Ergo Update

On 10 June 2021, SEBI introduced the SEBI (Delisting of Equity Shares) Regulations, 2021 (Delisting Regulations) which have now completely replaced the erstwhile regulations from 2009. A revamp of the delisting regime was imminent, and SEBI has sought to plug certain legal ambiguities and practical challenges that plagued the earlier regulations. This Ergo analyses certain key considerations and process involved in a voluntary delisting of equity shares of a company under the new Delisting Regulations. 

The Securities and Exchange Board of India (SEBI) has on 11 June 2021, repealed the SEBI (Delisting of Equity Shares) Regulations, 2009 (Erstwhile Delisting Regulations) and notified the SEBI (Delisting of Equity Shares) Regulations, 2021 (Delisting Regulations 2021). As per Regulation 37 of the Delisting Regulations 2021, the equity shares of a listed subsidiary company (Listed Sub Co) of a listed holding company (Listed Hold Co) may be delisted from the stock exchanges, pursuant to a scheme of arrangement under Sections 230 to 232 of the Companies Act, 2013 (Act).

In an important move, against the backdrop of a nationwide health crisis emanating from COVID-19 outbreak, the Employees’ State Insurance Corporation (ESIC), by way of circular dated 3 June 2021, has announced the ESIC COVID-19 Relief Scheme (Scheme) for the beneficiaries of the insured persons, in the instance the insured person died as a result of COVID-19. The Scheme will be valid for a period of 2 years with retrospective effect from 24 March 2020. In this update, the authors examine the salient provisions of the Scheme.

The Central Board of Direct Taxes (CBDT) vide its notification dated 24 May 2021 (Notification), has introduced Rule 11UAE under the Income Tax Rules 1962 (IT Rules). Rule 11UAE prescribes the method for computing the fair market value (FMV) of an undertaking being transferred pursuant to a slump sale.

The Supreme Court of India in the case of Lalit Kumar Jain v. Union of India & Ors. by its judgement dated 21 May 2021 upheld the validity of notification no. S.O. 4126 (E) dated 15 November 2019 (“the said Notification”) issued by the Central Government, which brought into force provisions relating to personal guarantors to corporate debtors with effect from 1 December 2019.

Businesses have come a long way since noted economist, Milton Friedman, advanced his doctrine that the social responsibility of a business is to generate profit for its shareholders. We have already discussed the shift towards a stakeholder-centric governance model, the ‘triple bottom line’ and ESG related developments in the Indian context in our previous Ergo which can be accessed here.

In a recent order in M/s DJ Surfactants v National e-Assessment Centre, Income Tax Department, New Delhi and Others (Writ Petition No. 4814/2021) (Order), the Hon’ble Delhi High Court (High Court) has granted interim stay on the assessment order (Assessment Order) passed in faceless assessment proceedings. The High Court, in doing so, observed that DJ Surfactants (Taxpayer) established a prima facie case of violation of the ‘principles of natural justice’ by National e-Assessment Centre (Tax Department) in doing faceless assessment.

Given the recent surge in COVID-19 cases across the country, the Central Board of Direct Taxes (Apex body for direct taxes administration) (CBDT) has issued circular no. 08/2021 dated 30 April 2021 (Circular).

The Securities and Exchange Board of India (SEBI), on 6 October 2017 had introduced the circular on categorization and rationalization of mutual fund schemes in order to bring uniformity across mutual funds by standardizing scheme categories broadly into equity schemes, debt schemes, hybrid schemes, solution oriented schemes and other schemes.