Understand Your Rights. Solve Your Legal Problems
We now hear from Pritha Jha who is an expert in ensuring that M&A transactions run as smoothly as possible. Here she discusses how parties can ensure their deal is completed in the least stressful way, and what the investment scope is currently looking like in India.
When negotiating contracts, how many people are ‘too many people’? What would you claim as the ideal team for negotiation?
It is not about how many people, but more to do with how many different types of personalities are involved. As long as the negotiating table is evenly balanced with people who are aggressive negotiators, people who are passive observers, and of course those who have years of experience in deal making, negotiations are fruitful and move along smoothly. Generally, a negotiating team should consist of no more than four people on either side: a mix of individuals from the target and the acquirer that know the business, and lawyers that know their documents and the sector in which investment is being made. There can never really be a perfect team, you need to draw resources depending on the crux of what is being negotiated.
When has testing boundaries worked in your favour during negotiation? What would you say are key characteristics to maintain in order to achieve the ideal outcome for your clients?
There are numerous times when a party on the other side has staged a “walk out” in the middle of negotiations. That can be troublesome. But honestly, in most cases this is more of a positioning and negotiating tactic. Take a step back, give both sides a week to cool off and they will be back on the table to find the middle ground that works for both. Rarely have I ever seen a deal fall through due to legal negotiations. There is always room to negotiate. You need to figure out what will work for you and the other side. The only way to cut through the lengthy negotiations is to offer solutions and think out of the box instead of harping on about what has already been stated and is not agreeable.
What difficulties do you face when advising multi-national companies? How do you ensure your knowledge on each related jurisdiction enables your clients to make the best decision?
The expectations of multinational companies are very high. They expect the turn out time to be short and require a high degree of expertise.
When advising multinational companies across jurisdictions, one has to be at least generally familiar with the legal framework of the relevant offshore jurisdictions involved in the transaction, though one is not expected to be an expert. It is not easy to keep oneself updated of the laws of multiple jurisdictions. You keep yourself briefly updated on the significant developments in such jurisdictions through interaction with law firms of these jurisdictions.
What are common mishaps that acquirers often make when trying to bring in innovative change to the sellers’ share – especially in a case of part ownership?
Part ownerships can be tricky. It is very important for the acquiring party to understand the kind of corporate culture that the target follows. Strategic acquirers tend to believe that once the acquisition is made, they can bully entrepreneurs and everyone within the organisation to adopt new policies of the acquirer overnight. Change is difficult to deal with for most people, and imposing it can lead to needless hostility. Sometimes, changes can be imposed without the attempt to have any prior discussions with the management team. In my experience, it is very important to have people with great soft skills on the ground post acquisition to make the acquisition successful. Managing the expectations of people, moulding people within your own scheme of things, making them work with you rather than against you, at the same time making it look like a collaborative effort is an art few people can master. The actual success of an acquisition can depend greatly on this.
How have you seen the M&A sphere change over the years - have there been any significant changes that took you by surprise?
The M&A sphere has changed over the years and recently has been very active. As the gestation period for setting up a new business could be long and cumbersome in India, growth through M&A is considered to be a speedier alternative. Further, due to changes in law such as: amendments to the takeover code, company law, competition law and foreign investment regulation, there has been an increase in the M&A activity. Since the last few years, even private equity funds have been engaged in M&A, which earlier saw mainly strategic buyer participation.
In the next year, what investments are you looking out for in India?
M&A in media and advertising is growing at a very quick pace. Having advised on most of the acquisitions within this space in India over the last few years, I expect this sector to be active over the next couple of years as well.
On the PE side, we have been very active in the healthcare, pharmaceutical, financial services and insurance space over the last few years. Given the recent foreign investment liberalisations in these sectors, we expect a significant growth in transactions in this space as well.
Pritha Jha
Associate Partner
DSK Legal
www.dsklegal.com
Pritha Jha is an associate Partner at DSK Legal, who specialises in private equity and strategic acquisitions of media and advertising companies. After graduating in law in 2007, her years of experience has enabled her to work up the legal ladder. Her motto is: “Achieving deal closure is a matter of knowing what is of importance to a client and negotiating in a manner that addresses concerns of all parties in the best way possible. A good deal is where you get a win-win for all sides, where the bigger picture can be achieved. Think out of the box!”
DSK Legal was set up in 2001 and has since established an excellent reputation for its integrity and value based proactive, pragmatic and innovative legal advice and its ability to help clients effectively traverse the complicated legal and regulatory regime in India. With offices in Delhi, Mumbai and Pune, DSK Legal has grown rapidly on the strength of its expertise to a multi-disciplinary team with over 100 lawyers, including 13 partners. We are modern and inclusive in our outlook, and have a solution oriented approach.
Leading the efforts in promoting global opportunities for its students is the O.P. Jindal Global University, whose graduates have pursued and continue to pursue study abroad programmes at leading world-class universities and institutions.
As many as 120 university students will be studying at some of the leading institutions across the globe this summer.
Over 30 students have enrolled for a programme on Human Rights in Development at the Harvard T. H. Chan School of Public Health. Another 30 students will be studying International Law and Global Governance at Somerville College, Oxford, while 15 students have enrolled to study business and corporate laws at Columbia University.
Over 17 students will be visiting Europe for a study tour of eleven Top East-European Universities and few others will be studying at the Law Schools Global League at ITAM, Mexico and the China University of Political Science and Law. Students have also enrolled to pursue language training at University of Granda and Instituto Superior de Derecho Economia, Madrid.
Describing the vision of the study abroad programmes at the university, JGU Founding Vice-Chancellor, Professor (Dr.) C Raj Kumar said, "We are committed to producing global citizens and are constantly exploring global opportunities for our students. Our exchange programmes not only introduce our students to multicultural and enriching environments but are aimed at equipping them with necessary qualifications and capabilities that set them apart in a globalized marketplace."
"Each of these programmes is specially curated and covers varied fields, such as law, business, global governance etc. for instance, the program at Somerville College, University of Oxford pertains to 'International Law and Global Governance' for over three weeks, the students will study under some of the best international law professors in the world and experience the unique tutorial system at Oxford," said, Aditya Swarup, Assistant Dean, International Collaborations, JGU.
Since its inception, JGU has fostered collaborations with over 175 universities and institutions in 45 countries across the world.
JGU students have also visited Brooklyn Law School, Bond University, East China University of Political Sciences and Law, ESADE Law School, SGV Sao Paolo, National Taiwan University, Queens Mary University, Singapore Management University, Stockholm University, Tel Aviv University, University of California, Temple University, Cornell Law School amongst many other leading universities and institutions for exchange and study abroad programmes.
(Source: JGU)
Every advocate, lawyer and barrister places their upmost dedication and passion into their role in the legal sector; the role they play more often than not, requires sacrifice and a hard-working nature. Gopal Subramanium is a perfect example to how hard work pays off, not solely for selfish purposes, but for the nation and its Courts.
Gopal commenced his legal practice in 1980 in the Supreme Court of India and by the time he was 35 years old, he was designated a Senior Advocate (Queen’s Counsel equivalent) suo moto by India’s Supreme Court.
His sheer dedication enabled him to become one of the youngest to be designated by the Supreme Court and thus saw him take on challenging and pinnacle cases that India would not forget and evidently so, as Gopal was honoured with the National Law Day Award for Outstanding Jurist, in 2009 by the President of India, for his consistent professional excellence and adherence to the highest traditions of the Bar.
