EDITORIAL

The last quarter of financial year 2013-2014 was marked by some important changes in Foreign investment and the Corporate law regulatory framework.

In the second stage of the overhaul of the old company law, the Ministry of Corporate Affairs (“MCA”) has notified 183 sections of the Companies Act, 2013 (“Act”) which took effect from April 1, 2014. With this, the MCA has notified a total of 282 of the 470 provisions of the Act. Since compliance with these newly notified provisions of the Act, is primarily dependent on the rules framed under the Act, the final rules corresponding to these sections are expected to come into force soon. With this latest notification, the main requirements of the new company law relating to incorporation, management, board functioning, accounts and audit have now become effective.

In another major development, RBI has proposed changes to the ‘valuation’ norms applicable to the acquisition/sale of shares by a foreign investor under the foreign direct investment (“FDI”) regime. The existing valuation guidelines prescribed the discounted cash flow method (“DCF Method”) to value shares that were being bought or sold by a foreign investor. RBI is now proposing to replace the DCF Method of valuation with a new method of computing valuation based on ‘acceptable market practices’. The operating guidelines in this regard are however, yet to be notified. Whilst, we await the fine print, such revision and recognition of market practices as a basis for valuation, is definitely a welcome step which will boost the inflow of capital in the country.

This issue of ‘Lex Novus’, amongst other, discusses in detail the key regulatory developments in the previous quarter in the FDI regime, the introduction of a new class of investors termed as Foreign Portfolio Investors, other developments in the Banking and Capital Market sectors along with important judicial decisions concerning the corporate sector.

We hope you find this issue of ‘Lex Novus’ interesting and insightful.

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