Regulatory Archives - S&R Associates

EU Law: Is Your Industrial Data Yours Alone?

Since data-dependent markets have high levels of concentration and entry barriers, EU policymakers have been trying to enhance business-to-business (B2B) and business-to-government (B2G) data sharing since 2020. In addition, the EU hopes to ramp up data access through collaborative cloud infrastructures. Despite GDPR, many recent EU legislations have focused on removing barriers to the free flow of data. Although existing EU laws, such as those related to digital markets and services, include newer rules, the obligation to ensure compliance falls primarily on gatekeepers and large providers. Moreover, it does not create portability between cloud service providers (CSPs). Likewise, the EU’s Data Governance Act, which promotes voluntary data-sharing, does not apply to CSPs. It is in this context that the European draft Data Act (DDA) facilitates switching between CSPs and other data processing services. Further, the DDA puts in place safeguards against unlawful international data transfers by CSPs. In addition, it imposes obligations on data holders to make their information available without discriminating between comparable categories of data recipients, including in respect of partner or linked enterprises.

SEBI v. Abhijit Rajan: A Flawed Interpretation of the Insider Trading Regulations?

Insights | February 27, 2023 | Practice Area: Capital Markets, General Corporate, Mergers and Acquisitions, Regulatory

In September 2022, the Supreme Court of India in SEBI v. Abhijit Rajan interpreted the insider trading regulation in India to include a ‘profit motive’ as an essential requirement for establishing a charge of insider trading. This note analyzes the Supreme Court judgement and highlights certain issues that arise for consideration following such judgement.

Being Cool: Investment Opportunities and Policy Imperatives to Combat Global Warming

Insights | February 21, 2023 | Practice Area: Clean Energy, Private Equity, Regulatory

Recent studies find that a steady rise in temperature across India will significantly impact socioeconomic productivity and GDP growth. Importantly, heat-related stress produces corresponding cooling demands. In this regard, the World Bank recently identified opportunities for the India Cooling Action Plan (ICAP) to encourage private investment in key sectors, such as space cooling in buildings, cold chain and refrigeration, passenger transport air-conditioning, as well as refrigerants. Nevertheless, such investments may be constrained by the country’s international obligations, such as those in respect of HCFCs and HFCs. Besides, India’s climate mitigation strategy, including its thrust towards renewable energy and decarbonization, remains inadequate by itself. Emissions from short-lived climate pollutants (SLCPs) need to be addressed as well. Accordingly, strategic investments in innovative ventures, such as seaweed start-ups that focus on reducing agricultural methane, can be explored further. In addition, the waste and agricultural commodities sectors, along with their critical interface with technology, may be significantly scaled up in the next few years.

InvIT and REIT Regulations: Recent Amendments

Legal Updates | February 20, 2023 | Practice Area: Capital Markets, Corporate Governance, Regulatory

This note provides an overview of the amendments that were issued on February 14, 2023 by the Securities and Exchange Board of India to the SEBI (Infrastructure Investment Trusts) Regulations, 2014 and the SEBI (Real Estate Investment Trusts) Regulations, 2014. The amendments primarily introduce governance-related requirements for investment managers of InvITs and REITs and apply to all InvITs and REITs, including those proposing to register or list. The amendments also include certain requirements with respect to the appointment of auditors of InvITs and REITs, limited review of the accounts of assets of InvITs and REITs and the treatment of unclaimed distributions. Clarifications in relation to the calculation of leverage thresholds and the definition of change in control under the regulations are also part of the amendments. The governance norms and the clarifications to the definition of change in control are effective from April 1, 2023 and the other provisions are effective immediately.

Renewed Focus: New Norms Directing the Electric Vehicles Sector

Insights | February 14, 2023 | Practice Area: Clean Energy, Regulatory

The Indian government has shown a continued commitment to its national mission on e-mobility and battery storage, including with respect to establishing a comprehensive roadmap for the increased adoption of electric vehicles (“EVs”) in the country. However, unlike the impressive roll-out of Chinese EV charging infrastructure, India’s has lagged. Further, with respect to EV battery production, India remains heavily reliant on Chinese imports to satisfy domestic demand for lithium and lithium-ion, as well as other raw materials. Nevertheless, several new laws and policies, formulated by various ministries and government departments over the past few months, have provided the necessary impetus towards an improved ecosystem – including through initiatives by the Ministry of Heavy Industries & Public Enterprises, the Ministry of Power, the Ministry of Housing & Urban Affairs, the Ministry of Road Transport and Highways, the Bureau of Indian Standards, the Ministry of Environment, Forest and Climate Change, as well as NITI Aayog. This note provides a snapshot of some such key government initiatives.

