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India Decoded: A Bird’s Eye View

June 2019

Cyril Amarchand Mangaldas

Character, Competence & Commitment

Elections 2019: The Verdict & Outlook
BJP-NDA victorious : Modi Wave 2.0
• Modi: “"Together we grow. Together we
prosper. Together we will build a strong
and inclusive India”

BJP’s footprint in India: 2014 v. 2019
2019 2014 NDA UPA

Source: TOI 4
Modi’s foreign policy agenda – More regional?
Global co-operation and foreign policy ‘ ‘Neighbourhood First’ Policy
• Global co-ordination – knowledge & • Based on the ‘Gujral Doctrine’
technology • Focus on immediate neighbours in South
• Continuous dialogue with Indians living Asia
abroad – global family

Strengthening the diplomatic cadre and Strong stance against cross border
outreach terrorism
• Establishment of university of foreign • Establishing a ‘comity of nations against
policy international terrorism’
• Capacity building –Indian & foreign • Tackling global evils – terrorism

Permanent membership of UNSC

• India’s growing role in world politics

Economic Backdrop
One of the World’s
fastest growing major

Economic growth of 6th largest economy

estimated at 7.0% for (from 11th in 2011)
FY 2019-2020 (RBI) (Interim Budget 2019)

Projected to cross
USD 3 trillion in 2019,
to become the 5th
largest economy

Modi 2.0: What to expect
Improvement of Make in India –
NaMo’s India –
direct / indirect tax global
World’s 3rd largest – simplify GST , manufacturing hub;
economy by 2030 income tax, etc. MSMEs; start-ups

Ease of doing
enforcement, rule Focus on job
business –
of law, reducing creation
improve rankings

Infrastructure &
Attracting greater Better agrarian
FDI investment policies

Key drivers for 2019 onwards
IBC: Opportunity for FDI from key regions Capital access
foreign players to pick will increase – constraints:
up Indian assets at investors are happy opportunities for well
attractive valuations with political stability priced distress deals

Domination of Deal activity likely to Infrastructure: Heavy

technology enablers: pick up in H2 2019; spending expected,
heavy investment in Capital markets may most of which is from
digitization, AI and
see flood of IPOs private sector / FDI

Vision 2030: 10 Legislative reforms “Big ticket” strategic

dimensions of will drive business transactions may
development for India activity and ease of continue – may be
of the future doing business driven by Indian
Ease of doing business in India
• World Bank Report 2019 - India ranked 77th
– Leaped 23 ranks: one of the top 10 reformers, for 2 years consecutively
– Rise and shine: protecting minority investors, enforcing contracts, getting
credit, construction permits, starting a business, trading across borders,
getting electricity
– Need for improvement: registering property, paying taxes, resolving
– Top 25 in:
• Getting credit
• Protecting minority investors
• Getting electricity

India & UK: A beautiful friendship?

Long standing bilateral ties

“Global Strategic Partnership” Defence and security co-

• Common democratic values operation
and shared interests • Agreements on technology
• Legal system established on transfer for missile systems,
similar values development of Advanced
• 15.4 billion pounds in bilateral
Hawk jet trainer etc.

Strategic Energy Partnership People to People ties

Co-operation • Community of over 1,451,862
• Investment, research, policy, Indians in UK
technical and commercial • Account for more than 2.30%
partnerships in power, of the UK population
renewables, energy efficiency,
civil nuclear and oil and gas

UK investment into India
• UK: 3rd largest contributor of FDI in India
• UK contributed USD 50.57. billion during 2000-18 (7% of total FDI in
• Growing trade ties: Trade amounting to $15.35 billion in 2018, accounting
for 17% of India's overall trade with the EU. Moreover, trade between
India and the UK increased at an average rate of 8.8% a year between 2002
and 2018
• The chemicals sector receives the lion’s share of British investment in India at
$6.1 billion (25% of UK FDI), followed by drugs and pharmaceuticals at $4.1
billion (17%) and food processing at $3.2 billion (14%).
• The UK also remains the largest job creator in India via FDI. Between 2000
and 2016, British FDI created 371,000 jobs – 10% of all jobs created by FDI.

