Mutual Funds and Alternative Investments - Stewardship Code

Introduction

On December 24, 2019, Securities and Exchange Board of India (“SEBI”) released a circular setting up a stewardship code for Asset Management Companies (“AMCs”), Mutual Funds (“MFs”) and all the categories of Alternative Investment Funds (“AIFs”) investing in listed Indian companies (“Stewardship Code” or “Code”). In keeping with global trends, SEBI has made it necessary for the power wielding cash-rich institutional investors, to act in accordance with the responsibilities that invariably accompany and behoove such powers and formulate a policy adopting the principles enshrined in the Code.

The Stewardship Code prescribes certain principles which, aim at enhancing the responsibilities of the AMCs/ AIFs to protect the interests of their investors/beneficiaries. The requirements pertaining to the Stewardship Code shall come into effect on April 1, 2020. Continue Reading Being Responsible Corporate Citizens – How Mutual Funds and Alternative Investment Funds will Rise Up to the Stewardship code

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Evolving Private Equity Trends in India – Buyout Transactions

INTRODUCTION

Private equity (PE) transactions in India conventionally comprised minority investments in Indian companies. However, maturing market conditions and an increasingly favourable regulatory landscape have been providing tailwinds to PE firms to undertake buyout transactions. Many PE firms investing in India have gained significant experience to deal with the governance and regulatory risks that Indian markets pose. This enables them to leverage their expertise from running businesses globally to managing businesses in India. Continue Reading Evolving Private Equity Trends in India – Buyout Transactions

Control deals Tender offers 2019 - Takeover regulations

Control deals are gaining popularity because of the ability of the incoming controlling shareholder to control the ‘when’ and ‘how’ of the functioning of the business that is housed in the company. Additionally, the stigma associated with promoter’s relinquishing control of their companies is on the wane in India. Despite the market conditions, 2019 saw a fair deal of control transactions in the country. For such category of deals, calendar year 2019 was comparable to calendar year 2018 in number and value terms.

In this blog, we are sharing with you our analysis of control transactions in which exit was offered to public shareholders through the tender offer route in 2019[1], under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (Takeover Regulations). We will be sharing a detailed report on the 2019 activity of such transactions separately. Continue Reading Control Deals Involving Tender Offers: Flashback 2019

IBC Second Amendment Bill 2019

The edifice of the Insolvency and Bankruptcy Code, 2016 (“IBC”) was conceptualised on ideas such as promoting ‘maximisation of value of assets’, ‘a transparent and predictable insolvency law’,  ‘avoiding destruction of value of the debtor’ and recognising the difference between ‘malfeasance and business failure’.[1] In the three years since the enactment of the IBC, many areas in the insolvency resolution process  have required judicial and legislative interventions to enable the process to achieve the desired results.

Among others, the ongoing investigations against insolvent entities and the risk of cancellation of critical government contracts during the insolvency process, were identified as key impediments to strategic interest in the stressed market. The introduction of the Insolvency and Bankruptcy Code (Second Amendment) Bill, 2019 (“Bill”), by the Government, is a step that will help overcome such ‘critical gaps in the corporate insolvency framework’.[2] Continue Reading IBC Second Amendment Bill, 2019: Finishing Touches to the Indian Restructuring Landscape

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The National Medical Commission Act, 2019. Community Health Providers

This blog post is part of a multi-part series. Our previous posts 1, 2 covered the salient features of the National Medical Commission Act, 2019 (NMC Act) where we highlighted some issues arising out of the same.

The NMC Act has some interesting aspects that relate to Community Health Providers (CHPs). We attempt to shed some light on this proposal.

Community Health Providers

The NMC Act, under Section 32(1) provides for granting of a limited license, “to practice medicine at mid-level as Community Health Provider to such person connected with modern scientific medical profession who qualify such criteria as may be specified by the regulations”. However, it also clarifies that the limited license granted under Section 32(1) shall not exceed one-third of the total number of licensed medical practitioners. Secondly, the scope of practice of CHPs has been limited and they can prescribe specified medicine independently, only in primary and preventive healthcare[1]. It has been clarified that in any situation other than primary and preventive healthcare, they may provide medicines only under the supervision of medical practitioners. Continue Reading The National Medical Commission Act, 2019. Community Health Providers: Legitimate or Not

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National Medical Commission Act 2019 - Part 2

This blog post is a part of a multi-part series. In the first part, we had written about the salient features of the National Medical Commission Act, 2019 (NMC Act) and the regime proposed by it. In this part, we will analyse some of the contentious issues in relation to the NMC Act.

