LEGAL ROUNDUP OF THE YEAR GONE BY Jan 11, 2015 91Views 9Likes The year 2014 witnessed upheaval in the corporate legal arena with several legislations, rules, regulations, notifications replacing the old order. It was a year that saw a new Government at the centre with a new thinking and thrust. Company Law From a corporate law perspective, the Companies Act, 2013(“2013 Act”) made all the news. It replaced the 60 year old Companies Act, 1956. The 2013 Act is essentially a rule base legislation. Around 281 sections out of the 470 odd sections in the 2013 Act have been notified. While 98 sections became applicable on 12th Set,13, the remaining 183 sections came into force on 1st April, 14. The Ministry of Corporate Affairs (MCA), issued chapter wise Rules and have also issued a plethora of Circulars, notifications and removal of difficulties Order. The year gone by kept the legal fraternity busy in debating and dissecting the various rules, clarifications some of which created more ambiguity than clarity. SEBI The Securities and Exchange Board of India (“SEBI”) Market Regulator too had an eventful year. It vide notification dated 7th Jan, 2014 brought all foreign Portfolio investments under the SEBI (foreign Portfolio Investors) Regulations, 2014. Vide circular dated 17th April,14 also made amendments in the clause 35B and clause 49 of the listing Agreement to bring them in conformity with the 2013 Act. Notified the norms for listing of business trust structures, Real estate Investment Trust (REIT) & Infrastructure Investment trust (invIT) by issuing the SEBI (Real Estate Investment Trust) Regulations, 2014 and SEBI (Infrastructure Investment Trust) Regulations, 2014. Overhauled its Insider Trading regulations after a gap of 20 years. It widened the definition of Insider. It also approved a revamp of its delisting guidelines. it also aligned its regulations with the Reserve bank of India’s “willful defaulter” norms, by blocking defaulters from raising money via the capital markets. FEMA In a significant development to provide more flexibility to foreign direct investment (FDI), the Reserve bank of India (RBI) has allowed pricing of shares of unlisted companies from DCF methodology to an internationally accepted pricing method for valuation of shares on an arms length basis. This fair value needs to be certified by a chartered Accountant or a merchant banker registered with SEBI. Vide circular dated July 3, 2014, restored the limit of Overseas Direct Investment (‘ODI’) to be undertaken by an Indian party under the automatic route to 400% (from 100%) of the net worth. However, any financial commitment exceeding USD 1 billion will require prior approval of RBI. The Ministry of Commerce and Industry, Department of Industrial Policy & Promotion (‘DIPP’), by way of Press Note 7 (2014 Series) dated August 26, 2014, revised the policy on FDI in the defence sector, whereby the FDI cap in the defence sector has been increased from 26% to 49%, under the approval route. Any investment above 49% will be permitted by the Cabinet Committee on Security (‘CCS’) on a case to case basis. DIPP, by Press Note 8 (2014 Series) dated August 27, 2014 revised the FDI Policy, wherein 100% FDI is now permitted in railway infrastructure under the automatic route. Competition Law The year gone by saw hectic activity in the competition law segment with the Competition Commission of India (CCI) firmly establishing itself as an active watch dog in all sectors of the business. The CCI by way of a notification dated 28th March, 2014 amended the competition commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011. Its overreaching aim, mirroring those of other mature competition law agencies, was to create and sustain competitive markets and protecting the interest of Indian consumers. Labour Law The labour Ministry introduced a host of reforms this year, including relaxing certain labour laws to attract more investments. Approval of two Acts i.e Apprentices Amendment Act,2014 and the labour laws (Exemption from furnishing returns and maintenance of registers by certain establishments) Amendment Act,2014. Launch of a new scheme providing a Universal Account number to 4.17 cr. employees to have their Provident fund Account portable. The Rajasthan Government amended the Industrial Disputes Act, Factories Act and the Contract (labour and regulation) Act, 2014. From Oct 17th,2014, one labour compliance of 16 labour laws has kicked off. With the single window scheme, the central ministry has all the data of companies that fall under the central labour laws. Each business unit will be allotted a specific number to process a unified labour law return. The year 2015 is expected to carry forward the changes in the corporate laws to enable India become a better and convenient place of doing business and thereby improve its position in the global arena.
Posted on: Mon, 12 Jan 2015 04:40:16 +0000
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