FEMA Compliance – A Checklist for Issuance of Equity Instruments in Foreign Inward Remittances
FEMA Compliance – A Checklist for Issuance of Equity Instruments in Foreign Inward Remittances Sr. No Event Form Required Documents required Compliance requirements Timeline Issuance of equity instruments by an Indian company to a person resident outside India and reckoned as Foreign Direct Investment under Foreign Exchange Management [Non-debt Instruments (NDI)] Rules, 2019.(Including issue of bonus shares/rights issue/ shares issued directly or on amalgamation/merger/demerger approved by NCLT or competent authority/issue of equity instruments on cross border merger/sweat equity/ ESOP/ conversion of convertible notes; issuance of equity instruments to foreign portfolio investors which is considered as FDI within the meaning of rule 2(t) of NDI Rules, 2019.) FCGPR Declaration from the authorized representative of the Indian company in a prescribed format*.Certificate from a company secretary (In case a company has a company secretary on the Board then from such company secretary and in other cases by practicing company secretary) in a prescribed format*.Valuation certificate (should not be more than 90 days old as on the date of allotment of shares), for rights issue it is not required.Form PAS-3 (e-form for allotment of equity instruments)/Board Resolution for allotment of equity instruments.Memorandum of Association (In case of First Subscription).Acknowledgement letter of FC-GPR/FC-TRS, as applicable, of the original investment – In case of Bonus/Rights issue.Extract of relevant approvals from the competent authority in case of Merger/ Demerger.A no-objection certificate (NOC) from the remitter for issuing equity instruments to the beneficial owner mentioning their relationship if applicable (e.g., Nominee Shareholder).Letter from the beneficial owner explaining the reason for the remitter making remittance on its behalf if applicable (e.g., Nominee Shareholder).Copy of agreement/board resolution from the investee company for issuing equity instruments to a person other than from whom the remittance has been received (e.g., Nominee Shareholder).Foreign Inward Remittance Certificate (FIRC).KYC of both the remitter and beneficial owner.Note: – There is no resubmission for this filing, A fresh form is required to be filed in case such form is rejected. It does not breach the sectoral cap applicable to the issuer company.Compliance with Foreign Exchange Management (NDI) Rules, 2019. Within 30 days from the date of issue of the equity instruments. Annual Return: – An Indian company that has received FDI or an LLP which has received investment by way of capital contribution in the previous year(s) including the current year or has made overseas investment. Foreign Liabilities and AssetsReturn(“FLA”) Financials as of end of the relevant Financial Year.Form FLA could be filed with the unaudited financials. A revised return could be filed once the relevant financials are audited. In case of revision of return, approval of RBI is to be obtained through the Flair portal of RBI. On or before the 15th of July of each year. Transfer of equity instruments(Including transfer of equity instruments on a recognized stock exchange by a person resident outside India; payment on a deferred basis, transfer of participating interest/rights in oil fields, buying back shares in a scheme of amalgamation/de-merger/ of Indian companies approved by NCLT/ competent authority. FCTRS Documents required in case of sale (Private Arrangement)Share transfer agreement/SH-4(Share transfer form).Valuation Certificate (should not be more than 90 days old as of the date of share transfer).Non-resident declaration in the prescribed format*.In case of sale by a non-resident, acknowledgment of FC-GPR/ FC-TRS as applicable for the Equity instruments whereby such equity instruments have been acquired by such non-resident.FIRC /Outward remittance certificate and KYC.In case of Gift: –Relevant regulatory approvals, wherever applicable.Consent letter: Consent letter between the donor and donee for the transfer. Non-resident declaration in the prescribed format*.Acknowledgement letter of initial allotment.In case of transfer by way of sale (on Stock Exchange):-Broker’s Note containing details such as date of trade/settlement, no. of shares transferred, name of investee company, and consideration amount.Non-resident declaration in the prescribed format*.Outward Remittance Certificate.Copy of acknowledgment of FC-GPR/ FC-TRS as applicable for the equity instruments whereby such equity instruments have been acquired by such non-resident. Prior government approval shall be obtained for any transfer in case the company is engaged in a sector which requires government approval.Compliance with Foreign Exchange Management (NDI) Rules, 2019. Within 60 days of transfer of equity instruments or receipt/ remittance of funds whichever is earlier. Conversion of External Commercial Borrowing (ECB) into equity(Including full conversion of ECB into equity and partial conversion of ECB into equity) FCGPR and ECB-2 For FCGPR please refer to documents in point 1.For ECB-2, a Loan Registration Number (LRN) is required to be obtained from RBI. Compliance with Foreign Exchange Management (NDI) Rules, 2019. Within seven working days from the close of month to which it relates. Issuing employees stock options (ESOP) to persons resident outside India who are its employees/ directors or employees/ directors of its holding company/ joint venture/ wholly owned overseas subsidiary/ subsidiaries ESOP Relevant extracts of the ESOP scheme.CS certificate in a prescribed format*.Declaration in a prescribed format*.Letter of Grant/ Offer – which shall contain the name of the employee in the letter of grant vis a vis name mentioned in the CS certificate, no. of shares and the exercise price. Prior government approval in case of issue to citizens of Bangladesh or