Gopal’s list of achievements is endless; he has been involved in a number of landmark cases, tackling issues from mental illness to terrorism. More recently in 2013, Gopal acted as a member of a Committee to Recommend Amendments to Criminal Laws, recommending much-needed amendments to various Indian laws, to ensure the safety and dignity of women and young children.
Gopal's arbitration experience includes appearing as lead Counsel for Indian companies in ICC and domestic arbitrations. He has also appeared in cases concerning the law of arbitration in India, including the BALCO case (2012), where the Supreme Court of India ruled on the applicability of Part I of the Indian Arbitration & Conciliation Act, 1996, to arbitrations held in a foreign seat, and awards arising therefrom. He has Acted as the Special Public Prosecutor in the prosecution of Ajmal Kasab, the sole surviving terrorist who carried out attacks on Mumbai in November 2008; and has acted as amicus curiae to the Supreme Court in 2011 in the matter of Bachpan Bachao Andolan v. Union of India, where he presented a report on the realities of trafficking of children in India, and assisted the Supreme Court in framing guidelines to deal with the menace of trafficking.
Gopal continues to act as lead counsel in several path-breaking matters. He recently acted as lead counsel for Novartis AG in Novartis' challenge before the Supreme Court to a denial to grant it an Indian patent for the cancer drug ‘Glivec'.
Evidently, Gopal’s extensive contribution to the legal sector is more than greatly appreciated and recognised; he has delved into significant cases and trials, which not only tested his own ability, but also challenged India’s Court.
This month it brings us great pleasure to discuss with Gopal his achievements, the actions he took to become as well recognised as he is today and how India has progressed throughout his years of practice; Gopal delves into how he dealt with cases involving the terrorist attacks in India, as well as individuals wrongfully detained in mental hospitals.
You were one of the youngest lawyers to be designated a Senior Advocate by the Supreme Court of India; can you explain to Lawyer Monthly what was behind this success? Moreover, how did you find that transition and how did you use your age to your advantage?
A prerequisite to becoming successful at the Bar is hard work. One also needs to ensure respect towards the Court and the judicial process. Equally, a lawyer ought to acknowledge his duties as an advocate, foremost among which must always be an unequivocal display of integrity.
Being designated a Senior Advocate by the Supreme Court was a great honour, though the transition was indeed difficult, involving some personal sacrifice. There was, for instance, a need to be patient with money, and to serve the Court with care and objectivity.
The advantage of being recognised as a Senior Counsel at a young age was an affirmation that the Court insisted on merit, character and independence of judgement as criteria for such designations.
What common cases do you face when called to the Supreme Court of India?
I have had the great privilege of arguing a variety of cases before the Supreme Court of India. These include criminal appeals, commercial cases, appeals from arbitral disputes, and intellectual property litigation. I also appear in several constitutional matters, especially those involving the interpretation of the Constitution and fundamental rights of citizens.
Importantly, I undertake pro bono work because of my commitment to Legal Aid, and am honoured by occasions where I am appointed Amicus Curiae by the Court to provide them an objective and non-partisan opinion in complex cases. I must say that while all the cases I deal with involve a significant degree of concentrated effort, it is such cases that are most deeply satisfying to me as a lawyer.
You’ve acted as a member of a Committee to Recommend Amendments to Criminal Laws in 2013. Since then, do you think amendments to the law have affected the ever-growing concern of equal rights for women and young girls (and boys) in India? What more do you think can be done?
I had the great privilege of serving on the Committee on Amendments to Criminal Law alongside Justice Leila Seth and the late Justice J.S. Verma. I cherish my experience with the Committee, especially owing the tremendous respect I have for my fellow members.
The Committee began its work during a challenging time for the nation and its people. Though this made our work difficult, it also made it more important. It was necessary to acknowledge the expectations Indian citizens had from the Committee; it was, however, more important to approach issues concerning gender equality and sexual violence with a degree of objectivity and dispassion.
We consulted several experts in criminology, gender studies and psychology before publishing a comprehensive report on the changes that were needed in India’s criminal law framework. The report made a number of recommendations on the law concerning rape, sexual harassment, trafficking, child sexual abuse, the medical examination of rape victims, and police reform. Recommendations were also made regarding the need to introduce sexuality education at schools.
I believe the Committee’s report was influential in addressing the concerns of gender equality. Some of our recommendations were accepted by Parliament, and have since brought about amendments to criminal law. The Report was also treated as a valuable contribution in other jurisdictions.
The Report, we intended, would enable us to change our thought and attitudes, and promote equality in its true essence.
I must add, however, that I am optimistic that with time, society will rid itself of the evils of sexual violence.
Can you talk Lawyer Monthly through the process of investigating into individuals being wrongfully detained in mental hospitals? What Thought Leadership skills did you apply to the case?
The case in question arose in Sheela Barse v. Union of India, a matter that concerned the unlawful detention of mentally ill persons in prisons. The Supreme Court had passed an order strictly prohibiting the confinement of non-criminal mentally ill patients in jails. To ensure that the State of Assam was complying with this order, I was appointed a Commissioner by the Court.
Gauging the reality on the ground was an immensely saddening, even devastating, experience. I found that almost 400 persons had been unlawfully confined to prisons solely on the ground that they were mentally ill. The conditions under which they were kept were deplorable, sufficient to cause more trauma to those so imprisoned. Many did not even suffer from any mental illness.
At personal expense, I had ventured beyond my mandate in preparing my Report, not because this was common practice, but because it was necessary. As an Officer of the Court, it was my duty to provide a comprehensive and objective account of the facts to the Court. In doing so, I also recommended that those who had been wrongfully confined be adequately compensated for the violation of their constitutional rights. It was a proud moment that the Court accepted my report in its entirety.
For me, the experience was also an exercise in learning. I learnt that the true spirit of the Constitution and the rights it recognises must be upheld and affirmed.
Moreover, what further considerations must you make when dealing with legal cases including terrorist attacks? How do you deal with the added pressure of the public’s concern and scrutiny?
Cases involving terrorist attacks are incredibly testing. One owes a duty to the Court to handle such matters delicately, with due care towards the rights of the accused, and above all, with a degree of impartiality. It is important for a prosecutor to refrain from falling prey to mass (though justified) hysteria, and to guide the Court towards a just decision. The outcome that is reached must be devoid of vengeance and malice, and instead serve the ends of justice.
I have looked to adopt this belief in cases that followed from terrorist attacks. I served as prosecuting Counsel for the Central Bureau of Investigation in the case of the Bombay Blasts of 1993 and later, as a Special Public Prosecutor in the Parliament attack case of 2001. I appeared in the case concerning attacks in Mumbai in November 2008, where 164 people lost their lives. It was a moment of gratitude when the Supreme Court in its judgement recognised my dispassion in this case. The feeling that one had done a service to the nation and achieved a just outcome was incredibly rewarding.
How do these specific considerations differ when you are acting as Counsel for commercial reasons (for e.g., your involvement in the Indian patent case concerning the drug ‘Glivec’)?
Appearing in commercial disputes requires approaching cases very differently. The frame of one’s mind while arguing a constitutional matter is, for instance, significantly different from the approach one takes to commercial litigation. There is, first, a need to acquire industry-specific knowledge. In a pharmaceutical patent case, this would involve studying medicinal chemistry and pharmacology in considerable detail. Similarly, for a mining dispute, one must spend sufficient time grasping the nuances of mining procedures and developing an understanding of the best mining practices. This knowledge may not always be of immediate relevance to a particular case, but is nevertheless necessary to form a thorough understanding of the intricacies at play. I often attempt to develop such an understanding through sessions with experts in their fields, in addition to a significant amount of self-study.
