SEBI struck its claws again by banning 3 entities from the market. The said order was passed in violation to the provision of the Prohibition of Insider Trading Regulation as the three entities were found to be in hold of unpublished price sensitive information. It is pertinent to note that the order was rightly passed upon the presumption that the securities were traded based upon the knowledge and information possessed in lieu of the unpublished price sensitive information. The watchdog has passed similar orders in the past, thereby, time and again it can be observed to be upholding transparency in the trading market.
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With the Indian economy currently grappling with mounting non-performing assets (NPA) and creditors including banks, financial institutions and other lenders are left high and dry with sluggish recoveries, pre-packs across jurisdictions are known to plug this wide recovery gap. In fact, pre-pack resolution plans are likely to facilitate adherence to the timelines prescribed under the IB Code. With the increase in threshold to 1 crore, numerous operational creditors especially MSMEs were deprived of remedies under the Code. However, the recent introduction of the pre-packaged insolvency framework is likely to support MSMEs – a major contributor to our GDP and employer to a sizeable Indian population. MSMEs have suffered the most during the pandemic and placing a strict timeline of 120 days on the pre-pack model is likely to soothe the distressed MSMEs. Additionally, the Ordinance is likely to provide a cost-effective and faster resolution process for MSMEs under the debtor in possession model, unlike the normal CIRP where it is RP in possession.
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The introduction of the Prepack framework was supposed to coincide with lifting the moratorium on filing fresh cases of Insolvency. Currently, the government has restricted Prepacks provisions for MSME and will extend to other Corporates in some time. Prepacks will help Corporate Debtors to enter into consensual restructuring with lenders and address entire liability side of the Company. The government needs to further augment the NCLT’s infrastructure so that pre-packs can be implemented in time bound manner. The government may consider setting up specific benches looking at Prepack and Insolvency above a certain size to expedite resolution of large cases in time bound manner
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This is a much-awaited amendment to the IBC. The intent of the government appears to be to provide for an alternative and efficient resolution mechanism especially for MSME’s by introduction of a new chapter in the statute. This is certainly a welcome step although it was hoped that such a framework available to non-MSME’s as well. The framework of the chapter does not reduce the role and involvement of NCLT’s very significantly - it is hoped that given that this process can be initiated only by the companies with the consent of 66% of its unrelated financial creditors, the disputes are minimal allowing the process to run more efficiently than the normal CIRP.
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“The Covid-19 pandemic paved way for a more dynamic and flexible work culture. Adoption of a 4-day workweek would certainly be a major next step and a significant leap forward in the same direction. From an employer’s perspective assessing the feasibility and its impact on the output would be immediate concerns to be addressed. Further, there are other ancillary challenges such as dual employment, as employees may tend to use the extra free time to take up other jobs during the 3 off-work days. From an employee’s perspective, working for 12 hours a day for 4 days at a stretch may increase stress levels and cause burnout in the long run, which will affect their productivity. Finally, a multitude of factors such as job role, nature of the industry, etc. would also play a vital role in the viability of 4 work-days a week and a blanket approach for all may not be a viable option. Also, a 4 day work week may just be the game-changer for enhancing the participation of women in India’s workforce. Most importantly, the recognition of a 4-day workweek by law would send an extremely strong signal to both employers and employees on the need for a better work-life balance. It would not be incorrect to say that working beyond normal working hours is a tacit norm and part of minimum expectations in India today, at least in the private sector - which certainly needs to change.” Minu Dwivedi, Partner, J Sagar Associates
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With immense competition from Chinese mobile manufacturers, LG has not been able to reclaim its lost market share in India. Despite its recent stance of looking to tap into the growing anti-Chinese sentiments and manufacture affordable India specific mobile phones under the PLI scheme, LG seems to have not actioned it. Given the low market share that LG had, the impact of LG pulling out of the smartphone business should not be substantial. Moreover, since LG did not have a dedicated factory for manufacturing mobiles in India, disruption in the labour market is also expected to be minimal. We have seen Nokia, Blackberry and other brands come back to India through a licensing route and LG may also go that way in case it indeed pulls out of the smartphone business.
