securities market

 

A regulatory environment that supports robust secondary market disclosures is critical for a well-functioning securities market. Ongoing disclosures by listed companies are being increasingly scrutinised by regulators, stock exchanges and market participants to see if timely and accurate disclosures of all material information are being made by the listed entity. Accordingly, it is important for companies to ensure that developments in their businesses translate to appropriate regulatory disclosures.

A recent example of the importance of secondary market disclosure is the Facebook case. In 2019, the US Securities and Exchange Commission (“SEC”) announced charges against Facebook Inc. (“Facebook”) for making misleading disclosures in its periodic filings against the risks pertaining to misuse of its user data by third parties. The SEC alleged that in public disclosures, Facebook presented the risk of misuse of user data as “merely hypothetical”, when they were aware that a third-party developer had actually misused Facebook user data. The SEC press release states that Facebook has agreed to pay $100 million to settle the charges.

We discuss this development and learnings for the Indian market below. Continue Reading Continuous Disclosure Obligations: Learnings for the Indian Securities Market

SEBI Working Group on Related Party Transactions

 In the battle for good governance, India Inc. keeps tripping on three letters – RPT. Related-Party Transactions. This, despite the fact that India has one of the most elaborate set of rules and regulations for disclosures and approval of RPT by both listed and unlisted companies.

Historically, the Companies Act, 1956 did not specifically regulate RPTs. It had provisions that only restricted certain types of transactions.

The Companies Act, 2013 (CA, 2013) enacted Section 188, which for the first time began regulating certain types of transactions between companies and its “related parties” (as defined in CA 2013), and provided for the approval of such transactions (exceeding a prescribed monetary threshold) by non-related parties. Continue Reading SEBI Working Group on Related Party Transactions: Will the net be cast too wide?

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LEGAL PROTECTION OF SOFTWARE IN INDIA

Introduction

As businesses strive to shift from paper to digital, there is an increasing penetration of software products across industries. This is particularly true in India. The NASSCOM Report evinces that the software products market was the fastest-growing segment amongst all IT services in India in FY2019.[1] While the making of software requires a considerable amount of human, technical, and financial resources; it can be copied within seconds, at infinitesimal cost. Thus, there is a need to protect software with the strongest available intellectual property protections. In India, the intellectual property regime provides a number of tools to protect such innovations. These include, patents and copyright. Each of these tools have their own set of peculiarities and will be discussed vis-à-vis protection of software, within the framework of cross-jurisdictional analysis. Continue Reading Grooming the Law with Technology: Legal Protection of Software in India

Charging Infrastructure for Electric Vehicles in India - Policy and Challenges

One of the biggest stumbling blocks for the success of deploying electric vehicle (“EV”) scheme in India is the lack of adequate charging infrastructure (“Charging Infrastructure”). The revised guidelines for Charging Infrastructure for EV, issued on October 01, 2019 (“CI Guidelines”),[1] aim to simplify the process for setting up Charging Infrastructure. Below is a brief analysis of the CI Guidelines: Continue Reading Charging Infrastructure for Electric Vehicles in India: Policy and Challenges

SEBI-Streamlines-Rights-Issue-Process

 

The SEBI has streamlined certain aspects of the rights issue process that is expected to not only reduce the timelines but also provide clarity on the renunciation and trading of rights entitlements. These are welcome changes and will potentially make rights issues a preferred option to raise capital for listed companies.

Whilst rights issues are offerings to existing shareholders, it typically takes 55 to 58 days to complete the process (excluding SEBI review and the time taken for due diligence and drafting the offer document). The process involves (i) a minimum 15-day rights issue application period, (ii) mandatory participation by certain investors only through the non-ASBA process (such as through cheque) and (iii) a seven clear working days intimation prior to the record date. SEBI has addressed some of these concerns through amendments to the SEBI ICDR Regulations, SEBI Listing Regulations (both effective from December 26, 2019) and a circular with effect from February 14, 2020. Continue Reading SEBI Streamlines Rights Issue Process

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Arbitration Agreements in Unstamped Documents

 

Introduction

There has been constant confusion with respect to admissibility of unstamped documents. Section 35 of the Indian Stamp Act, 1899 (“Stamp Act”), provides that an unstamped or inadequately stamped document is inadmissible in evidence. Applying Section 35 of the Stamp Act, the Supreme Court in Garware Wall Ropes Ltd v. Coastal Marine Construction & Engineering Ltd [1](“Garware Judgement”) held that an arbitration agreement contained in an unstamped contract cannot be taken in evidence and invoked. It was further held that, in case the Court is faced with an unstamped document, it must proceed to impound the same, in accordance with the provisions of the Stamp Act; only once such an impounding is done — the deficit stamp duty and penalty paid, can the Court proceed on the basis of the arbitration agreement. Continue Reading Invoking Arbitration Agreements in Unstamped Documents – A Case Comment on Garware Wall Ropes v. Coastal Marine Constructions & Engineering