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The Reliance-Aramco Deal – What it Means for Who!

I woke up this morning to see the news about the Aramco-RIL deal plastered on the headlines of The Economic Times. I am still processing the implications of this mega deal in my head, but here are some of my quick thoughts on what this deal means – for RIL, for Aramco, and for India. For
Continue Reading


Majulah Singapura! Majulah Lexygen! Celebrating a DECADE of Lexygen Singapore!!!

Today is Singapore National day. The inspiring Republic of Singapore celebrates 54 years of providing economic, political and social thought leadership across Asia and the world. Over these decades, despite often being dismissed by the West as “just a little red dot” – a reference to its tiny geographic size – Singapore has consistently managed
Continue Reading


Policy on FDI in E-commerce – Government shifts the goalposts

The Department of Industrial Policy & Promotion has, through Press Note No. 2 of 2018 dated December 26, 2018 (“Press Note 2”), revised the policy relating to Foreign Direct Investment (“FDI”) in e-commerce, which could have significant ramifications to the sector. While the Press Note 2 as well as the subsequent response to the media
Continue Reading


Short term measures, long term headache?

The Finance Act of 2017 had amended Section 10(38) of the Income Tax Act, 1961 (“IT Act”) to the effect that long term capital gains (“LTCG“) from transfer of equity shares of companies listed on stock exchanges, would be exempt from tax only if securities transaction tax (“STT”) was paid at the time of acquisition
Continue Reading


The Infosys-Panaya Deal – What is the Big Deal?

We lawyers love disclaimers, and I am going to start this piece by making a rather important one – I haven’t actually read the letters/emails reportedly written by two whistleblowers to the SEBI (they are not available anywhere in the public domain yet), and am only offering my views and reactions in this piece based
Continue Reading


Budget 2017: Adequate Wind beneath the Wings of Start-ups?

While there have been sops and benefits provided to start-ups by the Government since the formal launch of the Startup India initiative in 2016, there have been a bevy of demands and requests from the industry to increase and better streamline the benefits and assistance. It is during the recent Budget announced in February 2017
Continue Reading


Betting on the jockey

“Bet on the jockey, not the horse” goes the adage; it highlights a key aspect of early-stage investing – people (read: key employees of a company), and their ideas/execution capabilities are as important as ‘product’. It follows that preserving the value brought in by ‘people’ is vital for early stage companies and investors in such
Continue Reading


Celebrating an Amazing Decade of The Lexygen Experience!

Dear Clients, Lexygenians, Friends, Well-wishers and Critics of Lexygen, I’m very happy and proud to have the privilege of writing this post on behalf of everyone at Lexygen, for today marks a big day in the fascinating journey of our firm! This dream called Lexygen was born this very day ten years ago, after countless
Continue Reading


Takeover Code & Exemptions for Debt Restructuring

Recently, there has been a spike in the number of ‘bad loans’ in the Indian banking system, in response to which the banking regulator put in place a debt restructuring framework called the Strategic Debt Restructuring (“SDR”) scheme enabling lenders to take control of defaulting corporate borrowers. Two other schemes for debt restructuring are also
Continue Reading


Markets on the Internet and Foreign Investment

The recent Press Note issued by the Department of Industrial Policy and Promotion on March 29, 2016 (“Press Note”) has contributed immensely to the hullabaloo surrounding the hot topic of foreign direct investment (“FDI”) in the e-commerce sector. There seems to be a great amount confusion on whether to applaud and give the Government a
Continue Reading


Fund Managers: Welcome to India

The last few years have seen the introduction of several pro-funds industry measures on the tax side in India. One notable measure was the insertion of a ‘safe harbour’ provision into the Income Tax Act, 1961 (“ITA”) to protect offshore funds (hereinafter, “funds”) from the adverse tax consequences of having an onshore fund manager (“Safe
Continue Reading


Business Income or Capital Gains? Question Resolved!

The Central Board for Direct Taxes (“CBDT”) has, vide Letter F. No.225/12/2016/ITA.II dated May 2, 2015 (“Letter”), issued a clarification regarding the characterization of income arising from the transfer of unlisted shares. The clarification has been issued to resolve the oft litigated matter of characterization of income from the sale of shares (i.e., whether such
Continue Reading


Startup funding: All you want to know about term sheets

Startups and funding go hand-in-hand. First-time entrepreneurs are keen to bring angel investors and VC funds on board. That’s when all the documentation and legalities come into the picture. Several entrepreneurs find it difficult to understand legal documents. One such document is the ‘term sheet’. Vijay Sambamurthi, founder and managing partner at law firm Lexygen,
Continue Reading


Companies Law Committee Report, 2016 – Recommendations Galore!

