Substantial amendments vide SEBI(LODR) (Second Amendment) Regulation, 2021 Effective from 6th May, 2021

    

Insertion of Definition
Working days‖ means working days of the stock exchange where the securities of the entity are listed.
Applicability of Regulation The provisions of these regulations which become applicable to listed entities on the basis of market capitalisation criteria shall continue to apply to such entities even if they fall below such thresholds
Regulation	Before Amendment	After Amendment	Remarks
7 Share Transfer Agent	The listed entity shall submit a compliance certificate to the exchange within one month of end of each half of the financial year.	The listed entity shall submit a compliance certificate to the exchange within thirty days from end of the financial year.	Now the half yearly compliance certificate is to be submitted once in a financial year.
21 Risk Management Committee	(2) The majority of members of Committee shall consist of members of the board of directors.     (3A) Committee shall meet at least once in a year.                                                     (5) The provisions of this regulation shall be applicable  to  top 500 listed entities determined on the basis of market capitalisation, as at the end of the immediate previous financial year.	(2) The Committee shall have minimum 3 members with majority of them being members of the board of directors including at least one independent director. (3A) Committee shall meet at least Twice in a year. Insertion of new sub-regulation (3B) The quorum for a meeting of the Committee shall be either two members or one third of the members of the committee, whichever is higher, including at least one member of the board of directors in attendance. (3C) The meetings of the committee shall be conducted in such a manner that on a continuous basis not more than one hundred and eighty days shall elapse between any two consecutive meetings. Provided that the role and responsibilities of the Risk Management Committee shall mandatorily include the performance of functions specified in Part D of Schedule II   (5) The provisions  of  this  regulation  shall  be  applicable  to  top 1000 listed entities determined on the basis of market capitalisation, as at the end of the immediate previous financial year   (6) The Risk Management Committee shall have powers to seek information from any employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise, if it considers necessary.	Composition of the committee shall be at least three directors with at least one independent director     A committee shall hold minimum two meeting   Quorum of meeting was not defined earlier however as per amendment Quorum of the committee shall be 2 or 1/3rds of total members of RMC, whichever is higher Including at least 1 member of Board As per latest amendment two meeting are required to be conducted in a financial year the gap between two consecutive meetings shall Not be more than 180 days As provided under Part D of Schedule II, that inter alia includes: a)       Formulating of risk management policy; b)      Oversee implementation of the same; c)       Monitor and evaluate risks basis appropriate methodology, processes and systems. d)      Appointment, removal and terms of remuneration of CRO. Top 1000 listed companies need to constitute Risk Management Committee   The power of RMC include seeking of information from employee, obtain outside legal or other professional advice and secure attendance of outsiders with relevant expertise,
24A Secretarial audit and Secretarial Compliance Report	No time limit was prescribed before amendment	Every listed entity shall submit a secretarial compliance report in such form as specified, to stock exchanges, within sixty days from end of each financial year	Earlier in no time limit was prescribed in Regulation 24A however a circular was issued On Feb 8, 2019 prescribing the time line. The given amendment is in alignment with the said circular.
27 Corporate Governance Requirements	The listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board from time to time to the recognized stock exchange(s) within fifteen days from close of the quarter	The listed entity shall submit a quarterly compliance report on corporate governance in the format as specified by the Board from time to time to the recognized stock exchange(s) within twenty-one days from the end of each quarter	Corporate grievance Report to be submitted within 21 days from the end of quarter in place of 15 days from the end of quarte
31A Re-classification of status of a promoter/ person belonging to promoter group to public	(ii) the board of directors of the listed entity shall analyze the request and place the same before the shareholders in a general meeting for approval along with the views of the board of directors on the request: Provided that there shall be a time gap of at least three months but not exceeding six months between the date of board meeting and the shareholder’s meeting considering the request of the promoter(s) seeking re-classification.   (iii)the request of the promoter(s) seeking re-classification shall be approved in the general meeting by an ordinary resolution in which the promoter(s) seeking re-classification and persons related to the promoter(s) seeking re-classification shall not vote to approve such re-classification request	(ii) the board of directors of the listed entity has analyzed such request in the immediately next board meeting or within three months from the date of receipt of the request from its promoter(s), whichever is earlier and has placed the same before the shareholders in a general meeting for approval along with the views of the board of directors on the request: Provided that there shall be a time gap of at least one month but not exceeding three months between the dates of the board meeting and the shareholders ‘meeting considering the request of the promoter(s) seeking reclassification   (iii) the request of the promoter(s) seeking reclassification has been approved in the general meeting by an ordinary resolution in which the promoter(s) seeking reclassification and the persons related to him/her/it have not voted to approve such reclassification request: Provided that the provisions of this sub-clause shall not apply in cases: (a) where the promoter(s) seeking reclassification and persons related to the promoter(s) seeking reclassification, together, do not hold more than one percent of the total voting rights in the listed entity; (b) where reclassification is pursuant to a divorce.	