Escolar Documentos
Profissional Documentos
Cultura Documentos
Overview of
Anti-Corruption
Laws in India
A Legal, Regulatory, Tax
and Strategic Perspective
January 2019
January 2019
anticorruption@nishithdesai.com
Contents
INTRODUCTION 01
I. Civil Servants 11
II. Government Servant 11
3. LOBBYING 12
5. REGULATORY CONCERNS 15
I. Competition Act 15
II. Companies Act 15
I. Political Contributions 17
II. Illegal gratification 17
I. Procurement Bill 18
II. Blacklisting 19
III. Central Public Procurement Portal 19
I. Companies Act 24
II. Vigil Mechanism 24
III. Risk Management Policy 24
IV. Serious Fraud Investigation Office 25
V. Class Action Suit 25
VI. Reporting of Frauds by Auditor 26
VII. Independent Director 26
ANNEXURE I 27
Introduction
Behind every great fortune there is a crime1 resulting in unprecedented judicial orders
cancelling procurement contracts. 7 While
Corruption has been seen as an immoral these unprecedented judicial orders galvanised
and unethical practice since biblical times. the Government toward framing the Public
But, while the Bible condemned corrupt Procurement Bill, 2012, the same has since lapsed.
practices,2 Chanakya in his teachings considered The Finance Minister had mentioned a new public
corruption as a sign of positive ambition.3 procurement bill in his Annual Budget Speech in
Ironically, similar views are echoed by Mario 2015, however, this bill was not introduced.
Puzo in The Godfather!4
In India, the law relating to corruption is broadly
Historical incidents of corrupt practices and governed by the Indian Penal Code, 1860 (‘IPC’)
modern theories of regulation of economic and the Prevention of Corruption Act, 1988 (as
behaviour might evoke a sense of fascination, amended from time to time) (‘POCA’). The new
however, there can be no doubt that in modern amendments to POCA (‘POCA Amendment
business and commerce, corruption has a Act’) which provides for supply-side prosecution,
devastating and crippling effect. The annual among other key changes was passed by both
Kroll Global Fraud Report notes that India houses of Parliament and received the assent of
has among the highest national incidences of the President on July 26, 2018.8
corruption (25%). The same study also notes
In India, apart from the investigating agencies
that India reports the highest proportion
and the prosecution machinery, there is also
reporting procurement fraud (77%) as well as
the Comptroller and Auditor General (‘CAG’)
corruption and bribery (73%).5 According to
and the Central Vigilance Commission (‘CVC’)
the Transparency International Corruption
which play an important role due to Public
Perception Index, India is ranked 81 out of 180
Interest Litigations (‘PILs’) in India. For instance,
nations.6 These statistics do not help India’s
courts have directed that the CAG should audit
image as a destination for ease of doing business
public-private-partnership contracts in the
nor do they provide investors with an assurance
infrastructure sector on the basis of allegations
of the sanctity of Government contracts.
of revenue loss to the exchequer.9
In this decade, India has witnessed amongst the
Apart from the risk of criminal prosecution
worst scandals relating to public procurement
under POCA, there is also the
risk of being blacklisted 10 and subject to A bill was introduced by a Member of Parliament,
investigation for anti-competitive practices. The Disclosures of Lobbying Activities Bill, 2013
Despite the lapsed Public Procurement Bill, in Lok Sabha in 2013 in the wake of the Nira
2012, different Government departments Radia controversy but the same has since lapsed.
have procurement rules, the contravention of This bill sought to regulate lobbying activities
which may result in prosecution. In relation to and the lobbyist itself. However, regulation
public procurement contracts, the Competition of lobbying activities is envisaged only on the
Commission of India (‘CCI’ / ‘Competition supply-side and such an approach may not
Commission’) has the power to examine satisfactorily address concerns of transparency
information suo moto and take cognizance of and constitutional ethics.
cases even without a complainant before the CCI.
This body of amorphous laws and regulations,
An issue of regulatory compliance that is often coupled with high risk to directors makes
raised along with corrupt practices is one compliance a matter of great significance.
related to lobbying. As such, lobbying is not In this paper, we examine the regulatory
an institution in India like certain European framework and law in relation to anti-
countries or USA and it is not mandatory for corruption laws and risks associated with non-
Government agencies the executive to consider compliance, in particular reference to possibility
the viewpoints of various stakeholders and of a change in the anti-corruption landscape
interested parties before formulating rules and with the passing of the POCA Amendment Act.
regulations. Further, generally there is no law Additionally, we also address opportunities for
which provides for prior consultation with companies to design preventive and compliance
affected persons before rules and regulations are mechanisms. Litigation entails considerable risk
framed by administrative authorities. In certain and costs (financial and reputational) and hence,
circumstances, prior consultation may be seen it is imperative that, in the absence of regulatory
as a mandatory requirement. and legislative clarity, companies take proactive
measures to address these risks.