The much awaited report of the Companies Law Committee (“Committee”) which proposes a number of changes to the Companies Act, 2013 (“Act”) and rules laid down thereunder (“Rules”) was released in the first week of February (“Report”). The Report in itself is extensive and has covered various chapters and sections of the Act in detail,
Continue Reading


Reorganization and Arrangement under the DTAA – Get it right

While going through the recent judgements of the Income Tax Appellate Tribunal (“ITAT”), I came across this interesting decision issued by the Mumbai bench of ITAT in relation to transfer of shares of a company called Century Enka Limited (“CEL”), wherein the ITAT has given certain guiding principles as to what would mean by a
Continue Reading


Startup India – Is the Action Plan Adequate?

The Startup India Event organized by the Government last month was extremely well received by the entrepreneurial community. The event culminated in the unveiling of the Startup India Action Plan (“SAP”) by the Prime Minister. As expected, there were several interesting proposals aimed at promoting the growth and development of startups in India. This blog
Continue Reading


Ola, Uber & the CCI: This one’s for the road

While all of us have raved and ranted in equal measure about booking a cab in today’s time, it may be safely said that most people would, by now, have a ‘preferred choice’ of cab company which they use while trying to make it from point A to point B. However, the minute a ridiculous
Continue Reading


AIF Committee Recommends Revamp of Regulations

In March 2015, the Securities and Exchange Board of India (“SEBI”) constituted the 21 member Alternative Investment Policy Advisory Committee (“AIF Committee”), under the chairmanship of Infosys founder Mr. Narayan Murthy, to advise on ways to encourage the development of alternative investment and start-up ecosystems in India. The AIF Committee was well represented by various
Continue Reading


Green Bonds – Use them to clean up

The corporate sector has been very keen on helping the Government of India in its various initiatives whether it is the Swach Bharat Abhiyaan or the introduction of the Corporate Social Responsibility Norms, there have been efforts by the corporate sector to take these missions forward. In continuation to the same, there have also been
Continue Reading


Exit Offers for Dissenting Shareholders

Though the Companies Act, 2013 (“Act”) had provided for the treatment of dissenting shareholders and their exit in case of a company which, after raising funds from the public through a prospectus, has varied the terms of a contract referred to in the prospectus or the objects for which the prospectus was issued, it is
Continue Reading


Arbitration in India: The Seat is Still Vacant

The Arbitration and Conciliation (Amendment) Act, 2015 (“Amendment Act”), which was passed by the Parliament towards last year-end has come into force after its notification in the official gazette on January 1, 2016. The Amendment Act, brings about a slew of changes to the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and addresses several concerns
Continue Reading


POEM: The Shifting Sands of Substance & Form (or, A Tale of Two Circulars)

The subject of this blog post is the Ministry of Finance’s Draft Guiding Principles for Determination of Place of Effective Management of a Company (“Draft Guidelines”), and their impact on the taxability of the gains made by offshore funds that have an onshore advisory/investment manager entity. The Draft Guidelines do not yet have the force
Continue Reading


A Warm Welcome to Payment Banks

A Warm Welcome to Payment Banks Smrithi Punnoose January 4, 2016 The Reserve Bank of India (“RBI”), in August 2015 granted in-principal approval and licenses to 11 applicants to begin operations as payment banks. It is interesting to note that the recipients of the licenses include individual persons, namely, Mr. Vijay Shekhar Sharma and Mr.
Continue Reading


CCI Amends the ‘Investment Exemption’

In a previous post on the Lexygen Blog, I had noted that due to recent merger control rulings by the Competition Commission of India (“CCI”), the exemption given to acquirers from notifying minority/significant minority acquisitions that were made “solely as an investment” (“Investment Exemption”) had more or less evaporated. Ideally, funds would like the Investment
Continue Reading


External Commercial Borrowing – On which ‘Track’ are you?