UK-India: the Future
• In 2017, 55 of the fastest-growing Indian companies in the UK achieved an average
growth of 31%. Of these companies, 29 were mid-size corporates, 24 SMEs, and 2
MNCs, just behind the USA and Canada, and ahead of Japan, France and Germany.
• The top three sectors for Indian companies are technology and telecoms (31%),
pharmaceuticals and chemicals (24%), and business services (11%). London has
emerged as a global hub for infrastructure and green bond issuance for Indian PSUs
and private sector companies.
• Empirical evidence points to a rising trend in investment from the UK into India.
There has been a sharp increase in the number of UK companies entering India since
2000 – the number of incorporations between 2000 and 2010 was twice the number
for the whole of the 20th Century.
• The range of sectors attracting UK investment has also shifted. While advanced
manufacturing and financial & professional services still provide the most number of
companies, since 2000, a strong growth has been observed in sectors such as
education, retail, consumer goods, life sciences, healthcare, technology, and

Key Regulatory Trends

Where we are
• The ‘new’ regime for corporate Status of CIRPS
insolvency resolution has been in
effect for two years and five
94, 5%
months 152, 8%

• 1858 companies admitted into

• Out of 46 corporate debtors (with 378, 20%

total admitted claims <INR 1 1143,

billion) which have yielded
resolution under the IBC*: 91, 5%
– The average realization for financial
creditors = 42.26% of total closed on appeal/review/settled
admitted financial debt claims closed by resolution
– CIRP completed at an average of closed by liquidation
345 days (minimum 175 days and withdrawn under section 12a
maximum 631 days) ongoing cirps
*source: ibbi portal (as of march 31, 2019)
Regulatory changes and their impact
• Powers of the RBI
• Fast track insolvency mechanism introduced – 90+45 days
• Bidding process more streamlined
• Model timelines prescribed under regulations
• Section 29a- ‘defaulters’ paradise lost’
• Balancing act for resolution applicants – liberalized framework for
investor participation, but with accountability
• Charter of responsibilities – demarcation of roles of CoC and RP
• Defining contours of a new profession- insolvency professionals
• 1 registered information utility
• Registered valuers and registered valuers organizations
• Grievance redressal mechanism against service providers
Current trends
Sector-wise admissions Quarter-wise admissions
transport, storage and 160
electricity and others 120
hotels and restaurants

wholesale and retail trade 60

construction 20

real estate, renting and 0

business activities


0 100 200 300 400 500

Operational Creditors Financial Creditors
Ongoing Closed Corporate Debtors

Source: IBBI (as on March 31st, 2019)

Governance and Activism
Corporate Governance in India: Changing
Board Room Dynamics
• Separation of powers of
CEO and MD
– Not be related as per the
term of “relative”
– W.e.f April 1st, 2020
• Independent directors-
does the buck stop here?
– Subjective assessment of
– Undertaking at the time
of appointment and a
speaking resignation
• Advent of the
“governance crisis”
Personal Liability of Directors – Judicial
• General principle:
– the liability of directors of a company arises only when it is shown that the director
so prosecuted was in-charge of and responsible for the conduct of the affairs of a
company, a director (not being an “officer in default” or “officer in charge”) may be
personally liable;
• Courts have been holding directors accountable in more and
more cases (Jaypee Infratech, IL&FS, PNB-Nirav Modi, etc. )
– Includes independent directors in most cases;
– Freezing of accounts, restrictions on travel, prohibited to alienate property etc.
• As a result: see directors resign
– LODR amendments provide that independent directors are required to provide
and disclose detailed reasons for resignations and provide a confirmation that there
is no other material reasons other than those provided to the stock exchanges;