As regards bribe-giving, POCA Amendment Act exercising discretion while passing sentence
has only now taken away the clear immunity based on specific facts of each case.20
given to the bribe-giver.16 Given the very
Prosecution of public servants under POCA
limited scope of POCA until the enactment
requires prior sanction of a competent
of the POCA Amendment Act, instances of
authority.21 Obtaining such sanction itself
prosecuting bribe givers has been fairly limited
in the past has been a hurdle to effective
and unless a bribe giver was shown to be a
enforcement of the law. Supreme Court noted
co-conspirator, giving bribes in itself, has not
the submissions of the Attorney General in
been subjected to prosecution.17 While the
Dr. Subramanian Swamy v. Dr. Manmohan
1944 Ordinance provided for attachment of
Singh22 that out of 319 requests, sanction was
tainted property, POCA itself made no provision
awaited in respect of 126.
for attachment of tainted property. While the
POCA Amendment Act has only now granted POCA does not have extra-territorial operation
the power to attach property, confiscate money unlike certain other laws and its application
or property and administrate property tainted is restricted to the territory of India. Unlike
by corrupt activities, the process of investigation anti-corruption laws in other jurisdictions,
and trial empowered the investigation agency, POCA does not recognise illegal gratification
in appropriate cases, to attach tainted property, paid to foreign government officials or
in the past as well. Another important aspect official of a public international organisation.
about POCA was that it prosecuted only Interestingly, POCA does not define the
offences related to corruption in public sector expressions ‘bribe’, ‘corruption’ or ‘corrupt
and involving public servants. Therefore, practices’. While the Standing Committee on
payments made beyond a contract, or payments Personnel, Public Grievances, Law and Justice
made to fraudulently secure contracts in the in August 2013 (‘Standing Committee’) that
private sector, were not covered by POCA. Such looked into the pending amendment bill at
offences could be prosecuted only under IPC.18 the time had recommended that these key
provisions be defined, POCA Amendment
Unlike laws in some other jurisdictions,
Act has left these terms undefined. The
POCA makes no distinction between an
ambiguity brought about as a result of the
illegal gratification and a facilitation
absence of key definitions and expansive
payment. A payment is legal or illegal.
meanings given to certain expressions by courts
This treatment applies to other laws and
is certainly contrary to India’s commitment
regulations in India as well.
under the United Nations Convention against
POCA Amendment Act now stipulates that trial Corruption (‘UNCAC’).
of offences covered under POCA should take place
In August 2013, the POCA Amendment Act was
on a day to day basis and that endeavour shall be
introduced in Parliament, thereafter passed by
made to conclude such trials within two years.19
both houses of Parliament and assented to by
POCA also does not provide compounding of an
the President in July, 2018 which provided for
offence, however, courts have been
substantial changes to POCA. These changes are
discussed in the relevant section below.
related to the proposed Section 9 and Section 10 manager, secretary or other office would be
of the POCA Bill. The POCA Bill provided for the liable to be prosecuted.
prosecution of ‘commercial organisation’ as well.
The denial of the benefit of due diligence
Section 9, as proposed by the POCA Bill, appears harsh and the clubbing of neglect
provided that a commercial organisation would with connivance appears unreasonable. Such
be guilty of an offence ‘if any person associated onerous provisions are capable of misuse
with the commercial organisation offers, promises and causing more harm than good to curtail
or gives a financial or other advantage to a public corruption in India.
servant…’. However, as per the bill, it would be
LCI had rightly highlighted these concerns and
a valid defence for the commercial organisation
suggested that the proposed Section 9 and 10
if it is able to prove that it had ‘adequate
be kept in abeyance pending notification of
procedures’ in place.
‘adequate procedures’.
As rightly noted by LCI, unlike in UK where
LCI had also made recommendations to
Guidance has been published to determine the
amend the provisions relating to attachment
adequacy of ‘procedures’, the POCA Bill provided
proceedings under the POCA Bill and had
no such guidelines. Absence of guidelines would
recommended that the attachment mechanism
lead to considerable uncertainty in respect of
presently under the Prevention of Money
what would be seen as ‘adequate procedures’
Laundering Act, 2002 (‘PMLA’), 1944 Ordinance
and also lead to considerable subjectivity in the
or the Lokpal and Lokayukta Act, 2013 be
enforcement of the statute.
adopted rather than have new attachment
Explanation 1 to this Section 9 provided that the proceedings / mechanism under the POCA
capacity in which the person performed services Bill. As rightly pointed out by LCI, it is
for or on behalf of the commercial organisation important to streamline such proceedings
would not matter and even if such individual and avoid multiple enforcement mechanisms.
worked in the capacity of an agent, employee
or subsidiary, the liability would follow. This
would place a commercial organisation
C. POCA Amendment Act
at considerable risk since illegal acts by Since its introduction in Parliament on August
employees even at the entry level could expose 19, 2013, the POCA Bill underwent changes
the commercial organisation to prosecution. based on the Law Commission Report. After
Similarly, a commercial organisation would also five long years since its introduction, the POCA
be exposed to any consequential prosecution Bill was passed by the upper house on June 19,
stemming from the illegal activities of an agent. 2018, followed by the lower house on June 24,
2018. The POCA Bill finally received the assent
Section 10 (1), as proposed by the POCA Bill
of the President on July 26, 2018 and the POCA
provided that if a commercial organisation
Amendment Act came to be enacted.