As per a latest newspaper article, the External Commercial Borrowings (“ECB”) as percentage of the nominal GDP climbed to 9% at the end of June 2015, which according to them is the highest in the past decade or so. The Reserve Bank of India (“RBI”) on its part had amended the ECB Policy and introduced
Continue Reading


FDI in Defense: Recent Reforms

Foreign direct investment (“FDI”) into the defense sector has always been something of a contentious issue. Two reasons for this were articulated in a discussion paper published by the Department of Industrial Policy and Promotion (“DIPP”) in 2010 (“Discussion Paper”), though some of these reasons have been in the forefront since India’s independence: firstly, a
Continue Reading


FDI in e-commerce: The confusion continues

Under the extant FDI Policy, 100% FDI under the automatic route is permitted in entities engaged in B2B e-commerce activities, i.e., trading amongst manufacturers, wholesalers, and retailers on e-commerce platforms, but FDI is prohibited in retail trading (B2C activities) through e-commerce. Further, Indian entities having FDI engaged in single brand retail trading (“SBRT”) or multi-brand
Continue Reading


Draft Civil Aviation Policy: Wind beneath the Wings of the Indian Aviation sector?

The Ministry of Civil Aviation (“MoCA”) had recently issued the Draft National Civil Aviation Policy (“Policy”) which, after public consultation, it may implement in its entirety or in part. The Government believes that this sector has a multiplier effect on the economy and hence wishes to promote it in a significant manner. While the Policy
Continue Reading


FDI – Steps in the right direction?

The Indian Prime Minister speaking recently at the Economic Convention in Singapore had said that “Foreign Direct Investment” in short FDI to him is “First Develop India”. The Government of India through a host of measures such as relaxing provisions on ease of doing business in India and amendments to various laws has been trying
Continue Reading


FDI in AIFs – will there be any takers for hedge funds?

The idea of Indian domiciled hedge funds, though first mooted by the SEBI over a decade back, has not picked up steam yet. Even upon the AIF Regulations specifically permitting the formation of hedge funds, there were several missing pieces which held the sponsors from taking the plunge. The regime on hedge funds has since
Continue Reading


Companies Act, 2013: Craving Compliance Clarity

The Companies Act, 2013 (“2013 Act”) was enacted to replace the Companies Act, 1956, with one of its primary objectives being to lighten the compliance burden on businesses in India. Since its enforcement in April 2014, many sections of the 2013 Act have already undergone amendment and several exemptions have been granted by the Ministry
Continue Reading


Paypal: Not the RBI’s pal

The Payment and Settlement Systems Act, 2007 (“PSS Act”) prescribes certain conditions for companies to comply with, prior to setting up a payment system in India. As per the PSS Act, any system that enables a payment to be effected between a payer and a beneficiary is called a payment system; this would include credit
Continue Reading


The CCI, Investment Funds & Affirmative Rights

This blog post will discuss two recent merger control orders passed by the Competition Commission of India (“CCI”), Cairnhill CIPEF Limited & Anr. (“Cairnhill”), and Caladium Investment Pte. Limited (“Caladium”), and their implications for [minority/significant minority] acquisitions by investment funds. These orders indicate the manner in which the CCI will regard affirmative rights and board
Continue Reading


Proposed changes to Bankruptcy Laws – A Step in the Right Direction

“Capitalism without bankruptcy is like Christianity without hell”- Frank Borman Earlier this month the Bankruptcy Laws Reforms Committee (“Committee”) submitted its final report to the Ministry of Finance with recommendations for some sweeping changes. The report contains both the findings and recommendations of the Committee and the draft Insolvency and Bankruptcy Code (“Code”). This final
Continue Reading


FATCA – Impact on Domestic Funds

Much ink has been spilt of late over a United States (“US”) federal law called the Foreign Account Tax Compliance Act (“FATCA”) and hence we thought it fit to spend some time trying to analyse for the readers the aspects which may affect them. FATCA is a part of the US’ Internal Revenue Code, and
Continue Reading


Will the Super Budget turbocharge the Indian economy?

This budget could have been much more impactful had it considered some transformational changes in the system. Finance Minister Arun Jaitley presented his first union budget yesterday. It was a budget that was awaited with much anticipation and that was beginning, even before it was presented, to be described in certain sections of the media
Continue Reading


The QFI scheme – You blink and it’s gone!

The Indian Government (“Government”) has consistently been trying to introduce schemes and routes to bring in foreign investment to an ever depleting economy, where the need for foreign exchange is only increasing. Since access to foreign institutional investment opportunities in India was by and large limited to foreign institutional investors (“FII”) and foreign venture capital
Continue Reading


PE inflows in water: Not a ‘watered down’ proposition!

