General Corporate Archives - Page 5 of 9

Foreign Investment in Nuclear Energy in India

Insights | March 26, 2024 | Practice Area: General Corporate, Mergers and Acquisitions, Private Equity, Regulatory

Nations across the globe have announced their net zero targets and other climate action commitments. Each country is pursuing its own pathway to achieve the net zero goal considering the resources available to it. In this background, in December 2023, the Government of India announced that it has initiated steps to substantially increase India’s nuclear power capacity.
This note provides an overview of the current legal framework for private/foreign investment in nuclear energy in India and the increased level of screening for foreign investment globally in the energy sector.

Opportunities in the Semiconductor Industry in India

Insights | March 18, 2024 | Practice Area: General Corporate, Mergers and Acquisitions, Regulatory, Technology; Media and Telecommunications

Semiconductors or ‘chips’ are the building blocks of electronic devices and are used in a variety of electronic devices from cars to drones as well as smartphones and computers and across various sectors, including the aerospace and defence, telecom and automotive sectors. Currently, a majority of the semiconductor manufacturing market is dominated by countries such as Taiwan, China, the United States, South Korea and Japan. India relies on semiconductor imports from these countries. While the semiconductor manufacturing industry is currently at a nascent stage in India, due to the worldwide shortage of semiconductors, over the last couple of years, India has taken active steps to tap this market.
This note outlines the key initiatives of the Government of India in relation to the semiconductor industry, regulatory framework for investment, setting up operations in India and recent developments/investments in the semiconductor industry in India.

Regulatory Shifts in India’s Satellite Communication Landscape

Insights | March 11, 2024 | Practice Area: Capital Markets, General Corporate, Mergers and Acquisitions, Private Equity, Tax

There is a rising interest in satellite-based connectivity in the Indian market among internet service providers. Eutelsat OneWeb India, Jio Satellite Communications, Elon Musk’s Starlink and Amazon’s Kuiper are in the process of obtaining the requisite licenses to provide satellite communication services in India. Satellite communications represent an inevitable technological development in response to a continued demand for better network quality and higher capacity.
In this background, the Telecommunications Act, 2023 (“Telecommunications Act”) which received the President’s assent on December 24, 2023 and provides for administrative allocation of satellite spectrum as well as liberalization of the FDI policy applicable to the space sector further spurs the gaining momentum in satellite-based communication technology in India. This note explores the regulatory shifts in the Indian satellite communications landscape.

Indian Tax Treaties: Capital Gains and Beneficial Ownership Test

Insights | March 5, 2024 | Practice Area: Capital Markets, General Corporate, Mergers and Acquisitions, Private Equity, Tax

India’s double tax avoidance agreements (“DTAAs”) with certain countries (for e.g. Singapore, Mauritius and the Netherlands) provide that the capital gains on sale of shares is taxable only in the resident country of transferor and no tax is payable in India. However, the tax authorities have disputed the benefit available under the DTAAs by applying the “beneficial ownership” test. Further, they have also argued the sufficiency of tax residency certificate (“TRC”) to claim such benefit. In this note we analyze these aspects in light of the decision of Delhi High Court in Blackstone Capital Partners (Singapore) VI FDI Three Pte. Ltd., appeal against which has been recently admitted by the Supreme Court.

Investing in India: An Overview of Legal Considerations

Insights | February 27, 2024 | Practice Area: Capital Markets, General Corporate, Mergers and Acquisitions, Private Equity, Regulatory, Restructuring and Insolvency

Foreign investment is a key contributor to India’s growth story and India continues to consistently experience growth in inflow of foreign direct investment (“FDI”). The Government of India has announced that the provisional figure of FDI inflow into India for the financial year ended March 31, 2023 was USD 71 billion and according to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report, India remains a favored destination for global investors.
In this note we discuss certain key legal considerations for a foreign investor investing in India.

Compulsorily Convertible Debentures:
Whether ‘Debt’ or ‘Equity’?