was found guilty of an offence under Section
9, every ‘person in charge’ of the commercial The following key changes have been introduced
organisation would also be liable to prosecution. to POCA by way of the POCA Amendment Act:
However, it would be a defence if such
person was able to prove that the offence was
committed without his knowledge and that
i. Bribe-giver is liable to be
despite due diligence, such person was unable to prosecuted
prevent the offence. Section 10 (2) (as proposed
Conceding to the recommendations of the LCI,
in the bill) however, provides that if an offence
the scope of POCA has now been extended to
can be attributed to the ‘consent or connivance
cover to those who give or promise to give ‘undue
of, or is attributable to, any neglect’ of any director,
advantage’ to a person with an intent to induce or
manager, secretary or other officer, then,
reward a public servant to perform their ‘public
notwithstanding Section 10(1), such director,
duty’ ‘improperly’, as per Section 8. The immunity to prosecute commercial organizations, ‘if
granted in terms of the erstwhile section 24 any person associated with such commercial
has now been deleted. Such offence would be organizations gives or promises to give any undue
punishable with the maximum imprisonment for advantage to a public servant…’ 27.
a period of seven years and / or fine. In addition, if any director, manager, secretary
or other officer of the concerned commercial
An immunity from prosecution has also been
organization is proven to have consented and
granted in favour of those who are compelled
/ or connived to commit the said offence, such
to give such undue advantage provided such
officer would be punishable with imprisonment
persons report the matter to law enforcement
for a term not less than three years and
authorities within seven days from the date of
extendable to seven years and also liable to fine.
giving the undue advantage.25
Same as the POCA Bill, the POCA Amendment
In a departure from the recommendations of Act too states that it would be a valid defense
the LCI, the term ‘improperly’ is undefined, for the commercial organization to prove that it
and no distinction has yet been made between had ‘adequate procedures’ in place.
facilitation payments and other forms of bribery.
POCA Amendment Act failed to prescribe
Supply side prosecution was imperative to bring
guidelines to determine what would be seen
our anti-corruption laws in consonance with
as ‘adequate procedures’, as was recommended
international standards and act as a deterrent
by the LCI. India, unlike other jurisdictions
for private persons who bribed with impunity.
has faced severe criticisms for abuse of process
However, the ambiguity on the aspect of
despite laws being in place, therefore such
‘improper discharge of public duty’, could pose
provisions could lead to harassment for
more concerns and abuse of the process and
individuals within companies even if not
cause for concern leading to protracted litigation.
responsible/involved in the illegal act. It also
Given that recently the Supreme Court of potentially defeats the principle of ‘corporate
India has expanded the scope of ‘public veil’ and hence requires safeguards to be put in
official’,26 clarifications in respect of these place before implementation of these provisions
key expressions would have provided much to avoid harassment of professionals. While
needed certainty. This is particularly important the provision contemplates prosecution of an
considering non-compliance or a violation individual if the offence under the Bill is ‘proved
attracts criminal prosecution. Therefore, it is in the court to have been committed with the
imperative to have objective standards for the consent or connivance’ of any director, as a
expression ‘improperly’. The expression ‘public matter of practice, investigating authorities
official’, although defined in POCA, required ordinarily do not prosecute companies without
clarification in light of Supreme Court’s ruling making a director a party as well. Consequently,
and to negate possibility of expansion of private innocent directors / officers could be prosecuted
entities which are in collaborative projects with and subject to investigation.
government / state owned enterprises.
Companies need to introduce compliance
programs, manuals and guidance notes to ensure
ii. Commercial organizations liable that employees and consultants are adequately
to be prosecuted educated about obligations under POCA, as done
in other developed jurisdictions. Failure to do so
The POCA Amendment Act has largely retained might exacerbate liabilities under POCA.
the edict of the POCA Bill and grants the power
The UK Bribery Act’s Six Principles provide
an outline for an anti-corruption compliance
25. Section 8 system that establishes ‘adequate procedures’
26. Central Bureau of Investigation, Bank Securities & Fraud Cell
v. Ramesh Gelli & Ors., Crl. App. 1077-1081 of 2013 decided
on February 23, 2016 27. Section 9
to prevent a person from bribing on the and the checks and balances introduced in the
company’s behalf including: proportionality, amendment should protect such public officials.
tone at the top, risk assessment, due diligence,
communication, monitoring and review, used iv. Attachment of tainted property
as a valid defence. India needs to follow the path
POCA Amendment Act has added a new chapter -
without any further delay and publish guidelines
Chapter IV A to POCA, which grants the power to
to determine the adequacy of ‘procedures’.
attach property, confiscate money or property and
administrate property tainted by corrupt activities.
iii. Prior permission to be sought Adhering in spirit to LCI’s recommendations, the
before initiating investigation provisions of the Criminal Law Amendment
Ordinance, 1944 is now applicable to such
Considering the sensitive nature of a public
attachment proceedings. Earlier, tainted property
servant’s role, POCA Amendment Act makes
could be attached through measures under anti-
it mandatory for police officers to seek prior
money laundering laws.
approval before conducting an enquiry into any
offence committed by incumbent and retired It was important to streamline proceedings and
public servants. The approval would have to avoid multiple enforcement mechanisms. POCA
be sought from the relevant union or state Amendment Act has introduced the new chapter
government in whose employment the accused to help authorities recover proceeds of crime
‘public servant’ committed the offence expeditiously. It may also be possible that victims
in discharge of his official functions and duties. of such crimes can seek restorative justice.