The interest of private equity (PE) funds and other investors has continuously been on the rise in the water sector over the past few years, though, it still can’t be said that the flood gates have been opened up in the sector. Earlier, for many years it was only the Government which was ‘investing’ in
Continue Reading


How far will GAAR go?

Unless the final guidelines places additional and more stringent fetters on its invocation, given the extensive discretion granted to the tax authorities under the GAAR, the excessive tax and compliance burden will be worrisome. The issuance of draft guidelines for the implementation of the General Anti Avoidance Rules (GAAR) for public comments (Draft Guidelines) has
Continue Reading


Crowd funding – A panacea for startups in India?

The need of the hour is for the Indian government and regulators to carve out specific exemptions for crowd funding with effective checks and balances. Crowd funding, also popularly known as crowd financing or equity crowd funding, could broadly be described as the raising or pooling of monies by a group of people, driven by
Continue Reading


Retrospective Amendments – Turning the clock back?

The Government seems to be attempting to turn the clock back through its proposals in the Finance Bill 2012 (“Budget” or “Bill”), made with the objective of ‘reiterating the intent of the legislature’. Read in the light of the recent decision of the Supreme Court (“SC”) in January 2012 on the 2007 USD 11 Billion
Continue Reading


SEBI AIF Regulations – New & Improved Version?

It is too early to conclude as to whether the SEBI has “changed its mind” on some of the worrying proposals. The SEBI issued a press release last Friday announcing that it has decided to approve the issuance of the SEBI Alternative Investment Fund Regulations (“AIF Regulations”). The SEBI had put out a draft of
Continue Reading


Is “The Optionator” Now Dead? Weighing The Options

Government scraps controversial clause in FDI policy, categorizing PE investment with in-built put-call options as debt. Over the past 20 hours, we at Lexygen have received innumerable calls and emails seeking our view on the corrigendum issued yesterday by the Department of Industrial Policy and Promotion (“DIPP”) deleting a paragraph of the Consolidated FDI Policy
Continue Reading


The Accidental Non-Billionaires

Why aren’t Indian entrepreneurs as successful as their overseas counterparts? A close look at the critical factors… If Mark Zuckerberg, Larry Page, Sergey Brin, Jeff Bezos and so on had been Indian residents and had conceived of and started their respective companies in an IIT hostel room, or in a garage in Mumbai or at
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SEBI Draft Regulations For PE/VC Industry May Raise Cost Of Business

Too many categories of AIFs may require multiple registrations for sector agnostic growth funds, says Vijay Sambamurthi. Market regulator SEBI’s proposed regulations to monitor all classes of Alternate Investment Funds (AIF) seek to make major changes in the way private equity firms operate in India. Vijay Sambamurthi of Lexygen gives a legal eagle’s perspective. SEBI
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SEBI Ruling on IDR Conversion: One Step Forward, Two Steps Back

Last year, Standard Chartered was welcomed with much gusto and fanfare to list its Indian Depository Receipts (“IDRs”) on the Indian bourses, as it represented a sort of coming of age for the Indian capital market. It was the first ever issue of depository receipts in India and was brought about after commendable efforts from
Continue Reading


To Vote or Not to Vote – That’s not the question…It’s how to Vote

The archaic restriction with respect to voting rights contained in the Banking Regulation Act, 1949 (“BR Act”), prohibiting a person holding shares in a private bank from exercising voting rights in excess of 10% of the total voting rights of all the shareholders, has been a bane for many a shareholder including foreign investors for
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The Anti-Portfolio – If You Got It, Flaunt It

A fund could derive various benefits from publicizing its anti-portfolio. Celebrating success is an understandable and universally practised phenomenon. And it is consistent with the commonly accepted notion of success attracting more success. While failure is equally commonly considered in popular wisdom to be a stepping stone for success, failures are very seldom externally acknowledged
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THE ETERNAL CONUNDRUM OF A SPOTLESS PAC

SPOTLESS PAC!! OK, that does not really make sense, but just because I really liked the movie Eternal Sunshine of a Spotless Mind, I was inspired to title my blog along the same lines. OK, now I better stop thinking how flawless the script was and move on to the real issue before I get
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WHO LET THE BLOGS IN?

“I think we should have a blog!” – thus spake Devanshi, the youngest member of our Website Launch Group, in the Group’s first brainstorm on our soon-to-be-launched website. The brief silence that followed was the only time in the next several weeks that this question did not draw the most passionate and interesting set of
Continue Reading


The Reliance-Aramco Deal – What it Means for Who!