The request of reclassification now to be considered by the Board immediately in the next board meeting or within 3 months from the receipt of request of reclassification by promoter whichever is earlier         The time gap between the Board meeting and the shareholder meeting is revised now the time gap shall be minimum one month and maximum 3 months
Regulation 32 Statement of deviations and variations	Where the listed entity has appointed a monitoring agency to monitor utilization of proceeds of a public or rights issue, the listed entity shall submit to the stock exchange(s) any comments or report received from the monitoring agency.	Where the listed entity has appointed a monitoring agency to monitor utilization of proceeds of a public or rights issue, the listed entity shall submit to the stock exchange(s) any comments or report received from the monitoring agency within forty-five days from the end of each quarter	Comments of monitoring agency in respect of deviation and variation with regard to utilization of proceeds to be submitted quarterly within 45 days of end of quarter
Regulation 34 Annual Report	the top one thousand listed   entities   based   on   market   capitalization business responsibility report describing the initiatives taken by them from an environmental, social and governance perspective, in the format as specified by the Board from time to time:	The requirement of submitting a business responsibility report shall be discontinued after the financial year 2021–22 and thereafter, with effect from the financial year 2022–23, the top one thousand listed entities based on market capitalization shall submit a business responsibility and sustainability report in the format as specified by the Board from time to time Provided further that even during the financial year 2021–22, the top one thousand listed entities may voluntarily submit a business responsibility and sustainability report in place of the mandatory business responsibility report	Submission of business responsibility statement to be discontinued after the F/Y 2021-22 and from F/Y 2022-23 the Companies shall submit business responsibility and sustainability report same can be submitted by Companies on voluntary basis.
Regulation 40 Transfer Or transmission Or transposition of securities.	The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be, produces a certificate from  a  practicing company secretary within one month of the end of each half of the financial year, certifying that all certificates have  been issued  within  thirty days of the date of  lodgement  for  transfer,  sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies	The listed entity shall ensure that the share transfer agent and/or the in-house share transfer facility, as the case may be,  produces  a certificate  from  a  practicing company secretary within thirty days from end of the financial year, certifying that all certificates have  been issued  within  thirty days of the  date  of  lodgement  for  transfer,  sub-division, consolidation, renewal, exchange or endorsement of calls/allotment monies	Certificate from practicing company secretary that all the certificate in respect of issue of lodgment, transfer sub-division, consolidation renewal, exchange or endorsement of calls/allotment monies has been issued within 30 days to be obtained once in a Financial year in place of half yearly certificate
Regulation 43A Dividend Distribution Policy	The top 500 listed entities shall formulate a dividend distribution policy which shall be disclosed in their annual reports and on their websites	The top 1000 listed entities shall formulate a dividend distribution policy which shall be disclosed on the website of the listed entity and a web-link shall also be provided in their annual reports	Now top 1000 listed Companies to formulate dividend distribution policy which shall be displayed on website of Company the link of which shall be provided in annual report as well
Regulation 44 Meeting of Shareholder and voting	The listed entity shall submit to the stock exchange, within 48 hours of conclusion of its General Meeting, details regarding the voting results in the format specified by the Board.	The listed entity shall submit to the stock exchange, within 2 working days of conclusion of its General Meeting, details regarding the voting results in the format specified by the Board.	Now voting result to be submitted to stock exchange within 2 working days in place of 48 hours of conclusion of meeting
Regulation 45 Change in name of listed Entity	On receipt of confirmation regarding name availability from ROC, before filing the request for change of name with the Registrar of Companies in terms of provisions laid down in Companies Act, 2013 and rules made thereunder, the listed entity shall seek approval from Stock Exchange by submitting a certificate from chartered accountant stating compliance with conditions.	Upon compliance with the conditions for change of name laid down in Companies Act, 2013 and rules made thereunder, the listed entity, in the explanatory statement to the notice seeking shareholders’ approval for change in name, shall include a certificate from a practicing-chartered accountant stating compliance with conditions	Now, no requirement of SE approval for change in name is required and the certificate by the Practicing Chartered accountant to be attached with explanatory statement of shareholder meeting notice.

