The Monthly Digest- January 2022 – Union Budget 2022-23

February 14, 2022by admin0
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Union Budget 2022-23

A Quick Snapshot

*SEBI*

1. SEBI advises mutual funds to stop subscriptions into overseas funds- The Securities and Exchange Board of India (SEBI) has advised Mutual Fund (MF) houses to stop the subscription in the schemes intending to invest in the overseas securities.

2. PhonePe has applied for mutual fund license with SEBI-PhonePe a digital payments and financial services company has applied for a mutual fund license with Securities and Exchange Board of India (SEBI). The other notable financial services companies such as Bajaj Finserv Ltd, Zerodha Broking and Frontline Capital Services Ltd. have received the approvals from SEBI.

3. SEBI amends the winding up norms of Mutual Fund schemes- The Securities and Exchange Board of India (SEBI) has now made it compulsory to obtain the consent of unit-holders in the decision of winding up scheme for the trustees. The decision by SEBI came after the Supreme Court’s context of the winding-up of Franklin Templeton Mutual Fund’s six debt schemes.

4. Introduction of Special Situation Funds framework by SEBI- SEBI has brought into the market a framework for Special Situation Funds (SSF’s). This fund is created for investing only in the stressed assets. The fund has been introduced as a sub-category under Category-I Alternative Investment Funds (AIF’s).

5. SEBI now has the power to grant exemptions to FPI’s- The Securities and Exchange Board of India (SEBI) has granted powers to itself to relax the compliance requirements for foreign funds. SEBI has the powers to provide the special exemptions to the listed companies, fund houses and other market entities.

6. Change in control of the asset management company involving scheme of arrangement under Companies Act, 2013- SEBI has released a circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2022/10 regarding the change in control of the asset management company involving scheme of arrangement under Companies Act, 2013.

*MCA*

  1. Corporate affairs ministry received higher allocation of Rs 733 Crore for the next fiscal yearIn the Union budget 2022-23, the Government has allocated Rs. 692.52 crore and capital component of Rs. 40.50 crore. An amount of Rs. 58.02 Crore will be allocated for Insolvency and Bankruptcy Board of India (IBBI) and Rs. 46 Crore for the Competition Commission of India (CCI).[1]

[1] https://www.business-standard.com/article/markets/sebi-advises-mutual-funds-to-stop-subscriptions-into-overseas-funds-122012901071_1.html

[2] https://www.livemint.com/mutual-fund/mf-news/phonepe-applies-for-mutual-fund-licence-with-sebi-11643442016148.html

[3] https://thenewsmen.co.in/business/sebi-amends-norms-for-winding-up-of-mutual-fund-schemes/61420

[4] https://www.moneycontrol.com/news/business/markets/sebi-introduces-framework-for-special-situation-funds-7983111.html

[5] https://economictimes.indiatimes.com/markets/stocks/news/sebi-gives-itself-powers-to-grant-exemptions-to-fpis/articleshow/89007053.cms

[6] https://www.sebi.gov.in/legal/circulars/jan-2022/change-in-control-of-the-asset-management-company-involving-scheme-of-arrangement-under-companies-act-2013_55745.html

[7] https://www.freepressjournal.in/business/budget-2022-corporate-affairs-ministry-gets-higher-allocation-of-rs-733-cr-for-next-fiscal-year

  1. Kerala High Court states that Insolvency application must meet threshold as per IBC section 4 amendmentThe High Court of Kerala in a recent matter held that the litmus test whether the default exists as provided in amended section 4 of the INBC Code, increasing the default amount from Rs. 1 lakh to Rs. 1 core on the date of application and not on the date when the notice was sent to the corporate debtor u/s 8 of the Code.
  2. Ministry proposes fixed timeline for NCLT– The Ministry of Corporate Affairs (MCA) has proposed a robust norm against avoidance transactions, wrongful trading and inordinate delays through the changes to look-back period and fixed timelines for tribunals in a move to plug the gaps in the Insolvency and Bankruptcy Code (IBC).

*RBI*

  1. RBI to introduce digital rupee in FY23In the budget session it was announced that RBI will introduce digital currency in the next financial year. The step has been taken to boost the digital economy and in order to have an efficient currency management.
  2. Registration of Assignment of Receivables (Reserve Bank) Regulations, 2022The Reserve Bank of India (RBI) has through the notification no. DOR.FIN.081/CGM(JPS)-2022 released a regulation ‘Registration of Assignment of Receivables (Reserve Bank) Regulations, 2022. The regulation contains rules regarding receivables financed through TReDS, the authentication process etc.
  3. Reserve Bank of India imposes a monetary penalty on Navbharat Co-operative Urban Bank Ltd., Hyderabad, Telangana– The Reserve Bank of India has imposed a monetary policy of INR 12 Lakh on Navbharat Co-operative Urban Bank Ltd., Hyderabad for violations and non-compliances.
  4. Directions under section 35 A read with section 56 of the Banking Regulation Act (As applicable to Co-operative Societies), 1949-Indian Mercantile Cooperative Bank Ltd. Lucknow– RBI through the recent press release informed that in the banks shall not, without prior approval of RBI renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse etc. any of its properties or assets except as notified in the RBI direction.
  5. RBI imposes restrictions on Indian Mercantile Cooperative Bank– The Reserve Bank of India has imposed several restrictions on the Indian Mercantile Cooperative Bank Ltd. Lucknow that includes a cap