Pakistan.Compliance with Foreign Exchange Management (NDI) Rules, 2019. Within 30 days from the date of issue of ESOPs. Downstream Investment: An Indian entity or an investment vehicle making a downstream investment in another Indian entity which is considered an indirect foreign investment. Form DI PAS – 3 (e-form for allotment of equity instruments); or SH-4 (Share Transfer form) as the case may be.Certified true copy of Board Resolution for allotment of equity instruments or noting Transfer of equity instruments as the case may be.Certified true copy of Shareholders Resolution if applicable.Valuation Certificate.In case of an unlisted company – Declaration by an authorized representative of such company in a prescribed format*. Compliance with Foreign Exchange Management (NDI) Rules, 2019. Within 30 days from the date of allotment of equity instruments by such Indian entity in which downstream investment is made. Investment by Foreign Venture Capital Investor (“FVCI”) FCGPR Please refer to documents
Navigating ESG Compliance in India: Evaluating SEBI’s BRSR Core Framework and Value Chain Disclosures
Background ESG investments have been increasingly popular in recent years, with India playing a significant role in this development and the Securities and Exchange Board of India (“SEBI”) issuing Circular No. SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated 12 July 2023 (“BRSR Circular”) pertaining to Business Responsibility and Sustainability Reporting (“BRSR”) Core as a framework for assurance and Environmental, Social, and Governance (“ESG”) disclosures for the value chain. Indian businesses are progressively incorporating sustainability ideas into their framework for conducting business. By integrating ESG factors into their decision-making frameworks, many businesses are developing clear goals targeted at reducing their ecological footprint and enhancing their social and governance practices. There is still a lot of work to be done, even while there has been progress in the inclusion of ESG practices inside the Indian business environment. This is because there are several challenges that must be overcome, such as strengthening corporate resilience, implementing effective risk management, and ensuring stakeholder satisfaction. and ensuring stakeholder satisfaction. THE BRSR CORE The Business Responsibility and Sustainability Reporting or BRSR Core, which is suggested in the BRSR Circular, has been designed to be a subcategory of the present Business Responsibility and Sustainability Reporting format, which was adopted by SEBI in 2021. The nine Key Performance Indicators (“KPI”) that make up the present BRSR format are used to evaluate the listed companies. Providing sustainable goods and services, advocating, and upholding human rights, working to protect and restore the environment, encouraging inclusive growth and equitable development, and ethically delivering value to consumers are a few of these. The KPIs under Annexure I of the BRSR Circular were updated by the BRSR Core to include several additional qualities. These include trash management, employee well-being and safety, facilitating gender diversity, inclusive development, and greenhouse gas, water and energy footprint. ESG Disclosures For Value Chain Value Chain under the BRSR Core has been defined as, “the top upstream and downstream partners of a listed entity, cumulatively comprising 75% of its purchases/sales (by value) respectively.” It stipulates that disclosures for the value chain shall be made by the listed company as per BRSR Core, as part of its annual report. The listed entities shall report the KPIs in the BRSR Core for their value chain to the extent it is attributable to their business with their value chain partner. Such reporting may be segregated for upstream and downstream partners or can be reported on an aggregate basis. ESG disclosures for the value chain shall be applicable to the top 250 listed entities (by market capitalization), on a comply-or-explain basis from FY 2024-25. Assurance Provider The criteria for assurance providers as given under the BRSR Core framework include the following: – Analysis: Pros and Cons SEBI’s implementation of ESG disclosure requirements for value chains is highly relevant in the current context, as this mandate ensures the participation of smaller businesses and intermediaries, such as the micro, small, and medium enterprise (MSME) sector, in adhering to the disclosure standards. The implementation of ESG reporting standards would be facilitated by the integration of KPIs that particularly target the Indian markets, embracing both present and upcoming industries. The implementation of BRSR Core is in line with the recommendations made by the Committee on Business Responsibility Reporting of the Ministry of Corporate Affairs (MCA). The Committee suggested using “BRSR Lite” to convey the ideas of sustainable reporting to unlisted business entities. As it requires a smaller number of characteristics and does not call for detailed disclosures of ESG aspects, BRSR Core can be seen as a reduced version of BRSR Comprehensive. Therefore, it is advantageous for small-scale enterprises to adopt the framework early on. The BRSR Core format is also distinct from the BRSR main format since it encompasses KPIs that are not addressed within the regular BRSR format. Therefore, just receiving reasonable assurance for BRSR Core does not guarantee the overall reliability of the full BRSR disclosure. It solely enhances the reliability of BRSR Core parameters. This specific approach is anticipated to result in a significant bias towards BRSR Core inside internal ESG procedures. Reporting entities are likely to prioritize aligning BRSR Core with reasonable assurance standards, potentially at the expense of other disclosures. Hence, the implementation of BRSR Core, aimed at improving the dependability of ESG disclosures, has the potential to inadvertently divert