 

Conclusion :- The prime objective of introducing SEBI(LODR) (Second Amendment) Regulation, 2021 is to align the given regulation with Companies Act 2013 and the SEBI(ICDR) regulation 2018, whereby the given regulations have focused on gender neutrality by adding ‘her’ along with ’his’ as the main motive of the SEBI is to protect the interest of its investors, therefore with these amendments the SEBI, has focused in bringing more Companies under the Compliance of the Regulation by replacing the applicability of provision on top 1000 listed Companies in place of Top 500 listed Companies. Further to this, we have tried to capture major amendments in erstwhile regulations by SEBI(LODR) (Second Amendment) Regulation, 2021, whereas the other amendments in schedules, website disclosures etc. shall be covered in our upcoming article for our readers.

Here is the link of proposed amendment: 

https://www.sebi.gov.in/legal/regulations/may-2021/securities-and-exchange-board-of-india-listing-obligations-and-disclosure-requirements-second-amendment-regulations-2021_50100.html

This Article has been Compiled by Deepika Sharma (Senior Associate), and  Suruchi Garg (CS Trainee) You can direct your queries or comments to the author at deepika@factumlegal.com)

 Disclaimer:

The contents of this article should not be construed as legal opinion. This article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. We expressly disclaim any financial or other responsibility arising due to any action taken by any person on the basis of this article.

PRE-PACK PROCESS UNDER INSOLVENCY AND BANKRUPTCY CODE

Introduction

The Central Government recently promulgated the IBC Amendment Ordinance 2021, allowing a pre-packaged insolvency process for micro, small and medium enterprises. The stated Ordinance has been introduced for minimizing the draconian impact of stress in the corporate segment amid COVID, with an objective to rescue business in stress and promote entrepreneurship and credit available in the economy. Apart from this new process, India’s Rank moved up from 132 to 52 in terms of resolving insolvency in the World Bank Group’s Doing Business Reports. In the global innovation index India’s rank improved from 111 in 2017 to 47 in 2020 in ease of doing Business.[1] It has different nomenclature as pre-plan sale in the USA, pre-pack sale in the UK and scheme of arrangement in the Singapore.

The scheme of Pre-Pack Insolvency envisages the debt restructuring of the stressed corporate business through there promoters by partially interference of the Adjudicating Authority(s), no transfer of management and control viz. control in the hand of corporate debtor qua appointment of the Resolution Professional (“RP”), protecting the commercial wisdom of the Committee of Creditors (“CoC”).
The Insolvency and Bankruptcy Board of India notified the Insolvency and Bankruptcy Board of India (Pre-packaged Insolvency Resolution Process) Regulations, 2021 (PPIRP Regulations) on 9^th April, 2021, to enable an operationalisation of PPIRP.[2] By virtue of PPIRP, Companies (MSMEs) can achieve debt restructuring by entering into direct arrangement with the creditors to reorganize the terms of their debt payments.

PPIRP in the Indian framework context is an arrangement where the resolution of a company’s business is negotiated with a buyer before the appointment of an Insolvency Professional. It is a blend of informal and formal mechanisms, with the informal process stretching up to NCLT admission, followed by the existing NCLT supervised process for resolution as specified under the Insolvency and Bankruptcy Code (IBC).

Corporate cum debt restructuring through Pre-Pack - a critical analysis
The entire and seamless dependency on the defaulters viz. promoter of the CD and paving the way for restructuring of the debt by the CD in itself leads to suspicious positions.
Absence of publication of any public announcement or inviting claims from the creditors is another drawback of the said Pre-Pack Process. It envisages the collation of claims by the Resolution Professional (“RP”) with the cooperation of the promoters in default of the Corporate Debtor. Regulation 19 of the Pre-Pack Process Regulations, 2021, provide that RP shall make a public announcement (Form-P9) within 2 days from the date of the commencement of the Pre-Pack Process[3] further the same shall be sent to every creditor listed in Form-P2,[4] sent to Information Utilities[5] and published on the website, if any, of the Corporate Debtor and the Board[6]. However, the regulation doesn’t provide the wider publication and the same is concerned on E-publication of public announcement i.e., Form-P9, which also provides uncertainty of filing of claim by different class of creditors and ultimately leads to legal dispute before the Hon’ble Adjudicating Authority (“AA”).  To make Pre-Pack friendly, the IB Code casts the duty on the Corporate Debtor to extent their full cooperation to the RP on the following subjects:

