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Asset Finance

India

Overview
Including: Companies Act; Charges; Registration of Charges; Modification of Charges; Satisfaction of Charges; Company Law Board; Penalties; Company Registers

Including: External Commercial Borrowing; Security Agreements

Essar Shipping Limited has obtained a $121 million loan – a new record for the longest maturity ever achieved in the Indian shipping finance industry.

Banking

India

With a view to facilitating the expansion of Indian companies' operations abroad, the prudential limit of credit and non-credit facilities extended by banks to Indian joint ventures and wholly owned subsidiaries abroad has now been increased from 10% to 20% of the bank's unimpaired capital funds (Tier I and Tier II).

The Reserve Bank of India has issued a circular requesting that all non-banking financial companies submit a certificate from their statutory auditors annually in order to notify the Reserve Bank that they are continuing to carry on business as an NBFC and thus require a certificate of registration to do so.

With a view to increasing the transparency of the Indian credit system and improving customer protection, the Reserve Bank of India has prescribed broad fair practice guidelines to be formulated and approved by the board of directors of all non-banking financial companies.

The Reserve Bank of India has amended the requirements for non-banking financial companies to provide public notice before any change in their control or management. Instead of the previous requirement of three months' prior public notice, non-banking financial companies now need give only 30 days' prior public notice of a merger, amalgamation or change in the management or control of the company.

In order to help banks and other financial institutions improve their financial health, the Indian government has allowed 49% of foreign direct investment in the equity capital of asset reconstruction companies. India is now set to open up asset reconstruction companies for the benefit of financial institutions with bad debts.

The Reserve Bank of India has published a circular permitting foreign banks to become established in India in two phases. During the first phase foreign banks can establish wholly owned subsidiaries or convert existing branches into wholly owned subsidiaries according to certain guidelines.

More updates >

Capital Markets

India

Until recently the Securities Exchange Board of India (SEBI) had banned all assured returns and capital schemes, which are popular investment grounds globally, from the Indian market. However, after considerable lobbying SEBI has now amended the SEBI (Mutual Funds) Regulations 1996, authorizing the launch of capital protection-oriented schemes in the Indian market.

The Ministry of Finance has further liberalized the Scheme for the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through the Depositary Receipt Mechanism) 1993 by permitting unlisted Indian companies to sponsor an issue of American depositary receipts or global depositary receipts.

The Securities and Exchange Board of India has taken the final step in the process to allow foreign companies to raise capital via the Indian stock market. The introduction of a new chapter to the Disclosure and Investor Protection Guidelines frames the eligibility criteria for foreign companies wishing to raise capital in this way.

Company & Commercial

India

The government recently introduced the Companies (Amendment) Bill 2003 in Parliament with the aim of ushering in a more transparent corporate governance regime and protecting the interests of investors and creditors. Highlights of the bill are outlined in this update.

Including: Foreign Exchange Management Act; Amendments to 1956 Companies Act

The government continues to liberalize the economy by amending company legislation and modernizing foreign exchange and foreign investment regulation.

Corporate Finance/M&A

India

The Reserve Bank of India has issued a notification liberalizing the external commercial borrowing guidelines. The revised guidelines enable corporations to raise up to an additional $250 million through external commercial borrowing. Previously, corporations were permitted to raise only a maximum of $500 million through external commercial borrowing during one financial year.

Including: Mergers under the Companies Act; Mergers under the Income Tax Act; Mergers under SICA; Acquisitions

India's securities regulator will consider a number of changes to corporate finance legislation including stricter shareholder approval and corporate governance requirements.

Energy & Natural Resources

India

The Supreme Court recently imposed a ban on ore extraction, transportation and exports in Goa, pending review by the Central Empowered Committee. While those in support of the ban justify it as a necessary measure to curb rampant illegal mining, those affected by the ban have deemed the court's decision unconstitutional. As the sharp divisions continue to surface, debate on whether the ban should remain still awaits resolution.

Including: New Energy Policy; Foreign Investment in Oil and Gas; Oil Exploration; The Mining Sector

Petronet will consider bids for LNG transportation. But potential bidders must first meet pre-qualification requirements.

This article looks at effort to deal with an ever-widening gap between the demand and supply of natural gas in India.

Media & Entertainment

India

Following a Supreme Court ruling that airwaves and frequencies are public property and so must be controlled and regulated by a public authority in order to promote the public interest, the Ministry of Information and Broadcasting has published the draft Broadcasting Services Regulation Bill.

The government has revised its foreign direct investment policy in relation to the uplinking of television channels. Previously, the general policy was to permit foreign direct investment of up to 49% in an Indian joint venture company for setting up hardware, uplinking hubs or teleports.

After laying down the necessary framework for uplinking by Indian television channels, the Ministry of Information and Broadcasting has further notified new, stricter guidelines for downlinking by foreign channels with a view to gaining control over the content being broadcasted from satellite television channels uplinked outside India.

The government has made changes regarding uniform direct investment across various media platforms. For example, in print media the government has allowed 100% foreign direct investment for full editions of foreign newspapers and periodicals printed in India. These editions will not have access to Indian advertising revenue streams.

A committee of the Telecom Regulatory Authority of India has examined proposals to allow foreign direct investment in the private FM radio sector. Although it recommended that such investment be allowed, it set out guidelines to ensure that Indian shareholders maintain overall control of the equity.

New regulations circulated by the Indian Telecom Regulatory Authority propose guidelines for non-discriminatory access to television channels. If finalized, the regulations will be a major step towards the reform of television channel distribution and will have a long-term impact on the growth of the industry.

More updates >

Projects & Procurement

India

Overview
Including: New Policy; Lending Rules; Government Incentives

The government has decided to promote the development of venture capital funds by streamlining approval of funds and eliminating the risk of double taxation.

Shipping & Transport

India

A recent Bombay High Court ruling decided significant issues under Indian law regarding the right to arrest bunkers onboard a vessel where the vessel is unconnected to the dispute and the right to arrest cargo freight under similar circumstances. Under Indian law, an order arresting freight in relation to the cargo on board a vessel is unsustainable without privity or an entitlement to make a claim against the vessel itself.

As India carries out 95% of its international trade by sea, the presence of a strong national fleet exerts some influence on freight rates for India's import/export cargo, ensuring a competitive edge for Indian exports in the global markets. The Indian cabotage regulations, which reserve coastal trade for Indian flag vessels, are key to this development, as India has long coastlines and natural deep draft harbours.

The government subsidy scheme for shipbuilding, introduced in 2003, has recently achieved greater prominence due to rapid growth in the Indian shipping industry. Under the scheme Indian shipyards can receive a 30% subsidy for both domestic and export orders, provided they fulfil certain requirements.

Although India has not yet accepted the International Convention for the Prevention of Pollution from Ships (MARPOL) 1973 guidelines, the director general of shipping has independently gone ahead with the implementation of many of the MARPOL provisions issuing mandatory guidelines for bunker suppliers.

The Prime Minister's Office has recommended changes to the guidelines issued by the director general of shipping for the granting of permission to charter liquefied natural gas vessels for import and coastal trade. To this end, the Ministry of Commerce has prepared a cabinet note on the issues surrounding the relaxation or suspension of the guidelines.

The long-awaited tonnage tax regime has been introduced with the aim of encouraging global shipping companies to operate from Indian special purpose vehicles. The Finance Act 2004/2005 sets out the requirements for companies wishing to opt into the new regime, for example that a company's place of management must be in India.

More updates >