Lex Revisers

APPROVAL OF FRAMEWORK FOR CONSOLIDATION OF PUBLIC SECTOR BANKS:

An Alternative Mechanism for consolidation of the Public Sector Banks (PSBs) has been constituted under the Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley. The Alternative Mechanism will have Shri Piyush Goyal, Minister of Railways and Coal and Smt. Nirmala Sitharaman, Minister of Defence as Members.

The proposals received from banks for in-principle approval to formulate schemes of amalgamation will be placed before the Alternative Mechanism. A Report on the proposals cleared by Alternative Mechanism will be sent to the Cabinet every three months.

 [Source: https://economictimes.indiatimes.com/news/economy/policy/alternative-mechanism-to-suggest-merger-proposals-finance-ministry/articleshow/61412572.cms]

SEBI ALLOWS ENTITIES INCORPORATED IN A FOREIGN JURISDICTION TO ISSUE SECURITIES

In a notification dated 14th November 2017, via Circular No.: SEBI/HO/MRD/DRMNP/CIR/P/2017/120, SEBI amended the definition of “issuer” in the SEBI (International Financial Services Centres) Guidelines, 2015 to include entities incorporated in foreign jurisdictions, provided that such entities are permitted to issue securities outside the country of its incorporation.

Prior to the amendment, the definition of “issuer” only included entities incorporated in India.

[Source: http://www.sebi.gov.in/legal/circulars/nov-2017/securities-and-exchange-board-of-india-international-financial-services-centres-guidelines-2015-amendments_36586.html

NEW CODE OF CONDUCT FOR NON-BANKING FINANCIAL COMPANIES:

Through a notification on 9th November 2017, the Reserve Bank of India (RBI) issued new norms for non-banking financial companies (NBFCs) to regulate outsourcing by NBFCs.

The new code of conduct prohibits NBFCs from outsourcing core management functions like internal auditing, strategic and compliance functions for KYC norms, sanction of loans and management of investment portfolio. The RBI said “Access to customer information by staff of the service provider shall be on ‘need to know’ basis i.e., limited to those areas where the information is required in order to perform the outsourced function”.

The new norms have to be complied with within a period of two months and any leakage of customer information must be reported to the central bank and the NBFCs will be liable for any damage caused to customers due to such leakage.

[Source: https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11160&Mode=0]

NOTICE ISSUED BY A LAW FIRM ON BEHALF OF AN OPERATIONAL CREDITOR CANNOT BE TREATED AS A NOTICE OF SECTION 8 OF INSOLVENCY AND BANKRUPTCY CODE, 2016.

 The National Company Law Appellate Tribunal, New Delhi via its judgment dated 12th October 2017 in the case of Smartcity (Kochi) Infrastructure Pvt. Ltd. versus Synergy Property Development Services Private Limited & Anr. held that a notice issued under Section 8 of the I&B Code and even under Section 9 is not maintainable under law.

[Source: http://nclat.nic.in/final_orders/Principal_Bench/2017/insolvency/12102017AT802017.pdf]

RBI NOTIFIES FOREIGN EXCHANGE MANAGEMENT (TRANSFER OR ISSUE OF SECURITY BY A PERSON RESIDENT OUTSIDE INDIA) REGULATIONS, 2017

The Reserve Bank of India has notified an updated FEMA 20, consolidating amendments to the earlier FEMA 20 (investment by non-residents in India) and FEMA 24 (investment by non-residents specifically in partnership and proprietary concerns in India). A major change brought in by the regulation is the introduction of mandating late fee in case of delay in reporting by entities.

[Source: https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=11161]

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