It is also worth noting that a lawyer has a duty to guide the Court, carefully and meticulously, through what are often complicated cases. Subject-specific knowledge often impacts the success of this cause.
What different problems are you presented with when acting as lead Counsel for Indian companies? Have these changed over time as India as progressed?
Being the lead Counsel for companies before the Supreme Court is always a stimulating experience. The Court often, and rightly, considers public interest in reaching its decisions. To then convince the Court of the necessity of purely commercial interests becomes incredibly challenging (an enjoyable challenge, I might add).
I often appear on behalf of companies in property disputes, patent infringement matters, and challenge and enforcement proceedings that arise out of arbitrations. Perhaps the greatest difference I have observed over years of practice is the ever-increasing presence of foreign companies in commercial disputes. Indeed, foreign companies have to be advised about the Indian legal system carefully.
What are you hoping to change in the next few years in India that will enable it to progress globally?
At least at this point in my life, it would be wise to limit my efforts to the legal domain. I hope that the professional standards which lawyers must meet are not only met, but also surpassed. It is necessary for lawyers to conduct themselves with unquestionable integrity, devoid of ego or the need for personal gratification. I often tell my juniors that their need for personal financial development ought to be secondary, subordinate to their duties towards clients and the Court. A better and stronger judicial system, where the law is practised with honesty, will undoubtedly help in India’s progress in every way. The best investment, I told the government recently, was to strengthen legal institutions.
A new school which aims to combat child prostitution by teaching the victims law opens its doors last week in a world first.
The School for Justice in India will take underage girls out of the country’s brothels and train them to be lawyers and prosecutors with the power to ensure the criminals who force them into sex work are punished.
It has been set up by the Free a Girl Movement together with one of India’s most respected law universities and is both a physical school and an education programme. It will offer the support, tuition and mentoring that the girls need to reach university level.
After that, the girls will spend five years studying to get to their Bachelor of Law – and ultimately become public prosecutors to challenge India’s legal system from within.
Initially, 19 girls are being taught in the School of Justice, though this is poised to increase, and a class for 2018 is already in the making.
Asha, one of the first students at the School for Justice, said: “I want to become a lawyer, because I want to fight against child traffickers.”
India has the most underage sex workers in the world with an estimated 1.2 million children working in brothels against their will. These girls, some as young as seven years old, are abducted from their homes, sold to human traffickers and often tortured to cooperate. They suffer horrendously, with victims frequently living in inhumane conditions and sometimes locked up in cages.
Despite the magnitude of the problem, the amount of prosecutions against those involved is incredibly low. In 2015, there were only 55 cases that led to convictions. There is no data on 2016 yet. That’s 1.2 million children in forced prostitution vs. 55 legal cases. The fact the perpetrators are not being punished allows underage prostitution to continue on such a scale. In addition, a lack of good lawyers and judges with knowledge around human trafficking and child prostitution impacts the amount of convictions. All these factors have motivated the Free a Girl Movement India to take the radical step of opening the School for Justice.
Bollywood actor and activist Mallika Sherawat, who is an ambassador of Free a Girl Movement, is a committed supporter of the School for Justice. She said: “Underage girls forced into prostitution is a problem that we simply can’t ignore any longer. It’s the organised and systematic rape of young girls, happening on a mass scale, right here in Mumbai, Delhi and other cities in India. Girls, sometimes as young as 7 or 8, are forced into this life. By freeing the girls, we’re not changing the system that allows this crime to happen. To break this cycle, we will attack a key factor: the fact that the perpetrators are not being punished. Because they are not punished, they can continue with their crimes. I ask you to support the School for Justice to help the victims turn their anger at this injustice into a force for good – and a furious determination to put everyone involved in child prostitution behind bars.”
Francis Gracias, Free a Girl Movement CEO said: “The School for Justice is an ambitious project - the class of 2017 is just the first step in our plan. We want to attack the culture that allows the criminals behind child prostitution by educating the victims of this crime to become lawyers and prosecutors with the power to change the system. We appeal to all of India to get behind The School for Justice and support our cause - as we can’t do this alone. Ultimately we want governmental support and to build up a robust advocacy programme to push for law reform to make a positive change for India.”
The ad agency behind the idea, J. Walter Thompson Amsterdam has gone far beyond the traditional ad campaign for India’s burgeoning ‘Free a Girl Movement’ with its work to create a School for Justice where the victims of child prostitution in India are taught law, enabling them to prosecute the criminals responsible. This radical approach taken to help raise awareness about child prostitution in India for the movement is both a solution to a problem as well as a communications idea to boost its profile.
(Source: SchoolForJustice)
O.P. Jindal Global University (JGU) in association with Stanford University, US, hosted 'Law of Democracy - India Field Study', a joint exercise offering an exciting exploration of the legal, political and social constructions of the Indian and American democracies from 26th March - April 1st 2017. The programme was conducted under the auspices of the Centre for Post Graduate Legal Studies at the Jindal Global Law School.
The wide canvas of democratic elections, means that it embraces normative enquiries into meanings and modes of representation as well as policy debates over campaign finance, corruption and criminalization of politics. Given that democratic politics is not autonomous of law, this joint programme on election law and practice intends to gather insight into an interdisciplinary and comparative conversation about the mechanics of world's two largest democracies - India and the United States.
In order to understand and fathom the many intricacies in context of the Indian democratic system, the students from Stanford Law School visited various institutions like the Election Commission, Supreme Court of India, Delhi High Court and Delhi High Court Mediation and Conciliation Centre, Ministry of Law and Justice and Law Commission of India, Parliament, Rashtrapati Bhavan and attended intense interactive sessions with judges, officials and government functionaries.
As a part of the programme, Professor Benjamin L. Ginsberg, Stanford Lecturer, Partner, Jones Day Law Firm at Indian Law Institute delivered a distinguished Public Lecture on 'The Trump Administration to Date and What to Expect in the Future'. He said, "Trump considers social media as an enemy, a rival in the United States. We have seen a change in the way political agenda gets set every day. Of course, if you live by the tweet you can get burnt by the tweet."
"People in the United States and around the world have two very different views of Donald Trump. From the Trump administration side, they believe that they are historic and are really fighting to put in place the much needed changes, they believe they are off to the best start in the history of any presidency. In case you do not like Donald Trump, you are likely to see the distractions, immigration bans, the fights that he has picked with US senators and retailers," he further added.
Professor (Dr.) C Raj Kumar, Founding Vice-Chancellor, JGU, in his opening address at a conference on 'The Laws and Lives of Democracies', a part of the joint exercise, held at JGU on Day 4 observed that the programme in its entirety is crucial in helping develop an understanding of the functioning of the world's largest democracy.
Prof. Raj Kumar defining the India experience to the Stanford Law students remarked, "India is one of those countries where after you visit, you are never the same again. It is one of those countries where contradictions, contrasts and complexities are a part of the Indian experience. This conference will give a sense of some challenges and issues we face as a democracy and what we as a democracy are planning to address."
Describing the conference as opportune and relevant, Professor Nathaniel Persily, James B, McClatchy Professor of Law, Stanford Law School remarked, "Our democracy is under stress. The issues that we talk about here in terms of the voting rights, representations, the campaigns finance, corruption, access are ones that are continuously being debated in the United States."