• Corporate Debtor should be obligated to make available and updated list of outstanding claims, including contingent and future claims to the RP;

• A Debtor in possession model is envisaged under Pre-Pack Process by virtue of which the RP depends on the Promoters of the Corporate Debtor for effective transparency of the Pre-Pack Process;

• Corporate Debtor should also be obligated to draft an information memorandum (IM), based on its books, which may be certified by its Chairman/Managing Director/Managing Partner on behalf of Board of Directors of the CD, handed over to the RP on the day he is appointed by the AA;

As the Swiss challenge method is taken into consideration by creditors for arranging the resolution plan from the selected investors and selecting the best of them to serve as the base plan which may increase the commercial of the plan proposed by defaulters/Promoters of the CD.
However, the unavailability of Resolution Applicants/Investors make the swiss challenge method far-fetch impractical amid pandemic.

Debtor-in-Possession and Creditor-in-Control - Hybrid Approach
While the Pre-Pack Process is carried out by the RP and at the same time the Business is run by the existing management, the RP would make sure the CD is managed during the process in a manner which is not detrimental to the interest of the creditor. As the model is also based on Creditor-in-Control the certain decision of existing management shall require the approval of committee of creditors. The actions enumerated under section 28 of the IB Code shall not be taken solely by the existing management and without the prior approval of the committee of the creditor. For maximisation of the value of the assets of the Corporate Debtor, the RP shall appoint two registered valuer(s) to determine the fair value and liquidation value of the CD to ensure that the Pre-Pack Process is not misused by the existing management of the CD to write off its debts, intending to defraud creditors and at the same time the process envisages the applicability of provisions relating to avoidable transactions to Pre-Pack. Further for effective creditor-in-control the interim finance should be available to the existing management of the CD subject to the approval of the CoC, as it is an essential under section 28 of the IB Code and it shall be included in the Insolvency Resolution Process cost.
For balancing the said Debtor-in-Possession and Creditor-in-Control - Hybrid Approach, the roles and responsibilities of the RP and the CD is demarcated under the IB Code, apart from that, the fastening of the criminal and civil liability with the actions of the existing management of the CD and seek indemnification thereof, shall lead to wider litigation simultaneously when the CD is under Pre-Pack Process and causes huge loss to the assets which are already in stress. The same is questioning the model of the Pre-Pack Process and the objective of the IB Code.

Swiss Challenge Method under Pre-Pack Process[7]   
The IB Code envisages the resolution of the stressed assets through submission of resolution plan by the Corporate Debtor itself and by various other resolution applicants wherein the Corporate Debtor shall submit a base resolution plan to the RP within two days from the date of commencement of PPIRP. The CoC shall invite the resolution plan from prospective resolution applicants keeping in view the base resolution plan and the base resolution plan submitted by the Promoters of the CD shall form the basis for swiss challenge, where the details of the plan are disclosed therewith. Further, the Pre-Pack Process shall offer two optional approaches namely, (i) without swiss challenge but no impairment to Operational Creditors; (ii) With Swiss Challenge inclusive of rights of Operational Creditors and dissenting Financial Creditors, subject to minimum provided under Section 30(2)(b) of the IB Code. The CoC may opt the base resolution plan on its weighted average score in consonance with the applicable provisions of the IB Code or may opt to swiss challenge resolution plan submitted by the other investors / Resolution Applicants. It shall not be necessary that the resolution value shall be higher than the realisable value.[8]

The CoC may decide to close the process with the approval of 66% voting share, present and voting[9], if the CD engages in any activity which has the potential to cause depletion of assets or value to the detriment of the creditors, even the CoC at any time after the PPIRP commencement date but prior to approval of Resolution Plan, may resolve to initiate a CIR Process in respect to the CD by a vote 66%, of the voting shares, if such Corporate Debtor is eligible for CIR Process under Chapter II of the IB Code.[10] Apart from the above-said, the CoC can liquidate the CD with 75% of voting share provided the said decision solely is the commercial consideration of the CoC or if the CoC may deem fit for any other reason. 

• Conclusively, it is observed that in absence of wider publication of public announcement for invitation of claims from all the creditors of the CD causes uncertainty in respect to the resolution of the disputed/undisputed claims and leads to further litigation for already stressed business of the CD.

• The other drawback is the direct approach to Investors/Resolution Applicants by CoC/RP and without publication for invitation to Resolution Applicants, seems restricted, unviable and unfeasible. Further, it also creates an impediment for revitalizing distressed assets and the limited participation of Investors/Resolution Applicants in absence of the publication for inviting them as a bidder qua adoption of secretive approach will have drastic impact and will lead to exponentially rise in cases of CIR Process or Liquidation process and termination of Pre-Pack Process. 

