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Corporate Law Brief-June 2023

We are delighted to welcome you back to our newsletter for the month of May 2023, where we have endeavored to keep you informed about the latest updates from India’s corporate legal landscape.

We hope this message finds you and your loved ones safe and healthy!

We warmly welcome our esteemed readers as we proudly present our newsletter, unveiling the latest developments from the illustrious realm of India’s corporate legal landscape for the month of June 2023. Our Team has diligently compiled a range of news and insights covering regulatory advancement, ensuring that you stay updated and informed. Stay ahead with our expertly curated newsletter, featuring, regulatory updates, recent case laws, and invaluable insights. Sit back, sip your favorite brew, and embark on a journey through India’s corporate legal landscape.

Recent Developments:

  • Reserve Bank of India (RBI) authorises Indian banks to issue RuPay Prepaid Forex cards for usage at ATMs, Point of Sale (PoS) devices, and online retailers abroad. The measure, which was made public during a meeting of the RBI’s Monetary Policy Committee (MPC), intends to broaden the use and acceptance of RuPay cards globally. Additionally, this decision is in line with the RBI’s Payments Vision Document 2025, which strongly emphasizes extending the use of RuPay cards and the Unified Payments Interface (UPI) worldwide.
  • NITI Ayog is working to integrate Micro, Small, and Medium Enterprises (MSME’s) with supply chains. The Central Government intends to implement a comprehensive programme for MSME’s, which will allow simpler lending, including collateral-free loans and simplified documentation, to aid in their integration with the major supply chains. The approach requires the identification of goods in industries receiving Production-Linked Incentive (PLI) benefits that might be created and supplied by regional MSME’s through a focused vendor development project.
  • In order to curb deceptive advertising practices, the Advertising Standards Council of India (ASCI) issued Guidelines for Online Deceptive Design Patterns in Advertising, which will come into effect from September 01, 2023. Dark patterns are actions that intentionally take advantage of internet users, such as adding products to a shopping cart when a user has not requested it, or changing the price of a product as a customer is checking out, or even feigning urgency to encourage a purchase.

RBI’s Recent Initiatives:

  • RBI vide its notification dated June 07, 2023, has expanded the scope of the Trade Receivables Discounting System (TReDS) by permitting insurance companies to function as fourth participants in the platform. TReDS transactions will fall under the pool of ‘factoring’ business. TReDS is a web-based digital platform and a structured system for factoring trade receivables of Micro, Small and Medium enterprises (MSME’s). It facilitates the process of invoice discounting by employing an auction mechanism, thereby ensuring the timely collection of trade receivables.
  • RBI, on June 08, 2023, issued a comprehensive regulatory framework governing compromise settlements and technical write-offs for all the regulated entities (RE’s) to further encourage the resolution of stressed assets in the system and rationalise and harmonise the instructions across all RE’s. Earlier, RBI had issued several instructions to RE’s regarding settlement agreements for stressed accounts, including the prudential framework for resolution of stressed assets, which acknowledges compromise settlements as a valid resolution plan.
  • Giving the digital lending industry an essential boost, the RBI released its new Guidelines on Default Loss Guarantee (DLG) in Digital Lending. A regulated entity, such as a bank or NBFC (referred to as the RE), is now permitted to enter into agreements with a lending service provider (an unregulated fintech with which the RE has an outsourcing arrangement) or another RE to obtain a guarantee to compensate the RE on account of default in the loans the RE provided, for a maximum of 5% of the loss.
  • RBI has amended the Master Direction-Risk Management and Inter-Bank Dealings-Non-Deliverable Derivative Contracts (NDDC’s), whereby it has permitted Category-I AD banks operating International Financial Services Centre (IFSC) Banking Units (IBU) to offer NDDC’s involving Indian Rupee (INR) to a resident. These derivatives have foreign currency cash settlements. The said move intends to expand the onshore INR NDDC market and give locals the freedom to effectively construct their hedging strategies.

