Web Analytics Made Easy - StatCounter
Home

India: Unlisted Companies may issue DEMAT shares

September 18, 2018
VOL III
ISSUE No. 38
September 18, 2018

 


 

India: Unlisted Companies may issue DEMAT shares

sebi

Source: www.sebi.gov.in

With the increasing growth and development in the economic sector of India, a number of companies have come up. The ownership of the companies vests in the hands of its members known as shareholders and is managed by the board of directors thereby giving life to this artificial legal distinguished entity. Not only the shareholders have voting rights with respect to the company, they also possess the right to transfer their shares dependent upon the nature of the company.


The shareholders have the right to freely transfer their shares in case of a listed public company, on the other hand in case of private company such transactions are restricted.


Listed companies


The shares of public companies which are listed on any stock exchange for the purpose of trading are known as listed companies. This allows the companies to raise funds from the public thus allowing them to expand the horizon of their business arena.


There are 18 stock exchanges in India which include National Stock Exchange, Bombay Stock Exchange, Ahmedabad Stock Exchange, Delhi Stock Exchange.


Unlisted companies


The companies whose shares are not listed on any stock exchange are known as unlisted companies. The reasons for non-listing may include non-qualification to the norms of the respective stock exchange, non- requirement of public funds, etc.


Issuance of shares for unlisted companies

In the pursuit of creating a more transparent system of transactions, the Government may soon mandate the following with respect to the unlisted companies :
[1]

  • Issue of new shares in dematerialized or electronic form;

  • Transfer of shares in dematerialized or electronic form;

  • Issuance of bonus shares and stock split in dematerialized or electronic form;

The above transactions may be carried out on voluntary basis for the time being.

 

The Government is in the process to keeping the cost of conversion of shares from physical to dematerialized shares at minimum. The authorities would be shortly issuing rules under the Companies Act, 2013 for unlisted companies for having their shares dematerialized.

 

Advantages of dematerialization of shares of unlisted companies

 

The dematerialization of the shares of unlisted companies shall be beneficial in the following ways:

  • Clarity regarding the ownership of corporates;
  • Weeding out of shell companies which may be used to carry out illegal acts;
  • Curbing in the benami transactions;
  • Strengthening of ‘Know of Your Client’ framework;
  • Prevention of pledging of duplicate shares.

The dematerialization of the shares of unlisted companies would help create an organized and strong framework for prevention of any illicit activities.

_____________________

[1]https://timesofindia.indiatimes.com/business/india-business/govt-to-make-it-compulsory-for-unlisted-cos-to-issue-shares-in-demat-form/articleshow/65549798.cms

 


 
India: Telecom Commercial Communication Consumer Preference Regulation, 2018

sebi

Source: www.trai.gov.in

Communication has been a necessary facet of human life. It is because of this ability to communicate with one another that humans are also known as ‘Social animals’. The growth and development of science and technology has allowed people to connect over larger distances. Telecommunication plays an important part in modern times by transmission of messages over significant distances for the purpose of communication. Major sectors of the Indian telecommunication industry are telephone, internet and television broadcast Industry.


Regulatory Framework


The Government through its telecom branch- Department of Telecommunication enforces polices and guidelines for the regulation of telecommunication in India which is monitored by the Telcom Regulatory Authority of India (hereinafter referred to as “TRAI”) in accordance to the provisions of Telecom Regulatory Authority of India Act, 1997 (hereinafter referred to as “TRAI Act”).


Commercial Communication

In the past few years, telecommunications have become a mode of commercial communication for a number of corporate entities to boost their business.

Commercial communications are any voice calls/ messages using telecom services, where the primary purpose is to inform, advertise, or solicit business for goods or services, a supplier or prospective supplier of goods or services, business or investment opportunities or a provider or prospective provider of such opportunities.

Unsolicited Commercial Communication – A menace

Unsolicited commercial communication (hereinafter referred to as “UCC”) are the commercial communications which are neither as per the consent nor as per registered preference(s) of recipient. They are popularly known as spam communications.

The number of such fraudulent calls and messages have increased exponentially. The weaker verification process and access to novel technologies such as automated calling, the notorious elements have acquired the ability to reach ever larger target groups.

Solution by TRAI

With the objective to effectively deal with the nuisance of UCC, experienced by the subscribers, TRAI brought forth Telecom Commercial Communication Consumer Preference Regulation, 2018 (hereinafter referred to as the “Regulation”) on July 19, 2018.