New rules on Significant Beneficial Ownership
• Companies (Significant Beneficial Owners) Amendment Rules, 2019 issued
on February 8th, 2019
• Disclosure requirement from individuals having beneficial interest in the
shares of a company without their names being present in the register of
• Key points
– Who is a significant beneficial owner
– Who needs to make disclosures
– Criteria for determination of direct and indirect right/ entitlement in a reporting
– Filing requirements: timeline of 30 days from date of acquiring significant
beneficial ownership; initial deadline of 90 days ended on May 9th, 2019
– Rules not applicable to investor education and protection fund, the holding
reporting company of the reporting company, the government, any entity
controlled by government, investment vehicles registered with SEBI or regulated
by the RBI, IRDA and PFRDA
The Rise and Rise of Activism

Securities Class Action Lawsuits in India
• A ‘class’ for listed companies can now be formed by the lesser of:
– (A) 2% of the issued share capital,
– (B) 100 shareholders, or
– (C) 5% of the total number of shareholders.
• Scope of a class action under Section 245 of the Companies Act is fairly wide
– Banks, however, have been excluded from the purview of class actions under the
Companies Act.
• Contingency fees for lawyers is restricted under law in India
– . This makes the Government’s second initiative to fund class actions from the Investor
Education and Protection Fund, a key driver of change in this area of enforcement.
– More likely to have third party funding – key role in development of the class action
• Expecting an activist arbitrage to come in

Data Privacy & Data Localization

Recent Developments in Data Protection

K.S. Puttaswamy v Union of India

Held that right to Justice Srikrishna Committee
privacy is a Aadhaar Judgment
Submitted draft
fundamental right
personal data Application of the
Privacy is a protection bill three-part test by
horizontal right. (“PDP Bill”)and its the Supreme Court
Three-part test corresponding
report to the Principles of
government. purpose and
collection limitation
read into the law

Impact of PDP Bill, 2018


RBI Data Localization
• Notification dated April 6th, 2018
• Payment System is defined as “a system that enables payment to be
effected between a payer and a beneficiary, involving clearing, payment or
settlement service or all of them, but does not include a stock exchange.”
• It includes inter alia systems enabling credit card, debit card,
smart card and money transfer operations
• Mandates storage of data related to payment systems in India
• Must include end-to-end transaction details
• If a transaction has a foreign leg, related information maybe
stored in the foreign country as well

E-Commerce Policy 2019
• The E-Commerce Policy (“Policy”) defines e-commerce as the “buying,
selling, marketing or distribution of (i) goods, including digital products and (ii)
services; through electronic network.”
• States that data generated in the country is a national asset and seeks to
impose restrictions sensitive data that has been transferred abroad
• Sensitive data appears to include data that is generated from sources such
as inter alia social media networks, search engines and e-commerce
• As per the Policy, a business entity that stores sensitive data abroad will
not be permitted to share that data with any third party, even after
obtaining consent
• Suggests that reviews and ratings of products and services should be
authentic and reliable
• Government to have the right to seek disclosure of source code and
algorithms 29
Who we are

Cyril Amarchand Mangaldas

• India’s Largest and Leading Law Firm

– Founded to continue the legacy of the 100-year

old Amarchand & Mangaldas & Suresh A. New Delhi
Shroff & Co. (“AMSS”), whose pre-
eminence, experience and reputation of
almost a century has been unparalleled in the
Indian legal fraternity.
– Providing nationwide, seamless, integrated,
full-service offerings.
– Largest Indian law firm with over 750 lawyers, Mumbai
including 130 partners. Hyderabad
– Pan-India presence with offices in 6 major
cities – Mumbai, New Delhi, Bengaluru, Bangalore
Hyderabad , Chennai and Ahmedabad. Chennai

– Leading clients include domestic and foreign

commercial enterprises, financial institutions,
private equity funds, venture capital funds, start-
ups and governmental and regulatory bodies.
Recent Credentials of the Firm

Chambers Asia Pacific Awards

AsiaLaw Regional Awards 2019 India: National Law Firm of the Most Innovative Firm of the
National Law Firm Year 2018 Year 2018: India
of the Year Finance Law Firm of the Year 2019 M&A Deal of the Year 2018

