Friday, 29 September 2017

Firm News

Alpha in News

Alpha Partners was ranked as one of the top 10 Most Promising Legal Consultants by Consultant Review

IIDL empanels Alpha 

Alpha Partners was recently empaneled as a law firm with IFCI Infrastructure Development Limited (IIDL). IIDL, a wholly owned subsidiary, was promoted by IFCI to leverage its expertise in the emerging infrastructure and real estate sector. Besides re-development, modernization, ownership and management of properties owned by IFCI, IIDL strategically develops properties acquired through NPA resolution from various Banks and FIs or directly obtained from the Development Authorities.

We are honored to be associated with IIDL. 

Internet Broadcasting Organisations to come within the ambit of statutory licenses

Section 31D of the Copyright Act, 1957 of India was introduced vide an amendment to the Act in 2012 which provides for Statutory licence for broadcasting of literary and musical works and sound recording. Section provides that any broadcasting organisation desirous of communicating to the public by way of a broadcast or by way of performance of a literary or musical work and sound recording which has already been published may do so subject to the provisions of the Section.

Various stakeholders raised queries as to whether ‘any broadcasting organisation’ includes internet broadcasting organisations as well or only includes conventional media such as radio or TV.

The Department of Industrial Policy and Promotion, Ministry of Commerce and Industry (Copyright Section) has, vide office memo dated 5.9.17 clarified that ‘any broadcasting organisation’ shall include internet broadcasting organisations as well. In clarifying the above, the authority made reference to the definition and meaning of the term ‘communication to the public’ and observed that the same means and includes any media. 

Peer-to-Peer Lending

Reserve Bank of India, vide notification No. DNBR. 045/CGM (CDS)-2017 has specified that an institution that carries on ‘the business of a peer to peer lending platform’ shall be a Non-Banking Financial Company.

The term “the business of a peer to peer lending platform” shall mean the business of providing under a contract, the service of loan facilitation, via online medium or otherwise, to the participants who have entered into an arrangement with that platform to lend on it or to avail of loan facilitation services provided by it.

RBI had earlier released a consultation paper on P2P lending platforms where the central bank had proposed certain minimum eligibility criteria for registration of such platforms which were necessary in public interest and for regulation of such platforms.

Recognition of the P2P platforms as an NBFC has been a long standing demand of the industry and it provides a lot of clarity on how to run the business.

Restriction on number of layers of Subsidiaries

Section 2(87) of the Companies Act, 2013 defines the term ‘subsidiaries’ and recently, the proviso to the sub-section which provides for prescribing a limit to number of layers of subsidiaries which a holding company may have, has been notified. Companies (Restriction on number of layers) Rules, 2017 (the ‘Rules’) provides that a company cannot have more than two layers of subsidiaries except in following cases:

a.       A banking company;
b.      A systematically important non-banking financial company;
c.       An insurance company;
d.      A government company;
e.      A company acquiring another company incorporated outside India with subsidiaries beyond two layers;
f.        In computing two layers, a holding company having one layer of more than one wholly owned subsidiaries will be taken as one.
g.       Those allowed under Section 186(1) of Companies Act, 2013.

Every company have more layers than prescribed are required to file a return with the Registrar of Companies and are restricted to add to the layers beyond two or such number as is existing as on the date of the Rules, whichever is more.

It may be noted that both J J Irani Committee report as well as the Companies Law Committee formed in 2015 recommended against having any restriction on number of layers of subsidiaries which a company may have, as it will significantly put Indian companies at a disadvantage vis-à-vis their international counterparts.

Monday, 4 September 2017

Alpha relocates to new office

Alpha, in a span of around 4 years, has once again outgrown itself and relocated its office to a commercial building in NOIDA. Our new office address is:

1208, Express Trade Tower-2, B-36, Sector 132 NOIDA

Employment law

Wage Ceiling enhanced

     The Ministry of Labour and Employment increased the wage ceiling under the Payment of Wages Act, 1936 from INR 18,000 per month to INR 24,000 per month vide notification S.O. 2806 (E) with effect from August 28, 2017. The Payment of Wages Act, 1936 will apply to a larger number of employees as a result of such increase.