I woke up this morning to see the news about the Aramco-RIL deal plastered on the headlines of The Economic Times. I am still processing the implications of this mega deal in my head, but here are some of my quick thoughts on what this deal means – for RIL, for Aramco, and for India. For
Continue Reading

Majulah Singapura! Majulah Lexygen! Celebrating a DECADE of Lexygen Singapore!!!

Today is Singapore National day. The inspiring Republic of Singapore celebrates 54 years of providing economic, political and social thought leadership across Asia and the world. Over these decades, despite often being dismissed by the West as “just a little red dot” – a reference to its tiny geographic size – Singapore has consistently managed
Continue Reading

Policy on FDI in E-commerce – Government shifts the goalposts

The Department of Industrial Policy & Promotion has, through Press Note No. 2 of 2018 dated December 26, 2018 (“Press Note 2”), revised the policy relating to Foreign Direct Investment (“FDI”) in e-commerce, which could have significant ramifications to the sector. While the Press Note 2 as well as the subsequent response to the media
Continue Reading

Short term measures, long term headache?

The Finance Act of 2017 had amended Section 10(38) of the Income Tax Act, 1961 (“IT Act”) to the effect that long term capital gains (“LTCG“) from transfer of equity shares of companies listed on stock exchanges, would be exempt from tax only if securities transaction tax (“STT”) was paid at the time of acquisition
Continue Reading

The Infosys-Panaya Deal – What is the Big Deal?

We lawyers love disclaimers, and I am going to start this piece by making a rather important one – I haven’t actually read the letters/emails reportedly written by two whistleblowers to the SEBI (they are not available anywhere in the public domain yet), and am only offering my views and reactions in this piece based
Continue Reading

Budget 2017: Adequate Wind beneath the Wings of Start-ups?

While there have been sops and benefits provided to start-ups by the Government since the formal launch of the Startup India initiative in 2016, there have been a bevy of demands and requests from the industry to increase and better streamline the benefits and assistance. It is during the recent Budget announced in February 2017
Continue Reading

Betting on the jockey

“Bet on the jockey, not the horse” goes the adage; it highlights a key aspect of early-stage investing – people (read: key employees of a company), and their ideas/execution capabilities are as important as ‘product’. It follows that preserving the value brought in by ‘people’ is vital for early stage companies and investors in such
Continue Reading

Celebrating an Amazing Decade of The Lexygen Experience!

Dear Clients, Lexygenians, Friends, Well-wishers and Critics of Lexygen, I’m very happy and proud to have the privilege of writing this post on behalf of everyone at Lexygen, for today marks a big day in the fascinating journey of our firm! This dream called Lexygen was born this very day ten years ago, after countless
Continue Reading

Takeover Code & Exemptions for Debt Restructuring

Recently, there has been a spike in the number of ‘bad loans’ in the Indian banking system, in response to which the banking regulator put in place a debt restructuring framework called the Strategic Debt Restructuring (“SDR”) scheme enabling lenders to take control of defaulting corporate borrowers. Two other schemes for debt restructuring are also
Continue Reading

Markets on the Internet and Foreign Investment

The recent Press Note issued by the Department of Industrial Policy and Promotion on March 29, 2016 (“Press Note”) has contributed immensely to the hullabaloo surrounding the hot topic of foreign direct investment (“FDI”) in the e-commerce sector. There seems to be a great amount confusion on whether to applaud and give the Government a
Continue Reading

Fund Managers: Welcome to India

The last few years have seen the introduction of several pro-funds industry measures on the tax side in India. One notable measure was the insertion of a ‘safe harbour’ provision into the Income Tax Act, 1961 (“ITA”) to protect offshore funds (hereinafter, “funds”) from the adverse tax consequences of having an onshore fund manager (“Safe
Continue Reading

Business Income or Capital Gains? Question Resolved!

The Central Board for Direct Taxes (“CBDT”) has, vide Letter F. No.225/12/2016/ITA.II dated May 2, 2015 (“Letter”), issued a clarification regarding the characterization of income arising from the transfer of unlisted shares. The clarification has been issued to resolve the oft litigated matter of characterization of income from the sale of shares (i.e., whether such
Continue Reading

Startup funding: All you want to know about term sheets

Startups and funding go hand-in-hand. First-time entrepreneurs are keen to bring angel investors and VC funds on board. That’s when all the documentation and legalities come into the picture. Several entrepreneurs find it difficult to understand legal documents. One such document is the ‘term sheet’. Vijay Sambamurthi, founder and managing partner at law firm Lexygen,
Continue Reading

Companies Law Committee Report, 2016 – Recommendations Galore!