attention and provide contrasting outcomes. Investors may find the Core ESG rating to be a potential distraction, particularly considering the availability of two full ESG ratings. These ratings include one that is based on current global rating schemes and another that incorporates India-specific criteria, as per the decision made by the SEBI board. The gathering and analysis of data might present a significant difficulty when it comes to the disclosure of information. Due to a wide range of factors, it is probable that value chain partners would employ various methods of data collection and processing. This poses difficulties for the listed businesses in acquiring data for all KPIs. Monitoring and obtaining “third-party endorsed data” from a diverse range of value chain partners can be a challenging task due to the existence of disclosure laws. Conclusion While SEBI’s attempt to improve ESG compliance among listed companies is commendable, it is crucial to acknowledge that there are issues with the current framework that demand quick attention. The regulatory framework demonstrates several advantageous features intended to simplify reporting processes. These initiatives by SEBI show their commitment to establishing business entities that are socially and ecologically conscious, which lays the groundwork for fostering a responsible corporate environment. A sophisticated and flexible strategy that takes into account many traits of businesses and their value chain partners may increase the success and usefulness of ESG disclosures. With the help of this strategy, organisations may align themselves with international ESG disclosure requirements and pursue sustainable practices. – Nehal Daga, Associate, Solomon & Co. About Solomon & Co. Solomon & Co., (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law firms. The Firm is a full-service firm that provides legal
Mediation Bill 2023: Paving the Way for Effortless Dispute Resolution
Introduction With rise in rapid industrialization and a robust boost in commerce, one cannot obliviate a pivotal aspect of the commerce industry, being disputes that may arise between the parties under the contractual agreement. The escalation in disputes arising from contractual agreements, coupled with the arduous nature of litigation, has compelled parties to explore alternative avenues for dispute resolution. This has led to the adoption of Alternate Dispute Resolution (ADR) mechanisms, such as Arbitration, Conciliation, and Mediation. While Arbitration being a preferred mode of mechanism due to a streamlined process and resolving disputes in a time framed manner, Conciliation was preferred when parties were seeking resolution of disputes through an expert who would aim to help the parties to reach a mutually acceptable settlement. However, Mediation was an unexplored avenue due to lack of a clear legislative framework and inadequate infrastructure. With an exponential increase in resolving the disputes, parties considered resolving in the conventional way i.e. requiring them to seek redress through the appropriate courts of law. However, the backlog of cases and lengthy process of trials hinders the justice dispensation within time. As a matter of fact, the Hon’ble Chief Justice of India N. V. Ramana (Retd.) emphasized the formation of mediation centres as the alternate dispute resolution mechanism, as it can reduce the pendency of cases and it further allows the litigants a degree of control over the dispute resolution process. With an intention to increase the settlement of disputes outside the Court and encourage and facilitate mediation, the Hon’ble Supreme Court formed a panel in 2020 headed by Shri Niranjan Bhat to prepare a draft legislation on Mediation. After deliberations and recommendations finally, the Lok Sabha passed the Mediation Bill 2023 on 7th August, 2023, right after its approval by the Rajya Sabha. The bill, in an attempt to encourage settlement and resolving disputes by way of mediation, introduces innovative features aimed at addressing the shortcomings of the existing legal framework. People are privy to the concept of out of Court settlement, but its efficacy has been hindered by a lack of comprehensive rules and measures, as well as the absence of an autonomous governing body and the Mediation Bill aims to void the said gaps. Section 89 of the Code of Civil Procedure, 1908 vests a discretion upon the Courts to direct the parties to attempt settlement especially in commercial disputes. But the Section is a discretionary power vested upon Courts and not a mandatory provision and hence, failed to meet the object of settlement through courts. In 2018, to appeal the parties to the commercial contract and facilitate settlement before initiation of any commercial suit, the Parliament on 10th August 2018, passed a bill by inserting Section 12A to the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. The 2018 amendment for the first time, tossed the concept of as “Pre-institution mediation and settlement”, routing parties to first approach the mediation Centre and attempt to settle the matter and then litigate after failure to succeed in mediation. However, certain gaps and deficiencies in the Act were not thoroughly addressed during discussions and deliberations in the Lok Sabha. In an attempt to stage India at the centre point where disputes can be settled with an effective and backed up piece of legislation, the Mediation Bill hammers resolving disputes of both domestic as well as international nature and transactions which is the need of the growing times. The mediator’s role encompasses facilitating party autonomy, fostering constructive dialogues, and ensuring active participation by all parties involved, ultimately culminating in a well-negotiated resolution. Mediation Bill: A boon to the Commercial disputes? The Mediation Bill has several features which are likely to attract more parties towards mediation as against