FDI Updates

New FDI Policy

1.     The Department of Industrial Policy and Promotion recently released the consolidated FDI Policy vide circular no. D/o IPP F. No. 5(1)/2017-FC-1 dated August 28, 2017 (“New FDI Policy”). Under the New FDI Policy:

i.        Conversion of a LLP having foreign investment into a company and vice versa, is allowed under automatic route, where there are no FDI linked conditions;
ii.         Start-ups have been recognized under the New FDI Policy and have been allowed to issue equity shares, equity linked instruments or debt instruments to FVCI. Conditions for issue of convertible notes[1] by start-ups to a person resident outside India have also been prescribed;
iii.    The proposals requiring government approval will be dealt by the competent authority which has been defined under the New FDI Policy to mean the concerned administrative ministry/department empowered to grant government approval for foreign investment under the extant FDI Policy and FEMA Regulations;
iv.   The approval of Reserve Bank of India shall not be required for establishment of branch office, liaison office or project office or any other place of business in India if the applicant is engaged in the business of telecom, defence, private security or information and broadcasting and the applicant has been granted a license/permission by the concerned ministry/regulator.

[1] Convertible notes have been defined to mean an instrument, issued by a start-up against receipt of money repayable at the option of the holder, convertible into equity shares within a period not exceeding 5 years.

Company Law Updates

Provisions related to investigation of companies by by Serious Fraud Investigation Office notified.

1.     The Ministry of Corporate Affairs notified the provisions of sub-sections (8), (9) and sub-section (10) of Section 212 of the Companies Act, 2013 relating to investigation into the affairs of a company by Serious Fraud Investigation Office vide commencement notification dated August 24, 2017.  In this regard, the Companies (Arrests in connection with Investigation by Serious Fraud Investigation Office) Rules, 2017 were also notified on August 24, 2017.

Revised secretarial standards released

2.     The Institute of Company Secretaries of India notified the withdrawal of Notification ICSI No.1 (SS) of 2015 with respect to secretarial standards 1 & 2 (“Secretarial Standards”) with effect from September 30, 2017, vide notification dated August 16, 2017. The Institute announced that the revised Secretarial Standards will be applicable for compliance by all the companies (except the exempted class of companies) with effect from October 01, 2017 and will supersede the text of earlier Secretarial Standards. The Institute of Company Secretaries of India has subsequently announced that the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) have been revised and the revised Secretarial Standards have received approval from the Central Government which shall be applicable for compliance by Companies from October 1, 2017

Companies Act to be amended again

3.     The Companies (Amendment) Bill, 2017 (“Amendment Bill, 2017”) introduced in the Lower House of the Parliament received its assent on July 27, 2017. The Amendment Bill, 2017 seeks to make the following amendments in the Companies Act, 2013 (“Existing Act”):

Ø  Officers in whole time employment of a company at one level below the board of directors are proposed to be included in the definition of key managerial personnel;
Ø  The process and timelines involved in the private placement of securities are proposed to be amended by substitution of Section 42 of the Existing Act with a new section;
Ø  Section 90 of the Existing Act is proposed to be substituted  by a new section to introduce the concept of significant beneficial owner, to mean an individual, holding beneficial interest not less than 25% in shares of a company, whether directly or indirectly;
Ø  The annual general meeting  are proposed to be allowed to be held at any place in India if the consent of members has been obtained;
Ø  Extraordinary general meetings of a wholly owned subsidiaries are proposed to be  allowed to be held at a place outside India as well;
Ø  The requirement of ratification of auditors at every annual general meeting of a company is proposed to be done away with;
Ø  Section 185 of the Existing Act relating to loan to directors is proposed to be substituted by a new section to provide the conditions of provision of loan to persons in which the directors are interested;
Ø  Provisions relating to forward dealing and insider trading of securities are proposed to be omitted; and
Ø  The requirement of obtaining the Central Government approval for payment of managerial remuneration by a company in terms of Section 197 of the Existing Act is proposed to be dispensed with.

Registered office - changes introduced in case of relocation from one state to another

4.     The Ministry of Corporate Affairs, on July 27, 2017 notified the Companies (Incorporation) Second Amendment Rules, 2017 to prescribe certain changes in the process of shifting of registered office:

i.           within the same state; and
ii.         from one state to another.