India – Corporate And Commercial Updates – January 2020.

MARKET STUDY ON E-COMMERCE IN INDIA ISSUED BY CCI

 

On January 8, 2020, the Competition Commission of India (CCI) released the key findings and observations on the market study in the e-commerce sector in India. In view of the rapid growth and the rising importance of online trade in a large number of product categories, the purpose of the study was to better understand the functioning of e-commerce in India and its implications for markets and competition. The study covered various aspects of e-commerce, but the focus was on gathering qualitative insights from market participants on such trends, practices, and issues, which are relevant to competition. Information was received inter alia on the impact of e- commerce on competition and competitive strategies of businesses, the functioning and role of online platforms and their contractual arrangements with sellers/service providers. The Report is structured as follows: the key market trends and main features of e-commerce are outlined in Chapter 2. Chapter 3 discusses the key competition issues that have emerged from the study.

 

The observations of the Commission based on the findings are presented in Chapter 4.

 

INDIAN STAMP (COLLECTION OF STAMP-DUTY THROUGH STOCK EXCHANGES, CLEARING CORPORATIONS AND DEPOSITORIES)

 

RULES, 2019 On January 8, 2020 the Ministry of Finance released a gazette notification to issue the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) (Amendment) Rules, 2020 in order to revise the date of coming into force of the Indian Stamp (Collection of Stamp-Duty through Stock Exchanges, Clearing Corporations and Depositories) Rules, 2019 from January 9, 2020 to April 1, 2020.

 

ACQUISITION OF FINANCIAL ASSETS BY ASSET RECONSTRUCTION COMPANIES FROM SPONSORS AND LENDERS

 

On December 6, 2019, the Reserve Bank of India (“RBI”) on a review, decided ACQUISITION OF that Asset Reconstruction Companies (ARCs) shall not acquire financial assets

from the following on a bilateral basis, whatever may be the consideration:

 

• a bank/ financial institution which is the sponsor of the ARC;
• a bank/financial institution which is either a lender to the ARC or a subscriber to the fund, if any, raised by the ARC for its operations; an entity in the group to which the ARC  belongs.

 

However, they may participate in auctions of the financial assets provided such SPONSORS AND LENDERS auctions are conducted in a transparent manner, on arm’s length basis and the prices are determined by market forces.

 

REVIEW OF THE NON- BANKING FINANCIAL COMPANY – PEER TO PEER LENDING PLATFORM (RESERVE BANK) DIRECTIONS, 2017

 

On December 23, 2019, RBI on a review of the Non-Banking Financial Company – Peer to Peer (P2P ) Lending Platform (Reserve Bank) Directions, 2017 decided that:

 

(i) The aggregate exposure of a lender to all borrowers at any point of time, across all Peer to Peer (P2P) platforms, shall be subject to a cap of INR 50,00,000 provided that such investments of the lenders on P2P platforms are consistent with their net- worth. The lender investing more than INR 10,00,000 across P2P platforms shall produce a certificate to P2P platforms from a practicing Chartered Accountant certifying minimum net-worth of INR 50,00,000. Further, all the lenders shall submit declaration to P2P platforms that they have understood all the risks associated with lending transactions and that P2P platform does not assure return of principal/payment of interest.

 

(ii) Escrow accounts to be operated by bank promoted trustee for transfer of funds need not be mandatorily maintained with the bank which has promoted the trustee.

 

 

IBBI ISSUES THE INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (LIQUIDATION PROCESS) (AMENDMENT) REGULATIONS, 2020

 

On January 6, 2020, the Insolvency and Bankruptcy Board of India (IBBI) issued a notification regarding “Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2020”. This Amendment has been brought forth in order to amend the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The amended regulations are effective from January 6, 2020. Certain key amendments are as follows:

 

(a) The amendment clarifies that a person, who is not eligible under the Code to submit a resolution plan for insolvency resolution of the corporate debtor, shall not be a party in any manner to a compromise or arrangement of the corporate debtor under section 230 of the Companies Act, 2013. It also clarifies that a secured creditor cannot sell or transfer an asset, which is subject to security interest, to any person, who is not eligible under the Code to submit a resolution plan for insolvency resolution ofthe corporatedebtor.

 

(b) The amendment provides that a secured creditor, who proceeds to realise its security interest, shall contribute its share of the insolvency resolution process cost, liquidation process cost and workmen’s dues, within 90 days of the liquidation commencement date. It shall also pay excess of realised value of the asset, which is subject to security interest, over the amount of its claims admitted, within 180 days of the liquidation commencement date. Where the secured creditor fails to pay such amounts to the Liquidator within 90 days or 180 days, as the case may be, the asset shall become part of Liquidation Estate.

 

(c) The amendment provides that a Liquidator shall deposit the amount of unclaimed dividends, if any, and undistributed proceeds, if any, in a liquidation process along with any income earned thereon into the Corporate Liquidation Account before he submits an application for dissolution of the corporate debtor. It also provides a process for a stakeholder to seek withdrawal from the Corporate Liquidation Account.

 

COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) AMENDMENT RULES, 2020

 

The MCA vide its notification dated January 3, 2020 has issued the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2020, thereby amending the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which shall be applicable in respect of financial years commencing on or after April 1, 2020. As per the amended Rules, from now on a private company having a paid-up share capital of INR 10 crore or more would be required to appoint a whole-time Company Secretary, instead of the earlier requirement to appoint a whole-time company secretary by private companies having paid-up share capital of INR 5 crore or more.

 

Further, as per the amended Rules, every company having outstanding loans or borrowings from banks or public financial institutions amounting to INR 100 crore rupees or more would be required to undergo secretarial audit.