The Union Cabinet on 28 August 2019 has issued a press release proposing some significant changes to the Foreign Direct Investment (FDI) policy of the Government of India, specifically relating to 4 (four) sectors as detailed below. Whilst the fine print of the revised policy is awaited, following are some of the key changes proposed:
The President of India has promulgated the Banning of Unregulated Deposit Schemes Ordinance on 21 February 2019 (Ref: No. 7 of 2019) (Ordinance). The Central Government had tabled a bill in the Lok Sabha (lower house of the Indian Parliament) which proposed to ban unregulated deposit schemes.
On 1 January 2019, the Ministry of Commerce and Industry (MCI) vide Press Note No.1 of 2019 Series (Press Note 2019) specified the list of defence items under the Industries (Development and Regulation) Act, 1951 (IDRA) and the list of arms and ammunitions requiring license under Form VII of the Arms Act, 1959 (Arms Act), for which the licensing authority has been granted to the Department of Industrial Policy and Promotion (DIPP). The Press Note 2019 supersedes the Press Note No.3 of 2014 Series issued by the MCI on 26 June 2014 (Press Note 2014).
Applicability and Deadline: Every company incorporated on or before 31 December 2017 is required to file e-form ACTIVE (Active Company Tagging Identities and Verification) on or before 25 April 2019. Companies that have not filed due financial statements or annual return are restricted from making the filing (unless under management dispute which has been registered by the Registrar of Companies (ROC)).
On 8 February 2019, the Ministry of Corporate Affairs (MCA) released the Companies (Significant Beneficial Owners) Amendment Rules, 2019 (New SBO Rules) to revise and amend the Companies (Significant Beneficial Owners), 2018 (Old SBO Rules). The New SBO Rules have once again kick-started the process of requiring significant beneficial owners to start the reporting procedures. On certain aspects, the New SBO Rules have brought in clarity to the significant beneficial owner disclosure regime.
This is further to our Ergo Update dated 5 July 2019 regarding Securities and Exchange Board of India’s (SEBI) in-principal approval to the framework for enabling initial public offer of ordinary equity shares by tech companies having equity shares with superior voting rights (SR Shares).
All issuance and transfers of ‘securities’ will be subject to stamp duty (i.e. exemption on transfer of dematerialized securities has been removed, Stamp duty will be calculated on an ad valorem basis on: (i) actual trade price for listed securities; or (ii) price identified in instrument of transfer. More importantly, unified stamp duty schedule across India – not linked to or varied with the state of execution.
In view of the Central Government’s objective of improving “ease of doing business” in India, the Reserve Bank of India (RBI) announced a new framework for external commercial borrowings (ECB) on 16 January 2019 liberalising the current ECB policy (the Revised ECB Framework).
The Securities and Exchange Board of India (SEBI) delivered on its commitment to bring transparency, objectivity and consistency to the SEBI (Prohibition of Insider Trading) Regulations 2015 (Insider Trading Regulations) while implementing recommendations of the Report of the Committee on Fair Market Conduct of 8 August 2018 under the chairmanship of Dr T K Viswanathan (Committee), by way of the SEBI (Prohibition of Insider Trading) (Amendment) Regulations 2018 (Amendment Regulations) that will be effective from 1 April 2019.
The Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industry, Government of India has issued Press Note No 2 (2018 Series) on 26 December 2018 (PN 2 of 2018). PN 2 of 2018 amends paragraph 5.2.15.2 (e-commerce activities) of the current ‘Consolidated FDI Policy’ of the DIPP effective from 28 August 2017 (FDI Policy), effective from 1 February 2019. Paragraph 5.2.15.2 (e-commerce activities) incorporates the provisions of Press Note No 3 (2016 Series) dated 29 March 2016 (PN 3 of 2016)
