FEMA

Disposal of Unsubscribed Portion in Rights Issue: Legal Position in India

Summary: The Board’s discretion to dispose of unsubscribed portion of rights issue to non-shareholders was made a bit easier by the Companies Act, 2013, by giving more flexibility to the Board as compared to the language used in the 1956 Act. However, whether such disposal is tantamount to a preferential allotment or a public offer (when offered to more than 200 persons) has always been a subject of legal debate. This blog demystifies the legal position and clarifies the applicability of the RBI’s pricing guidelines under FEMA, when such allotment is made to a non-resident investor.Continue Reading Disposal of Unsubscribed Portion in Rights Issue: Legal Position in India

Extra - territorial operation of India’s corporate laws

Summary: This article examines certain provisions in India’s key commercial laws, including the Companies Act 2013, Competition Act 2002, and SEBI regulations, analyzing how these laws extend beyond India’s territorial boundaries. While analysing the constitutional permissibility of such provisions, the article highlights potential challenges including jurisdictional overreach and compliance conflicts for multinational corporations.Continue Reading Extra – territorial operation of India’s corporate laws

Changing Face of Regulators

Summary: There is an unmistakable change in India’s regulatory architecture. Traditional heavyweight institutional regulators are gradually introducing measures to move away from a rigid enforcement system to a more trust-based framework. Enforcement actions of two key regulators – the Securities and Exchange Board of India (SEBI) and the Reserve bank of India (RBI) appear to be softening. The finance ministry’s move towards deregulation was also evident in Budget 2025, where the formation of a committee to overhaul non-financial sector regulations was announced. The intention behind this announcement was to shed regulatory load and nurture an environment where enterprises can thrive.  Simultaneously, newer watchdogs and their enforcement instincts are emerging as powerful force. They are turning out to be more assertive, which thwarts the effort to balance systemic resilience with enterprise growth.Continue Reading Changing Face of Regulators

FIG Paper No 49: IFSC, GIFT City: A New Legal Frontier for Cross-Border Payments

Summary: This article is crucial for legal, fintech, and business leaders as it unveils how the IFSCA PSP License at IFSC, GIFT City empowers cross-border payment service providers to operate globally from within India. By offering a unified regulatory framework, tax incentives, and foreign exchange flexibility, it positions IFSC as a strategic hub for building scalable, efficient, and globally aligned payment infrastructures.Continue Reading FIG Paper No 49: IFSC, GIFT City: A New Legal Frontier for Cross-Border Payments

Compounding Under FEMA: What Has Changed Post 2025 Amendments

Introduction

The compounding mechanism under Section 15[1] of the Foreign Exchange Management Act, 1999 (“FEMA”), allows individuals and companies to voluntarily admit breach of FEMA provisions and pay a penalty to regularise their contraventions without undergoing lengthy enforcement actions. In continuation of our earlier analysis of the Foreign Exchange (Compounding Proceedings) Rules, 2024[2] (“Compounding Rules”), read with Master Directions on Compounding of Contravention under the FEMA[3] (“Compounding Directions”), notified last year, we now examine the latest amendments to the compounding mechanism under the Compounding Directions. The Reserve Bank of India (“RBI”), through A.P. (DIR Series) Circulars notified on April 22, 2025, and April 24, 2025[4] (“April Amendments”), respectively has further amended the Compounding Directions. These amendments were preceded by a press release dated April 11, 2025[5], where the RBI mandated all banks, financial companies, and other regulated entities to submit their regulatory authorisations/ licenses/ approvals exclusively through the PRAVAAH online portal on and from May 1, 2025, onwards.Continue Reading Compounding Under FEMA: What Has Changed Post 2025 Amendments

Introduction

Keeping up with the advancements in the digital payments industry and the Indian government’s initiative to promote ease of doing business, the Ministry of Finance, in consultation with the Reserve Bank of India (“RBI”), notified the Foreign Exchange (Compounding Proceedings) Rules, 2024 (“Compounding Rules”), on September 12, 2024, in supersession of the erstwhile Foreign Exchange (Compounding Proceedings) Rules, 2000 (“Erstwhile Compounding Rules”). The Compounding Rules were followed by Direction on Compounding of Contravention under the Foreign Exchange Management Act, 1999 (“FEMA”), which was notified by the RBI on October 01, 2024 (“Compounding Directions”).Continue Reading Foreign Exchange Compounding Proceedings: Baby Steps or Revamped?

Vote-Pooling Arrangements between Shareholders – Deeper Reflections

Cardinal Principle:

The cardinal principle of Company law, as enshrined under Section 47 of the Companies Act, 2013 ( “the Act”)provides that every equity shareholder shall have the right to vote on every resolution placed before the company and his voting right on a poll shall be in proportion to his shares in the paid-up equity share capital of the company.Continue Reading Vote-Pooling Arrangements between Shareholders – Deeper Reflections

The Reserve Bank Of India Mandates Compounding For Issuance Of Partly Paid-Up Units By AIFs Prior To March 14, 2024

The Reserve Bank of India (“RBI”) vide its circular dated May 21, 2024 (“Circular”),[1] has required that issuance of partly paid-up units by Alternative Investment Funds (“AIFs”) to foreign investors prior to March 14, 2024, should be regularised through compounding under Foreign Exchange Management Act, 1999 (“FEMA”). Compounding by RBI is prescribed for the contravention of foreign exchange regulations as per Foreign Exchange (Compounding Proceedings) Rules, 2000, and involve payment of a fees. In many instances, compounding requires payment of a monetary penalty to RBI.Continue Reading The Reserve Bank Of India Mandates Compounding For Issuance Of Partly Paid-Up Units By AIFs Prior To March 14, 2024