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360 Degree View December 2023

1. No more IPC, CrPC & Evidence Act!

On December 25, 2023, the President of India assented to three new criminal law bills.
(a)The Bharatiya Nyaya Sanhita replacing Indian Penal Code (IPC),
(b)the Bharatiya Nagarik Suraksha Sanhita replacing the Code of Criminal Procedure (CrPC), and
(c)the Bharatiya Sakshya Adhiniyam replacing the Indian Evidence Act

These three bills were first introduced in Lok Sabha on August 11, 2023, and passed by the Lok Sabha on December 20, 2023, before being passed by the Rajya Sabha on December 21, 2023.


2. Asian Rising Stars

Over the medium term (2024-28) India is seen as a rising star among Asian peers, besides Indonesia and the Philippines, and is expected to be among the fastest-growing economies in the region in the 2024 decade, Nomura said in its latest Asia macro outlook. According to Nomura India’s GDP will expand at 5.7% in 2024. As compared to other emerging market regions, Asia has stronger economic fundamentals; higher growth, lower inflation, and healthier external finances.

3. The Indian stock exchange surpassed the Hong Kong stock exchange and took 7th position globally

India’s stock market surpassed Hong Kong to become the world’s 7th largest, underscoring the optimism surrounding the economic potential of the world’s most populous nation, as per a CNBC report. The total market capitalization of all listed companies in India stood at $3.989 trillion at the end of November, slightly above Hong Kong’s $3.984 trillion, according to data from the World Federation of Exchanges, a trade body.

The surge in Indian stock prices in November, fuelled by growing investor confidence following the better-than-expected performance of the ruling Bharatiya Janata Party in state elections and robust macroeconomic indicators, has set the stage for the country to secure the 7th largest position globally, behind the New York Stock Exchange, Nasdaq, Shanghai, Euronext, Japan, and Shenzhen.

So far this year, Indian equity benchmarks – the S&P BSE Sensex and Nifty50 have risen 14% & 15%, respectively, as against a 17% fall in Hong Kong’s benchmark Hang Seng index. This bearish slump in Hong Kong’s exchanges has come amid China’s deteriorating real estate sector, raising concerns of a possible spillover across the broader economy. Notably, the Hang Seng index mainly comprises China’s mainland companies. After three years of COVID-19, the Hong Kong markets have been downweighed by higher interest rates across the world, elevated inflation, sluggish foreign investment, and persistent turmoil in the housing market.

Interestingly, Indian equity markets reached more than the $4 trillion mark on December 5, marking a key milestone for the world’s 5th biggest equity market as it overtakes slumping Hong Kong.

CLSA said that it expects India’s GDP growth to propel it to the top three of the globe’s largest economies – estimating $29 trillion by 2047 and $45 trillion by 2052. “China and the US will be the only economies bigger than India by then. If big bang reforms unleash efficiencies, India could overtake the US economy in size by 2052,” the brokerage firm had said in an earlier note. On the other hand, Morgan Stanley believed India’s relative valuations were ‘less extreme’ than in October (2022), and the nation’s reform and macro-stability agenda supports a strong capex and profit outlook.


4. Startups

Mr. Piyush Goyal Commerce and Industry Minister said that there are 114,902 entities as start-ups recognized as of October 31, 2023. These entities are allowed to seek fiscal incentives for 3 years under the Start-up Action Plan launched in January 2016.

To reach a $5 Trillion Economy, Inclusive Growth is a key parameter and to achieve the same Government has taken a key initiative of the Startup India Program to support early-stage startups via Financial & Non-Financial Benefits. Some of the Key benefits are:

a)Startup India Seed fund – Up to 20L Grant & Up to 50L Debt
b)Trademark Assistance – Get your trademark by Paying Only a Stamp Duty of INR 4,500
c)Cloud Credit – AWS Credit worth up to $10,000
d)Patent Assistance – Get your Patent by paying only INR 1.600 Stamp Duty
e)Unlock Numbers of Grant & Challenges
f)Income Tax Exemption under 80IAC for 3 years
g)Partnership Tools with INR 10 Lakh (Freshwork, Zoho, Exotel, Etc.

