Ergo Update

The first full union budget of the re-elected Narendra Modi Government presented on 1 February 2020 (Budget 2020) was a highly anticipated one from the perspective of the Indian fund management industry, with the industry expecting several tax and regulatory announcements to give a fillip to the industry. While Budget 2020 did deliver on several counts from the industry’s perspective, certain long-standing demands continue to remain unfulfilled.

The Securities and Exchange Board of India (SEBI) has recently passed an ad interim ex parte order impounding notional gains made and losses avoided by, amongst others, promoters of PC Jeweller Limited (Company) for having executed trades based on unpublished price sensitive information of the Company (UPSI).

The Competition Commission of India (CCI) dismissed a complaint filed by two Informants against the Ministry of Railways (MoR) and Indian Railway Catering and Tourism Corporation Limited (IRCTC, a subsidiary of the Indian Railways) (collectively, the OPs), which alleged that they abused their dominant position by rounding off the railway passenger fare.

In a landmark decision, the Gujarat High Court vide its order dated 23 January 2020, in Mohit Minerals Private Limited v Union of India and Another [Special Civil Application No 726 of 2018] and other connected petitions, has struck down two notifications: (i) No. 8/2017-Integrated Tax (Rate) dated 28 June 2017 and (ii) No.

There has been a lot of ambiguity on whether a foreign portfolio investor (FPI) registered under the SEBI (Foreign Portfolio Investor) Regulations 2019 (FPI Regulations) can make investments in unlisted equity shares of an Indian company under the foreign direct investment (FDI) route specified under Foreign Exchange Management (Transfer or Issue of Security in Person Resident outside India) Regulations 2017 (FEMA 20), which have now been superseded by the Foreign Exchange Management (Non-debt instruments) Rules 2019 (FEMA NDI Rules).

The Reserve Bank of India (RBI) revised the features of investment by Foreign Portfolio Investors (FPIs) in India vide two circulars published on 22 January 2020, namely the circular on FPI investment in debt (FPI Investment Circular) and Voluntary Retention Route’ (VRR) for FPIs investment in debt (VRR Circular).

India’s capital markets regulator, the Securities and Exchange Board of India (SEBI) has issued a circular dated 17 January 2020 introducing “Guidelines for rights issue of units by a listed Infrastructure Investment Trusts (InvIT)” (Guidelines). Under the Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014 (InvIT Regulations), a listed InvIT may issue units through various modes including a follow-on offer, preferential allotment, qualified institutional placement and rights issue.

Under the Securities and Exchange Board of India (Real Estate Investment Trusts) Regulations 2014 and relevant guidelines and circulars issued thereunder (REIT Regulations), a real estate investment trust (REIT) is required to list its units on a recognised stock exchange only through an initial public offer.

On 17 January 2020, the Central Government of India issued a notification (Notification) declaring the United Arab Emirates (UAE) a ‘reciprocating territory’ for the purpose of Section 44A of the Code of Civil Procedure 1908 (CPC). In effect, the Notification allows civil decrees / judgments passed by certain specified courts of UAE to be directly executed in India, in a manner akin to a decree of an Indian district court.

In Marico Limited v Abhijeet Bhansali (Notice of Motion No 1094 of 2019 in COMIP No. 596 of 2019), the Bombay High Court (Court) has passed a landmark order directing removal of a Youtube “review” video titled “Is Parachute Coconut Oil 100% Pure?” by a social media influencer/v-blogger Abhijeet Bhansali (Defendant) under the alias “Bearded Chokra” regarding Marico’s Parachute coconut oil.