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

Aircraft Leasing in IFSC

In our previous post we had provided a synopsis of the legal framework relating to aircraft leasing in India and Indian IFSCs. In this piece, we will provide an overview of the tax incentives offered to the aircraft leasing activities undertaken from  IFSCs located in India to achieve the dream of developing the GIFT IFSC into a global aircraft leasing hub. We have provided  a few more thoughts to ponder upon as India fuels its engines to realise its objective of ‘letting the common citizen of the country fly’ (Ude Desh Ka Aam Nagrik).Continue Reading Part III (B): Aircraft Leasing in IFSC – Let’s kick the tires and light the fires!

ESOPS as Managerial Remuneration - Do Regulators Need to Revisit Regulatory Architecture

Employee Stock Option Plans (ESOPs) are a well-recognised method of compensating employees and attracting and retaining the best talent. Compensation in the form of equity shares helps in creating a sense of ownership in the mind of employees. Benefit schemes for employees, including ESOPs, have gained popularity, especially in technology start-ups that have limited financial resources in the initial years, but want to attract the best talent. ESOPs are the option or a right, but not an obligation, which is offered by a company to its employees to purchase its shares at a pre-determined price in the future. ESOPs align the interest of the employees with long term interest of the companies and play a vital role in retaining employees at the growing stage of the company.

Section 2(37) of the Companies Act, 2013 (“Act”), defines ‘employees’ stock option’ as the option given to directors, officers or employees of a company or of its holding company or subsidiary company or companies, if any, which gives such directors, officers or employees, the benefit or right to purchase, or to subscribe for, the shares of the company at a future date at a pre-determined price. The Act expressly prohibits ESOPs for Independent Directors[1] as the law makers believe that it compromises the ‘independence’ of such Independent Directors. Section 62(1)(b) of the Act provides for the approval of shareholders by a special resolution. Rule 12 of the Companies (Share Capital & Debentures) Rules, 2014, lays down the legal framework for issuance of ESOPs for unlisted companies. Listed companies having ESOP plans are required to comply with the SEBI (Share Based Employee Benefits) Regulations, 2014 (“ESOP Regulations”).
Continue Reading ESOPS as Managerial Remuneration: Do Regulators Need to Revisit Regulatory Architecture?

ABOLITION OF DIVIDEND DISTRIBUTION TAX

Introduction

The Hon’ble Finance Minister, Ms Nirmala Sitharaman, had presented the Union Budget for the financial year 2020-21 on February 1, 2020, and introduced the Finance Bill, 2020 (“Bill”) in the Lok Sabha. The Bill comprised of financial proposals, including taxation related proposals, to amend the provisions of the Income-tax Act, 1961 (“IT Act”) for financial year 2020-21. The final Bill, incorporating certain amendments, was passed by the parliament on March 26 and received the assent of the President of India on March 27, 2020, and has now been enacted as the Finance Act, 2020 (the “Finance Act”).

In this post, we are covering the provisions of the Finance Act related to dividends distributed by Indian companies. For the changes impacting the tax on dividend distributions to the unitholders of Real Estate Investment Trust and Infrastructure Investment Trusts please see our earlier post here.
Continue Reading Abolition Of Dividend Distribution Tax: A New Paradigm For Equity Investments

Tax implications on INVITs, REITs and its Unitholders under Finance Act 2020

As you are aware, the Finance Minister, Ms. 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 comprised 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. Subsequently, the Finance Minister and her team had several discussions with various stakeholders, who we understand made many representations, seeking changes in some of the proposals. Pursuant to this, amendments to the Bill were presented and the Bill, incorporating the amendments was passed by the parliament on March 26, 2020 and received the assent of the President of India on March 27, 2020. It has now been enacted as the Finance Act, 2020 (“Finance Act”).
Continue Reading UPDATE:  Tax implications on INVITs, REITs and its Unitholders under Finance Act 2020

 e-commerce platforms allowed to list products of direct selling entities without their consent

E-commerce websites such as Amazon, Flipkart, Snapdeal and 1MG (“Online Platforms”) can now breathe a sigh of relief. The Division Bench of the Delhi High Court (‘Division Bench’), in a recent judgment in Amazon Seller Services Pvt. Ltd. v. Amway India Enterprises Pvt. Ltd. & Others[1], allowed e-commerce websites/ platforms/ mobile applications to list products of direct selling entities like Amway, Modicare and Oriflame (“Direct Selling Entities”) without their consent.

In July 2019, a single-judge (“Single Judge”) bench of the Court had, in Amway India Enterprises Pvt. Ltd. v. 1MG Technologies Pvt. Ltd. & Another[2], restrained such online platforms from displaying, advertising, offering for sale, selling, facilitating repackaging of any products of Direct Selling Entities, without their written permission/ consent. The Single Judge had also directed Direct Selling Entities to give notice to the concerned Online Platforms to take down relevant listings if they found their products being displayed on such platforms without their consent. Accordingly, the Online Platforms would then have to take down the said listings within 36 hours.
Continue Reading ‘BUY NOW’ or ‘REMOVE FROM CART’? – Delhi HC allows e-commerce platforms to list products of direct selling entities without their consent