the Court preferred modes of resolving disputes. Unbiassed Mediator: To curb the possibility of any kind of bias in any case that may arise during the conduct of mediation proceedings, the Mediation Bill under Section 12 (1), mandates filing of disclosure before initiation of mediation proceedings by the assigned/elected mediator. This will help eliminate any justifiable doubts that may that doubt his independence or impartiality while conducting mediation. Mediated Settlement Agreement a binding contract: After effective mediation, parties shall reduce in writing under a settlement agreement termed as “Mediated settlement agreement” all terms and conditions duly authenticated by the Mediator. This formalized document serves as a binding contract, outlining the rights, responsibilities, and obligations of each party based on their consensus during the mediation process and shall be enforceable in accordance with the provisions of the Code of Civil Procedure. Timebound Process along with option to Withdraw if mediation likely to fail: The bill aims to reduce the time limit under which the parties may complete the mediation process, requiring them to finish the process in a period of 180 days which may further be extending by another 180 days and not beyond that. The time bound process shall compel the mediation centers or mediator to resolve the disputes effectively and in a circumscribed time period, without any undue delay. Further, after the first two sessions, in case the settlement seems to hit a roadblock, any party may voluntarily withdraw from the mediation without having to wait for the 180 days’ timeframe to get over. This provision empowers the parties by allowing them to assess the viability of the settlement and make an informed decision regarding their continued participation in the mediation proceedings. Privilege against disclosure: In an attempt to encourage parties to settle the dispute that has arisen, the acts safeguards the parties, by way of a confidentiality, under which, any participant, mediator, expert and/or advisors cannot be compelled to act as a witness or disclose any admission that if so, is required by any tribunal or Court of law or divulge any valuable information that might have been discussed during the mediation process. This provision, therefore, serves as a robust mechanism to uphold the sanctity of discussions and information shared during mediation,
Testamentary Succession in the state of Goa
The State of Goa is known for its scenic beauty and boasts about the fact that it is the only state in India that has civil laws which are applicable to all faiths ensuring uniformity and parity. Formerly, the civil rights of Goans were only protected by the provisions laid down in the Portuguese Civil Code, 1867; Portuguese Code of Civil Procedure, 1939 and the Family Laws Marriage, Divorce, Children, the Goa Code of Civil Registration, 1912. However, the Government of Goa felt a need to consolidate and amend the laws relating to intestate and testamentary succession, notarial law and other laws relating to partition of an inheritance, etc. and accordingly legislated a new Act known as ‘The Goa Succession, Special Notaries And Inventory Proceeding Act, 2012’ (“Act”). Inheritance under the Act is vast and does not fall within the ambit of a straight jacket formula. The procedures related to the various aspects of inheritance would differ based on the facts and circumstances of every case. This article touches upon an aspect of inheritance i.e. testamentary succession in the State of Goa and provides a basic understanding on the following: A. Succession The Act terms Succession as a process by which deceased’s estate is transferred to the successor(s). It includes testamentary succession i.e when the deceased has left a Will and the same has to be executed and Intestate succession i.e. when the assets devolves upon the heir(s) in absence of a Will. In both cases, in order for the assets to devolve, and for the rights of every heir, legatee and/ or successor, to be determined, an inventory proceeding is instituted and the court is required to adhere to the order of succession as provided in the Act. Order of Succession Legal succession would devolve following order of priority being i) on the descendants, then i) (a) on the surviving spouse, then ii) on the ascendants subject to the provisions of sub section (2) of Section 72, then iii) on the brothers and sisters and their descendants, then iv) on the collaterals upto the sixth degree, and then v) on the State, provided that, in the absence of testamentary or intestate heir of a beneficial owner or of an emphyteusis, the property shall revert to the direct owner i.e, if a beneficial owner dies without leaving a Will or does not have any heirs, the property will revert back to the State. B. Proceedings for the execution of Will of the Deceased. Inventory Proceeding An inventory proceeding is a proceeding to partition the inheritance of the deceased person or to obtain a formal order of inheritance by the Court. It is initiated for executing a Will or, in its absence, to determine the asset distribution. Inventory proceedings are classified into two which are the following: When the estate leaver leaves behind a spouse or heirs who are legally incapacitated, absent, unidentified, or minors, the division of assets will occur by instituting an inventory proceeding only. When the Interested parties (hereinafter defined) do not fall within the ambit of a mandatory inventory, they may opt for inventory proceedings to partition the inheritance. Jurisdiction The place of opening of the inheritance shall be established in the following manner: Procedure for Inventory for execution of Will An Inventory proceeding is instituted by the Interested party (hereinafter defined) in person or through a constituted attorney. “Interested Party” is the heir, moiety holder (spouse) of the deceased, executor in a Will