FDI in India

Impact of COVID-19 on FDI Regimes – One Year Later

In a significant move more than a year ago, the Indian Government directed that all investments from countries that share land borders with India will require prior regulatory approval. This change covered both direct and indirect investments and came in the wake of scrutiny by the Indian securities regulator of Chinese ownership of portfolio investors and the introduction of stricter FDI regimes worldwide. It may be time for the Government to consider whether the rules introduced in 2020 are justified any more in their current form. If not, certain modifications could be considere


FDI in India

Treatment of ‘Inter-Connected’ Transactions under Indian Competition Law

Under the Competition Act, 2002, transactions that qualify as a ‘combination’, are required to be notified to, and approved by, the Competition Commission of India (the “CCI”) prior to completion, unless any exemptions apply. If addition, all transactions that are ‘inter-connected’ with such ‘combination’, are also required to be notified to the CCI in a single application along with the combination. This applies irrespective of the inter-connected transaction being exempt from notification requirement on a standalone basis, and the inter-connected transaction may not be completed prior to receipt of the CCI’s approval. However, the identification and treatment of such ‘inter-connected’ transactions is fraught with uncertainty. This note aims to provide an overview of the existing Indian merger control framework and identify certain issues often faced by stakeholders in this regard.


Sharing of Unpublished Price Sensitive Information on WhatsApp and “Innocent Tippee” Liability

In 2020, a set of orders were issued by the SEBI in which the SEBI imposed penalties on certain individuals for forwarding WhatsApp messages with details of companies’ earnings ahead of formal announcements. These individuals received such messages on WhatsApp groups that they were a part of, and forwarded such messages as they had received them. The SEBI refused to accept the defense that the information shared was simply market chatter that was “heard on the street” and was not unpublished price sensitive information (“UPSI”). The SEBI’s orders were recently overruled by the Securities Appellate Tribunal (“SAT”). The SAT ruled that information could be considered UPSI only when a person in receipt of such information had knowledge that it was UPSI.


Does the Prevention of Money Laundering Act, 2002 Safeguard Third-party Rights in the Course of Attachment of Properties?

A key feature of the Prevention of Money Laundering Act, 2002 (the “Act”) is the power of the investigating agency under the Act, i.e., the Directorate of Enforcement (the “ED”), to provisionally attach any property believed to be involved in money laundering for an initial period up to 180 days from the date of such attachment. This provision ensures that proceeds that are obtained directly or indirectly from the offences noted under the Act (“scheduled offences”) are not dealt with in any manner so as to frustrate proceedings relating to the confiscation of such proceeds under the Act. Ex facie, this provision appears to be in direct conflict with the rights of bona fide third-parties such as banks, mortgagees, transferee, and lessee etc. who may otherwise have a lawful interest in a property alleged to be involved in money laundering and had no knowledge of such involvement at the time of acquisition of interest in such property. In light of this apparent conflict, does the Act adequately safeguard the rights of such third-parties who have a lawful interest in a property provisionally attached by the ED?


national company law tribunal

Residuary Jurisdiction of the National Company Law Tribunal under Section 60(5) of the Insolvency and Bankruptcy Code, 2016: A Brief Analysis

Pursuant to Section 60(5) of the Insolvency and Bankruptcy Code, 2016 the National Company Law Tribunal is bestowed with wide jurisdiction to decide: (i) ‘any’ application or proceeding against a corporate debtor; (ii) ‘any’ claim made by or against a corporate debtor including claims by or against its subsidiaries; and (iii) ‘any’ questions of priority or ‘any’ question of law or facts, arising out of or in relation to insolvency resolution or liquidation proceedings of the corporate debtor.  Are there any limits to such jurisdiction of the National Company Law Tribunal?


Regulating Big Data: Contextualising CCI Probe into WhatsApp’s Privacy Policy

The CCI’s recent order directing an investigation into WhatsApp’s privacy policy provides us with the opportunity to look at how competition regulators, both in India and abroad, have sought to regulate data collection and sharing. There are multiple concerns to be balanced in this process – the ability of businesses with large data sets to better serve customers, entry barriers to new business with access to comparatively smaller data sets, and increased consumer dependency on a limited set of players. The CCI’s recent order could be indicative of its recognition of these concerns and its intention to take a more interventionist approach where it believes that user data is being exploited in a manner that creates entry barriers or otherwise adversely impacts competition or consumers’ interests.


Cases analysis

Case Note: Judgement of the Supreme Court in the Essar Steel Case

By a judgment dated November 15, 2019, the Supreme Court of India in the case of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Others delivered its final verdict on the acquisition of Essar Steel India Limited under the Insolvency and Bankruptcy Code, 2016. The proceedings under the IBC in relation to the acquisition of Essar Steel lasted for more than two years and laid down precedents on several questions arising out of the then newly introduced insolvency legislation in India. This paper is a comment on this judgment. It critically analyses the decision of the Supreme Court and the impact of the judgment on insolvency law in India.


Tata-Mistry Case: A Bittersweet Victory for the Tata Group

On March 26, the Supreme Court delivered its verdict in a matter that has grabbed headlines for more than four years. Two prominent business groups, historically inter-connected with each other in multiple ways, have engaged in a no-holds-barred battle that by all accounts will be a significant marker in the history of corporate India. It started at a board meeting of Tata Sons on Oct. 24, 2016, when Cyrus Mistry was removed by the board of directors from his position as executive chairman. This led to a series of cascading events that ultimately ended up in the courts.


The Conundrum of “Unpublished Information” under the Insider Trading Regulations

The SEBI’s Insider Trading Regulations prohibit trading in listed securities when in possession of unpublished price-sensitive information (“UPSI”). Therefore one question which invariably needs to be addressed in such matters is whether the information that was alleged to be UPSI was “unpublished”. In a recent order issued by the SEBI in February 2021, Future Corporate Resources Private Limited, Mr. Kishori Biyani and certain other persons (together, the “Noticees”) were held to be in violation of the Insider Trading Regulations. It was alleged that the Noticees traded in shares of Future Retail Limited when in the possession of UPSI. The Noticees argued, inter alia, that the information that was alleged to be UPSI was already in the public domain in the form of media reports. This argument was rejected by the SEBI. It was not the first time that such an argument was made. It will likely not be the last. However, the backdrop is that the original 1992 regulations, and then the amendments in 2002 and 2015, have taken divergent approaches on this point. It has also not helped that the orders of adjudicatory authorities on this point have been inconsistent.