A Two-section Ordinance, holding the key to India’s NPA crisis By Vinod Kothari

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The much-awaited ordinance, expected to make a tangible impact on India’s crisis of piling non-performing loans, was signed into a law by the President on 5th May 2017. The Ordinance, consisting of barely two sections, makes amendments to the regulatory framework of banking in India, viz., the Banking Regulation Act. After reading the law, one is forced to think – if this is what was holding up the resolution of NPA crisis in the country, did it actually have to take all this time?

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Legal Nature of Bitcoins: the encrypted digital currency by Vallari Dubey

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Team financial services division, (finserv@vinodkothari.com)

What is a bitcoin?

A bitcoin is a virtual currency first introduced in the year 2008 by an untraceable group called Satoshi Nakamoto. It’s an open source peer-to-peer crypto-graphical system (direct connections without an intermediary) where transactions happen through a public ledger called blockchain, handling users’ data anonymously. The term is a combination of bit and coin where bit is the basic unit of computing and coin represents currency, combining to mean virtual currency.

Eight years since its introduction, bitcoin has gone through a lot. From receiving little support in the beginning in our country to now being the most widely used and accepted digital currency, we analyze its legal nature, its implications, and possible future scenarios.

Bitcoin is a refreshing concept in the traditional world of economy, bringing in a lot of debates, discussions and differences of opinions. For any issue to be handled legally, it becomes a prerequisite to first define it, see where it fits and then start working on it.

Defining bitcoin is tricky, especially in India where the legal and regulatory set up is rather a lot complex. Further, given no clarity as to its regulation yet, it becomes a more composite task.

Given its meaning and all the attributes it holds, bitcoin could be considered to be goods, currency, an instrument, consideration, money, value for money, property, etc.

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Impact of winding up petitions on insolvency filings by Nitu Poddar

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Can an Application for resolution process of a company be filed under IBC, 2016 in case a winding up Petition is pending before a High Court?

MCA Notification on transition for pending proceedings

MCA notification for Companies (Transfer of Pending Proceedings) Rules, 2016[1]  only provides for the transition of the litigation process from High Court to the NCLT.  This Rule lays down the criteria for deciding whether the matter will be filed with and adjudged by NCLT or by High Court.

As per the Rule 5 of the said Rules, where the Petition for winding up has been served on the Respondent Company and is pending before the respective High Court, such Petition shall be adjudged by the High Court.

When a matter is being adjudged by the High Court under Act, 1956, the same will be governed by the provisions of the erstwhile Act, 1956.

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Get Set Go…. to transfer shares to IEPF! by Pammy Jaiswal

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Introduction

MCA vide its notification dated 28th February, 2017 had tried to simplify the modus operandi for transferring shares to the IEPF Authority. In doing so, it had left various questions unanswered. For instance, Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Amendment Rules, 2017 (‘IEPF Amendment Rules’) stated that companies would be required to transfer the shares to the IEPF demat account. However, the same did not mentioned anything regarding the expected time frame by which such accounts would open or what would be the modalities of transfer at the depository level. As a result of which corporates kept wondering on the ways to effect the transfer of shares to the IEPF account.

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A DISPUTE AS TO “DISPUTE” by Sikha Bansal- (Under the aegis of Vinod Kothari & Company)

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The Insolvency and Bankruptcy Code, 2016 (“the Code”) enables a financial creditor and an operational creditor to initiate insolvency proceedings against a corporate debtor. While in case of a financial creditor, the creditor may initiate a case without serving “demand notice” on the corporate debtor; an operational creditor, before taking action under section 9, shall first serve a demand notice on the corporate debtor. If in response, the corporate debtor intimates existence of a “dispute”, the operational creditor cannot proceed under section 9. Therefore, “dispute” becomes a crucial word as it decides whether an operational creditor has a “cause of action” against the corporate debtor.

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RECTIFICATION OR RESTRUCTURING OR RECOVERY: JUDICIARY CLEARS THE AIR OF CONFUSION, by Sneha Bhawnani

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In the recent past, the financial sector has witnessed an alarming rise in the number of stressed assets. Undoubtedly, the ability of the lender to deal with stressed assets has been time and again tested. Nevertheless, there is existence of informal as well as formal framework to deal with default on the part of the borrower company. For instance, the informal regulatory framework of the country provides various avenues to the lenders for the purpose of revitalising Read more →

Companies Act now permits cross border mergers by Meenakshi Lakshmanan

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Cross border merger is not a novel concept in the corporate arena. This concept has taken shape stage by stage. The origin of the cross border merger started with the foreign trade which extended to branch establishments in the foreign territory and later merging with entities of the foreign country. When it comes it Indian scenario, the initial step towards cross border mergers was taken in 2005 by the JJ Irani committee. The need for widening the scope of business internationally and the necessity of ensuring compliance with law is a mammoth task for all the jurisdictions to balance.

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