Communications Not Spam

The Regulations aim to weed out spam communications and explicitly exclude the following from the purview of UCC:

  • any transactional message or transactional voice call;
  • any service message or service voice call;
  • any message or voice calls transmitted on the directions of the Central Government or the State Government or bodies established under the Constitution, when such communication is in Public Interest;
  • any message or voice calls transmitted by or on the direction of the Authority or by an agency expressly authorized for the purpose by the Authority.

Co-regulation where Telecom Service Providers/ Access Providers

The Regulations cast duty on the telecom service providers/ access providers to ensure compliance to the legal guidelines by devising Code(s) of Practice legally backed by regulation ensuring registration of entities, content, consent.

Intermediaries

The Regulations prescribe for the necessity to register all such entities and intermediaries providing cloud services or bulk messaging services, such as Senders or content providers, Principal Entities, aggregators and others.

Methodology to control spam communications

The Regulations introduced by TRAI provides for the below stated measures to mitigate the havoc created by spam communications:

  • Adoption of Distributed Ledger Technology (or blockchain) as the regulatory technology to ensure regulatory compliance while allowing innovation in the market.
  • Registration of senders (businesses and telemarketers) in order to verify their authenticity and diminishing calls/ messages from fraudulent entities.
  • Registration of Headers so as to enable the customers of the senders to distinguish between differently classified communications sent for their specific purpose.
  • Registration of subscribers’ consent has become mandatory providing them with complete control over their consent and the ability to revoke the consent already granted, at their option.
  • Registered Message template to prevent deliberate mixing of promotional messages into the transactional stream.

  • Fine grained control over preferences including such options as the time window in which to permit specific types of unsolicited communication.

Customer Complaint Registration Facility

The Regulations require Access Providers to establish Customer Complaint Registration Facility which shall not only provide modes to make complaints but also acknowledge their receipt and address them appropriately.

Penal consequences

In event of failure of the access provider to comply with the provisions of the Regulations, they shall be liable to fine up to INR 500,000 (USD 6914 approx.) and INR 100,000 (USD 1382 approx.) if it is found to be not imposing timely restrictions on outgoing usage of unregistered sender(s).

Conclusion

TRAI intends to enforce the Regulations with the ambition to bring about necessary flexibility and speed to combat the spammers who continually change their tactics and morph their identities to escape detection. While safeguarding against the annoyance caused by UCC, the Regulations at the same time distinguish these from transactional/ service/ Government communications.

 


 

India: Subsidy for electric vehicle charging infrastructure

cpcb

Source:
www.cpcb.nic.in

The modern-day world is full of the miracles gifted by science and technology. The dawn of industrialization has replaced human labour with machines. The most important facet which has been revolutionized by the human evolution is transport. It has not only connected people at distant places but has also transported them to the next level being able to travel in space. Various modes of transport including motor-bikes, cars, trucks, trains, ships, airplanes, rockets have made our life simpler. But all these come at the cost of fuel which is not only derived from rapidly depleting non-renewable sources of energy but also their burning causes pollution.

The problem of pollution

The over-exploitation of resources for energy and improper disposal of their remnants has resulted in high levels of pollution contaminating the air, water, soil and the overall environment around us. With the objective of the protection and improvement of environment, the Government has come up with numerous legislative frameworks and policies.

Environmentally friendly travel

In order to promote environment friendly travel, the Government on March 7, 2018 launched the National E-Mobility Programme (hereinafter referred to as the “Programme”) to provide an impetus to the entire e-mobility ecosystem including vehicle manufacturers, charging infrastructure companies, fleet operators, service providers, etc. This will lead to increase of electric vehicles in the country. With the expectation of 20,000 electric cars, India is expected to save over 5 crore litres of fuel every year leading to a reduction of over 5.6 lakh tonnes of annual carbon dioxide emission.

Subsidy for electric vehicle charging infrastructure

The Government plans to provide INR 1,000 crore as subsidy for building a nationwide charging infrastructure for electric vehicles as it seeks to expedite the roll-out of India’s ambitious EV programme. [1]

Planning of EV charging infrastructure needs to take into account multiple issues such as number of charging stations needed and their locations, availability of sites for the charging stations, type of charging station needed at each location, rules and regulations relevant for the deployment, availability of electrical grid capacity, timing of the rollout, dealing with possible changes in the plan, etc.

A charging station is intended to be installed at every 25 KM on these highways, according to the note prepared by the Government. The government also plans to have 1,000 charging stations across the country especially on major highways such as Delhi-Chandigarh, Delhi-Mumbai, and Mumbai-Surat-Pune stretch.