E-Vroom! An Overview of the Electric Vehicle (EV) Sector in India

Insights | February 9, 2023 | Practice Area: Clean Energy, Regulatory

Over the last few years and months, several policies and laws related to electric vehicles (EV) have been introduced in India, spanning several discrete pivots, such as in respect of: (1) local manufacturing, (2) emissions and waste reduction, and (3) charging infrastructure and batteries. This note aims to highlight some of the key initiatives undertaken by the government in the Indian EV sector, along with existing concerns and future opportunities.

Building Bonds: The Mechanics of India’s Debut Sovereign Green Issuance

Insights | January 24, 2023 | Practice Area: Banking and Finance, Capital Markets, Clean Energy, Regulatory

India’s debut issuance of sovereign green bonds by auction provides a significant opportunity to ascertain the current market appetite for such sustainability-linked initiatives, including among institutional investors. Indeed, such bonds have been successful in the past in the context of an eclectic set of sovereign issuances. Among other things, standards established by such issuance may lead to welcome improvements in the Indian bond market in general terms. For instance, Indian companies may want to ride on enhanced credibility standards, as applicable, and seek to better address persistent concerns related to greenwashing. Such broad advantages notwithstanding, in this piece, we look at some of the finer details related to India’s debut sovereign green bond issuance.

Renewed Challenges to the IBC Distribution Waterfall

Insights | December 28, 2022 | Practice Area: General Corporate, Mergers and Acquisitions, Regulatory, Restructuring and Insolvency

The Insolvency and Bankruptcy Code, 2016 (“IBC”) ushered in a new era in the Indian insolvency regime by introducing a distribution waterfall mechanism under Section 53 of the IBC. The waterfall mechanism prioritizes dues owed to financial creditors over dues owed to operational creditors and government authorities.
The waterfall mechanism in the IBC is based on the recommendations of the Bankruptcy Law Reforms Committee. The preamble to the IBC also highlights its objective of balancing the interests of the stakeholders, including by alteration in the order of priority of payment of government dues.
There has recently been a rising trend of courts and tribunals seeking to deviate from the distribution waterfall under the IBC. Unfortunately, this tends to put the success of an insolvency resolution process at risk. In this note, we examine three recent examples and discuss why any such deviation could disturb the delicate balance sought to be achieved under the IBC.

The Promise of ‘Virtual’ Power Purchase Agreements

Insights | December 9, 2022 | Practice Area: Clean Energy, Corporate Governance, Regulatory

In the US and elsewhere, ‘virtual’ power purchase agreements (VPPAs) have appealed to a wide variety of corporate buyers, including for the purpose of meeting renewable energy (RE) targets quickly. Further, compliance with ‘green’ mandates by procuring renewables through a VPPA has become an important element of business branding across the world. With regard to India, too, recent reports suggest that VPPAs are essential to meet corporate needs and wants, particularly in the country’s expanding commerce and industry (C&I) segment.
However, in response to investor demand with respect to environment, social, and governance (ESG) standards, if a company seeks to shift completely to RE, it may not be able to do so for various reasons, including on account of inherent risks in RE generation. Further, ‘physical’ PPAs are not viable for projects below a logistical minimum. Accordingly, C&I consumers with lower load requirements and/or fragmented demand may not yet have a cost-effective mechanism to procure RE, despite India’s newly democratized ‘open access’ regime. In this regard, VPPAs may still be the answer.
Nevertheless, given that your company needs/wants to acquire or generate RE – should, and can, you enter into a VPPA in India?

Bilateral Courts: Wooing Europe with Investor-friendly Free Trade Deal

Insights | December 7, 2022 | Practice Area: Litigation and Arbitration, Mergers and Acquisitions, Regulatory

Negotiations between the EU and India in respect of a significant trade and investment deal are currently ongoing. This EU-India deal involves three separate agreements: (1) a free trade agreement (FTA), (2) an investment protection agreement (IPA), and (3) an agreement on geographical indications. Of particular interest is the proposed investment court system (ICS) in the IPA. Although ICS marks a break from standard dispute-resolution mechanisms under investment treaties, it has been used by the EU in the past across FTA-plus deals signed with Canada, Vietnam, and Singapore. Previously, investor-state arbitration (ISA) was the standard template for resolving international investment disputes. Now, the EU wants to include ICS in all its future treaties. While it remains to be seen whether ICS offers a superior paradigm relative to ISA, the EU itself has argued, including before UNCITRAL, that ICS will ensure a more consistent jurisprudence and improve judicial accountability. Nevertheless, as India looks to export more capital in the future, whether ICS will be able to protect investors better in the long run is something that India needs to think about.