Independence of Autonomous Boards:

The NMC Act has made provisions for the constitution of 4 (four) autonomous boards, namely, the Under-Graduate Medical Education Board; the Post-Graduate Medical Education Board; the Medical Assessment and Rating Board; and the Ethics and Medical Registration Board (Boards). However, in terms of Section 16(1) of the NMC Act, these “autonomous” Boards will remain under the overall supervision of the National Medical Commission (NMC). Section 16(2) of the NMC Act further provides that each of the abovementioned Boards shall be an autonomous body, however, in the same breath, it also dictates that these Boards shall carry out their functions subject to regulations made by the NMC. Furthermore, the Central Government has been entrusted with the responsibility of appointing the President and Members of these Boards on the recommendation of a ‘Search Committee’, which itself is comprised majorly of Central Government appointees. In terms of Section 23(1) of the NMC Act, the presidents of the Boards have been allowed only such administrative and financial powers, “as may be delegated” by the NMC. Continue Reading The National Medical Commission Act, 2019. A Look : Part 2

Personal Data Protection Bill 2019 - Analysis

A draft of the Personal Data Protection Bill, 2019 (“Bill”) has been introduced before the Lok Sabha on December 11, 2019.

The Bill is based, in large part, on the proposed draft of the Personal Data Protection Bill, 2018 (“Draft Bill”) which was attached to the report submitted to the Government by the Committee of Experts constituted under the Chairmanship of Justice Srikrishna (Retd.) (for details see our analysis[1] of the Draft Bill and its comparison with the European Union’s General Data Protection Regulation[2] (“GDPR”)[3] ).

That being said, the Bill also includes several modifications and changes in scope and intent. Continue Reading The Personal Data Protection Bill, 2019: An Analysis

Exclusion of Time Spent in Pre-arbitration Negotiations

Complex commercial transactions and arrangements often contemplate a requirement to engage in good faith negotiations/discussions or mediation in order to resolve the dispute amicably before the parties can resort to arbitration[1]. It is also common in these arrangements that the parties are required to spell out their claim in writing and provide the other party with an opportunity to respond before good faith negotiations can commence. Given the complex nature of arrangements, stakes involved and multitude of relationships between the parties, often a considerable amount of time is spent in exploring ways to amicably resolve matters instead of “washing dirty linen in public”. It has been a matter of considerable debate whether the time spent in good faith negotiations/discussions/mediation can be excluded for the purpose of computing the period of limitation for reference to arbitration.

The recent Supreme Court judgement in the case of Geo Miller & Co. Pvt. Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd.[2] (Geo Miller Case) has explained the legal position on this aspect and paved the way for making a carve out for time spent in exhausting pre-arbitration procedures for the purpose of computing the period of limitation for reference to arbitration. Continue Reading Exclusion of Time Spent in Pre-arbitration Negotiations/Settlement Discussions: A Much Needed Carve Out

DECRIMINALIZING OUR COMPANY LAW

In line with the government’s stated goal of promoting Ease of Doing Business, the Company Law Committee (CLC), set up by the Ministry of Corporate Affairs (MCA), has recently submitted its report to the MCA, recommending decriminalisation of 46 compoundable offences under the Companies Act, 2013 (the Act). This list is in addition to the 16 compoundable offences already decriminalised by the Companies (Amendment) Act, 2019.

To put things into perspective, attempts to decriminalise business laws is not new to India. This process began with liberalisation of the Indian economy in 1991. The first commercial law that was decriminalised was the Imports and Exports (Control) Act, 1947. It was replaced by the Foreign Trade (Development and Regulation) Act, 1992, which decriminalised most of the offences relating to imports and exports. The most fundamental step in this direction was the replacement of draconian Foreign Exchange Regulation Act (FERA), 1973, by Foreign Exchange Management Act (FEMA), 1999 which decriminalized offences relating to foreign exchange regulations. Continue Reading Decriminalizing our Company Law – Has the Pendulum Moved Too Far?

Electrosteel Steels Limited v. Securities and Exchange Board of India

On November 14, 2019, almost a decade after the initial public offering of Electrosteel Steels Limited (Electrosteel), the Securities Appellate Tribunal (SAT) delivered its judgment in Electrosteel Steels Limited v. Securities and Exchange Board of India[1] (the SAT Order). It partially upheld the judgment dated March 31, 2016 (SEBI Order) of the adjudicating officer of the Securities and Exchange Board of India[2] (SEBI). The SAT Order has discussed the concept of ‘materiality’ in the context of disclosure in offer documents. Continue Reading To Disclose or Not to Disclose? An Analysis of the Order of the Securities Appellate Tribunal in Electrosteel Steels Limited v. Securities and Exchange Board of India