Jurisdiction - India
Reports and Analysis
India – News Monthly Roundup.

27 February, 2013

 

Legal News & Analysis – Asia Pacific – India

 

Corporate and Commercial  

  

  • The government has proposed to simplify the foreign investment regime, wherein any foreign investment in a company greater than 10% of its equity will be considered as strategic investment or foreign direct investment (“FDI”) and investment less than 10% as portfolio investment. Further, foreign investment will include all modes of investment, private equity, foreign institutional investment and FDI. The proposal is expected to be taken up in the upcoming Budget.​ http://economictimes.indiatimes.com/news/economy/policy/budget-2013-government-to-give-facelift-to-foreign-investmentregime/articleshow/18264841.cms
  • The RBI has made the following amendments to the ECB Policy :
    • Indian companies in the hotel sector, with a total project cost of Rs. 2500 million or more, irrespective of geographical location, are now permitted eligible borrowers for availing ECB for repayment of outstanding rupee loans and/or for fresh rupee capital expenditure. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7818&Mode=0 
    • The ECB limit for Non-Banking Financial Companies (“NBFC”) categorized as Infrastructure Finance Companies (“IFC”) under the automatic route has been increased from 50% of their owned funds to 75% of their owned funds, including outstanding ECBs. NBFC-IFC desirous of availing ECB beyond 75% limit shall be under the approval route.
    • http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7794&Mode=0
  • The RBI has released consolidated and amended guidelines for issue of Commercial Paper (“CP”), namely the ‘Reserve Bank Commercial Paper Directions, 2012’ which inter alia, includes provisions on eligibility for issue of CP, mode, procedure and limits of issuance of CP, eligibility for investment in CP, buyback of CP etc. http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=7785&Mode=0 
  • The Enforcement of Security Interest and Recovery of Debts Laws (Amendment) Act, 2012 has been published in the Official Gazette which amends the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. PIB Release dated January 9, 2013 http://pib.nic.in/newsite/erelease.aspx?relid=0
  • The SEBI has amended the Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999, to prohibit listed entities from framing any employee benefit schemes involving the acquisition of own securities from the secondary market. http://www.sebi.gov.in/cms/sebi_data/attachdocs/1358405632526.pdf 
  • The SEBI, in its board meeting on 18th January 2013 approved certain amendments to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, inter alia (PR No. 17/2013 http://www.sebi.gov.in/sebiweb/home/detail/25197/yes/PR-SEBI-Board-Meeting):
  • With respect to the relevant date for making public announcement and determination of offer price in cases of:
    • i. Combined mode of acquisition – shall be the earliest date on which such obligations are triggered, subject to the condition that this shall not apply when the trigger is due to willful and deliberate act on the acquirer’s part.
    • ii. Preferential allotment – shall be the date of the board resolution authorizing the same and not the date on which special resolution is passed under Sec. 81(1A) of the Companies Act, 1956.
  • The completion of market purchase of shares made during the open offer period can be completed in such period provided that the shares are kept in an escrow account. Also, these shares can be transferred from the escrow account to the acquirer after expiry of 21 working days from date of the detailed public statement, provided the acquirer deposits 100% of the consideration payable in cash in the escrow account.

The above shall come into force pursuant to the necessary circular being brought about by SEBI. 

 

Banking:

 

 

Pharmaceutical:

 

 

  • The government issued guidelines on ‘Registration of import of cosmetics’, which will be applicable till the time the necessary gazette notification G.S.R 426(E) dated 19th May, 2010 for amending the Drugs & Cosmetics Rules, 1945 providing for registration of import of cosmetics into India are enforced.
  • http://www.cdsco.nic.in/Guidelines on Registration of Import of Cosmetics.pdf
  • Pharmaceutical companies will now mandatorily have to launch their product for marketing within six months of obtaining the permission/license from the Central Drugs Standard Control Organization otherwise their license shall 
  • stand cancelled. http://www.cdsco.nic.in/cancellation_of_permission.pdf


Miscellaneous:

 

 

This article was supplied by Clasis Law

 

For further information, please contact:

 

Vineet Aneja, Partner, Clasis Law
vineet.aneja@clasislaw.com
 
Sakate KhaitanPartner, Clasis Law
sakate.khaitan@clasislaw.com

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