______________________

[1]https://www.livemint.com/Industry/gPQkdVveA5yWzXzit3iQFL/1000-crore-subsidy-likely-for-EV-charging-infrastructure.html

 


 

India: Insolvency plea against Lavasa Corp admitted by NCLT

ibbi

Source: www.ibbi.gov.in

In order to tackle the problem of unscrupulous debtors escaping and delaying the repayment of debts, the Government of India brought forth the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘IBC’). Not only does it seek to promote the availability of credit in a more transparent and systematic manner, but, it also balances the interests of all stakeholders by making the legal framework stronger in terms of reorganization and insolvency resolution of corporate persons, insolvent entity in a time bound manner and for maximization of the value assets.


Procedure under IBC


With the view to carry out liquidation or resolution process, the following steps are to be followed –

  • Apply to National Company Law Tribunal (hereinafter referred to as the “NCLT”);
  • The NCLT merely has to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. However, in case of an operational creditor such party needs to first make a demand for his unpaid debt and it is open to the corporate debtor to defend the claim on the basis that there is an ongoing dispute;
  • Once the application is admitted, NCLT may issue a moratorium, because a public announcement of the initiation of corporate insolvency resolution process and call for the submission of claims or appoint an interim resolution professional (hereinafter referred to as “IRP”) within 14 days of commencement of insolvency to manage the operations of the corporate debtor as a growing concern;
  • The IRP shall verify claims of all the creditors; take into his custody or evaluate all the assets, property, effects and actionable claims of the corporate debtor; take measures to protect and preserve the same; carry on the business of the corporate debtor for its beneficial liquidation, etc.
  • The corporate insolvency resolution process shall be completed within a period of 180 days from the date of admission of the application to initiate such process.

In the news

On August 30, 2018, the NCLT Mumbai Bench admitted an insolvency petition against Lavasa Corp. Ltd.[1] (subsidiary of Hindustan Construction Co. Ltd) filed by one of its creditors, Raj Infrastructure Development (India) Pvt. Ltd. The tribunal has approved the appointment of Devendra Prasad as the IRP under the provisions of the IBC.

Conclusion

The enforcement of IBC reposed faith of the creditors in the legal mechanism assuring them speedy resolution of their disputes against the debtors who may evade off their liabilities taking recourse to the insolvency proceedings.

____________________

[1]https://www.thehindubusinessline.com/companies/nclt-admits-insolvency-plea-against-lavasa/article24823461.ece

 


 

India: Principles of the Evolving Data Protection Framework

lock

Introduction:


The Committee headed by Justice B N Srikrishna recently provided its recommendations with respect to the issue of data privacy and protection in a 176 page report along with a draft Personal Data Protection Bill, 2018. While a primary legislation to govern the issue of data privacy is still to come into force, it becomes pertinent to note the principles governing the current privacy regime in India.


Privacy as a fundamental right


A nine-judge bench of the Supreme Court of India in the landmark case of Justice K.S. Puttaswamy (Retd.) v. Union of India[1] unanimously delivered its judgment on August 24, 2017 and laid down that Right to Privacy is a constitutionally protected fundamental right under the Constitution of India under Article 21 (Right to Life) and furthermore under Part III.


Fundamentals governing consent under GDPR:


The General Data Protection Regulation (hereinafter referred to as ‘GDPR’) went into effect on May 25, 2018 and has set guidelines for the collection and processing of personal information of the citizens of European Union (hereinafter referred to as ‘EU’). As per the GDPR, even the entities based outside the EU which deal with the personal data of EU residents are required to obtain consent of the EU residents before processing its data in order to comply with the GDPR. In case of non-compliance with GDPR, entities may face imposition of penalty of up to EUR 20,000,000 or 4% of the global annual turnover, whichever is higher.


This has forced many Indian companies into updating their privacy policy as well as terms of use in order to ensure compliance with the GDPR. Therefore, it becomes important to note the following principles governing consent under GDPR:


  • Nature of consent: Consent to be obtained from the data subject should be freely given, specific, informed, explicit and unambiguous indication of the data
  • Evidence of consent: Clear evidence/ records are required to be kept so as to demonstrate that the consent has been duly obtained in a manner which is clearly distinguishable from other matters to prove that the data subject had freely consented for his/ her data to be processed. Such records/ evidence is necessary to ensure that the consent can be verified.
  • Withdrawal of consent: The GDPR provides a right to the data subject to withdraw her consent at any time. The GDPR prescribes to ensure that the withdrawal of consent should be as simple and uncomplicated as the giving of the consent.