Updates from the Ministry of Finance:

Ministry of Finance has notified the Court of Additional Sessions Judge-03, South-West District, Dwarka, as the special court for speedy trial of offences committed under the Securities Exchange Board of India Act, 1992 (SEBI Act), Securities Contracts (Regulations) Act, 1956 (SCRA) and Depositories Act, 1996 (Depositories Act). Section 26A of the SEBI and SCRA and Section 22C of the Depositories Act empower the government to notify a special court for the purpose of speedy trial of offences committed under the SEBI.

  • On June 28, 2023, the Ministry of Finance decided to put on hold the decision to include international credit card spending under the Liberalized Remittance Scheme (LRS) which means that there will be no adjustment in the Tax Collected at Source (TCS) rate for expenditures made internationally using credit cards. Further, the implementation of the higher TCS rate of 20% has been postponed for a period of three months until October 1, 2023.

Updates from the Ministry of Corporate Affairs (MCA):

  • MCA has amended the Limited Liability Partnership (Amendment) Rules, 2023, whereby it has revised Form No. 3, which must be filed initially at the time of registration of the LLP Agreement and whenever any changes occur.
  • Considering the transition of the MCA-21 Portal from Version-2 to Version-3, MCA has allowed companies to file Form DPT-3 for the financial year ending March 31, 2023, without incurring additional fees until July 31, 2023.

Updates from Securities Exchange Board of India’s:

  • SEBI has amended the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012, (AIF Regulations) whereby it has introduced several significant changes, including the introduction of the concept of a Liquidation Scheme, which aims to facilitate the liquidation of unliquidated investments whose tenure has expired in the existing AIF Regulations. The changes are as follows:
    • The requirement of a minimum experience of 5 years for at least one Key Personnel (KP) of the key investment team has been eliminated. However, at least one KP must possess certification.
    • The appointment of a compliance officer has been made mandatory for AIF’s.
    • Previously, AIF’s could register themselves as Category I, II, or III. Now, they have the option to register themselves as ‘Specified AIF.’
    • AIFs are now required to issue their units only in dematerialised form. Previously issued units in physical form need to be dematerialized by October 31, 2023, for AIFs with a corpus exceeding Rs. 500 Crore, and by April 30, 2024, for AIFs with a corpus less than INR 500 Crore.
    • The Manager of the AIF is responsible for filing a compliance report with SEBI regarding the dematerialisation of units.
    • The compliance test report should include details concerning the compliance of dematerialization of units.
  • SEBI vide circular dated June 16, 2023, notified amendments to Anti-Money Laundering (AML) Standards and Combating the Financing of Terrorism (CFT) (AML Guidelines) to enhance the AML/CFT framework in accordance with the amendments to the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. The following are the key amendments:
    • Controlling ownership interest is now defined as ownership of/entitlement to over 10% of shares or capital or profits for non-individual/trust clients, replacing the previous threshold of 25%.
    • Registered intermediaries must register their client’s details on the DARPAN Portal of NITI Aayog if the client is a non-profit organization.
    • Stock Exchanges and intermediaries must identify and assess Money Laundering (ML)/ Terrorist Financing (TF) risks associated with new products, practices, delivery mechanisms, and technologies.
    • Use of technology is encouraged for effective name screening to meet sanctions requirements.

Upcoming Nuggets:

  • On June 02, 2023, RBI  published  the draft Master Directions on Cyber Resilience and Digital Payment Security Controls for Payment System Operators (PSOs) for public comments. The proposed Master Directions look into effective governance structures for the detection, evaluation, monitoring, and management of cyber security issues. Additionally, the guidelines will contain fundamental security procedures to guarantee system resilience, as well as safe and secure digital payment transactions. According to the proposed standards, PSO’s are required to create a Business Continuity Plan (BCP) based on several cyber threat scenarios, including the most unlikely but conceivable occurrences to which it might be subject. To manage cyber security events or incidents, the BCP should be evaluated at least once a year and include a thorough response, resume, and recovery plan.From the Docket:

We trust that this edition of our newsletter has proven to be an enlightening and valuable resource for your professional endeavors. If you have any questions about any of these developments or would like to see something different next month in your inbox, we warmly encourage you to reach out to us at


The content provided in this newsletter is intended for general awareness and should not be considered as legal advice. Readers are advised to consult with a qualified legal professional regarding any specific issues mentioned herein. If you have any questions about any of these developments or would like to see something different next month, reach out to us at

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