The much awaited report of the Companies Law Committee (“Committee”) which proposes a number of changes to the Companies Act, 2013 (“Act”) and rules laid down thereunder (“Rules”) was released in the first week of February (“Report”). The Report in itself is extensive and has covered various chapters and sections of the Act in detail,
Continue Reading

Reorganization and Arrangement under the DTAA – Get it right

While going through the recent judgements of the Income Tax Appellate Tribunal (“ITAT”), I came across this interesting decision issued by the Mumbai bench of ITAT in relation to transfer of shares of a company called Century Enka Limited (“CEL”), wherein the ITAT has given certain guiding principles as to what would mean by a
Continue Reading

Startup India – Is the Action Plan Adequate?

The Startup India Event organized by the Government last month was extremely well received by the entrepreneurial community. The event culminated in the unveiling of the Startup India Action Plan (“SAP”) by the Prime Minister. As expected, there were several interesting proposals aimed at promoting the growth and development of startups in India. This blog
Continue Reading

Ola, Uber & the CCI: This one’s for the road

While all of us have raved and ranted in equal measure about booking a cab in today’s time, it may be safely said that most people would, by now, have a ‘preferred choice’ of cab company which they use while trying to make it from point A to point B. However, the minute a ridiculous
Continue Reading

AIF Committee Recommends Revamp of Regulations

In March 2015, the Securities and Exchange Board of India (“SEBI”) constituted the 21 member Alternative Investment Policy Advisory Committee (“AIF Committee”), under the chairmanship of Infosys founder Mr. Narayan Murthy, to advise on ways to encourage the development of alternative investment and start-up ecosystems in India. The AIF Committee was well represented by various
Continue Reading

Green Bonds – Use them to clean up

The corporate sector has been very keen on helping the Government of India in its various initiatives whether it is the Swach Bharat Abhiyaan or the introduction of the Corporate Social Responsibility Norms, there have been efforts by the corporate sector to take these missions forward. In continuation to the same, there have also been
Continue Reading

Exit Offers for Dissenting Shareholders

Though the Companies Act, 2013 (“Act”) had provided for the treatment of dissenting shareholders and their exit in case of a company which, after raising funds from the public through a prospectus, has varied the terms of a contract referred to in the prospectus or the objects for which the prospectus was issued, it is
Continue Reading

Arbitration in India: The Seat is Still Vacant

The Arbitration and Conciliation (Amendment) Act, 2015 (“Amendment Act”), which was passed by the Parliament towards last year-end has come into force after its notification in the official gazette on January 1, 2016. The Amendment Act, brings about a slew of changes to the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and addresses several concerns
Continue Reading

POEM: The Shifting Sands of Substance & Form (or, A Tale of Two Circulars)

The subject of this blog post is the Ministry of Finance’s Draft Guiding Principles for Determination of Place of Effective Management of a Company (“Draft Guidelines”), and their impact on the taxability of the gains made by offshore funds that have an onshore advisory/investment manager entity. The Draft Guidelines do not yet have the force
Continue Reading

A Warm Welcome to Payment Banks

A Warm Welcome to Payment Banks Smrithi Punnoose January 4, 2016 The Reserve Bank of India (“RBI”), in August 2015 granted in-principal approval and licenses to 11 applicants to begin operations as payment banks. It is interesting to note that the recipients of the licenses include individual persons, namely, Mr. Vijay Shekhar Sharma and Mr.
Continue Reading

CCI Amends the ‘Investment Exemption’

In a previous post on the Lexygen Blog, I had noted that due to recent merger control rulings by the Competition Commission of India (“CCI”), the exemption given to acquirers from notifying minority/significant minority acquisitions that were made “solely as an investment” (“Investment Exemption”) had more or less evaporated. Ideally, funds would like the Investment
Continue Reading

External Commercial Borrowing – On which ‘Track’ are you?