The introduction of such provisions are in
accordance with other jurisdictions which require
prior sanction for all offences and for all persons.
v. Time limit for trial
The Bill now requires trial of offences to be held
While POCA Amendment Act binds such
on a day to day basis and endeavor to conclude it
approving authority to pass its decision within
within two years.
three months, further extendable by a month, this
may dilute the power of investigating authorities A time bound trial would certainly help expedite
from effectively prosecuting guilty officials. the process of effective prosecution and would
act as a powerful deterrent for habitual offenders.
However, such prior sanction would not be
required in the cases of arrest of officials caught
‘red-handed’ accepting or attempting to accept D. Other Important Principles
any undue advantage for himself or for any under POCA
other person.
With a view to protect honest public servants,
POCA Amendment Act has sought to restrict
i. Public duty and Public servant
the scope of offences proposed to be covered Public duty is defined as ‘a duty in the discharge
under the POCA by identifying ‘criminal of which the State, the public or the community
misconduct’. This restricted definition no at large has an interest’.28 The expression ‘state’
longer takes into account, previously covered also has an inclusive definition. The significance
grounds such as disregarding public interest, of the definition accorded to ‘public duty’ is that
abusing his / her position, using illegal means, persons who are remunerated by Government
etc. The element of criminal intent is added to for public duties 29 or otherwise perform public
lend more objectivity to enforcement. duties ,30 may also be public servants for POCA.
Requirement of prior sanction for retired
public officials and change of scope of 28. Section 2(b)
‘criminal misconduct’ would encourage 29. Section 2(c)(i) of POCA
retiring bureaucrats to take faster decisions 30. Section 2(c)(viii) of POCA
POCA defines public servant in a wide and ii. Taking gratification, influencing
expansive manner. The expression is not public servant and acceptance
restricted to instances set out in the definition
clause and courts have also adopted an
of gifts
interpretation which enables more persons to Section 7, Section 8, Section 9 and Section 11 of
be included within its ambit. 31 The definition POCA, as substantially amended by way of the
of public duty and public servant was examined POCA Amendment Act, provide for instances
in P.V. Narasimha Rao v. State.32 Although the of taking gratification, influencing public
case related to a Member of Parliament, the servants or accepting gifts. These sections are
Supreme Court’s ruling made it clear that both amended substantially keeping in mind India’s
public duty and public servant would be given obligations under the UNCAC.
a wide interpretation. Applying these principles
In respect of offences under Sections 7, 11
in Ram Gelli’s case, even though the concerned
and 13, the court has held these to be an
individuals were not employees of State or its
abuse of office by the relevant public servant.
instrumentalities, in view of the public duty
Transactions which contravene provisions of
element and nature of work performed by bank
POCA necessarily contemplate a public servant
managers, the Supreme Court came to the
and illegal gratification in connection with
conclusion that for the purpose of POCA, such
securing a favour from the public servant or as
officers would be public servants..
an incentive or reward to the public servant.
In Bhupinder Singh Sikka v. CBI 33 the Delhi
It is equally important that there should be
High Court ruled that an employee of an
a demand of such sum made by the public
insurance company that was created by an act of
servant and the mere fact that the individual has
Parliament was automatically a public servant
a valuable thing, in the absence of proof of such
and further, no evidence was required to be led
demand, may not result in a conviction under
in respect of the same.
Section 7 of POCA.35 It has also been held that
The expansive definitions being adopted an offence under Section 7 is an abuse of office36
by Supreme Court can lead to a state of and that the acts of the concerned individuals
unpredictability and uncertainty in the law. have the colour of authority.
In Ram Gelli’s case, Section 46A of the Banking
Regulation Act, 1949 (‘Banking Act’) that E. Investigation, trial and
provided that certain officers 34 would be settlement
deemed public servant for IPC, was held also
applicable in respect of POCA. However, it Investigation of offences under POCA takes
leaves open the question of the role of directors place as per the procedure set out in the Code
and key managerial personnel in infrastructure of Criminal Procedure, 1973 (‘Criminal Code’).
projects and other projects of a public nature, or POCA does not provide for a settlement or
of national importance. compounding mechanism.37 The Criminal
Code provides for cases in respect of which
compounding is possible.38 However, even
though offences under POCA are not mentioned
in Section 320 of the Criminal Code, the
31. Section 2 (c) of POCA. See also Ram Gelli case above. Supreme Court has held that in certain cases
32. (1998) 4 SCC 626.
33. Crl. App. No. 124 of 2001, Delhi High Court, decided on
March 25, 2011. 35. P. Satyanarayana Murthy v. The District Inspector of Police
(2015) 10 SCC 152.
34. S. 46A Banking Act - Every chairman who is appointed on
a whole-time basis, managing director, director, auditor, 36. Parkash Singh Badal, above.
liquidator, manager and any other employee of a banking
37. Settlement or any form of plea bargaining.
company shall be deemed to be a public servant for the
purposes of Chapter IX of the Indian Penal Code (45 of 1860). 38. Section 320 of Criminal Code.
which do not involve moral turpitude and FCRA has defined ‘foreign contribution’ to
are more commercial in nature, it would be include the donation, delivery or transfers of any
permissible for parties to settle the dispute. currency or foreign security. Section 3(2) (a) of
Supreme Court has observed: the FCRA extends this prohibition to persons in
India and citizens of India residing outside India
In respect of serious offences, including those
receiving foreign contributions on behalf of the
under IPC or offences of moral turpitude under
aforementioned categories of persons.
