February 23, 2018
We are excited to introduce #BulletinBoard through which we will be bringing to you snippets and short extracts of latest developments in our different practice areas, be it regulatory notifications, judgments, amendments to legislations, news updates etc. Stay tuned for more such updates every week.
RBI Press Release on PNB’s SWIFT Scam
In the wake of Punjab National Bank’s SWIFT-related fraud for a reported INR 11,400 cr, RBI has reiterated its confidential instructions to banks. It has mandated banks to implement, within the stipulated deadlines, the prescribed measures for strengthening the SWIFT operating environment. Further, in view of large divergences and rising incidences of frauds observed in asset classification and credit portfolio provisioning, it has been decided to constitute an Expert Committee under the chairmanship of Shri Y. H. Malegam, a former member of the Central Board of Directors of RBI. The Committee will look into these issues, and recommend steps needed to prevent them. This will include strengthening of audits currently conducted on banks to mitigate the occurrence of such fund divergence and frauds.
Insolvency and Bankruptcy Board of India amends the Fast Track Insolvency Resolution Process for Corporate Persons Regulations
On February 07, 2018, the Insolvency and Bankruptcy Board of India (“IBBI”) introduced amendments to the Fast Track Insolvency Resolution Process for Corporate Persons Regulation. The amendment introduces provisions for appointment of Registered Valuers by the Resolution Professional (i.e. insolvency professional appointed to conduct the corporate insolvency resolution process) to determine the liquidation value of the corporate debtor. Additionally, it amends the current provisions regarding the responsibilities of the Resolution Professional with respect to:
- submission of information memorandum;
- invitations to persons who submit the Resolution Plan (i.e. plan proposed for insolvency resolution of the corporate debtor as a going concern); and
- submission of Resolution Plan.
Ease of Doing Business
Dispute regarding agreement to sell initiated in 1986 was finally to put to rest by the Hon’ble Supreme Court on February 16, 2018 in Kalawati v Rakesh Kumar. Stressing on the importance of streamlining the judicial system and efficiently resolving suits and appeals, the Supreme Court has reiterated the importance of “ease of doing business” and “enforcement of contract”. The Court held that it is time to introspect and introduce case management programmes to bring about efficient justice delivery. The Court’s rationale is in line with the Government’s Economic Survey 2017-2018, which has dedicated an entire chapter to ease of doing business and specifically stated:
“..the next frontier on the ease of doing business is addressing pendency, delays and backlogs in the appellate and judicial arenas. These are hampering dispute resolution and contract enforcement, discouraging investment, stalling projects, hampering tax collections but also stressing tax payers, and escalating legal costs.”
SEBI Circular on “Easing of Access Norms for investment by Foreign Portfolio Investors”
SEBI has made changes in current regulatory provisions to ease the access norms for investment by Foreign Portfolio Investors (“FPIs”). The main takeaways from this circular are:
- Discontinuance of requirements for seeking prior approval from SEBI in case of change in local custodian/ Designated Depository Participant (“DDP”);
- Rationalization of procedure for submission of certain declarations and undertakings and investor grouping requirement at the time of continuance of registration of FPIs;
- Placing reliance on due diligence carried out by erstwhile DDP at the time of change of Custodian/ DDP of FPIs;
- Simplification of process for addition of share class;
- Permitting appropriately regulated private bank/ merchant bank to invest on their behalf and also on behalf of their clients; and
- Other clarifications on conditional registration.
MCA passes Companies (Removal of Difficulties) Order, 2018
This Order has been aimed at curing the difficulties in giving effect to the provisions of the Companies Act, 2013 regarding appointment and removal of independent directors from the boards of companies. Through the Order, the MCA has introduced a new proviso to Section 169 (1) of the Companies Act, 2013 with regard to the removal of an independent director. The earlier provision required only an ordinary resolution to be passed for the removal of such independent director (unlike the re-appointment which required a special resolution). With an aim to ensure better corporate governance in companies, and the balancing of powers of the board of the company, the new proviso reads as follows:
“Provided that an independent director re-appointed for second term under sub-section (10) of section 149 shall be removed by the company only by passing a special resolution and after giving him a reasonable opportunity of being heard;”
SC dismisses Singh brothers’ appeal against INR 3500 cr Arbitral Award to Daiichi
The Hon’ble Supreme Court rejected the Special Leave Petition (“SLP”) filed by former promoters of Ranbaxy – Malvinder Mohan Singh and Shivinder Mohan Singh challenging the Delhi High Court order which had upheld the INR 3,500 cr arbitral award in favour of Japanese drug maker Daiichi. The bench comprising Justice Gogoi and Justice Banumathi, after hearing the counsels for Daiichi Sankyo dismissed the SLP saying that they are “not inclined to interfere” with the impugned judgment.