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Competition (Amendment) Bill, 2022 Introduced in the Lok Sabha

The Competition (Amendment) Bill, 2022 was introduced in the Lok Sabha on August 05, 2022, seeking to amend the Competition Act, 2002. The majority of the amendments proposed to pertain to widening the scope of powers of the Competition Commission of India (CCI), and if passed and enforced, will certainly impact the regulation of mergers and acquisitions in the country. The amendments sought include:

(i) modifying the scope of ‘combinations’ to include transactions (in connection with the acquisition of any control, shares, voting rights or assets of an enterprise, merger or amalgamation) valued upwards of INR 2000 Crores, thereby introducing the value of transactions as a criterion for notifying combinations to the CCI.

(ii) modifying certain definitions like “enterprise”, “relevant product market”, “group”, and “control” to provide clarity. For instance, the definition of ‘control’ is proposed to be amended to mean “the ability to exercise material influence, in any manner whatsoever, over the management or affairs or strategic commercial decisions” by one or more enterprises/groups, either singly or jointly, over another enterprise/group.

(iii) reducing the prescribed time limit for deemed approval of combinations from 210 days from the date of application for approval to 150 days from such date instead;

(iv) broadening the scope of anti-competitive agreements and inclusion of a party facilitating an anti-competitive horizontal agreement under such agreements.

(v) prescribing a limitation period of 3 years for filing information on anti-competitive agreements and abuse of dominant position before the CCI.

News

RBI Adopts Liberalisation Measures – External Commercial Borrowing (ECB) Policy

The Reserve Bank of India has brought temporary liberalisation measures to ‘enhance forex inflows while ensuring overall macroeconomic and financial stability which will be in force for ECBs raised till December 31, 2022, vide A.P. (DIR Series) Circular No. 11 dated August 01, 2022. The Master Direction – External Commercial Borrowings, Trade Credits and Structured Obligations has also been amended as of August 01, 2022, to reflect the temporary liberalisation measures.

The liberalisation measures are:

(i) increase in automatic route limit from USD 750 million or equivalent per financial year to USD 1500 million or equivalent per financial year, for ECBs raised till December 31, 2022; and

(ii)  increase in All-in-Cost Ceiling by 100 bps for ECBs raised till December 31, 2022. The enhanced all-in-cost ceiling shall be available only to eligible borrowers of investment grade rating from Indian Credit Rating Agencies (CRAs). Other eligible borrowers may raise ECB within the existing all-in-cost ceiling.

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CBIC Issues Clarification on GST Application on Payments in Nature of Liquidated Damages

The Central Board of Indirect Taxes and Customs (CBIC) issued a clarificatory circular on the applicability of service tax / GST on payments in the nature of liquidated damages arising out of breach of contract, on August 03, 2022. “Agreeing to the obligation to refrain from an act or to tolerate an act or a situation, or to do an act” has been specifically declared to be a supply of service in para 5 (e) of Schedule II of the Central Goods and Services Tax Act, 2017 (CGST Act) if the same constitutes a “supply” within the meaning of the CGST Act. The CBIC has provided clarification on treatment of liquidated damages within the scope of such an entry.

The CBIC opines that “where the amount paid as ‘liquidated damages’ is an amount paid only to compensate for injury, loss or damage suffered by the aggrieved party due to breach of the contract and there is no agreement, express or implied, by the aggrieved party receiving the liquidated damages, to refrain from or tolerate an act or to do anything for the party paying the liquidated damages, in such cases liquidated damages are mere a flow of money from the party who causes breach of the contract to the party who suffers loss or damage due to such breach. Such payments do not constitute consideration for a supply and are not taxable.”

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IBBI Publishes FAQs on Insolvency and Bankruptcy Code, 2016

The Insolvency and Bankruptcy Board of India vide its notification dated 7th February 2022 published “Frequently Asked Questions (FAQs) on Insolvency and Bankruptcy Code, 2016”.

The current version of the FAQs was released with an objective of enriching the existing version of the publication that was released by ICAI in2017. The current version strives to create awareness and disseminate knowledge about the code in an easy-to-understand FAQs format. 

The revised edition offers insights that cover the developments incorporated in the Code and the subordinate legislation spanning this period. It also offers thematic and issue-wise jurisprudence for an extensive comprehension of legal positions of various concerns with respect to the Code. The publication aims to presents itself as a guide to professionals and relevant stakeholders of the IBC for unambiguous interpretation and enhanced understating of the insolvency laws.

The revised edition clarifies that the provisions pertaining to the insolvency and liquidation of corporate debtors shall be applicable only when the amount of the default is one lakh rupees or more. However, the Central Government may, by way of notification, specify the minimum amount of default of higher value which shall not be more than one crore rupees.

Further, the Notification dated 24.03.2020 which was issued by the Ministry of Corporate Affairs, wherein the minimum amount of default limit was specified as ₹ 1 crore, shall be prospective in nature.

Further it has also been clarified that the National Company Law Tribunal is the Adjudicating Authority for the insolvency resolution and liquidation process of a corporate person.