special statutes, like POCA, offences committed
by public servants while working in that Section 6 of the FCRA regulates the acceptance
capacity may not be sanctioned for settlement of foreign hospitality by a member of a
between offender and victim.39 Legislature or an office-bearer of a political party
or Judge or Government servant or employee
of any corporation or any other body owned
F. Foreign Contribution Regulation or controlled by the Government. It mandates
Act that these persons shall not accept any foreign
hospitality while visiting any country outside
Foreign Contributions Regulation Act, 2010
India except with prior permission of the
(‘FCRA’) regulates foreign contribution and
Central Government save for medical aid in the
acceptance of foreign contributions and foreign
event of contracting sudden illness while abroad.
hospitality by certain specified persons. Section
3 of the FCRA prohibits certain categories of A proposed amendment to FCRA on the
persons from accepting foreign contributions. definition of ‘foreign source’ is pending in
These persons include, among others, Parliament.40
candidates for election, judges, Government
servants, employees of Government owned
or controlled bodies, members of Legislature,
political parties or political organizations.
39. Gian Singh, above. 40. Cl. 233 of the Finance Act, 2016.
3. Lobbying
A private Member’s bill, The Disclosures of General Clauses Act, 1897, provides that where
Lobbying Activities Bill, 2013 was introduced a law contemplates prior publication of rules /
in Lok Sabha in 2013 in the wake of the Nira regulations, such rules / regulations shall first
Radia controversy50 but the same lapsed. be published in a manner prescribed and that
The bill sought to regulate lobbying activities objections to the draft legislation shall also be
and the lobbyist itself. However, regulation invited. Several other laws such as the erstwhile
of lobbying activities is envisaged only on the Central Tea Board Act (since repealed), Section
supply-side and such an approach may not 30 (3) of the Chartered Accountants Act, Section
satisfactorily address concerns of transparency 43 of Co-operative Societies Act contemplate
and constitutional ethics. prior publication.
As such, making representations to the However, it is possible that in the future, a law
Government or to Government agencies in on lobbying is enacted by the Parliament.
respect of policies is not prohibited under Indian
law. Stakeholders making representations about
proposed regulations is not illegal or unethical
provided that there is transparency in respect
of the process and representations. Several laws
provide for pre-consultation prior to enactment
of delegated legislation. Section 23 of the
54. http://cvc.nic.in/ar2014.pdf
51. Website of Central Vigilance Commission, available at, 55. See Nishith Desai Associates Regulatory Hotline, Direction
http://cvc.gov.in/cvc_back.htm. for CAG audit of DISCOMs quashed; private companies can be
subject to CAG audit, November 2015. See also Nishith Desai
52. Vineet Narain & Ors. v. Union of India (1998) 1 SCC 226.
Associates Dispute Resolution Hotline, Supreme Court: Private
53. Section 3 of CVC Act. Telecom Service Providers under CAG Scanner, April 2014.
56. Centre for Environment and Food Security vs. Union of India
(UOI) and Ors.
57. (2012) 3 SCC 104.
58. Report of the National Commission to Review the Working
of the Constitution, available at http://lawmin.nic.in/ncrwc/
finalreport/v1ch11.htm.
5. Regulatory Concerns
committee. Companies Act itself seeks to set higher
I. Competition Act standards of corporate governance for companies.
Anti-competitive practices are prohibited under
the Competition Act, 2002 (‘Competition Act’) A. Political Contributions
and the CCI has the power to take cognisance
Section 182(1) of Companies Act, 2013
of cases suo moto and direct investigations in
(‘Companies Act’) provides that neither
respect of matters which CCI concludes are
government companies nor companies that
prima facie anti-competitive.59
have been in existence for less than three years
The Competition Act prohibits anti-competitive are permitted to make political contributions.
behaviour including abuse of dominance by The Companies Act does not provide for a
an entity that enjoys dominance in a relevant definition of what constitutes a ‘contribution,’
market.60 Entities are also prohibited from however Section 182 (2) specifies that a
imposing unfair and discriminatory terms of donation, subscription or payment caused to
sale, purchase of goods or services.61 There is fair be given by a company on its behalf or on its
degree of nexus between certain kinds of anti- account to a person who, to its knowledge, is
competitive practices and possibilities of corrupt carrying on any activity which can reasonably
practices and there is precedence for at least one be regarded as likely to affect public support
such instance when CCI took cognisance on the for a political party shall also be considered
basis of reports of CAG.62 In this particular case, a contribution. Additionally, the amount of
CAG had prepared a report on procurement in expenditure incurred, directly or indirectly,
defence contracts and CCI took cognisance on by a company on an advertisement in any
the ground that bidders were indulging in cartel- publication – i.e., a souvenir, brochure, tract,
like behaviour. In this case, while CAG gave an pamphlet or the like – by, on the behalf or for
adverse finding against some of the employees of the advantage of a political party shall also be
certain Ordnance Factories, it is important to note considered as a contribution. Eligible companies
that in certain scenarios, investigations by one may make a contribution in any financial
agency can also lead to investigation by another. year provided that such contribution shall not
exceed 7.5% of its average net profits during the
Consequently, a company that is facing allegations
three immediately preceding financial years.63
relating to corrupt practices may also be
investigated for anti-competitive behaviour such as Additionally, there must be a resolution passed
abuse of dominance and cartel like behaviour. at a Board of Directors meeting authorizing
such contribution under Section 182 (1) of the
Companies Act. Section 182 (3) prescribes that
II. Companies Act such contribution must be disclosed in the
profit and loss account of the company with
Political contributions are not per se prohibited
the amount and the name of the political
and may be made subject to fulfilment of
party. The penalty for non-compliance with
certain conditions in the Companies Act, 2013
a provision of the section which could be 5 times
(‘Companies Act’). The Companies Act also
the amount so contributed and each officer
provides for a vigil mechanism and an audit
of the company would be punishable with
imprisonment for a term of 6 months and a fine
which could be 5 times the amount contributed.