Insights | January 4, 2024 | Practice Area: General Corporate, Mergers and Acquisitions, Private Equity

Compulsorily convertible debentures (“CCDs”), as the type suggests, are debentures that are compulsorily convertible into equity shares. CCDs first became prominent in the foreign direct investment (“FDI”) context in 2007 when Indian foreign exchange laws expressly recognized them as the only type of debentures that Indian companies could issue to raise FDI. The reason to disallow other types of debentures for FDI purposes was to curb debenture issuances to foreign investors in the guise of equity. Since the foreign exchange laws had established a FDI regime for equity instruments and a separate external commercial borrowing (“ECB”) regime for debt instruments, it was felt that Indian companies were bypassing the ECB route by issuing hybrid debt instruments under the FDI route. Thus, CCDs have been regarded as equity instruments for FDI purposes.
In November 2023, the Supreme Court of India (“Supreme Court”) delivered its judgment in IFCI Limited v. Sutanu Sinha that dealt with the question whether CCDs are to be treated as ‘debt’ or ‘equity’ in a different context. This note analyzes the Supreme Court judgment and the ‘repayment of principal’ test that courts have consistently applied to determine whether convertible debt instruments are regarded as ‘debt’ or ‘equity’.

Innovative Constructions: Assessing the Investment Viability of New Construction Technologies

Insights | November 20, 2023 | Practice Area: Banking and Finance, Clean Energy, Corporate Governance and ESG, General Corporate, Projects; Infrastructure and Energy, Regulatory

Every year, Indians require 10 million new homes. At the same time, global markets are increasingly focused on sustainability, climate change and ESG-related goals. The confluence of such factors has created various opportunities to employ climate-responsive construction techniques, including through the use of eco-friendly and sustainable material. Relatedly, the interplay of energy-efficient solutions, green-certified buildings, targeted investments and financing, key legislative changes, government incentives and a coordinated regulatory framework, as well as increased digitalization, may change this ecosystem in fundamental ways.

Managing Foreign Sellers’ Risks in Indian M&A Transactions

Insights | November 14, 2023 | Practice Area: General Corporate, Mergers and Acquisitions

In a previous note published earlier this month, certain common risks for foreign buyers in Indian M&A transactions were discussed in addition to the strategies to mitigate such risks. In this note, the most common concerns of foreign sellers in an M&A transaction have been discussed i.e., to mitigate risk of deal certainty, risk of any payment default by buyer and limitation of foreign sellers’ liability post completion of an M&A transaction. This note also discusses certain trends and market practices relevant for foreign sellers to manage such risks within the Indian legal framework.

Reliance Retail’s Capital Reduction: The Position of Minority Shareholders

Insights | November 1, 2023 | Practice Area: General Corporate, Regulatory

In July 2023, Reliance Industries Limited announced that the board of directors of its indirect subsidiary, Reliance Retail Limited has approved a proposal to reduce its share capital. The proposed reduction involves canceling the shareholding of the minority shareholders of Reliance Retail, making Reliance Retail a wholly-owned subsidiary of its parent company, Reliance Retail Ventures Limited.
This capital reduction is of interest due to the trading of Reliance Retail’s equity shares on the unlisted market. While Reliance Retail’s valuation is based on reports from independent valuers, objections could arise if the minority shareholders perceive the offered consideration as lower than the price in the unlisted market.

Modifications to Schemes of Arrangement

Insights | October 5, 2023 | Practice Area: Corporate Governance and ESG, General Corporate, Mergers and Acquisitions, Regulatory, Technology; Media and Telecommunications

Once a scheme of arrangement has been approved by its shareholders or the relevant National Company Law Tribunal, what, if any, modifications are permissible to the scheme of arrangement without seeking fresh shareholder approval?

This note considers the legal framework for modifications to approved schemes of arrangement. It also examines the proposed merger of Zee Entertainment with Sony Pictures India where this question potentially arises for consideration.