[8]https://www.livelaw.in/ibc-cases/iinsolvency-application-must-meet-threshold-as-per-amended-s4-ibc-though-notice-u/s-8-was-issued-pre-amendment-kerala-high-cour-190906#
[9]https://www.business-standard.com/article/economy-policy/ministry-proposes-fixed-timeline-for-nclt-extended-look-back-period-in-ibc-121122301254_1.html
[10]https://timesofindia.indiatimes.com/business/india-business/rbi-to-introduce-digital-rupee-in-fy23-to-boost-digital-economy-better-currency-management/articleshow/89270243.cms
[11]https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12223&Mode=0
[12]https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53195
[13]https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53189

of INR 1 lakh on withdrawals. The restrictions were released vide Directive Ref. No. DoS.CO.OCCD/185569/12.28.007/2021-22 dated January 28, 2022.

*IPR*

  1. Public notice with respect to extension of period of limitation along with its enclosuresIn the matter of Suo Motu Writ Petition (Civil) No. 3 of 2020 (In Re: Cognizance for Extension of Limitation), the Hon’ble Supreme Court of India has extended period of limitation prescribed under the general law or special laws with effect from 15.03.2020 till further orders.[1]
  2. India, United Kingdom conclude round 1 of free trade agreement talks-India and the United Kingdom on Friday concluded the first round of negotiations, for a bilateral Free Trade Agreement (FTA), the commerce and industry said in a Joint Outcome Statement.
    The talks covered 26 policy areas including trade in goods and services such as financial services and telecommunications, investment, intellectual property, customs, sanitary and phytosanitary measures, technical barriers to trade, gender, sustainability and geographical indicators.[2]
  3. Bombay High Court clarifies the contours of Copyright infringement and confidentiality law

The Bombay High Court in Tarun Wadhwa v. Saregama India Ltd &Anr. [ 25th October’ 2021] deliberated upon the intersection of copyright infringement and confidentiality law and held that ideas cannot be copyrighted but can be protected through the application of confidentiality law.[3]

  1. Explained: WTO calls for urgent deal on IPR waiver; how it can empower nations to fight COVID-19– The World Trade Organisation (WTO) has asked member nations to intensify efforts on finalising a deal related to the waiver of intellectual property rights (IPR) for COVID-19 vaccines, therapeutics, and diagnostics, a proposal mooted by India.[4]

 

*REAL ESTATE*

  1. Real Estate industry welcomes the budget initiativesThe Union Budget’s announcement provides indirect stimulus for all the key real estate asset classes such as commercial, residential and warehousing. The new SEZ Act will help the commercial real estate boost and can be seen as an enabler for inducing the capital flow in the asset class.

[14]https://www.livemint.com/industry/banking/rbi-imposes-restrictions-on-indian-mercantile-cooperative-bank-details-here-11643415232563.html
[15]https://ipindia.gov.in/writereaddata/Portal/News/784_1_Public_Notice_dated_18th_January_2022_for_publication_on_website.pdf
[16]https://economictimes.indiatimes.com/news/economy/foreign-trade/india-united-kingdom-conclude-round-1-of-free-trade-agreement-talks/articleshow/89186539.cms
[17]https://spicyip.com/2022/01/bombay-hc-clarifies-the-contours-of-copyright-infringement-and-confidentiality-law.html#:~:text=Bombay%20HC%20Clarifies%20the%20Contours%20of%20Copyright%20Infringement%20and%20Confidentiality%20Law,-by%20Namratha%20Murugeshan&text=Saregama%20India%20Ltd%20%26%20Anr%20deliberated,the%20application%20of%20confidentiality%20law.
[18]https://www.cnbctv18.com/healthcare/explained-wto-calls-for-urgent-deal-on-ipr-waiver-how-it-can-empower-nations-to-fight-covid-19-12110272.htm
[19]https://www.goodreturns.in/news/budget-2022-23-how-real-estate-sector-will-be-impacted-1238434.html

2. Investment in data centers, other alternate real estate assets grow by 26% in 2021-Investments in alternate assets in the real estate sector reached $500 million in 2021, growing 26% from 2020 levels. The real estate business in India has seen significant transformation and has the potential to grow in 2022-23, says real estate experts.