59. Section 19(1) of Competition Act.
60. Section 4(1) of Competition Act.
61. Section 4(2) of Competition Act.
62. Suo Moto Case No. 4 of 2013. 63. Section 182 (1) of Companies Act.
The Whistleblowers Act also provides for The Whistleblowers Protection (Amendment)
safeguards against complainants making Bill, 2012 has introduced ten categories of
disclosures, as well as people making disclosures information in respect of which there is
during the inquiry process. Section 11 a prohibition on reporting or making disclosures.
provides that a person shall not be victimized These are the sovereignty, strategic, scientific,
or proceeded against merely on the ground or economic interests of India, records of
that he has made a disclosure or rendered deliberations of the Council of Ministers,
assistance to an inquiry. If a person is being anything that is forbidden to be published by
victimized, he may make an application to a court, anything relayed in a fiduciary capacity,
the Competent Authority which will take personal or private matters, information
action following a hearing with the public received by a foreign government, breach of
authority and the victim. This action can legislative privilege, anything that could impede
include restoring the victim to its original an investigation, commercial confidence/trade
position, and imposing a fine of INR 30,000 secrets/intellectual property, as well as anything
in the event of non- compliance with any that could endanger a person’s safety.98
orders issued by the Competent Authority.96
Moreover, if the Competent Authority is under
the impression that the complainant needs
to be protected, it may issue directions to the
concerned government authorities to protect
such persons.97
However, as mentioned above, an area The 2011 ICC Rules have policies for compliance
where there is a conspicuous gap in India’s and these policies would go a long way in
legislative and regulatory framework, is in ensuring compliance with anti-corruption laws
relation to public procurement, prosecution of and ensuring preventive measures.
illegal gratifications in the private sector and
Apart from certain reporting obligations under
satisfactory preventive measures.
auditing standards and Companies Act, there
are no legally enforceable and binding standards
III. International Chamber of compliance. POCA, the POCA Amendment
of Commerce, Rules on Act and the proposed amendments of 2015 and
the Standing Committee unfortunately do not
Combating Corruption address this very crucial aspect.
place. For better corporate governance, Risk Central Government may assign the investigation
management policy should also be approved into affairs of a company to the SFIO:
by the Board
on receipt of a report of the Registrar or
The presence of a comprehensive policy may be inspector,
seen to demonstrate bona fides of a company. In
on intimation of a special resolution passed
the event of any investigation or prosecution,
by a company that its affairs are required to
a company may be able to demonstrate that it
be investigated,
did what was reasonably possible by sensitising
employees, having workshops and even in the public interest, or,
a compliance audit to ensure that employees
on request from any Department of the
across the company, were aware of rights,
Central Government or a State Government.
obligations and duties under the law and in
respect of business transactions. Such measures No other investigating agency shall proceed
must however be aggressively and continuously with investigation in a case in respect of any
monitored, updated and implemented.100 offence under Companies Act, once the case has
been assigned to SFIO. The SFIO has power to
For instance, the Competition Commission in
arrest individuals if it has reason to believe that
a case101 directed a party (the Karnataka Film
he is guilty based on the material in possession.
Chamber of Commerce and other respondents
SFIO shall submit a report to the Central
in the proceeding) to have a compliance manual
Government on conclusion of investigation.
in place and to ensure that its members were
adequately educated about the law and their
obligations under the Competition Act. Further, V. Class Action Suit
parties were also directed to file a compliance
report within six months of the Competition The concept of Class Action Suit was
Commission’s order. recommended by J.J Irani Committee Report.
The concept of Class Action is new in Indian
context. Recently, class action suit were of
IV. Serious Fraud relevance in the context of the allegations of
Investigation Office fraud in Satyam in 2009. While investors in
India could only take recourse under ordinary
Section 211 of the Companies Act empowers civil law, investors in foreign jurisdictions
the Central Government to establish an office could claim compensations from the company
called Serious Fraud Investigation Office through class action suits or a similar litigious
(‘SFIO’) to investigate frauds relating to remedy. Section 245 of Companies Act provides
companies. Until the above mentioned SFIO that certain members or depositors or any class
is in place, the Serious Fraud Investigation of them are of the opinion that the management
Office set-up by the Central Government in or conduct of the affairs of the company are
terms of the Government of India Resolution being conducted in a manner prejudicial to
No. 45011/16/2003-Adm-I, dated the 2nd July, the interests of the company or its members
2003 shall be deemed to be the Serious Fraud or depositors, file an application before the
Investigation Office for this purpose. Tribunal on behalf of the members or depositors.