5. Nominee of shares-- Ruling of Apex Court-- Only the successor can claim shares or debentures, and not the nominee rules SC (December 14, 2023)

On December 14, 2023, the Supreme Court ruled that the claim over financial instruments such as share and debenture certificates should be with the successor by law or by Will of the Original Owner, and not with the Nominee. The Companies Act and the Depositories Act are not the law of succession and the Nominee holds the investment of the deceased shareholder in a fiduciary capacity.

It says that if a person is a nominee in a share/debenture certificate, he is not entitled to inherit it by default. He is just a custodian. The inheritance or the succession of these instruments will be determined by the contents of the deceased’s Will or as per the Succession laws (the Hindu Succession Act or the Indian Succession Act)

A Will is a legal document that specifies the exact intentions of the testator concerning the succession of his properties. A Will supersede any arrangements or nominations made during an individual’s lifetime. It is, therefore, critical to ensure that an individual, despite making nominations, also creates a Will. However, one has to make a Will carefully and ensure that what’s written in a Will matches the people named as beneficiaries, Nominees, and legal heirs.

However, from the Companies Act 2013 perspective, the Company recognizes the Nominee as the shareholder of the share of the deceased shareholder. The Nominee is a temporary custodian until succeeded by legal heirs, without absolute title to the asset.

6. Release of the inspection report on Audit by the National Financial Reporting Authority ('NFRA')

The National Financial Reporting Authority (‘NFRA’) is a statutory authority set up under section 132 of the Companies Act 2013 (‘ CA 2013’ ) to monitor the implementation and enforce compliance with the auditing and accounting standards and to oversee the quality of service of the professions associated with ensuring compliance with such standards. NFRA is empowered under section 132 (4) of the CA 2013 to investigate for the prescribed classes of companies, the professional or other misconduct and impose a penalty for proven professional or other misconduct of the individual Chartered Accountants or firms of Chartered Accountants.

NFRA began inspecting four large audit firms (EY, PWC, Deloitte, and KPMG) in December 2022. NFRA on-sight audit inspection review was on three crucial areas revenue, trade receivables, and investments, as these are of big concern of risk of material misstatements. NFRA officials said that the purpose of such an audit is to drive quality change across the firm so that shareholders have comfort in the audited accounts of companies.

In December end, NFRA released an inspection report and revealed certain audit lapses by each of the four audit firms.

7. NSE Emerge Platform- Crossed 1 Lakh crore market capitalisation mark

In a Press Release by the National Stock Exchange (NSE) dated December 05, 2023, NSE said NSE Emerge listed companies crossed Rs.100,000 crore market capitalization which is a significant milestone.

NSE EMERGE is the NSE’s new initiative from 2012 created for Small and Medium-sized Enterprises (SME) and startup companies from India. As of date, 397 companies are listed on NSE Emerge and raised 7800 crores of funds.

8. NSE Awarded as an Exchange of the Year

In the Regulation Asia Awards for Excellence 2023, held in Singapore on November 14, 2023, the National Stock Exchange (NSE) of India was awarded as the “Exchange of the Year”. This Award acknowledges Exchanges that exhibit global and regional leadership, Innovation, and commitment to sustainability, resilience, and integrity. The judging panel evaluated exchanges based on market growth, Cost-Efficient Operations, Fair Market access, and transparency.

9.SEBI to relook at Maximum Investment in a company by Angel Funds

Alternative Investment Fund or AIF means any fund established or incorporated in India which is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing it by a defined investment policy for the benefit of its investors and is regulated by SEBI.