Asian Legal Business

Employer of Choice for 2017, 2016
& 2015

Credentials of The Firm

Corporate Law Firm of

the Year 2017
M&A Law Firm of the
Year 2016 & 2015

2016 | Ranked no. 1 by 2016 | The Asian Lawyer Emerging

2016 | Ranked no. 1 in
Emerging Markets M&A deal value in India for Markets Awards
India for Equity IPO
Review Ranked #1 in India M&A M&A Deal of the Year for
Issuer Advisers by deal
for M&A in H1 2016 1. Energy, 2. Pharmaceuticals &
value and deal count
(by deal value) 3. Other sectors
Capital Markets Deal of the Year:
Dedicated Practice Groups
▪ Corporate
Competition Intellectual TMT
▪ Banking and Finance Property
Employment Bankruptcy
▪ Capital Markets Private Client
Financial Investigations
▪ Infrastructure and Project Regulatory Real Estate
Finance Investment Tax
▪ Dispute Resolution Funds

Specialist industry groups: Life Sciences, Oil & Gas,

Financial Services, Corporate Advisory and cutting
edge regulatory advice
Dedicated International Desks servicing Japan, Korea,
China, USA, UK and Europe.

Mr. Cyril Shroff
• Mr. Cyril Shroff is the Managing Partner of Cyril Amarchand Mangaldas since May
2015 and previously was the Managing Partner of Amarchand & Mangaldas & Suresh
A. Shroff & Co.
• With over 37 years of experience in a range of areas, including corporate and securities
law, disputes, banking, bankruptcy, infrastructure, private client, financial regulatory and
others. He is consistently ranked as “star practitioner” in India by Chambers Global and
often regarded as the “M&A King of India” and regularly recognized as an award
winning professional across various practices. Mr. Shroff was awarded with
“Managing Partner of the Year 2019” at the Asia Legal Business (ALB) India Law
Awards and recognized as “Thought Leader for M&A and Governance” by Who’s
Mr. Cyril Shroff Who Legal at its Annual Awards in 2019.
Managing Partner • Mr. Shroff was a member of SEBI constituted Uday Kotak Committee on Corporate
Governance and SEBI Committee on Insider Trading. He is member of first apex
advisory committee of the IMC International ADR Centre; task force member of
Society of Insolvency Practitioners of India and an advisory member of the Finance
Planning Standard Board of India and Macquarie.
• He is a member of the Media Legal Defence Initiative International Advisory Board;
part of various committees of the CII’s the National Council on Corporate
Governance, the National Committee on Capital Markets, Private Equity & Venture
Capital, Commodities Markets, Financial Investors and Regulatory Affairs.
• He is on the Board of IIM, Trichy and Krea University; a member of the Advisory
Board of the Centre for Study of the Legal Profession established by the Harvard Law
School and Advisory Board of the National Institute of Securities Markets (NISM).
legally privileged and confidential 35
Mrs. Vandana Shroff
• Vandana Shroff is a Partner at Cyril Amarchand Mangaldas. She has over
28 years of wide-ranging experience in general corporate matters and
specific expertise in private equity and funds related areas.
• She has extensive experience in corporate law and has been advising both
domestic and international clients on all aspects of its activities, including
mergers, acquisitions, restructuring, foreign investment and commercial
• She has advised for several foreign and domestic private equity funds and
Mrs. Vandana Shroff venture capitalists, both in public and private investments and has handled
Partner all aspects, including due diligence, regulatory fillings, open offers and
other compliance issues. Her clientele includes blue-chip private equity
funds across a range of geographies.
• She is a member of the Senior Leadership team of the firm.

legally privileged and confidential 36

Contact Details
• Mr. Cyril Shroff
– cyril.shroff@cyrilshroff.com

• Mrs. Vandana Shroff

– vandana.shroff@cyrilshroff.com

Cyril Amarchand Mangaldas

5th Floor, Peninsula Chambers, Peninsula Corporate Park,
Ganpatrao Kadam Marg, Lower Parel,
Mumbai - 400 013