3. FAIRA seeks center to bring down short-term capital gains tax in budgetThe Federation of All India Real Estate Association (FAIRA) has sought the center to offer sops during the budget stating a boom in the sector would also increase the tax collection.

4. Defer revision of market values, realtors urge government-The real estate developers associations have appealed to the Telangana government to defer the revision of the market value of the properties as various factors adversely affected the prices of the real estate and market sentiment.

*FDI*

  1. Sudden spurt in FDI in 2020-21 In the April-September 2021 period, the FDI inflows continued to be buoyant at Rs 4,413 crore, growing at the rate of 53 per cent over the same period in 2020-21. Although price competitiveness and good quality have enabled homegrown medicine producers to be dominant players in the world market, thereby making the country the ‘Pharmacy of the World’, the Survey pointed out that India is significantly dependent on the import of bulk drugs that are used in the formulation of medicines.
  2. FDI policy update in the works to push LIC selloff: DPIIT Secretary– Industry secretary Anurag Jain said on Thursday that the government is making changes in the foreign direct investment (FDI) policy to facilitate disinvestment of the country’s largest insurer Life Insurance Corporation of India (LIC).
  3. Why Karnataka got record 45% of India’s total FDI in first half of this financial year-Karnataka for two successive quarters of the fiscal year 2021-2022 has attracted the highest FDI in the country.In the first two quarters of 2021-2022 the state accounted for 48 per cent and 41 per cent of total FDI in India.The state received over Rs. 1.02 lakh crore in FDI by the end of September 2021.
  4. FDI policy update in the works to push LIC selloff: DPIIT Secretary– The Industry Secretary Anurag Jain stated that the government is making certain changes in the foreign direct investment (FDI). The move has been made in order to facilitate disinvestment of the country’s largest insurer Life Insurance Corporation of India (LIC).

[20]https://www.timesnownews.com/business-economy/real-estate/investment-in-data-centers-other-alternate-real-estate-assets-grows-26-in-2021-article-89183575
[21]https://timesofindia.indiatimes.com/business/india-business/faira-seeks-centre-to-bring-down-short-term-capital-gains-tax-in-budget/articleshow/89220989.cms
[22]https://www.newindianexpress.com/states/telangana/2022/jan/28/defer-revision-of-market-values-realtors-urge-government-2412110.html
[23]https://economictimes.indiatimes.com/news/newsblogs/economic-survey-2022-live-news-updates/liveblog/89233956.cms
[24]https://economictimes.indiatimes.com/news/economy/policy/fdi-policy-update-in-the-works-to-push-lic-selloff-dpiit-secretary/articleshow/88746461.cms
[25]https://theprint.in/economy/why-karnataka-got-record-45-of-indias-total-fdi-in-first-half-of-this-financial-year/811995/
[26]https://economictimes.indiatimes.com/news/economy/policy/fdi-policy-update-in-the-works-to-push-lic-selloff-dpiit-secretary/articleshow/88746461.cms

*CORPORATE UPDATES*

1. PM announces startups ‘backbone’ of new India and declares January 16 as ‘National Startup Day’- ThePrime Minister of India calls startups “backbone” of new India and has declared Jan 16 as ‘National Startup Day’ in a virtual gathering of over 150 entrepreneursas he termed startups as the “backbone” of new India and the engine that will power the nation’s economic growth in the run up to the 100th year of Independence.
2. Startup India has snagged record investments of up to $3.5 billion-Indian startups snagged record investments of up to $3.5 billion across 130 deals through January marking a decadal high amid a downturn in global markets, signaling sustained investor interest in the country’s booming startup ecosystem.
3. 4 Unicorns, $4.6 Bn funding in the month of January-The Indian startups have continued their bullish run in the first month this year. It was found that the home-grown startups have raised over $4.6Bn in funding between January 1, 2022 and January 29, 2022 representing an increase of 5 times compared to last year.
4. Concessional 15% corporate tax rate for new manufacturing companies and startups-The Union budget brought in concessional rate of 15 per cent for 1 more year till March 2024 for the newly incorporated manufacturing companies. The corporate tax rate remains unchanged in this year’s budget.

[27]https://economictimes.indiatimes.com/tech/startups/pm-narendra-modi-calls-startups-backbone-of-new-india-declares-jan-16-as-national-startup-day/articleshow/88912955.cms
[28]https://economictimes.indiatimes.com/tech/startups/startup-inc-begins-2022-with-a-bang-snags-3-5-billion-in-jan/articleshow/89207698.cms.
[29]https://inc42.com/buzz/4-unicorns-4-6-bn-in-funding-indian-startups-kick-off-2022-with-a-bang/
[30]https://indianexpress.com/article/business/budget/one-year-extensions-concessional-15-corporate-tax-rate-for-new-manufacturing-cos-startup-sops-7752299/

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