Elaborating on the experiences gathered from various field visits, Prof. Persily said, "We have already learnt an enormous amount from our meetings with various Supreme Court justices and visiting other institutions here in India. We know we have a lot to learn and in some ways you learn even more about your own country when you have something to compare it to."
Expounding the theme of the seminar, Prof. Dabiru Sridhar Patnaik, Director, Centre for Post Graduate Legal Studies said, "The seminar is part of the joint programme on Law of Democracy - India: Field Study that covers all the three pillars of Indian Democracy to understand the process of law making, law implementation and interpretation in India and the varied legal and policy challenges that Indian Democracy faces. So the seminar is an idea to invite multidisciplinary and comparative perspectives on laws and lives of democracies in India and USA to develop awareness, knowledge and critical thinking on the issues and challenges in India and US on matters of elections, representation and accountability."
Delivering the keynote address on 'Dreaming Democratic Decentralization: On What it Takes to Represent Cities and Villages', Dr. Jayaprakash Narayan, Founder, Loksatta Party and General Secretary of Foundation of Democratic Reforms praised the Indian democratic structure for sustaining itself over the years despite being a nation vast in its diversity. "The fact that there has been peaceful transfer of power in the country, perhaps the only country in the post Second World War era to have built a successful federalism structure, and its actually getting better, the fact that the world's most complex multi-lingual nation could somehow handle the issue of language harmoniously, all these are wonderful tributes to democracy."
However, he disparaged the asymmetry of institutional power which has been a deterrent in establishing a successful democracy in the country, "Now there is an increasing dependence on 'super men', the big leaders, the messiahs. In these days of social media there is a desperate hunger for success and leadership and therefore, we want to achieve miracles, quick fixes by dramatic flourishes and few gestures. It may be demonetization here or some other slogan, but it doesn't solve anything. It is the curse of centralization, the moment you centralize in a vast country, like ours, all your hopes on one human being on a national or state level and nobody else matters."
Calling for repairing the fractures in the Indian democratic structure, Dr. Narayan added, "If you take the initial conditions of Indian democracy and impose the universal adult franchise on that without correcting the initial distortions in society which are not hospitable to democracy, it's mathematically inevitable that we land where we are in India today. It's not because India is unfit for democracy, it's not because some other society is more fit. It's because we haven't created conditions necessary for successful democracy."
The joint programme also had an illuminating lecture by Dr. Shashi Tharoor, Member of Parliament, Lok Sabha. He spoke about the fickle nature of Indian voters and the challenges faced by political parties, "In the US house of representatives, the re-election rate is 92% over the last 30 years, and if you look at India's lower house, the house that I belong to, the re-election rate is 26% over the last 25 years. So the voters are incredibly demanding and they change their minds every 5 years, and it becomes a particular challenge to work for change in the midst of all this at a time when a majority of your voters live of less than $2 a day, while you are trying to bring about far reaching changes in the society."
The five-day joint programme consisted of a diverse range of thinkers and practitioners to reflect on democratic processes, election laws and institutional design and the panellists employed a range of methods - historical, comparative, sociological, political, philosophical, legal and empirical - to explore challenges in the theory and practice of democracy. This programme was part of an evolving research agenda between partner institutions of JGU and is expected to be a melting pot of ideas on democracy and its institutions and likely to determine the course of future discussions and debate on the subject.
(Source: O.P. Jindal Global University)
The Finance Act 2015 had proposed to amend the test of residence for foreign companies to provide that a company would be treated as resident in India if its place of effective management in the previous year is in India. Earlier, section 6 of the Income-tax Act, 1961 (the Act) referred that, a company is considered to be an Indian resident company, only if it is incorporated in India or the control and management of its affairs is situated wholly in India.
As per the amendment, a company shall be considered an Indian resident company if:
- It is incorporated in India; or
- Place of effective management, in that year, is in India.
"Place of effective management" has been defined to mean a place where key management and commercial decisions that are necessary for the conduct of the business of an entity as a whole are, in substance, made. In the recent budget 2017 announced on February 1st 2017, the Government said it aims to target the shell companies that are created to evade taxes through the place of effective management (POEM) rules, but excluded firms with an annual turnover of less than Rs 500 million from its purview. The Central Board of Direct Taxes (CBDT) made public the long-pending "guiding principles" to determine place of effective management of a company, which have been effective April 1st 2016.
The PoEM rules with an aim to assess the tax liability was to come into effect in the current fiscal. The final guidelines have now been issued. The main objective of introducing PoEM, was to ensure that the companies incorporated outside India, but controlled and managed from India do not escape taxation in India. It also brings in the concept of residency of corporates in line with internationally-accepted principles said Neeraj Bhagat, founder of Neeraj Bhagat & Co, an Indian Chartered Accountancy firm serving various MNC'S from across the globe.
"The final guidelines on POEM contain some unique features. Active Business Outside India (ABOI) test has been provided so as not to cover companies outside India which are engaged in active business," CBDT said in a statement. The guidelines prescribed to determine PoEM of a non-resident is indeed welcome as it ushers in certainty for foreign investors in terms of applicability and the procedure to be followed by the revenue authorities. The final guidelines address some of the issues highlighted by the stakeholders, such as determination of PoEM in case of back-office/support services, existence of PE, meaning of certain terms, methods used in the active/passive business tests, shareholders’ activity, etc.
Tax payers likely to be affected by PoEM are:
Activities likely to trigger PoEM are:
Draft PoEM guidelines:
The place of effective management of a company conducting active business outside India shall be considered to be outside if majority of board of directors meetings of the company are held outside India or it its assets, employees, income, and employee expenses are from outside India. For a company whose directors are not involved in decision making and such decision making powers are exercised by a holding company or a person resident of India, then the company is considered as a resident under the place of effective management rules.
In case of use of technology such as telephone or video conferencing by the board members in conducting meetings, the location of head-office is considered as place of effective management. It is not necessary for the person taking decisions to be physically present at a particular location.
Further, Support function is an important part of the business, but is not the decisive part of the conduct of business and hence presence of support function in India shall not tantamount to effective management in India. Also, the concept of separate legal entity shall prevail and the corporate veil shall not be lifted.
A permanent establishment (PE) of a foreign company is a separate legal entity and shall not be considered as place of effective management of the foreign company in India.
It is imperative to note that having a PE in India is vastly different from having PoEM in India, since having a PE shall mean the income related to the PE is taxable in India; however, having PoEM in India means that the worldwide income of the foreign company is taxable in India.
However, overseas-incorporated entities held to have PoEM in India would face some of the following challenges:
(Source: Neeraj Bhagat, at the Institute of Chartered Accountants of India)
In recent years India has made significant moves towards achieving a more evolved and harmonized IP environment, both for the benefit of domestic and foreign stakeholders. The results of some such initiatives have already been experienced and with more in the pipeline, Lawyer Monthly here talks to Manisha Singh, Founder Partner at LexOrbis, India’s premier IP law firm, who details the latest shifts in the Indian IP Landscape.
Are there any new movements and progressions in IP that are worth following?
With the assumption of responsibilities in 2014, the Government has taken several significant initiatives to improve Indian IP laws and systems at an international level. One of the most remarkable achievements was India adopting a National IPR Policy to drive innovation culture to create valuable IP assets and provide robust IP administrative and enforcement systems. Some of the key highlights of the national policy are as under:
How do you feel India compares to other (Western) countries in regards to their IP and Trademarks laws?