Unlike the provisions relating to prevention of
oppression and mismanagement under Section
100. Comply or Suffer: CCI Highlights Importance of Compliance
Manuals, by Abigael Bosch, Payer Chatterjee, M.S. Ananth 241 to 244, in a class action suit application
and Pratibha Jain, Nishith Desai Associates, International can be filed against the company, its Officers,
Financial Products & Services Committee, October 2015,
Volume 4, Issue 3. auditors, audit firm, any expert or advisor or
101. Kannnada Grahakara Koota & Anr. v. Karnataka Film consultant or any other person for any incorrect
Chamber of Commerce & Ors. Case No. 58 of 2012, decided or misleading statement made to the company
on July 7, 2015.
or for any fraudulent, unlawful or wrongful act or duties and responsibilities of Independent
conduct or any likely act or conduct on his part. Directors towards the company and
shareholders and stakeholders. Among all
Among all other matters, an application under
corporate governance duties, an Independent
Class Action Suit may also be filed to restrain
Director is also required to report the concerns
company from committing any future action
about unethical behaviour, actual or suspected
which is ultra vires the memorandum and
fraud or violation of the company’s code of
articles of association of the company and
conduct or ethics policy. Additionally, the Code
to restrain the company from taking action
also requires the Independent Director to hold
contrary to any resolution passed by its members.
separate meeting at least once in every year to
review the performance of non-independent
VI. Reporting of Frauds by directors and the Board as a whole.
Auditor The adherence to this Code by Independent
Directors and the fulfilment of their
By introducing Section 143 of the Act, the responsibilities in a faithful manner is expected
Central Government requires the Auditor(s) of to promote the confidence of the investors,
the Company to maintain transparency and as stakeholders, minority shareholders, regulators
well as the interests of shareholders at large. in the company.
Section 143 (12) read with Section 143(15) of It is to be noted that Companies Act places
the Companies Act and its Rules require an several obligations and duties on the Board and
auditor of a company including branch auditor, individual directors as well. These are designed
cost accountant and company secretary in to ensure maximum corporate governance,
practice to report immediately to the Central accountability and transparency. In respect of
Government in the course of the performance of certain measures, such as transactions with
their respective duties has reason to believe that related parties, apart from disclosures to the
an offence involving fraud is being or has been Board, disclosures are also to be made in annual
committed against the company by officers or accounts and to shareholders regarding direct
employees of the company. and indirect interest of directors. Corrupt
practices may manifest in opaque forms and
indirectly. Indian law, including proposals to
VII. Independent Director amend the law, do not provide for prosecuting
private transactions are corrupt practices.
Section 149 (6) of Companies Act makes a special
Corrupt practices may manifest in opaque forms
provision for appointment of ‘Independent
and in an indirect manner. Internationally, the
Director’ to the following class of companies in
line may blur between a corrupt practice and
addition to a company listed on a stock exchange:
a commercial fraud, however, the two are quite
in India due to the law in force in India.
Public companies having paid up capital of
rupees ten crore or more or Experience shows that brands and goodwill that
are built over decades can be frittered away by
Public companies having turnover of rupees
careless employees and it is important to guard
one hundred crore or more or
against such acts of indiscretion or other wilful
Public companies having in aggregate lapses. Investors and directors would need to
outstanding loans, debentures and deposits ensure that the company and other directors
exceeding rupees fifty crore or more rigorously adhere to the highest standards of
integrity and accountability.
Section 149 also provides that the Independent
Directors should abide Code for Independent
Directors as specified in Schedule IV of
Companies Act (‘Code’). The Code states the
27
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
28
Scope of Public servant under the IPC and POCA. Can be private Foreign official The Singapore POCA and the Criminal Law
Legislation (see The Amendment now extends the scope citizen or public (broader than Penal Code do not specifi- Convention
section on third of POCA to cover natural persons and officer ‘public servant’) cally deal with the bribery of on Corruption
parties and corporate entities engaging in providing a ‘foreign public official’, the Implementation of
intermediaries) bribes. statutes do not define this Program of Action
term, but the statute refers to against Corruption
‘Member of Parliament’ and
‘Member of Public Body’.
Important Under POCA Improper Issuers – Under Singapore POCA “Public official” shall
Definitions / Performance– Publically Gratification: given a be understood by
Gratification: means bribe, and is not Defined in traded very broad definition to reference to the
Interpretations limited to pecuniary gratification or to
sections 3, 4, and companies that include money or any definition of “official”,
gratifications estimable in money (s.7b
5. In summary, are registered gift, loan, fee, reward, “public officer”, “mayor”,
read with Section 2)
this means under commission, valuable “minister” or “judge” in
Undue advantage: means any performance the 1934 security or other property the national law of
gratification whatever, other than legal which amounts Securities and or interest in property; the State in which the
remuneration (s. 2d) to a breach of Exchange Act any office, employment person in question
an expectation or contract; any part or performs that function
Commercial organization: means: (a) that a person will Corruptly – full payment, release and as applied in its
a body which is incorporated in India Must have a
act in good faith, or discharge from any criminal law.
and which carries on a business, corrupt intent
impartially, or in obligation or other
whether in India or outside India; (b) The term “judge”
accordance with a Anything liability; any other service,
any other body which is incorporated referred to in sub-
position of trust. of value – favour or advantage
outside India and which carries on a paragraph above shall
interpreted of any description
business, or part of a business, in any include prosecutors
To assess whether broadly and whatsoever; and any offer,
part of India; (c) a partnership firm or and holders of judicial
an act is improper, can include undertaking or promise of
any association of persons formed in offices.
the test is of what a payment any such gratification.