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The FM's speech briefly touched upon aspects of MSME, entrepreneurship and innovation. The allocation of funds for MSMEs has doubled to INR 15,700 and the incorporation of small companies and one-person companies will be aided by the amendments in the requirement of paid-up capital and turnover. This will provide a boost to innovators, entrepreneurs and MSMEs. The budget did not specifically talk about strengthening aspects of technology, communication, financial inclusion, AI/ML etc. - but these will definitely be positively impacted by some of the other announcements made today. Increasing the FDI cap in the insurance sector from 49% to 74% will make it more lucrative for foreign companies to setup shop and also have ownership of the business. This will provide a boost to the insurance tech sector in the country. The allocation of INR 3000 crore for the country's first "digital census" will generate goodwill among those who are betting big on digitalization and tech. The consolidation of provisions of the SEBI Act, Depositories Act, Securities Contracts Regulation Act and other similar acts will also impact the ease of doing business positively - making it more lucrative for businesses to open up and aim towards going public.
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The Hon'ble FM mentioned about the staggering GST collections. This swelling GST collection will certainly help the Government to meet various expenditures as well as reduce the fiscal deficit.
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The law governing data protection in India is prescribed in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011. (“Rules”). The Rules broadly regulate (a) the collection, receipt, possession, use, storage, dealing in and handling of sensitive personal data or information (SPDI); (b) the transferor disclosure of SPDI; and (c) the security procedures to be adopted for protecting SPDI. SPDI or personal information is defined as any information that relates to a natural person, which, either directly or indirectly, in combination with other information available or likely to be available with a body corporate, is capable of identifying such person and inter-alia includes (i) password; (ii) financial information such as bank account or credit card or debit card or other payment instrument details; (iii) physical, physiological and mental health condition; (iv) sexual orientation; (v) medical records and history; (vi) biometric information. In terms of the Rules, in India, a body corporate (such as Whatsapp in this case) is required to obtain prior consent in writing from the provider of the sensitive personal data or information (in this case its users) regarding the purpose of usage before collection or transfer of such information which we understand is being obtained by clickwrap agreement by Whatsapp. In the present case, the data privacy rights of the Users is not being compromised (by Whatsapp) so long as the other body corporate / Facebook company (whether located in India or outside) to which the data is proposed to be shared/transferred by Whatsapp maintains the 2 same level of data protection as provided in these Rules, and where such User has consented to data transfer. Having said that, it is incumbent on each User to check what the revised privacy policy of Whatsapp encapsulates and what kind of data (of its Users) is Whatsapp proposing to share / transfer with other Facebook companies. In the event the User is not agreeable to the sharing of its data, he/she is free to delete the account by using the “in-app delete account” feature ensuring that all saved data is also deleted thereby withdrawing consent to use/ process/transfer such Users’ data. So long as Whatsapp is in compliance of the Rules, the rights of the Users are being safeguarded within the ambit of the legislation of data protection in India. Prima facie, in India, there is no embargo on transfer/ disclosure of personal data of an individual so long as consent is obtained for the same and the processes mentioned in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 are adhered to by Whatsapp. However, we are not in a position to comment on this aspect vis-à-vis global privacy and data policy regulations. While India presently does not have any express legislation governing data protection or privacy, the relevant laws in India dealing with data protection are the Information Technology Act, 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules. However, the ever-changing legal and regulatory landscape within India has given rise to the need for having a robust law for the protection of personal data in India. This has paved the way for the birth of the Personal Data Protection Bill, 2019 (“Bill”) which emphasises on the need for increased safeguards vis-à-vis personal data along with stringent penalties. In terms of the Bill, there is increased accountability on the part of the person processing, collecting or using the data, which in turn, increases its risk and exposure to liability unless complied with the provisions of this upcoming law. The Bill is yet to be passed by the Parliament and become a law and it is to be seen in what form and shape it will be enacted.
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“The draft report on pre-packaged insolvency is a step in the right direction but falls short of clear criteria on many vital concepts. For instance, the select committee has suggested that the trigger for the initiation of a pre-pack scheme should occur on subjective criteria such as ‘covid defaults’ or ‘pre-default stress’. While it is clear that a successful pre-pack insolvency scheme will need to attract debtors to resolve impending credit issues even before a default has occurred, terms such as above need definitional precision for any uptake by prospective users.”
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