Ergo Newsflash

With a move that will mark a further evolution of the comparatively young alternative investment fund (AIF) industry, the Securities and Exchange Board of India (SEBI) released “Consultation Paper on Introduction of Performance Benchmarking and Standardization of Private Placement Memorandum for Alternative Investment Funds” (Consultation Paper) on 4 December 2019. The primary objective of the Consultation Paper is to bring more uniformity and transparency in the AIF industry.

Taking into account the deepening liquidity crisis in the financial services sector and the resultant failure of some of the biggest non-banking financial companies (NBFCs) in discharging their immediate debt obligations, the Indian government finally took the bull by the horns.

On 15 November 2019, a three judge bench of the Supreme Court delivered its judgment in the much-anticipated matter of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors., Civil Appeal No. 8766-67 of 2019. The Supreme Court heard appeals against the National Company Law Appellate Tribunal’s (“NCLAT”) judgment dated 04 July 2019 (“Judgment”). The Supreme Court also heard challenges to the Insolvency and Bankruptcy (Amendment) Act 2019 (“2019 Amendment”) which has introduced key amendments to the Insolvency and Bankruptcy Code 2016 (“Code”).

The Authority for Advance Rulings (AAR) pronounced its ruling on the application of the India Mauritius Double Taxation Avoidance Agreement (DTAA), holding that the disposal by a Mauritian resident of its Indian investment would not be subject to tax in India. The AAR held that, in the absence of compelling evidence to the contrary, a valid Tax Residency Certificate (TRC) and Category 1 Global Business License (GBL-1) are sufficient for a Mauritian entity to avail benefits of the DTAA.

The Reserve Bank of India (RBI) issued a long pending clarification on permissibility of bank lending to Infrastructure Investment Trusts (InvITs) vide Circular no. RBI/2019-20/83 DBR.No.BP.BC.20/08.12.014/2019-20 dated 14 October 2019 (RBI Circular). InvITs are registered with Securities and Exchange Board of India and are regulated by Securities and Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014, as amended (SEBI InvIT Regulations).

With effect from 15 October 2015, amendments in terms of sections 139, section 143(i) and section 144 of the Finance Act, 2015 (Finance Act) which amend the Foreign Exchange Management Act, 1999 (FEMA) have been notified.

The Central Board of Direct Taxes (CBDT) – the apex body for administration of direct taxes in India – has issued a circular (Circular No. 29/2019 dated 2 October 2019) (Circular) clarifying that the companies which opt for the recently announced reduced corporate tax rate of 22% will not be eligible to claim set-off of brought forward (i) credit on account of Minimum Alternate Tax (MAT) paid in the past; and (ii) loss on account of additional depreciation.

With the introduction of Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations 2019 (FPI Regulations 2019), the regulator has renewed its commitment towards bolstering development of the International Financial Services Centre (IFSC) at the Gujarat International Finance Tec-City (GIFT City) as an attractive investment regime.

The Telecom Regulatory Authority of India (TRAI) has issued its recommendations relating to the regulatory terms and conditions for ‘other service providers’ (OSPs) on 21 October 2019. These recommendations are a culmination of a six-month long consultation process, which involved submissions by various stakeholders including multinational companies, industry bodies and associations, as well as detailed deliberations during the open house discussion, which were instrumental in highlighting the key concern areas of the industry.

By way of a notification published on 30 October 2019 (Amendment), the Competition Commission of India (CCI) has yet again amended the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (Combination Regulations). The Amendment, effective from 30 October 2019, has enhanced the filing fee which is payable along with the merger notification to the CCI for a pre-merger approval. The Amendment marks the third instance where the filing fee has been increased by the CCI.