In the past three decades, since India opened its economy to the world, the Indian Courts have played a very significant and proactive role in introducing some of internationally well-established legal principles to Indian IP jurisprudence. Like the US trademark laws and unlike the Europe Community trademark laws, Indian Trademarks laws follow the ‘first to use’ system. However, some early decisions of the Indian Courts have further expanded the scope of use to include ‘first use’ anywhere in the world, which resulted in a trans-border reputation of the mark in India.
To establish trans-border reputation of a mark, the Courts relied on advertisement and promotional materials, including in in-flight magazines, which were not even directed at Indian consumers. This expansion of scope is in stark contrast to the EU’s position, where the right in an unregistered mark can be enforced only by establishing goodwill amongst the actual customers, or in the US where the mark is required to be used in domestic commerce. The Indian system worked well for foreign brand owners who couldn’t do business in India due to then prevalent policy restrictions.
Furthermore, use of a mark in India, or anywhere in the world, is not a pre-requisite for seeking registration of the mark and to acquire statutory rights. A mark can be applied and registered in India on ‘proposed’ or ‘intended to be used in India’. There is no requirement of establishing use, even at the renewal stage. However, if the mark is not used in India within five years of registration, it becomes vulnerable to cancellation. In a 2008 decision of the Intellectual Property Appellate Board even that position was diluted and the Board held that a mark consisting of an invented word cannot form the subject matter of a cancellation application, especially when the party seeking cancellation has adopted a similar mark with the intention to deceive.
With technology everchanging, how have industry relations changed? Do you think changes have been positive or have hindered legal progress?
The remarkable change that we are witnessing today in India’s IP administration system was only possible with the use of new technologies and tools. We are happy that the government was open and willing to adopt and use such tools, and was even ready to innovate new tools that suit requirement. The results are that all records of IP assets are accessible with a click of mouse, all applications are filed online, all payments are made through electronic banking systems, all documents/office actions are accessible online and sent over e-mails, the responses are filed electronically, hearing notices are uploaded online, and certificate are sent over e-mails.
This month’s legal game changer is one of a kind. Lawyer Monthly is proud to present Mr. Musthafa Zafeer O.V., Founder & Managing Director of Musthafa & Almana, an Asian global legal and financial advisory firm operating internationally.
Over the next few pages, Mr. Musthafa Zafeer O.V. talks to Lawyer monthly about several ways him and his firm have ‘changed the legal game’, set precedents in the development of legal talent, and changed the perspective of the legal world through their innovative initiatives.
Mr. Musthafa Zafeer O.V. also discusses the route he pursued through the years, his inspiration in becoming a lawyer, and the advice that pointed him in the right direction. With a mind for innovation, this game changer is a formidable example of a passionate and service-hearted lawyer in a complex world of shifting regulation and unreformed injustice.
Admitted to the bar in 1987, Mr. Musthafa Zafeer O.V. is in his 30th year of legal practice with rich experience in litigation as well as in non-contentious and transactional practice areas. Mr. Musthafa Zafeer O.V. is a pioneer in multi-jurisdictional issues and cross border transactions. As one of the most sought after legal expert and thought leaders in UAE, he has been instrumental in structuring and advising major investments in the region and the Indian subcontinent. He has authored several articles and opinion pieces for major newspapers, magazines and legal journals and is a permanent speaker in many legal and business workshops and seminars conducted in UAE, India, the US and the UK.
He is one of the permanent faculty members of Dubai Judicial Institute (DJI) and Sharjah International Commercial Arbitration Center (SHIAC) and his expertise in both common law and civil law makes him one of the unique legal practitioners of the current generation. Mr. Musthafa Zafeer O.V. is also a Corporate Service Provider to the RAK ICC, and the Ras Al Khaimah Investment Authority (RAKIA).
Under his leadership, Musthafa & Almana has achieved many accolades and the firm now has a unique positioning as the first Asian global legal, business, management and FDI consultancy firm. Also, his unmatched business intelligence and legal acumen has resulted in Musthafa & Almana introducing unique and innovative concepts that help corporate entities as well as individuals to legally streamline their businesses and personal matters.
Mr. Musthafa Zafeer O.V.’s areas of specialization include the business laws of UAE, India, the UK and the US with specific expertise in mergers & acquisitions, franchises and joint ventures. His expertise in FDI related laws of UAE, the United Kingdom and India enables him to advise and provide expert legal services to foreign investors on entry and exit strategies in various sectors including real estate, hospitality, insurance, sports & entertainment and healthcare. He is considered as a pioneer in many unique practice divisions and has the rare distinction of being the first lawyer in Asia and Middle East having expertise in Fashion Law and Music Law, apart from the conventional practice areas.
Musthafa & Almana is a firm with presence in four countries, UAE, India, the UK, and the US. The firm was founded as a law practice in India in 1992, in the state of Kerala, by Mr. Musthafa Zafeer O.V. and Mrs. Almana Zafeer, the founding partners.
The firm’s expertise lies in providing bespoke and innovative solutions to our clients’ requirements, while leveraging our deep understanding of the unique cultural and commercial nuances that exist in each jurisdiction that we operate under. Our clients span multiple industries and sectors and range from start-ups to government entities.
Our experience has enabled us to capture the true spirit of doing business. We are passionate about innovation, entrepreneurship and law. Consequently, we evolved from a full service legal firm in India to a business and FDI consultancy firm, growing organically with the needs of our clients.
For over two decades, we have placed emphasis on fostering long lasting relationships with our clients and other key stakeholders in the jurisdictions we operate in. The depth and scope of our advisory services and our unrivalled understanding of the business dynamics of our focus industries distinguishes us from our competitors.
In 2015, Musthafa & Almana launched two of Mr. Musthafa Zafeer O.V.’s unique and innovative concepts, which aim to support aspiring entrepreneurs and established business groups namely MASS (Musthafa Almana Start up Support) and IAS (Internal Arbitration System).
Another project we have launched is Destination Dubai – Legal Route for Investments, our flagship platform for facilitating UAE inbound investments. We have partnered with a range of state and federal institutions for this purpose. As a trusted advisor of longstanding repute in the region, Musthafa & Almana plays a key role in attracting strategic and financial investments to the Dubai jurisdiction which provides a robust and welcoming investment environment. More information on this and all the other projects we engage in can be found on our website at www.musthafa-almana.com.
WINNER GOLDEN PEACOCK AWARD 2016
In 2016, Musthafa & Almana was awarded the prestigious Golden Peacock Innovative Service Award 2016 for creating a legal framework for the unique ecosystem comprising of the innovative initiatives listed above, among others. The Award instituted by the Institute of Directors, India is regarded worldwide as a benchmark of Corporate Excellence. The Award jury was headed by Mr. Justice Venkatachaliah, former Chief Justice of the Supreme Court of India and it was presented by His Highness Sheikh Nahyan bin Mubarak Al Nahyan the Hon’ble Minister of Culture, Youth and Social Development, UAE at a glittering Award function held in Dubai on 19th April, 2016.
Why would you say you are a Legal Game Changer within your field?
All throughout the globe lawyers depend on litigation and arbitration as a means of service and business, but these are two bi-products of the sector, and any industry that depends on bi-products cannot have thriving businesses. This scenario is exactly what has happened for the legal world and its lawyers.