As per a latest newspaper article, the External Commercial Borrowings (“ECB”) as percentage of the nominal GDP climbed to 9% at the end of June 2015, which according to them is the highest in the past decade or so. The Reserve Bank of India (“RBI”) on its part had amended the ECB Policy and introduced
Continue Reading

FDI in Defense: Recent Reforms

Foreign direct investment (“FDI”) into the defense sector has always been something of a contentious issue. Two reasons for this were articulated in a discussion paper published by the Department of Industrial Policy and Promotion (“DIPP”) in 2010 (“Discussion Paper”), though some of these reasons have been in the forefront since India’s independence: firstly, a
Continue Reading

FDI in e-commerce: The confusion continues

Under the extant FDI Policy, 100% FDI under the automatic route is permitted in entities engaged in B2B e-commerce activities, i.e., trading amongst manufacturers, wholesalers, and retailers on e-commerce platforms, but FDI is prohibited in retail trading (B2C activities) through e-commerce. Further, Indian entities having FDI engaged in single brand retail trading (“SBRT”) or multi-brand
Continue Reading

Draft Civil Aviation Policy: Wind beneath the Wings of the Indian Aviation sector?

The Ministry of Civil Aviation (“MoCA”) had recently issued the Draft National Civil Aviation Policy (“Policy”) which, after public consultation, it may implement in its entirety or in part. The Government believes that this sector has a multiplier effect on the economy and hence wishes to promote it in a significant manner. While the Policy
Continue Reading

FDI – Steps in the right direction?

The Indian Prime Minister speaking recently at the Economic Convention in Singapore had said that “Foreign Direct Investment” in short FDI to him is “First Develop India”. The Government of India through a host of measures such as relaxing provisions on ease of doing business in India and amendments to various laws has been trying
Continue Reading

FDI in AIFs – will there be any takers for hedge funds?

The idea of Indian domiciled hedge funds, though first mooted by the SEBI over a decade back, has not picked up steam yet. Even upon the AIF Regulations specifically permitting the formation of hedge funds, there were several missing pieces which held the sponsors from taking the plunge. The regime on hedge funds has since
Continue Reading

Companies Act, 2013: Craving Compliance Clarity

The Companies Act, 2013 (“2013 Act”) was enacted to replace the Companies Act, 1956, with one of its primary objectives being to lighten the compliance burden on businesses in India. Since its enforcement in April 2014, many sections of the 2013 Act have already undergone amendment and several exemptions have been granted by the Ministry
Continue Reading

Paypal: Not the RBI’s pal

The Payment and Settlement Systems Act, 2007 (“PSS Act”) prescribes certain conditions for companies to comply with, prior to setting up a payment system in India. As per the PSS Act, any system that enables a payment to be effected between a payer and a beneficiary is called a payment system; this would include credit
Continue Reading

The CCI, Investment Funds & Affirmative Rights

This blog post will discuss two recent merger control orders passed by the Competition Commission of India (“CCI”), Cairnhill CIPEF Limited & Anr. (“Cairnhill”), and Caladium Investment Pte. Limited (“Caladium”), and their implications for [minority/significant minority] acquisitions by investment funds. These orders indicate the manner in which the CCI will regard affirmative rights and board
Continue Reading

Proposed changes to Bankruptcy Laws – A Step in the Right Direction

“Capitalism without bankruptcy is like Christianity without hell”- Frank Borman Earlier this month the Bankruptcy Laws Reforms Committee (“Committee”) submitted its final report to the Ministry of Finance with recommendations for some sweeping changes. The report contains both the findings and recommendations of the Committee and the draft Insolvency and Bankruptcy Code (“Code”). This final
Continue Reading

FATCA – Impact on Domestic Funds

Much ink has been spilt of late over a United States (“US”) federal law called the Foreign Account Tax Compliance Act (“FATCA”) and hence we thought it fit to spend some time trying to analyse for the readers the aspects which may affect them. FATCA is a part of the US’ Internal Revenue Code, and
Continue Reading

Will the Super Budget turbocharge the Indian economy?

This budget could have been much more impactful had it considered some transformational changes in the system. Finance Minister Arun Jaitley presented his first union budget yesterday. It was a budget that was awaited with much anticipation and that was beginning, even before it was presented, to be described in certain sections of the media
Continue Reading

The QFI scheme – You blink and it’s gone!

The Indian Government (“Government”) has consistently been trying to introduce schemes and routes to bring in foreign investment to an ever depleting economy, where the need for foreign exchange is only increasing. Since access to foreign institutional investment opportunities in India was by and large limited to foreign institutional investors (“FII”) and foreign venture capital
Continue Reading

PE inflows in water: Not a ‘watered down’ proposition!