There are three Categories of AIF and an Angel Fund is a sub-category of Venture Capital Funds under Category I AIF. In the case of an angel fund, it shall have a corpus of at least Rs.10 crores. The fund can accept investments from a maximum of 200 investors, 

Angel funds can make investments only in investee companies that are incorporated in India, should not be more than 3 years old and a turnover not exceeding Rs. 25 crore and are unlisted. It should not have any family connection with the investors who are going to invest in the company.

The government and SEBI may take a relook at the maximum investment that an angel fund can make in a single company. At present the investment limit, capped at ₹10 crore, may be at least doubled, according to fund and startup industry circles.

10. Women in the Executive Director Role

Out of the total independent directors on boards, 27% are women. Out of the total executive directors on boards, 10% are women. Overall, about 19% of total board members are women,” said Sanjay Kapoor, Managing Director and lead Board & CEO Advisory in India at Russell Reynolds Associates.

Female executive directors hold only 9% of financial services and industrial board seats and a mere 6% of technology board seats, according to the analysis.

Of CSR Committees, 28% are led by women, and Nomination and Remuneration Committees follow with 26% chaired by women. Unfortunately, only 10% of Audit Committees have women leaders, showing a significant gender imbalance in committee leadership.

Deciphering the Indian Boardroom: Russell Reynolds’ 2023 Board Analytics and Insights | Russell Reynolds Associates

11.Stamping on arbitration clause

On December 13, 2023, A seven-judge bench of the Supreme Court led by Chief Justice of India Dhananjaya Y Chandrachud overruled the April 2023 Supreme Court Judgement and stated that arbitration clauses in unstamped or inadequately stamped agreements are enforceable and are not void or void ab initio or unenforceable if an arbitration. It is a landmark judgment that will boost the arbitration ecosystem and promote India as an International arbitration hub.

Insufficiency of stamping does not make the agreement void or unenforceable but makes it inadmissible in evidence. However, it is a curable defect as per the Indian Stamp Act and therefore, non-stamping or improper stamping does not result in the instrument becoming invalid.

The seven-judge bench, further clarified that objection as to stamping does not fall for determination u/s 8 or 11 of the Arbitration Act when a Court has to refer parties to an arbitral tribunal and the concerned Court must examine whether the arbitration agreement prima facie exists. Any objections about stamping fall within the ambit of the arbitral tribunal.

12. IPOs in 2023

There were 58 mainboard IPOs in 2023, of which over 50 have delivered gains after listing and raised nearly Rs 49,500 crore. In addition, 172 SME IPOs also hit the markets this year, raising nearly Rs 4,500 crore.

13. Healthy Economy and development in this sector in 2023

Medical Tourism- Approximately 2 million patients visit India each year from 78 countries for medical, wellness, and IVF treatments, generating $6 billion for the industry which is expected to reach $13 billion by 2026 backed by the government’s Heal in India initiative. The ‘Heal in India’ initiative aims to position the country as a global hub for medical and wellness tourism. Under this initiative, foreigners or those seeking medical help will be able to locate the list of hospitals in the country available to provide their choice of medical treatments through a ‘one-stop’ online portal.

Medical Devices- Foreign Direct Investment (FDI) is permitted up to 100% in the hospital sector and in the manufacturing of medical devices. The Government of India has introduced a Scheme for the Promotion of Medical Devices Parks to support the medical devices industry.

Artificial Intelligence (AI)- In 2024, Artificial Intelligence (AI) will continue to play a significant role in the health sector in India. AI is being used to develop systems that can predict and detect diseases at an early stage, with the use of AI telemedicine has grown, allowing people to consult with healthcare professionals remotely. AI is being utilized to analyze vast amounts of healthcare data for research purposes. AI is used for monitoring and predicting the spread of diseases at a population level. This aids in implementing timely interventions and preventive measures.

Internet of Things (IoT) – The concept of IoT-Powered Virtual Hospitals is gaining momentum, especially in regions with limited physical healthcare infrastructure. By harnessing the IoT, these virtual ecosystems provide remote access to consultations, monitoring, and even certain treatments, bridging the gap in healthcare accessibility.