Our initiatives, which tackle this scenario, are what makes our firm a game changer; including our first ‘Legal Lounge for Business’, which we launched in 2007. The game began to change when we started illustrating to the public and to businesses that law is a positive tool. In this day and age, most see the law as a negative object, but it should not be seen as such, and through this initiative we have tried to change this perspective.
Another concept or platform which we have launched under our banner is the Musthafa Almana Startup Support (MASS), which we launched in 2015, and is in fact the brainchild of our elder son, Azhan Backer, who is the CEO of MASS.
MASS is uniquely designed to enable groundbreaking ideas to crystallize into change-making organizations. We do not focus on the traditional metrics. We ensure that resources, be it capital or time, flow into ideas that have the power to transform societies and communities. We are looking to enable a paradigm shift in the way capital is being employed today.
Through MASS, we serve as a platform for seed-stage and early-stage companies that address key global challenges and leverage our extensive expertise in the legal, financial, technical, and public sector domain to scale up these companies. We are breaking the conventional labels that are employed today and we look to transcend the role of a traditional VC or an incubator and are committed to create a platform that can blood innovative ideas. We want to work with entrepreneurs and entities that share our vision to create micro and macro ripples in the system.
Another game changing contribution is in the dispute resolution domain wherein a significant role has been carved out for legal professionals to use their negotiating and problem solving skills for resolving issues without taking them to Courts. According to me, the first step in solving a problem is in recognising that there is one and then look at it judiciously, ethically and morally. It is this concept that has been included in the IAS project. Since its introduction we have been flooded with requests to resolve issues using the platform, and I am proud to say that within 10 months of its introduction we could resolve a major dispute between a Business Corporation in UAE and their Counterpart in India, which was in the courts for more than four years, over the proprietary rights of the business in India. We managed to reach out at a settlement through sustained dialogue and applying the IAS methodology, within just six months of the matter being put into our Internal Arbitration System.
Our latest initiative on the innovation front makes us the real game changer; the first ever Legal Innovation Centre, namely Musthafa & Almana Legal Innovation Centre (MALIC), which will be located at Smart City, Kochi, India, and is a state of the art facility, the first of its kind, dedicated to testing, launch and incubating start-ups in the legal industry in Asia & Middle East.
Many older lawyers respond to each new advent of technology in law with either studied indifference or technophobic bravado, ‘I’m useless with computers and proud of it!’ But openness to, and affinity for, the newest tools of the legal trade are now fundamental to competent lawyering (and in several jurisdictions, an ethical requirement too). Software is daily growing its capacity to perform legal tasks. Law is poised to finally leverage its enormous stores of data, and you’ll need to know the analytics involved. Law will never again be an exception to the rule. The basic concept of MALIC is to bring law & technology together for the betterment of communities.
You can see that we started as a normal law practice in 1992, and have since evolved ourselves into a global consulting firm, and now the first legal innovators on the move, and I feel that it is this unique and unconventional approach that has given us the tag LEGAL GAME CHANGER.
How comprehensive is commercial law in UAE in? Do you think there is room for more clarity? How does this compare to the UK/US?
When we talk about any legal segment, we have to approach it pertaining to the legal system that is in place. Although the core principles of law in the UAE are drawn from Sharia law, most legislation is comprised of a mix of Islamic and European concepts of civil law, which have a common root in the Egyptian legal code established in the late 19th to 20th centuries. The French influence is most clearly demonstrated by the adoption of the civil law by most countries in the region, similar to those in European states, rather than the common law system in the UK.
In addition to specific legislation covering agencies, company law, labor law, and intellectual property, the UAE has enacted civil and commercial codes. In the constitutions, Islam is identified as the state religion as well as one of the principal source of law. However, although the principles of Sharia influence criminal and civil laws, the direct influence of Sharia in the UAE is primarily confined to social & personal laws, such as family law, divorce or succession.
When you look at it from this perspective, our commercial legislation can be assimilated to that of commercial laws in Europe. In terms of clarity and transparency, from a foreign investment perspective, almost every country has programs implemented for the purposes of attracting foreign investment, but not every segment is open to FDI.
In UAE, foreign investment regulations could be clearer. At its core, one primary rule is that all domestic mainland limited liability companies shall have a UAE National as 51% equity shareholder in the business, leaving only 49% available to the foreign investor, even though he has invested in full for the business. However, in UAE’s ‘free trade zones’, which are scattered throughout Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras al Khaimah and Um Al Qwain, foreign investment can take place in the form of 100% ownership.
Having said that, for the last 40+ years people have been investing here, and it’s safe to say that UAE is quite a young nation, both in terms of law and industrial and financial growth. The legal systems of the UK and the US, for example, have been established for over 400 years, with a history of progress throughout. Therefore there cannot be a comparison between the legal systems there and that in UAE.
In addition, UAE has been the first country in the GCC, and Dubai has been the first Emirate in UAE, to have a dual legal system; we have the Dubai International Financial Centre (DIFC) Courts, which is a common law Court which deals with only commercial disputes, and we have Dubai Courts which follows Civil Law, UAE’s primary legal system. This has proved very positive, by the works of the government, in allowing investors to feel comfortable and safe,
as they have a fantastic and advantageous infrastructure to do business.
What legislative developments in commercial law would you like to see happen in UAE?
My main playground, in terms of common law, is India, where I started my career. In India, the law is as transparent as it can get, and the nation has made huge steps in recent years. UAE is now catching up with that, and has recently introduced many new legal directives.
This month the World Economic Forum (WEF) declared UAE one of the safest places in the world to do business, and alongside other common law developments, also in several of UAE’s regions, we are increasingly excited about the future of this nation, and what our firm can do to contribute.
What major differences and similarities have you found between commercial law in UAE and its neighbouring Middle East jurisdictions?
UAE’s Legal System, as per the other legal systems in the Gulf, is usually quite simple. While comparing the neighboring jurisdictions I would rather confine to GCC jurisdictions, and in my opinion those unfamiliar with their workings can find this region very difficult. The fact is that these systems are completely different to those in the west, with a whole different language, which makes it worrying for those who want to transact in business in the UAE and the Gulf states.
Although these systems are different, the basic legal principles and structure are logical and understandable. They have evolved over many centuries, in a similar way to the west and, especially in the UAE, are adapting to the changing needs of society with new developments in thinking for a modern age. More changes in commercial law have also liberalized legal regimes, creating a more open and understandable environment for foreign businesses and investors.
Amongst the Middle Eastern nations, UAE is far ahead in terms of legislative development. Following Dubai’s model, Abu Dhabi has also opened a common law Court called ADGM Court, and so has the Qatar Financial Centre, which has introduced a common law court as well as an arbitration centre.
I would like to see a similar progression and development in Saudi Arabia, a nation that is becoming increasingly idyllic for investment, where more and more sectors are opening up to commerce, and where the market is huge. Saudi Arabia is only just about getting on its feet, and while for now we don’t have many clients in Saudi Arabia, we have built relationships and connections on the legal front. Unfortunately in Saudi Arabia, foreign law firms are not permitted to operate, but recently we have received several invitations to engage in matters there, especially since we started provided consulting services.
As a game changer, how do you assist entrepreneurs and start-ups in their legal matters?
As mentioned earlier, one of our latest initiatives has been the introduction of the ‘Legal Innovation Centre’ in India, which should be up and running in 2017. Although similar centres exist in the US and Canada, there they are administered and funded by the government, while in this case, the centre is governed by a private sector entity, making it a first of its kind.
