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Showing posts from February, 2020

Legal Capsule by Law Office of Madhavan Srivatsan

The term ‘Debentures’ as defined under the Companies Act, 2013 (“Act”) includes debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not. In general, debentures are medium to long term debt instruments that are used by companies to borrow money from members of the company or third parties. Such debentures do not form part of the share capital of the company and are regarded as a debt that is acknowledged by the company which may or may not carry a charge on the assets of the company, with an option to convert such debentures into equity shares of the company. They may be issued at a particular rate of interest. However, the Act doesn’t impose any restriction upon issue of debentures on discount. Further, one of the distinct features of debentures is that unlike shares, they don’t carry voting rights. A debenture is a moveable property in the form …

Legal Capsule by Economic Law Practice

Open General Export Licenses
In lieu of the Government’s mandate to ensure ease of doing business, the Department of Defence Production (DDP) has published two notifications dated October 21, 2019 for the issuance of an Open General Export License (OGEL) for the intra company transfer of technology as well as export of spare parts and components.
These notifications have been introduced with a view to reduce the bureaucracy and red-tapism plaguing the defence industry and to ensure that exports of defence related goods occur in a much faster time frame. Companies having offices abroad as well as in India will view this as a welcome break from the task of  constantly  seeking approvals and licenses from the various Ministries and Departments of the Indian Government.
INTRA-COMPANY TRANSFER OF TECHNOLOGY The OGEL for transfer of technology only applies  to those companies having a foreign parent company, with a subsidiary in India. Such transfer of technology shall be from the Indian su…

Legal Capsule by Economic Law Practice

Implications of the WTO Panel’s Decision: India – Export Related Measures (DS541)BACKGROUND On October 31, 2019, a WTO Panel issued its report in the dispute India – Export Related Measures (DS541), finding that a number of incentives provided by the Indian Government, under various export promotion  schemes, violated certain WTO disciplines. The complaint which was initiated against India by the United States challenged the following schemes: Export Oriented Units and Sector-Specific Schemes (EOU/EHTP/BTP)Merchandise Exports from India Scheme  (MEIS)Export Promotion Capital Goods  (EPCG) SchemeSpecial Economic Zones (SEZ) SchemeDuty Free Imports for Exporter Scheme (DFIS)Depending upon the scheme in question, an eligible participant, may be entitled to the following incentives:Exemptions from customs duties  on importation of various goods (including raw materials and capital goods)Exemption from central excise duty payable on “excisable goods”, IGST and compensation cessDuty credit …

Legal Capsule by Economic Law Practice

Interplay of Goods and Services Tax Laws vis-à-vis Customs LawsINTRODUCTION There is no doubt, the introduction of GST has allowed its effects to be felt in other laws, including the Customs Law. This article highlights, via illustrations, the strong interplay of GST and Customs in relation to international trade transactions.
VALUATION As per the provisions of Section 14 of the Customs Act, 1962 (Customs Act) read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (Customs Valuation Rules), the value of the imported goods is the transaction value of such goods where the buyer and seller of the goods are not related and price is the sole consideration for the sale. Specific additions  to the transaction value are prescribed under  Rule 10 of the Customs Valuation Rules. Given that value of certain services is included in the transaction value of imported goods, there is double taxation per se in respect of those services wherein there is no exemption of IGST…

Legal Capsule by Economic Law Practice

Scrutiny of the Online Hotel Booking Sector by the Competition Regulator India’s e-commerce revenue is growing at an annual rate of 51% the highest in the world46. A sector which has been part of this unprecedented growth is the online hospitality sector. According to a 2017 study, this sector is expected to grow to a USD 4 billion by economy 202047. However, growth always comes hand in hand with its own set of typical issues. Some of these issues have been raised before the Competition Commission of India (CCI), involving allegations against two key market players in the online hotel booking sector i.e. Oravel  Stays Private Limited (OYO) and MakeMyTrip India Pvt. Ltd. (MMT), under two separate complaints.
Broadly, all market participants in the online hotel booking sector such as OYO, MMT, and Fab Hotels, are in effect providing intermediary services/platforms to two different set of consumers viz., the hotels that use their services  to sell their rooms to the consumers …

Legal Capsule by Economic Law Practice

Consumer Protection Act, 2019: Changing Consumer Law Landscape in Changing TimesINTRODUCTION The Consumer Protection Act, 2019  (new CPA) is set to replace the three-decade old 1986 enactment (old CPA). This has been introduced against the backdrop of various consumer-centric initiatives of this government and a spurt in consumer-centric actions/notices from the authorities. Given the above context, it will be pertinent for businesses having any B2C interface, to take note of the significant changes introduced under the new CPA, which this article attempts to discuss.
INTRODUCTION OF NEW CONCEPTS Unfair Contract Unfair contract is widely defined to cover any contract having such terms which cause “significant change in the rights of such consumer”. It also specifically includes situations such as excessive security deposits/penalties, unilateral terminations and unreasonable charges being levied.While the Supreme Court has under the old CPA (in the matter of Pioneer Union)  granted reli…

Legal Capsule by LexCounsel

MCA Opens a New Way Out for an Old Problem – Squeezing Out the Minority Shareholders from a Company
The Ministry of Corporate Affairs, Government of India (“MCA”) vide its Notification dated February 3, 2020, has brought into effect the eagerly anticipated sub-sections (11) and (12) of the Section 230 of the Companies Act, 2013 (“CA2013”). These provisions facilitate the takeover of the company/squeezing out the minority shareholders under a scheme of compromise/arrangement. While the remaining provisions of Section 230 of the CA2013, and for that matter the whole Chapter XV of the CA2013 relating to compromise, arrangements and amalgamations, were brought into effect in the year 2016, it has taken the MCA well over 3 (three) years to notify these key provisions.

Simultaneously with the commencement of Section 230 (11) and (12) of CA2013, the MCA has also notified the consequential revisions to the National Company Law Tribunal Rules, 2016 and the Companies (Compromises, Arrangements …

Legal Capsule by Economic Law Practice

Sanctions, Exports Controls, CFIUS and ICTS As an important foreign policy tool to tackle geopolitical challenges, the United States (US) continues to impose economic sanctions on various countries including Iran, Russia, North KoreaandSyria(sanctionedcountries), individualsandcompanies(sanctioned persons). Further, to increase national security, advance its foreign policy interests and economy, the US maintains various regulations (including export controls and foreign investment related laws and regulations) against US and non-US based companies.
Given the constantly changing nature of these regulations,  their  extraterritorial  applicability and more critically, the impact of these  regulations on businesses, it is important for international companies to keep abreast with any latest developments.
This article provides an insight on key regulations of the US which have a significant bearing on businesses globally.

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