Foreword
We are pleased to present the latest edition of our quarterly newsletter, where we have covered those significant amendments which may have wide implications on the ease of doing business especially in light of the challenges faced due to the pandemic. On the foreign exchange front, the government amended the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, to align the same with the modified FDI policy. These amendments specify activities that are not considered as “real estate business”. Further, start-ups have been allowed to issue convertible notes for a maximum period of 10 years, which was earlier subject to maximum limit of 5 years. Additionally, the body corporates incorporated by the government under Central and State Acts have been included within the definition of “Indian Company”.
SALIENT FEATURES
- These amendment rules which entered into force on April 12, 2022, specify activities that are not considered “real estate business”.
- An amendment has been made to Rule 2(e) whereby the period of conversion of convertible notes has been extended. The new rules allow a start-up to issue convertible notes which can be converted into equity shares of the company within a period of 10 years on occurrence of specified events as agreed.
- New definitions for “Share-Based Employee Benefits” (“SBEBs”) and “Subsidiary” have been introduced under Rule 2. SBEBs have been defined as any issue of equity instruments to an Indian Company’s employees or directors or to employees or directors of holding company or joint venture or wholly owned overseas subsidiary or subsidiaries who are resident outside India, pursuant to the SBEB scheme formulated by such an Indian Company and subject to certain specified terms and conditions. The term “subsidiary” has been assigned the same meaning as in the Companies Act, 2013.
Key amendments in Companies Act, 2013
- Companies (Management and Administration) Amendment Rules, 2022
- Companies (Prospectus and Allotment of Securities) Amendment Rules, 2022
- Companies (Incorporation) Second Amendment Rules, 2022
- Companies (Compromises, Arrangements and Amalgamations) Amendment Rules, 2022
- Companies (Appointment and Qualification of Directors) Second Amendment, Rules, 2022
Key amendments in Securities Law
- CIRCULAR NO. SEBI/HO/CFD/DIL2/CIR/P/2022/51 DATED APRIL 20, 2022
- CIRCULAR NO. SEBI/HO/CFD/SSEP/CIR/P/2022/48 DATED APRIL 08, 2022
- CIRCULAR NO. SEBI/HO/MIRSD/MIRSD_RTAMB/P/ CIR/2022/76 DATED MAY 30, 2022
- CIRCULAR NO. SEBI/HO/CFD/CMD1/CIR/P/2022/47 DATED: APRIL 08, 2022
- CIRCULAR NO. SEBI/HO/IMD/FPI&C/CIR/P/2022/84 DATED JUNE 21, 2022
