TLA LEGAL DIGEST

NAVIGATING THE CORPORATE LEGAL WORLD

JULY – AUGUST 2024

RECENT AWARDS & RECOGNITION

Recognised by Benchmark Litigation Asia Pacific 2024 for Commercial & Transaction and Hyderabad-2024

Ranked as Top Law Firm (above 10-year exp) by Forbes India Legal Powerlist 2023

Key amendments to the Non-debt Instruments Rules, 2019

On August 16, 2024, the Ministry of Finance revised the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 (“NDI Rules”). The amendments aim to provide cross-border share swaps and provide issuance or transfer of equity instruments of Indian entity against equity of foreign companies. The amendment also provided clarity on the treatment of downstream investments by entities owned by Overseas Citizens of India on a non-repatriation basis, amended the definition of “control” as provided in the Companies Act, 2013 for bringing consistency, and aligned the definition of a “startup company” with the latest DPIIT notification on the same.

Draft Framework on Alternative Authentication for Digital Payments

On July 31, 2024, the RBI released the draft of ‘Framework on Alternative Authentication Mechanisms for Digital Payment Transactions’. This framework requires Additional Factor of Authentication (AFA) in electronic payments and aims to reduce reliance on SMS-based OTPs. It outlines principles of authentication that payment system providers must adhere to, specifying that all digital payments (except for certain exempted transactions) must be authenticated using a dynamically created AFA that is transaction-specific and cannot be reused. Issuers are required to obtain explicit consent before implementing new authentication methods.

Application to C-PACE for voluntary LLP strike-off

The Ministry of Corporate Affairs (MCA) notified amendments to the Limited Liability Partnership Rules, 2009 on August 5, 2024, for the purpose of reducing the time required for LLP strike-off. The applications for voluntary strike-off shall be processed through the Centre for Processing Accelerated Corporate Exit (CPACE) which shall facilitate a smoother and quicker process for striking off company names from the MCA Register. This shall be effective from August 27, 2024. The application for strike-off shall be submitted to C-PACE which have not been carrying on any business or operation for a period of one year or more.

Master Direction on Treatment of Wilful Defaulters and Large Defaulters

The RBI has released Reserve Bank of India (Treatment of Wilful Defaulters and Large Defaulters) Directions, 2024 on July 30, 2024. The Master Directions provide the regulatory framework and procedures for classifying borrowers as willful defaulters. The directions provide the scope of wilful defaulters i.e. defaulter with an outstanding amount of ₹25 lakhs and above and large defaulter i.e. defaulter with an outstanding amount of ₹1 crore and above and formation of Identification Committee and the Review Committee in identifying and reviewing the wilful defaulters. The draft comprehensive guidelines were earlier released for comments in September 2023.

Mandatory AI Disclosure by Investment Advisors proposed by SEBI

SEBI through the consultation paper on Review of Regulatory Framework for Investment Advisers and Research Analysts dated August 6, 2024 proposes to mandate investment advisors and research analysts to make a complete disclosure of the extent of their use of AI tools to clients. While SEBI acknowledged the use of AI tools like OpenAI’s ChatGPT and Google’s Gemini for summarizing and analyzing data and enhancing efficiency. Such tools may also lead to data breach and data security concerns. The disclosure is aimed to assist clients in making and informed decisions pertaining to availing the services of the investment advisor or research analyst using AI tools.

ABOUT THE FIRM

Tempus Law Associates is a full-service law firm.

Our practice areas include Corporate Law, VC, M&A Transactions, Dispute resolution, Intellectual property, and Real estate.

We at Tempus, take pride in the firm’s ability to service our clients by rendering prompt legal services of the high quality, reliability and Integrity.