Draft Data Privacy Code released by a citizen’s initiative:

A citizen’s initiative called “Save our Privacy” which is supported by the Internet Freedom Foundation (a non-profit organization engaged in the protection of digital rights) had released a draft Data Privacy Code. The seven principles[2] which provide a summary of the said draft Data Privacy Code are as follows:

  • Individual rights are at the center of privacy and data protection.
  • A data protection law must be based on privacy principles.
  • A strong privacy commission must be created to enforce the privacy principles.>
  • The government should respect user privacy.
  • A complete privacy code comes with surveillance reform.
  • The right to information needs to be strengthened and protected.
  • International protections and harmonization to protect the open internet must be incorporated.

TRAI’s recommendations on Privacy in Telecom Sector:


The Telecom Regulatory Authority of India vide press release [3] no. 78/ 2018 on July 16, 2018 released its recommendations with respect to “Privacy, Security and Ownership of Data in the Telecom Sector”. TRAI’s recommendations are made with due respect to the digital ecosystem which includes Service providers, Devices, Browsers, Operating Systems, Applications etc.


TRAI first recommendation provides that “each user owns his/ her personal information/ data collected by/ stored with the entities in the digital ecosystem. The entities, controlling and processing such data, are mere custodians and do not have primary rights over this data.”


TRAI further stated in its recommendations that “the existing framework for protection of the personal information/ data of telecom consumers is not sufficient. To protect telecom consumers against the misuse of their personal data by the broad range of data controllers and processors in the digital ecosystem, all entities in the digital ecosystem, which control or process their personal data should be brought under a data protection framework.”


TRAI also recommended that all entities in the digital ecosystem including Telecom Service Providers should transparently disclose the information about the privacy breaches on their websites along with the actions taken for mitigation and preventing such breaches in future.


Recommendations of Justice B N Srikrishna committee:


Justice B N Srikrishna provided its recommendations in a 176 page report[4] along with a draft Personal Data Protection Bill, 2018[5] . Some of the major recommendations are reproduced below:


  • The definition of personal data will be based on identifiability.
  • Sensitive personal data will include passwords, financial data, health data, official identifier, sex life, sexual orientation, biometric and genetic data, and data that reveals transgender status, intersex status, caste, tribe, religious or political beliefs or affiliations of an individual.
  • Consent will be a lawful basis for processing of personal data. However, the law will adopt a modified consent framework which will apply a product liability regime to consent thereby making the data fiduciary liable for harms caused to the data principal.
  • For consent to be valid it should be free, informed, specific, clear and capable of being withdrawn. For sensitive personal data, consent will have to be explicit.
  • A data principal below the age of eighteen years will be considered a child. Data fiduciaries have a general obligation to ensure that processing is undertaken keeping the best interests of the child in mind.
  • The principle of granting protection to community data has been recognized by the Committee.
  • Cross border data transfers of personal data, other than critical personal data, will be through model contract clauses containing key obligations with the transferor being liable for harms caused to the principal due to any violations committed by the transferee.
  • Personal data relating to health will however permitted to be transferred for reasons of prompt action or emergency.
  • The proposed data protection framework replaces Section 43A of the Information Technology Act and the SPD Rules issued under that provision. Consequently, these must be repealed together with consequent minor amendments.
  • The data protection law will set up a Data Protection Authority (DPA) which will be an independent regulatory body responsible for the enforcement and effective implementation of the law. Broadly, the DPA shall perform the following primary functions:
    (i) monitoring and enforcement;
    (ii) legal affairs, policy and standard setting;
    (iii) research and awareness;
    (iv) inquiry, grievance handling and adjudication.
  • The RTI Act prescribes a standard for privacy protection in laying out an exemption to transparency requirements under Section 8(1)(j). This needs to be amended to clarify when it will be activated and to harmonies the standard of privacy employed with the general data protection statute.
  • The Committee has identified a list of 50 statutes and regulations which have a potential overlap with the data protection framework.>

Concluding remarks:

After implementation of GDPR, TRAI and Justice B N Srikrishna committee have now provided their recommendations with respect to the data privacy and protection framework which although are not binding in nature however, they do provide an outlook of the evolving data protection framework in India. It is expected that when a primary legislation governing data privacy and protection in India comes into force, above mentioned principles will be given their due weightage.

___________________

[1]Writ Petition (Civil) No. 494 OF 2012


[2]
Refer:
https://saveourprivacy.in/principles


[3]
Refer:
https://www.trai.gov.in/sites/default/files/PRNo7816072018.pdf 


[4]
Available at:
http://meity.gov.in/writereaddata/files/Data_Protection_
Committee_Report.pdf 


[5]
Available at:
http://meity.gov.in/writereaddata/files/Personal_Data_
Protection_Bill%2C2018_0.pdf 

For more information please contact us at : info@ssrana.com