• This secretive approach leads to substantive interference by the Promoters of the CD and defeats the objective of swiss challenge method. Further, the Pre-Pack Process is too oriented for resolution by the CD itself and strict adherence of time period of 90 days with extension of 30 days may leads to unproductive results which tends to initiation of CIR Process or liquidation or closing of Pre-Pack Process without resolution of the debt of the Corporate Debtor/MSME.

Reviewing, revitalizing and restructuring of stressed assets of the CD with this additional tool of PPIRP in a time bound manner is beyond the approach of this framework. Even, there is need of sense of resolution of debt which must be imbued in such measures with the intent to not to allow things to drag further with keeping an eye over the situation emerging from suspension of the Insolvency Laws in the financial sector and it's a matter of concern that in both ways, the framework of Pre-Pack Process will become worthy to spike and maintain the balance in the financial sector.  

This Article has been Compiled by Himanshu Mohinani (Associate), and edited by Deepika Sharma (Senior Associate) You can direct your queries or comments to the author at himanshu@factumlegal.com or deepika@facumlegal.com
Disclaimer:

The contents of this article should not be construed as legal opinion. This article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. We expressly disclaim any financial or other responsibility arising due to any action taken by any person on the basis of this article.

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[1] Report of the Sub-Committee of the Insolvency Law Committee on Pre-packaged Insolvency Resolution Process
[2] Insolvency and Bankruptcy Board of India Notification No. IBBI/2021-22/GN/REG071 dated 09.04.2021
[3] Regulation 19(2)(a) of the INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS) REGULATIONS, 2021
[4] Regulation 19(2)(b) of the INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS) REGULATIONS, 2021
[5] Regulation 19(2)(c) of the INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS) REGULATIONS, 2021
[6] Regulation 19(2)(d) of the INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (PRE-PACKAGED INSOLVENCY RESOLUTION PROCESS) REGULATIONS, 2021
[7] Report of the Sub-Committee of the Insolvency Law Committee on Pre-packaged Insolvency Resolution Process
[8] Supreme Court (2020), Maharashtra Seamless Limited Vs. Padmanabhan Venkatesh & Ors., CA Nos. 4967-4968 of 2019
[9] Section 54-K (13) of the Insolvency and Bankruptcy Code, 2016
[10] Section 54-O (1) of the Insolvency and Bankruptcy Code, 2016

DPIIT ISSUED NEW SOPS FOR CLEARANCE OF FDI PROPOSAL

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INTRODUCTION:

With the aim of enhancing "ease of doing business" and "promoting the principle of Maximum Governance and Minimum Government", the Government of India abolished the Foreign Investment Promotion Board ("FIPB") on May 24, 2017. In its place, the relevant administrative ministry/department in consultation with the Department for Promotion of Industry and Internal Trade ("DPIIT") are now directly responsible for processing applications for foreign direct investment ("FDI") in India in sectors which require prior approval of the Government. However, (DPIIT) earlier known as Department of Industrial Policy & Promotion (DIIP).

The Government of India, vide its Notice No. 1/8/2016-FDI Policy Government of India, Ministry of Commerce & Industry, Department of Industrial Policy & Promotion on 9th November, 2020 revamp the existing Standard Operating Procedures (SOPs) for processing foreign direct investment (FDI) proposals to fast track approvals.

The Salient features of the updated SOPs for processing FDI proposals, inter alia includes:

     A.      Online Filing of Application:

• Proposals for foreign investment in sectors/activities requiring Government approval as per the Consolidated FDI Policy dated 15.10.2020, as amended from time to time (FDI Policy) and Foreign Exchange Management (Non-Debt Instrument) Rules, 2019 dated 17.10.2019, as amended from time to time (FEM Non-Debt Instrument Rules 2019) would be filed online through the Foreign Investment Facilitation Portal (FIFP).
• The applicant would be required to submit the proposal for foreign investment in terms of the guidelines and requirements under the FDI Policy, SOP and FIFP. The applicant shall make the application as per the format and requirements under the FIFP and have to upload 23 documents of which 9 are mandatory. The documents include details of ownership, control and significant beneficial owners of the entities involved, and registration of outlets with states.
• After filing the proposal, DPIIT will identify the concerned Administrative Ministry/Department and e-transfer the proposal within 2 days to the concerned Administrative Ministry/Department (Competent Authority) for processing and disposal of the case. In case if applications are not digitally signed, upon receipt of the online communication from DPIIT  the applicant would be required to  submit the signed physical copy of the application within 7 days of such communication from DPIIT. However, additional 7 days may be provided by the Competent Authority for submission of application.