where there is a minor, interdicted (person who is declared to be incompetent to manage his/her assets by the order of the court) or absent heirs or legatees and the person who have a the right to usufruct of a part of the inheritance without specifying its value or thing and also the executor. Set out below is the procedure for instituting an inventory proceeding for the execution of a Will where the Interested Parties mutually consent to the same. Steps Stage Explanation 1. Filing of the Inventory Proceeding and appointment of Head of Family (Cabeca de Casal) A petition is filed along with the death certificate of the estate leaver; self attested Aadhaar Cards and /or Pan Cards of the Petitioner and Interested Parties in order to substantiate the relationship with the estate leaver; marriage certificate of the deceased person along with the marriage certificate of the Interested Parties to the inventory proceeding; anda Will. If the death of the estate leaver is not registered, then the burial certificate is produced along with affidavits sworn by three witnesses on oath stating that they were present when the estate leaver died.Upon institution of such petition for inventory proceedings, the court shall appoint the eldest member of family to be the head of the family provided he/she has not attained the age of 70 years. However, if there are no other heirs, to represent the deceased then he/she can be appointed as head of family in assisting the court wherein he/she shall be bound to make declaration on oath pertaining to the death of the estate leaver; place of death, details of the Interested Parties;details of testamentary disposition i.e., Will;anti – nuptial agreement; and / oradditional documents may be produced depending on the nature of the case. 2. Summons When the court is satisfied that the inventory is maintainable and that the estate leaver is governed by the laws of the state of Goa, it shall fix a date for the submission of the list of assets and shall issue notices to all of the Interested Parties intimating about the initiation of the inventory proceedings and such Interested party may participate and render their say/objections to the proceedings within a period of 30 days from receipt of the notice along with the relevant documents which ensures a fair judicial process.If there are unknown legatees and creditors, they shall be served by substituted service by affixing the summon in some conspicuous place in the court.If the Interested Parties wish to execute the Will mutually, then the Interested Parties would appoint
Overview of Make in India Policy- Telecom Sector
1. BACKGROUND 1.1 The Make in India initiative started in the year 2014 aimed to establish India as a global manufacturing hub, fostering self-sufficiency and competitiveness. It encourages suppliers to the Government to have adequate local content, promoting local manufacturing and sourcing of goods/services by the Indian Government. Further it was aimed to encourage local manufacturing, including incentivizing foreign companies to establish manufacturing units in India. 1.2 The Department of Industrial Policy & Promotion (“DIPP”) of the Ministry of Commerce and Industry issued the Public Procurement (Preference to Make in India), 2017 (subsequently modified by revision orders dated 4th June 2020,16th September 2020 and 19th July 2024) (hereinafter referred as the “General Order”) to encourage Indian and global companies to increase the development, production, manufacturing, and assembly of products made in India with a view to enhancing income and employment. 1.3 Accordingly, the Ministry of Communications- Department of Telecommunications (“DOT”), governs the technology and infrastructure of the telecom sector that facilitates communication across the country. The Telecom Sector is broadly divided into the following sub-sectors, viz. (i) Infrastructure, (ii) Equipment, (iii) Mobile Virtual Network Operators, (iv) White Space Spectrum, (v) 5G, (vi) Telephone service providers and broadband. 1.4 DOT has issued a separate notification dated 29th August 2018 of a list of telecom products, services, and works for their purchase preference from local suppliers for public procurement vide notification dated 29th August 2018 (“DOT Specific Order”). The General Order and the DOT Specific Order combined govern purchase preference in the Telecom Sector. Ministry-specific orders and tender requirements take precedence over the General Order. The General Order and the DOT Specific Order requires products to be fully manufactured in India and mandates local suppliers to manufacture equipment from the component level in India and develop local vendor networks for raw materials, components, and parts. 1.5 This article gives an overview of the Make in India policy of the government concerning the Telecom Sector. 2. HIGHLIGHTS OF MAKE IN INDIA 2.1 Categorisation of Supplier. Suppliers or service providers are categorized under the General Order based on Local Content as follows – (i) Class-I LS: Local Content ≥ 50%, (ii) Class-II LS: Local Content ≥ 20% but < 50%, (iii) Non-Local Supplier: Local Content < 20%. 2.2 Eligibility for bidding. Per the General Order, bidding eligibility hinges on local capacity and competition. Under Clause 3(a) of the General Order, if sufficient local capacity and competition for particular goods or services is communicated by specific Ministry/Department, only Class-I LS is eligible to bid irrespective of the purchase value. In pursuance of Clause 3(a) of the General Order, the DOT has issued the DOT Specific Order which provides a list of products that have sufficient local capacity and provide for percentage of minimum local content(MLC) against each item. In this sense, for the Telecom products that are included in the DOT Specific Order, the local content requirements as given in the DOT specific Order shall be adhered to. Furthermore, the DOT Specific Order also provides for a “Preference to Make in India” index(PMI) which provides that for a certain percentage (as indicated against each item) the government authority is bound to purchase from local suppliers having MLC. For other telecom products and services which are not mentioned in the DOT Specific Order as having sufficient local capacity, Class-II Local Suppliers or Non Local Suppliers are eligible to bid depending upon the requirements of the tender. However, Class-I will get preference over Class-II Local Suppliers or Non-Local Suppliers. 