One of the concepts this incorporates is that of ‘legal incubation’ for young legal practitioners. I began my legal career like many lawyers do, first as a trainee, then a junior, an associate and so on; but this is a risky and competitive market, and in order to attract clientele a supportive system is crucial. To this end, our legal incubation segment allows young legal practitioners to come and ‘incubate’ within our firm, for however long they wish to, and at whichever stage of knowledge and experience they are at. In doing so, they can learn, develop, and grow with the support, help, encouragement and expertise of experienced peers.
As an example, a qualified lawyer may join us for ‘incubation’, and in promoting the firm’s brand and attracting clients, can be served with the assistance of our lawyers, as flexibly as they would like. He/she would have the liberty of taking a case on their own, or to be helped by our teams. By this system, these future lawyers, the general public, and our firm, can benefit extensively, throughout all the major jurisdictions we operate in.
What is the best advice you have ever been given and what would be the best advice you may give to young lawyers?
On day one of my first legal role, my senior asked me ‘Are you sure you want to become a lawyer?’ I said ‘Yes sir’. He explained that money would come in slowly, and asked ‘Are you prepared to wait?’ I said ‘Yes sir’. Over the years I realised that what he truly meant was: ‘Don’t run after money, if you are a good lawyer, let the money run after you’.
Secondly, the same senior once told me: ‘Even if you lose one crore (10 million rupees), you’d rather lose it than be present in a court as plaintiff, defendant, complainant, accused or witness, but only ever as a lawyer’. He wanted me to protect the interests of the people, and to never be a party to a problem or issue, only the solution.
Twenty-first century lawyers are playing a much more challenging game than our predecessors did, so we need to bring a very particular set of skills to the table. Today’s lawyers are expected to be leaders, innovators, and strategists, and are also expected to be managers, systems analysts, and business advisors. Everyone’s sleeves should be rolled up now. Nobody gets to just ‘do the work’ or ‘stay outside the business’. You need a wide range of proficiencies and capabilities, acquired and developed through exposure to best practices in several industries and professions outside the law.
It’s 2016; my advice to young lawyers is that ‘It’s time for a new breed of lawyer, a modern legal entrepreneur, more reminiscent of Elon Musk, Tory Burch, Megan Trimble, or James Dyson, than of Lord Denning.’
What do you find most enjoyable about your work and why?
The most rewarding and enjoyable part of my work is seeing satisfaction on the faces of our clients, once we have fulfilled their needs. With different clients, come different requirements and therefore different challenges, and each success has its own reward.
Also what I enjoy is the knowledge I gain from different jurisdictions and understanding the intricacies of various jurisdictions. When you are accepted as a global lawyer, I think that is the best enjoyable position you may experience.
What I tell my team is that our primary concern as lawyers is to bring comfort to the issues and circumstances of our clients, even if that means putting ourselves in discomforting situations.
What led you to embark upon a career in law? What inspired you?
My family, in Kerala, India, was very well-known for our judicial service pedigree, but in my generation I was the only one to pursue a career in law. A silly incident that happened during my school days prompted me to choose law as a career and profession.
It all started when I was on my way to school one day, and in my native town at the time, bus was how we travelled to school. Due to the overcrowding on the bus, that day I had to travel by standing on the footboard of the bus, which was actually prohibited by law as it amounts to travelling dangerously and is an offence punishable under Indian Penal Code and the Indian Motor Vehicles Act; little did I know about the legalities when I travelled on that day.
The bus was pulled over at a police checkpoint, and the inspector called me out from the bus. He questioned me, asked my name and my father’s name, and would not excuse me until he was done asking questions, despite attempting to pardon myself away.
After two days, police men in uniform came to my house; all hell broke loose. This was the first time a uniformed police man had come into our family’s home looking for an accused, whereas usually the police would come to my family house as escorts to my uncles, who were Highly Positioned Judges or statesmen. I was looked at by my siblings and other family members as a “criminal.” At that time one of my uncles was a senior leading lawyer practising in the district court, and he told me to come to his office. As I was shivering in front of him, he told me I would be called to court, and that when I am on the stand and the judge speaks to me, I should say ‘Yes, I am guilty’, and my uncle would take care of the rest.
When the day came in court, I was brought to the defence stand alongside uniformed police men, and the clerk read out the charges against me: that I had travelled dangerously on the footboard of the bus. When asked how I plead, as planned I announced that I was guilty, after which my uncle stood up and said ‘Your Honour, he is under age and therefore may be pardoned under the probation of offender effect’. The judge looked at me and asked whether I would do it again, and of course I said ‘No, Sir’, and was allowed to leave.
The relief I experienced in my heart was overwhelming, and I understood how a lawyer can give comfort and peace; at that point I decided I would become a lawyer and provide the same relief for others. This incident might have influenced my decision to choose a legal career as my life’s profession.
What do you hope to further achieve in throughout 2017?
On the expansion front we will be introducing services to Australia which again is a new jurisdiction. Our first office in Australia is coming up in Sydney. Also, we will be entering Europe by setting up offices in various locations. We have already finalized 2 locations to set up our offices which are Bucharest in Romania and HAGUE in Netherlands.
In ASIA we are opening in SINGAPORE and Seoul, SOUTH KOREA. The year 2017 is going to be very exciting and at the same time very crucial for the firm.
However, the bigger picture for us is that 2017 will be the 25th year that our law firm has been in business, as we started in 1992 in India. Throughout the year we are running several programs and projects, and one of these will be a global women empowerment platform called ‘LYLLY’ (Live Your Life Legally). This program’s mission is to convey the message that each woman on the planet has a right to live legally and respectfully, and real women empowerment can be brought through legal empowerment. LYLLY will be a platform that women and girls can look to for legal awareness, legal support and legal education.
During 2017 we will also be opening at more locations in the UK, the US and India, besides Australia and Europe, making this year a year of expansion and continued game changing for Musthafa & Almana.
Is there anything else you would like to add?
We are now four lawyers in the family. As you can see my principal partner, and co-founder of Musthafa & Almana, is Mrs. Almana, who is also my life partner. Our elder son Azhan Backer is now heading the MASS, and similarly, our second son Zahan Backer has joined the firm after graduating in law from Warwick University, UK, this year. Azhan graduated in law at Warwick University, UK, did an MA in Islamic Finance at Durham University, UK, and an LLM in Commercial law at Cornell Law School, US. Zahan has opted for specialising in Fashion law & IP Laws and is now interning under our Fashion law Practice Division, and at the same time engaging in MASS activities as Deal Flow Executive. I think he has started the same way as I had 30 years ago.
On a personal note, when I look back, I think I have achieved much more than what I thought I would in the beginning, but when I look forward, I think I am yet to achieve much more. My studentship and learning process is always on the move.
Contact Details:
Musthafa Zafeer O.V.
Founder & Managing Director
Musthafa & Almana
Tel: +971 04 38 69 993
Fax: +971 04 38 69 994
www.musthafa-almana.com
www.mastartups.com
The modern corporate world is pitted with potential legal pitfalls. It takes a skilled and experienced legal professional to guide companies through the challenges involved, challenges which vary from country to country. Here Lawyer Monthly hears from Sumesh Sawhney, Global Head of Lakshmikumaran & Sridharan Attorneys’ Corporate and M&A practice, on issues surrounding the corporate world in India and the UK and the relationship these countries share.
