The Legal 500

1 What are the main statutes and regulations relating to employment? The main statutes relating to employment are the Portuguese Employment Code (approved by Law 7/2009 of 12 February 2009) and the Regulation of the Employment Code (Law 35/2004 of 29 July 2004) which is still in force notwithstanding the fact that parts have been revoked with the entry into force of the new Employment Code. Within the Employment Code, the vast majority of the rules are mandatory and, therefore, can only be modified by agreement of the parties and only if such amendment is intended to improve the position or rights of the employees.

Norms for highway projects pact changed

The threshold limit in the conflict of interest clause in the model concession agreement for highway projects has been increased from 5 per cent to 25 per cent, thereby allowing any two Special Purpose Vehicles (“SPV”) with a common partner having up to 25 per cent stake to bid for same project.

Power

New Regulations for Load Dispatch Centers

Central Electricity Regulatory Commission (“CERC”) has notified the final regulations for the fee and charges to be levied by the National and Regional Load Dispatch Centers under the provisions of the Indian Electricity Act, 2003. Ensuring financial autonomy is the main objective of these regulations so that they can discharge their statutory functions in an independent and non-discriminatory manner.

Case Laws

Arbitration and Conciliation Act, 1996

Uzi Justman v. Telephone Cables Ltd. and Anr.

The issue for consideration before the Delhi HC in this case was whether application under Section 22 of Sick Industrial Companies (Special Provisions) Act (“SICA”), 1985 for suspension/stay of proceedings acts as a bar for execution of an arbitral award and for recovery of dues.

Amendments in Information Technology Act, 2000 The Information Technology (Amendment) Act, 2008 has come into force from October 27, 2009. Some key amendments in the Information Technology Act, 2000 (“IT Act”) are highlighted below:

Exchange Control

Liberalization of Foreign Technology Agreement policy

Ministry of Commerce and Industry, GOI, has on December 16, 2009 issued Press Note No.8 (2009 Series) for the liberalization of outbound remittances made for technology collaborations and use of trademarks and brand name, by removing the earlier limits. The remittance for royalties and lump sum fees paid towards transfer of technology, use of trademark and brand name would henceforth be permitted under the automatic route, i.e. without any approval of GOI. Indian companies will now have to directly approach their designated Authorised Dealers (“AD”) with necessary documentation, for payment to foreign technical collaborators. Accordingly, the previous Press Note (Press Note 2 (2003) which provided for the limit on the payment of royalty (5 per cent on domestic sales / 8 per cent on exports) and payment of technical fee (US$ 2 million) has been superseded. The GOI would separately notify suitable post-reporting system for technology transfer / collaborations and use of trade mark / brand name.

Amendments in (Substantial Acquisition of Shares and Takeovers) Regulations, 1997

Securities and Exchange Board of India (“SEBI”) has amended the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 (“Takeover Code”). Under the erstwhile Regulation 3(2) of the Takeover Code, acquisition of American Depository Receipts (“ADR”) / Global Depository Receipts (“GDR”) were exempted from open offer requirement until the time of their conversion into the underlying equity shares carrying voting rights. SEBI has now clarified that an exemption from open offer would be available only as long as the ADR / GDR holders remain passive investors without any kind of voting arrangement on the underlying equity shares whatsoever.

Certain important and recent legal developments in this area are set out below.

Anti Dumping Duties

Income-tax (Dispute Resolution Panel) Rules, 2009

In cases involving transfer pricing adjustments or cases involving income adjustments to be made on the foreign companies, which are prejudicial to the taxpayer, the tax officer is required to forward a draft order to the taxpayer, who can file objections against the draft order to the Dispute Resolution Panel (“DRP”).

Goods and Service Tax

The Empowered Committee of State Finance Ministers has released the first discussion paper on Goods and Service Tax (“GST”). The mechanics of the provisions and even the macro level parameters are still under discussion. GST is set to replace the various State and Union indirect taxes. The discussion paper provides for dual GST, State level and Union level. Though instead of compliances under plethora of taxes at present, the compliances would be restricted to GST, but the issues of interplay of State and Union taxation, rivalry amongst States to garner more revenue, would continue to haunt the taxpayers. The earlier deadline of April 01, 2010 for implementation of GST is likely to be missed.