2.3 Local content (i) Meaning of Local Content and its components Under the General Order, Local Content is defined as the amount of value added in India which shall, unless otherwise specified by the Nodal Ministry, be the total value of the item procured (excluding net domestic indirect taxes) minus the value of imported content in the item (including all customs duties) as a proportion of the total value, in percent. The following are excluded from the calculation of local content-(a) imported items sourced from resellers and distributors, (b) license fees/royalties paid/technical charges paid out of India, (c) repackaged, refurbished and rebranded products, (d) transportation, insurance, installation, commissioning, training, and after-sales support like AMC/CMC Cost for Assembly/Integration/Testing as local content-When assembling, integrating or testing a final product,10% of its cost can be counted as “local content,” but if only a system or a sub-system of a product is being assembled/integrated/tested, 10% of the system/sub-system’s cost can be calculated as a local content. Design as local content-The DOT Specific Order also mentions that the design (comprising hardware design and software design and development) of a Telecom product can also become a component while calculating the local content on the following two conditions: (a) Intellectual Property Right resides in India for Hardware Design, (b) The copyright is in India for the Software Design and Development. (ii) Calculation of Local Content Local content = (Sale price – Value of imported content) * 100/ Sale price Where – (a) “Sale price” means the price of the item minus net domestic indirect taxes (for instance – excise duty, goods, and service tax, etc.); and (b) “Value of imported content” means the price of imported content including all customs duties. Further, please note that the above formula is a basic formula provided in the General Order and practically it has been observed that each tender would specify their respective formulas to be used towards the calculation of Local Content. (iii) Verification of Local Content With reference to the verification of the percentage of Local Content, a self-certification for any procurement below INR 10 Crores and a certificate from the statutory auditor or cost accounting indicating the percentage of Local Content for any procurement above INR 10 Crores is required to be submitted by the bidder. The tenders can provide for different requirements for a certification. Practically, it has been observed that local content certification is an ongoing process and the percentage of the local content can be required to be certified even after
The Legal Landscape of Indian Business: Navigating Legal Complexity with Ease
Introduction India has become the 5th largest economy in the world ranking by enabling local manufacturing, relaxed foreign direct investments policies, attractive government initiatives and incentives to business owners, and much more. With India’s vast consumer base and accelerating economy, India presents an opportunity for foreign companies/investors to expand their global presence in India. Moreover, Reserve Bank of India in its March 2024 bulletin, issued that India had an inflow of US$59.5 billion in foreign direct investments from April 2023 to January 2024. In this article, we will deep dive into the important aspects of doing business in India, along with a legal perspective of Indian laws. To start with, one should be aware of the advantages of doing business in India, some of which are as follows: Legal perspective of doing business in India From a legal perspective, doing business in India entails navigating a complex regulatory landscape influenced by diverse laws and regulations. Understanding and complying with Indian laws, including those governing company formation, taxation, labor, intellectual property, and contract enforcement, is crucial for local business owners and foreign investors. India’s legal system, based on English law principles, offers a robust framework for resolving commercial disputes, although judicial backlog remains a challenge. Additionally, recent reforms aimed at enhancing the ease of doing business, such as the introduction of commercial courts and online dispute resolution mechanisms, signify a commitment to improving the business environment. Engaging competent legal counsel, maintaining compliance with regulations, and staying abreast of legal developments are essential strategies for mitigating risks and ensuring successful business operations in India. Let us break down some factors for you: We hope that this information is helpful to anyone seeking introductory information on commencing and conducting business in India and on gaining a legal perspective about doing business in India. The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. As such, it should not be used as a substitute for consultation with a competent adviser. Before making any decision or taking any action, the reader should always consult a professional adviser relating to the relevant article posting. – Aaron Solomon Managing Partner, Solomon & Co. About Solomon & Co. Solomon & Co., (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law-firms. The Firm is a full-service firm that provides legal service to Indian and international companies and high net-worth individuals on all aspects of Indian law.