The interest of private equity (PE) funds and other investors has continuously been on the rise in the water sector over the past few years, though, it still can’t be said that the flood gates have been opened up in the sector. Earlier, for many years it was only the Government which was ‘investing’ in
Continue Reading

How far will GAAR go?

Unless the final guidelines places additional and more stringent fetters on its invocation, given the extensive discretion granted to the tax authorities under the GAAR, the excessive tax and compliance burden will be worrisome. The issuance of draft guidelines for the implementation of the General Anti Avoidance Rules (GAAR) for public comments (Draft Guidelines) has
Continue Reading

Crowd funding – A panacea for startups in India?

The need of the hour is for the Indian government and regulators to carve out specific exemptions for crowd funding with effective checks and balances. Crowd funding, also popularly known as crowd financing or equity crowd funding, could broadly be described as the raising or pooling of monies by a group of people, driven by
Continue Reading

Retrospective Amendments – Turning the clock back?

The Government seems to be attempting to turn the clock back through its proposals in the Finance Bill 2012 (“Budget” or “Bill”), made with the objective of ‘reiterating the intent of the legislature’. Read in the light of the recent decision of the Supreme Court (“SC”) in January 2012 on the 2007 USD 11 Billion
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SEBI AIF Regulations – New & Improved Version?

It is too early to conclude as to whether the SEBI has “changed its mind” on some of the worrying proposals. The SEBI issued a press release last Friday announcing that it has decided to approve the issuance of the SEBI Alternative Investment Fund Regulations (“AIF Regulations”). The SEBI had put out a draft of
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Is “The Optionator” Now Dead? Weighing The Options

Government scraps controversial clause in FDI policy, categorizing PE investment with in-built put-call options as debt. Over the past 20 hours, we at Lexygen have received innumerable calls and emails seeking our view on the corrigendum issued yesterday by the Department of Industrial Policy and Promotion (“DIPP”) deleting a paragraph of the Consolidated FDI Policy
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The Accidental Non-Billionaires

Why aren’t Indian entrepreneurs as successful as their overseas counterparts? A close look at the critical factors… If Mark Zuckerberg, Larry Page, Sergey Brin, Jeff Bezos and so on had been Indian residents and had conceived of and started their respective companies in an IIT hostel room, or in a garage in Mumbai or at
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SEBI Draft Regulations For PE/VC Industry May Raise Cost Of Business

Too many categories of AIFs may require multiple registrations for sector agnostic growth funds, says Vijay Sambamurthi. Market regulator SEBI’s proposed regulations to monitor all classes of Alternate Investment Funds (AIF) seek to make major changes in the way private equity firms operate in India. Vijay Sambamurthi of Lexygen gives a legal eagle’s perspective. SEBI
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SEBI Ruling on IDR Conversion: One Step Forward, Two Steps Back

Last year, Standard Chartered was welcomed with much gusto and fanfare to list its Indian Depository Receipts (“IDRs”) on the Indian bourses, as it represented a sort of coming of age for the Indian capital market. It was the first ever issue of depository receipts in India and was brought about after commendable efforts from
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To Vote or Not to Vote – That’s not the question…It’s how to Vote

The archaic restriction with respect to voting rights contained in the Banking Regulation Act, 1949 (“BR Act”), prohibiting a person holding shares in a private bank from exercising voting rights in excess of 10% of the total voting rights of all the shareholders, has been a bane for many a shareholder including foreign investors for
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The Anti-Portfolio – If You Got It, Flaunt It

A fund could derive various benefits from publicizing its anti-portfolio. Celebrating success is an understandable and universally practised phenomenon. And it is consistent with the commonly accepted notion of success attracting more success. While failure is equally commonly considered in popular wisdom to be a stepping stone for success, failures are very seldom externally acknowledged
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THE ETERNAL CONUNDRUM OF A SPOTLESS PAC

SPOTLESS PAC!! OK, that does not really make sense, but just because I really liked the movie Eternal Sunshine of a Spotless Mind, I was inspired to title my blog along the same lines. OK, now I better stop thinking how flawless the script was and move on to the real issue before I get
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WHO LET THE BLOGS IN?

“I think we should have a blog!” – thus spake Devanshi, the youngest member of our Website Launch Group, in the Group’s first brainstorm on our soon-to-be-launched website. The brief silence that followed was the only time in the next several weeks that this question did not draw the most passionate and interesting set of
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