Lawyer Monthly Magazine - November 2019 Edition

On 19 August 2019, the Competition Commission of India (“CCI”) introduced a “Green Channel” clearance for Merger & Acquisitions which will be effective from 15 August 2019, wherein an automatic system of approval for combinations under Green Channel has been introduced in order to make the M&A filings for approvals faster. Under this process, the combination is deemed to have been approved upon filing the notice in the prescribed format, however, if the CCI later finds that the combination does not fall under the green channel mechanism, the notice given and the deemed approval granted shall be void and the CCI would deal with such combination in accordance with the provisions of the Competition Act, 2002. The Green Channel is aimed to sustain and promote a speedy, transparent and accountable review of combination cases, strike a balance between facilitation and enforcement functions, create a culture of compliance and support economic growth. • In order to provide relief to listed companies which have already made a public announcement of buy-back before 5 July 2019, it is provided that tax on buy-back of shares in case of such companies shall not be charged. • The Government has also decided to expand the scope of CSR 2% spending. Now CSR 2% fund can be spent on incubators funded by Central or State Government or any agency or Public Sector Undertaking of Central or State Government, and, making contributions to public funded Universities, IITs, national laboratories and autonomous bodies (established under the auspices of ICAR, ICMR, CSIR, DAE, DRDO, DST, Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting Sustainable Development Goals (SDGs). • The total revenue foregone for the reduction in corporate tax rate and other relief estimated at INR 1,45,000 crore (approximately USD 21.1 billion). Indian Insurance Companies (Foreign Investment) Amendment Rules, 2019 On 2 September 2019, the Ministry of Finance issued the Indian Insurance Companies (Foreign Investment) Amendment Rules, 2019 to further amend the Indian Insurance Companies (Foreign Investment) Rules, 2015. In terms of these amendment rules: • There shall be no cap on foreign equity investment in companies which are registered as insurance intermediaries. • The foreign direct investment shall be allowed under the automatic route, subject to verification by the Insurance Regulatory Development Authority (“Authority”) and the foreign investment in intermediaries or insurance intermediaries shall be governed by the same terms as provided under rules 7 and 8 of the Indian Insurance Companies (Foreign Investment) Rules, 2015. • The insurance intermediary that has majority shareholding of foreign investors shall be required to comply with the following conditions: (i) It should be incorporated as a limited company under the provisions of the Companies Act, 2013; (ii) At least one from among the Chairman of the Board of Directors or the Chief Executive Officer or Principal Officer or Managing Director of the insurance intermediary shall be a resident Indian citizen; (iii) It shall take prior permission of the Authority for repatriating dividend; (iv) It shall bring in the latest technological, managerial and other skills; (v) It shall not make payments to the foreign group or promoter or subsidiary or interconnected or associate entities beyond what is necessary or permitted by the Authority; (vi) It shall make disclosures in the formats to be specified by the Authority of all payments made to its group or promoter or subsidiary or interconnected or associated entities; (vii) The composition of the Board of Directors and key management persons shall be as specified by the concerned regulators. LM Regulatory Update of the Month: India Green Channel Clearance for Merger & Acquisitions By Clasis Law 21 NOV 2019 | WWW.LAWYER-MONTHLY.COM

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