Key Changes under the Foreign Direct Investment Policy (“FDI Policy”) on the Space Sector
Background India accounts for only 2 percent of the currently valued global space economy which is about USD 360 billion despite being among the few spacefaring nations in the world. The Union minister of the State (Independent Charge) for Science and Technology, Dr. Jitendra Singh while inaugurating the IN-SPACe Technical Centre, stated that their target is to take the space economy from 2 percent to 10 percent by the year 2030, targeting a five-fold increase. The vision is to have a 15 percent share in the global space economy by 2047. To realize this vision, there was a need to provide scope for Non-Governmental Entities to participate in the Indian space program and play a key role in boosting India’s market share in the Global Space Economy. In India, players in the private sector industry have been very limited to being vendors or suppliers to the government’s space program. The need to promote private entities to establish themselves as independent players was also emphasized. The Indian Space Policy 2023 was notified as an overarching, composite, and dynamic framework to implement the vision for unlocking India’s potential in the Space sector through enhanced private participation. This policy aims at augmenting space capabilities; enabling, encouraging, and developing a flourishing commercial presence in space; using space as a driver of technology development and derived benefits in allied areas; pursuing international relations, and creating an ecosystem for effective implementation of space applications among all stakeholders. The Government of India to foster growth and innovation and with the vision to promote ease of doing business facilitating greater participation by foreign investors in the Space sector of the economy decided to liberalize the FDI Policy by prescribing liberalized thresholds for various sub-sectors/activities. These amendments to the Policy are expected to attract more foreign and domestic investment in India’s booming space industry. Extant FDI Policy on the Space Sector: 100% FDI was permitted in the establishment and operation of Satellites only through the Government Approval route. Further, such foreign investments were subject to the sectoral guidelines of the Department of Space/ISRO. New Policy on the Space Sector: The Department for Promotion of Industry and Internal Trade (“DPIIT”) vide a Press Note announced the review of the FDI Policy on the Space sector in India to streamline the FDI regulations and pave the way for enhanced participation and collaboration in various segments of the space industry. The proposed reforms seek to provide clarity for FDI in Satellites, Launch Vehicles, and associated systems or subsystems, the Creation of Spaceports for launching and receiving Spacecraft, and manufacturing of space-related components and systems. Pursuant to the significant amendments, now the satellites sub-sector has been divided into three different activities with defined limits for foreign investment in each such sector, subject to the sectoral guidelines issued by the Department of Space from time to time, as follows – (a) For Manufacturing and Operations, Satellite Data Products, and Ground Segment and User Segment, investments up to 74% fall within the Automatic Route, while investments beyond 74% will fall within the Approval Route, i.e. require Government Approval; (b) For Launch vehicles and associated systems and subsystems, Creation of Spaceports for launching and receiving Spacecrafts, investments up to 49% fall within the Automatic Route, while investments beyond 49% will fall within the Approval Route, i.e. require Government Approval; (c) For Manufacturing of components and systems/sub-systems for satellites, ground segment, and user segment, investments up to 100% fall within Automatic Route and there is no requirement of Government approval. Further, the amended policy provides clear definitions of various activities within the space sector including satellite manufacturing and operations, satellite data products, ground segment, user segment, launch vehicles, creation of spaceports, and manufacturing of components and systems/subsystems. Conclusion: Evidently, this policy is the Government’s attempt to encourage investment, innovation, and technology transfer in the Space sector through the private sector. It is aimed at bringing about a new era of opportunities and growth in India’s space industry. With the enhanced contribution from both domestic as well as foreign investors, the country can strengthen its position in the global market as a global hub for space technology and innovation. The increased private sector participation would help in generating employment and enabling modern technology absorption enabling companies to set up their manufacturing setups in India duly encouraging the Make in India (MII) initiative of the Government. The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. As such, it should not be used as a substitute for consultation with a competent adviser. Before making any decision or taking any action, the reader should always consult a professional adviser relating to the relevant article posting. – Kinjal Champaneria, Partner, and Shakshi Bafna, Associate, Solomon & Co. About Solomon & Co. Solomon & Co., (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law firms. The Firm is a full-service firm that provides legal services to Indian and international companies and high-net-worth individuals on all aspects of Indian law.