Pharmaceuticals – 100% Foreign Direct Investment (FDI) in the pharmaceutical sector is allowed under the automatic route for greenfield pharmaceuticals. 100% FDI in the pharmaceutical sector is allowed in brownfield pharmaceuticals; wherein 74% is allowed under the automatic route and thereafter through the government approval route. Major segments of the Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & and manufacturing, biosimilars, and biologics. India is the only country with the largest number of US-FDA compliant plants (more than 262 including APIs) outside of the USA. Government policies, such as production-linked incentives and collaborations with research labs, are set to enhance the industry’s growth. The industry aims to become a volume leader and a top-10 contributor in terms of value by 2030, with aspirations to reach the top 5 by 2047.

14. What is RSU (Restricted Stock Unit)

RSU is a form of employee compensation. RSU is an award of stock shares earned by the employee on meeting certain conditions before the RSU is transferred to the owner. RSUs are issued to employees through a vesting plan and distribution schedule after they achieve required performance milestones or upon remaining with their employer for a particular length of time.

RSUs give employees interest in their employer’s equity but have no tangible value until they are vested. The RSUs are assigned a fair market value (FMV) when they vest. RSUs are considered income once vested, and a portion of the shares is withheld to pay income taxes. The employee then receives the remaining shares and has the right to sell them. Unlike stock options or warrants, RSUs always have some value based on the underlying shares. RSUs are treated differently for tax purposes than other forms of stock options. For tax purposes, the entire value of vested RSUs must be included as ordinary income in the year of vesting.

RSUs also allow a company to defer issuing shares until the vesting schedule is complete, which helps delay the dilution of its shares. RSUs don’t have voting rights until actual shares get issued to an employee at vesting.

Employees’ Stock Options provide employees with the right but not the obligation to acquire shares of the company at a specified price. If the share price rises the employee can acquire the shares and sell them at the higher market price. Whereas, RSUs are awarded outright on a set series of dates over several years. The employee then owns the shares and can sell or keep them. Till RSU is vested, it doesn’t carry any voting rights or is entitled to dividends, or any Bonus or Right Issues are factored in before vesting

15. Inspiring story of Sujan Clinic— a free center 

Since the year 2000, Padma Shri Dr. Arunoday Mondal has traveled every weekend in the Sunder bans to run his Sujan clinic, a free medical service center. On average 12,000 patients are treated every year for free by Sujan Clinic. Leisure is not the thought that crossed the mind of Dr. Mondal.

69-year-old Dr Arunoday Mondal, a resident of Kolkata’s Lake Town, is a doctor who won the Padma Shri award in 2020 for treating patients free of cost for over two decades in remote areas of Sundarbans. He has set up a charitable hospital in Hingalganj area in Sundarbans near the India-Bangladesh border.

He earned an MBBS degree from the National Medical College and Hospital in Kolkata and worked as a physician at Dr. B.C. Roy Memorial Hospital for Children. In 1980 he quit his job and started treating patients from his chamber at Birati.

Talking about his inspiration to do such services he said that he was born and brought up in the rural Sundarbans in an underprivileged family, hence he simply wishes to give back to his community through his knowledge. He further said that due to a lack of electricity and other amenities like a supply of drinking water as well as the road connectivity being very poor, the people suffer from different types of diseases here like Gastroenteritis, Worm infestations, Typhoid, Hepatitis, and various other such diseases. They also suffer from airborne diseases like chronic cough and cold, and bronchial asthma, at the same time they also suffer from various skin diseases because of the salinity of the river water

At 70, Padma Shri Doctor Travels 160 Km Every Weekend To Treat Villagers (thebetterindia.com)

Success Story: छह घंटे की यात्रा कर पहुंचते हैं गांव, मुफ्त करते हैं इलाज…भगवान से कम नहीं यह पद्मश्री डॉक्‍टर! – success story of arunoday mondal travels six hours to reach village provides free treatment this padma shri doctor is no less than god – Navbharat Times (indiatimes.com)

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