Some key amendments to the exchange control regulations, Companies Act, 2013, and the Indian Stamp Act, 1899 were introduced in the second half of 2019. This update summarises some of these developments along with our expectations for the year 2020.

THE YEAR THAT WAS

This year witnessed changes to the foreign investment policy aimed at streamlining regulations, liberalising existing sectoral restrictions and bringing clarity on existing conditionalities in certain sectors. Additionally, steps were taken to decriminalise offences under the Companies Act, 2013 and to bring parity on stamp duty payable on transfer of shares, irrespective of the form in which such shares are held.

1. CHANGES TO THE FOREIGN DIRECT INVESTMENT REGIME

Pursuant to an amendment to the Foreign Exchange Management Act, 1999, the Government of India was vested with the power to regulate capital account transactions involving 'non-debt instruments' (such power was previously with the Reserve Bank of India). Consequently, the Government of India notified the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules), which consolidate various regulations applicable to 'non-debt instruments'.

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