Unauthorized Possession and Mesne Profits: Legal Implications and Analysis
1. Introduction: 2. Genesis of Mesne Profits: 3. Unauthorized Possession in Mesne Profits: 4. Concluding Reflections: Shruti Mehta, Associate, Solomon & Co. About Solomon & Co. Solomon & Co. (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law-firms. The Firm is a full-service firm that provides legal service to Indian and international companies and high net-worth individuals on all aspects of Indian law. “Disclaimer” The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. As such, it should not be used as a substitute for consultation with a competent adviser. Before making any decision or taking any action, the reader should always consult a professional adviser relating to the relevant article posting. Copyright © 2020 Solomon & Co., All rights reserved.
Reverse CIRP: Breathing New Life into Distressed Assets
1. Introduction: 2. Overview of Reverse CIRP: This article proceeds to discuss the process of Reverse CIRP, its defects, and how an ex-ante regulatory regime would work in its betterment. The Deficiencies in the Present Regime: The need for an ex-ante Approach: Conclusion: Nishka Shah, Associate, Solomon & Co. About Solomon & Co. Solomon & Co. (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law-firms. The Firm is a full-service firm that provides legal service to Indian and international companies and high net-worth individuals on all aspects of Indian law. “Disclaimer” The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. As such, it should not be used as a substitute for consultation with a competent adviser. Before making any decision or taking any action, the reader should always consult a professional adviser relating to the relevant article posting. Copyright © 2020 Solomon & Co., All rights reserved.
CPC and Trademarks Act: Demystifying Jurisdiction Clauses
Introduction Mischief Rule of Interpretation Through this interpretative lens, it becomes apparent that the jurisdiction clauses in these acts are plaintiff-centric. They aim to address the inconvenience and costs faced by injured parties, encouraging them to seek relief more conveniently and efficiently, thereby promoting access to justice. Notably, the geographical location of the defendants and the place where the cause of action arises are irrelevant in such cases. Sections 134(2) and 62(2) do not make any reference to the location of the cause of action or the defendants’ whereabouts. However, challenges such as forum shopping and inconsistencies in the interpretation and application of trademark laws persist. These challenges underscore the need for continued review and refinement of jurisdictional provisions to ensure fairness and consistency in the adjudication of trademark disputes. Indian Performing Right Society Ltd. v. Sanjay Dalia, Burger King Corporation v. Techchand Shewakramani & Ors Manugraph India Ltd v. Simarq Technologies Pvt Ltd & Ors Conclusion The divergent interpretations of jurisdictional provisions by the Bombay and Delhi High Courts highlight the ongoing judicial effort to balance convenience for plaintiffs with fairness to defendants in intellectual property disputes. The rulings underscore the need for clarity and consistency in applying these legal principles. As seen in the case of Manugraph India Ltd v. Simarq Technologies Pvt Ltd & Ors, the Bombay High Court allowed jurisdiction based on the location of the plaintiff’s principal place of business, emphasizing the intent to prevent misuse of remote subordinate offices. In contrast, the Delhi High Court’s decision in the case of Ultra Home Construction Pvt. Ltd. v. Purushottam Kumar Chaubey & Ors focused on the cause of action, requiring suits to be filed where it arose. Thesediffering approaches reflect the complex nature of jurisdictional issues and the necessity for continuous legal refinement. Moving forward, it is imperative for the judiciary to harmonize these interpretations to ensure equitable access to justice and efficient resolution of intellectual property disputes, fostering a legal environment that supports both plaintiffs and defendants. Nishka Shah, Associate, Solomon & Co. About Solomon & Co. Solomon & Co. (Advocates & Solicitors) was founded in 1909 and is amongst India’s oldest law-firms. The Firm is a full-service firm that provides legal service to Indian and international companies and high net-worth individuals on all aspects of Indian law. “Disclaimer” The information contained in this article is intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. The application and impact of laws can vary widely based on the specific facts involved. As such, it should not be used as a substitute for consultation with a competent adviser. Before making any decision or taking any action, the reader should always consult a professional adviser relating to the relevant article posting. Copyright © 2024 Solomon & Co., All rights reserved.