Sumesh Sawhney is Global Head of the Corporate and M&A practice at India’s premier law firm, Lakshmikumaran & Sridharan Attorneys (L&S), and Head of the firm’s UK office. In a career spanning over 25 years, Sumesh has expertise in India-related cross-border investments, M&A and corporate advisory matters. He is qualified as a solicitor in England & Wales but does not practice as such, and is a member of the Bar Council of Delhi, India.
Established in 1985, L&S has a pan-India presence and is amongst the few Indian law firms to establish its international presence in London and Geneva. The firm specializes in corporate and M&A, competition, international trade, intellectual property and taxation.
How would you describe India’s current corporate market and its involvement with UK companies?
India is gaining momentum as a vibrant emerging market under the current political regime and is increasingly outperforming other BRICS economies. With the Government-backed ‘Make in India’ agenda, India is now rebalancing its growth plans from a services-driven outlook to an export-oriented manufacturing outlook. On the other way, as the third largest foreign investor in the UK, India invests more in the UK than the rest of the European Union combined. Likewise, the UK is the third largest foreign investor in India. There is growing interest from both countries to tap previously unexplored funding avenues – the latest being the Indian Rupee-denominated debt securities market. Pursuant to changes in India’s External Commercial Borrowing framework in 2015, this year witnessed the historic issuance of the first offshore ‘masala bond’ by an Indian corporate on the London Stock Exchange. I am positive that Indian and British businesses will continue to engage closely and that this trend shall expand in scope as well as have an upward trajectory.
How do you envision this relationship evolving throughout 2017?
Naturally, the past few months saw intense speculation from the international business community and the economic roadmap ahead for India and UK depends greatly on the bilateral Free Trade Agreement negotiations proceeding favourably. Uniquely, Indian investors are spotting lucrative financial opportunities in post-referendum Britain. To illustrate, the British Pound’s decline relative to the Indian Rupee has translated into significant gains for Indians– especially first-time buyers – in London’s immovable property market. In the wake of an impending ‘Brexit’, Britain needs to send strong signals to its trade partners that it is committed to providing a conducive environment for foreign capital, foreign-owned businesses and international talent. India and UK already share a robust economic relationship – at a glimpse, total bilateral trade in goods and services touched a staggering £16.55 billion last year. Given the mutual political will being demonstrated by both countries’ leadership, there is good reason to be optimistic about bilateral trade further strengthening.
You are highly involved in UK/Europe - India M&A and joint venture transactions; what particular challenges do these present?
India’s foreign exchange, securities and corporate governance regimes were historically known as cumbersome and restrictive. However, these regulatory frameworks are undergoing transformative changes in order to attract foreign capital. The Foreign Direct Investment Policy is being progressively liberalized with each passing year - permissible investment limits and sectoral conditions have been lifted altogether or greatly relaxed and many industry sectors have already been brought under an ‘Automatic’ investment route from their erstwhile ‘Government Approval’ route. The new Companies Act, 2013, is a landmark piece of legislation that has replaced the out-dated framework of Companies Act, 1956. Such reforms have been instrumental in boosting merger and acquisition activity in India - between January to September 2016, M&A deals have already touched $46 billion in value. Nevertheless, there still remains scope to make India’s investment climate more favourable.
To give you an example, under the Companies Act, 2013, issuance of equity shares with differential rights is permitted inter-alia only if a company boasts a consistent track record of distributable profits for the previous three years. This limitation dampens the participation of private equity and venture capital investors into early-stage enterprises. Absence of a single-window mechanism for obtaining business licenses/approvals had long made it difficult for domestic and international entrepreneurs and investors alike. Now, necessary clearances, licenses, mandatory tax registrations and regulatory filings can be applied for and obtained on a single-window ‘e-Biz’ platform. Pendency and long-drawn litigation proceedings in Indian courts is also a deep-rooted problem.
Though efforts to facilitate speedy redressal of disputes are underway – the most recent being establishment of special commercial courts to settle high-stake commercial disputes as well as constitution of the National Company Law Tribunal and its appellate body - I encourage parties to have in place a strong mechanism for international commercial arbitration, at the outset. Then there are legislations that can vary from State to State coupled with the absence of digitized records in the public domain, which can slow down the due-diligence process.
What type of clients do you regularly work with and what makes you their first choice of representative?
In my experience, clients – whether multinationals, small and medium enterprises, individual entrepreneurs or institutional investors - place heavy premium on legal advice rooted in commercial pragmatism as much as in the knowledge of local market trends. Having successfully executed cross-border transactions when the Indian economy has been liberalizing, I’ve had the opportunity to understand foreign businesses’ key concerns when engaging with Indian entities and vice-versa. Of course, all successful relations are built on the classic foundation of trust, work ethic and appreciating clients’ unique business goals.
How can India expand its appeal in terms of FDI and corporate presence?
Sweeping reforms aimed at increasing transparency in corporate affairs, reducing stringent compliances and promoting ‘ease of doing business’, have been implemented lately. Government initiatives of ‘Start-up India’ and ‘Digital India’ are stimulating a culture of innovation and entrepreneurship and to encourage inflow of foreign funds, alternative investment vehicles such as Infrastructure Investment Trusts and Real Estate Investment Trusts have been permitted. The Companies
(Amendment) Bill, 2016 – which seeks to amend the Companies Act, 2013 – when enacted, will rectify omissions and contradictions in the legislation and harmonize it with the Central Bank and securities market regulations. On the other end of a company’s life cycle, the Insolvency and Bankruptcy Code, 2016, has been recently enacted to provide a streamlined mechanism for debt restructuring and address systemic challenges such as the multiplicity of bankruptcy regulations and the long-drawn nature of winding–up proceedings.
What thought leadership assets would you say previously working at Clifford Chance and Jones Day has brought to your current role?
At Clifford Chance and Jones Day, I led the India corporate practices and advised multinationals through the lifecycle of their India-entry, business development/growth and exit strategies. L&S recognizes the value addition that international transactional experience, crossover legal knowledge and inter-cultural sensitivity can bring to clients at the negotiating table, and has entrusted me with the privilege of establishing its second international office in London and of charting the firm’s future vision for its global corporate and M&A practice.
As a thought leader, what significant legislative developments do you think are still necessary in India’s corporate law sphere?
Every jurisdiction poses peculiar regulatory challenges. India is battling a poor image of corruption with Transparency International ranking India 76 out of 168 countries in its latest Corruption Perception Index. When enacted, the Prevention of Corruption (Amendment) Bill, 2013 will align India’s anti-corruption legal framework in conformity with international best practices laid down by the United Nations Convention Against Corruption.
India’s public sector banks are currently straining under the burden of non-performing assets, making it critical for an alternative source of funding to be made available, especially to finance large infrastructure projects. In light of this, efforts to accelerate the development of India’s nascent corporate bond market are underway and the Securities and Exchange Board of India has framed a set of implementable recommendations.
The indirect tax regime of India is characterized by taxation rates and structures differing from State to State. The Government looks set to meet its target for implementing the ground-breaking ‘Goods and Services Tax’ (GST) reform on April 1st, 2017. GST shall subsume various Central and State-level indirect taxes and unify India into a single, common market. For industry, GST promises easier compliance, removal of hidden costs of doing business and a system of seamless tax-credits across the value chain as well as across regions. This will translate into efficiency gains and enhance the competitiveness of India’s manufacturing sector.