         B.       Competent Authorities for Approval/Rejection of Foreign Investment:

After the abolition of the FIPB, the DPIIT issued a standard operating procedure ("SOP") for processing FDI proposals with guidelines, including detailed timelines, to ensure uniformity of approach across sectors. The SOP identified administrative ministries/departments (the "Competent Authority") for respective sectors in which FDI requires the prior approval of the Government.

Investments from an entity of a country that shares a land border with India, or where the beneficial owner of an investment into India situated in or is a citizen of any such country, would require clearance from the Ministry of Home Affairs.

 C.   Procedure for Processing of Applications Seeking Approval for Foreign Investment for a simpler and expeditious disposal:

1.     Upon receiving the proposal, DPIIT shall circulate the same within 2 days to RBI and Ministry of External Affairs for their comments. Additionally, if security clearance is required the proposal would be referred to Ministry of Home Affairs (MHA).

2.     If specific issues of proposals requires clarification in FDI Policy, the same shall be referred to DPIIT for clarification within 2 weeks of referral.

3.     Consultation with any other Ministry/ Department will require full justification and approval of the concerned Secretary.

4.     Comments of the concerned ministries/departments and MHA for security clearance shall be uploaded on the portal within 4 weeks and 6 weeks from the  online receipt of the proposal, respectively.

5.     Within 1 week of scrutinizing the application with additional comments, the Competent Authority shall raise queries or ask for additional documents from the applicant. Time taken by applicant to address the same to be excluded from time limit for disposal of application.

6.     Once the proposal is complete, the approval/rejection shall be communicated online to the applicant and the consulted Ministries/ Departments by the Competent Authority within 4 weeks.

7.     In case of proposals involving total foreign equity flow of more than Rs. 5000 crores, the Competent Authority will place the same for consideration before the Cabinet Committee on Economic Affairs within the timelines specified, with the decision to be communicated 1 week from such consideration concluding.

8.     Proposals which are sought to be rejected, or proposals stipulating additional conditions, shall require concurrence of DPIIT by the Competent Authority within 10 – 12 weeks (MHA should be consulted) from receipt of the proposal.

9.     All Mergers & Acquisitions involving FDI requires approval of the NCLT/Competent authority as a “necessary pre-condition”. In case if NCLT/Competent authority approval is not available the applicant may be advised to resubmit the application along with requisite approval(s).

10. Secretary, DPIIT is the competent authority that issued the approval letter in the prescribed format for rejection of the proposal/stipulation of additional condition.

11. DPIIT and each of the Competent Authorities shall maintain a database on the proposals received along with details such as date of receipt, investor and investee company details, volume of foreign investment involved, and date of grant of approval/rejection letter.

12. If an applicant proposes to surrender an approval letter granted to the investee entity/investor, then concerned administrative Ministry/Department may accept the withdrawal of the approval letter and an acknowledgement in this regard has to be sent to the applicant clearly indicating the date from which the approval letter stands withdrawn.

    D.  Monitoring & Reviewing:

• Competent Authorities will hold a regular monthly review on the foreign investment proposals pending with them.
• Regular Review meeting on pendency of FDI proposals with concerned Administrative Ministry(ies)/Department(s) would be convened by Secretary, DPIIT, periodically every four (04) to six (06) weeks. The Secretary of the concerned Administrative Ministry/Department may also attend the meeting.
• Administrative Ministries/Departments should update the information regarding date of physical receipt of the application and update the decisions taken on the portal.
• Administrative Ministries/Departments should furnish a fortnightly report on pending proposals. Also, administrative Ministries/ Departments should maintain an updated database of all proposals dealt by them.

CONCLUSION:-

DPIIT has issued a new set of guidelines in place of existing SOP issued in 2017, to expedite the process for clearances, including security, for processing FDI proposals on the fast track approval route in terms of the guidelines and requirements under the FDI Policy, SOP and FIFP. 

This Article has been Compiled by Deepika Sharma  (Senior Associate) You can direct your queries or comments to the author at deepika@factumlegal.com

Disclaimer:

The contents of this article should not be construed as legal opinion. This article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. We expressly disclaim any financial or other responsibility arising due to any action taken by any person on the basis of this article.