India and which carries on a business
reasonable person of money, In the case of
29
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
30
Section 8 – giving or promising to give advantage to Certain other Scenarios that are covered Art. 9 – bribery of
an undue advantage to another person another person in persons that by the Penal officials in International
to induce / reward a public servant to one of two cases: are not issuers/ organisations.
Code include a public
perform their public duty improperly domestic concerns
Case 1 applies servant (including any Art. 10 – Bribery
that are acting
Section 9 – commercial organizations where P intends the person expecting to be a of members of
while in the US
shall be punishable with a fine, if persons advantage to bring public servant) taking a international
associated with such organizations give or about the improper Bribery Offence gratification, other than legal parliamentary
promise to give any undue advantage to a performance by Prohibits US remuneration, in respect assemblies.
public servant another person of a companies and of an official act; a person
Art. 11 – Bribery of
relevant function or individuals, US taking a gratification in
Section 10 – directors, managers, judges and officials of
activity or to reward issuers, and order to influence a public
secretaries or other officers of a international courts.
such improper anyone acting in servant by corrupt or illegal
commercial organization which have
performance. the US from: means; and a person taking Art. 18 – Provides for
consented or connived to commit an
a gratification for the exercise liability of companies
offence under s. 9, will also be liable for Case 2 applies Corruptly offering,
of personal influence with a as well.
punishment and fine where P knows or promising,
public servant.
believes that the authorizing or
Section 11 – obtaining undue advantage
acceptance of the paying, anything Parliament (Privileges,
without consideration
advantage offered, of value to any Immunities and Powers) Act-
Section 12 – those who abet offences promised or given foreign official, to
Prohibits Members of
under POCA will also be liable for in itself constitutes obtain and retain
Parliament from benefiting
punishment and fine the improper business, or to
from a debate in the
performance of a secure any other
Section 17 – Prior approval of relevant House in which they have a
relevant function or improper business
body in whose employment said offence pecuniary interest. (Section
activity advantage
was committed, to be taken before 32).
commencing Inquiry / investigation Section 2 – Passive
FCPA also prohibits
Corruption (being Customs Act-
Section 18A – attachment and forfeiture the payment of
bribed)
Section 7- Company
failing to prevent
bribery (corporate
offense) (strict
liability)
A commercial
organisation
will be liable to
prosecution if a
person associated
with it bribes
31
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
32
another person
intending to obtain
or retain business
or an advantage
in the conduct of
business for that
organization
Common Law
Offence
No universal
definition, agreed
upon components
include:
Offering, giving or
receiving – Any
undue reward – By
or to any person
whatsoever in a
public office – In
order to influence
his behaviour in
office and incline
him to act contrary
to the known rules
of honesty and
integrity.
Under Representation of the People Act, Political Donations Act- Apart from any measure
33
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
34
Penalty Under POCA, imprisonment ranges from Under section For violating anti- Under the Singapore P.O.C.A., As per domestic law.
3 to 7 years and also legislates for fine to 11, the maximum bribery provision any person found guilty of
be imposed penalties that can an offence shall be liable
be imposed on an FCPA to conviction to a fine or to
provides that
individual convicted imprisonment, or both.
corporations
of an offence under
and other
section 1, 2 or 6 is Under S.13 (1), Singapore
business
an unlimited fine P.O.C.A., the Court shall also
entities are
and imprisonment order him to pay a penalty
subject to a
for up to 10 years. equivalent to the amount of
fine of up to $2
bribes received.
million.
Individuals, The Corruption, Drug
including Trafficking and Other Serious
officers, Crimes (Confiscation of
directors, Benefits) Act, under S.29 of
stockholders, the Act allows the Court to
and agents confiscate properties and
of companies, pecuniary resources from
are subject to corrupt offenders, if the
a fine of up to said properties are found
$250,000 and to be benefits of corruption
imprisonment offences.
for up to five
years.
For violating
accounting
provision
35
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
36
It has wide powers to prosecute all The Securities Commercial Affairs
offending politicians, ministers, and and Exchange Department (“CAD”).
senior civil servants, including the Commission
Prime Minister. Monetary Authority of
Singapore (“MAS”).
The Central Vigilance Commission The Singapore Exchange
The Auditor and Comptroller General Limited (“SGX”).
of India
Territorial India and to foreign payments from abroad Has widest extra – The FCPA also Extra – territorial jurisdiction Applies to members
Application in India. territorial reach. applies to certain can be exercised against under Article 34 of
foreign nationals Singapore citizens the Criminal Law
An offence may
or entities that committing corruption Convention on
be prosecuted
are not issuers or offences outside Singapore. Corruption.
when any act or
domestic concerns.
omission forming
This may be either Under s.37 of Singapore
part of the offence:
directly or through POCA, where any Singapore
Takes place in
an agent that citizen commits a corruption
the UK Done by
engages in any act offence outside Singapore,
a person with a
in furtherance of a he may be dealt with in
‘close connection’
corrupt payment (or respect of that offence as if
with the UK (s.
an offer, promise, it had been committed within
12)2)c)) Close
or authorization Singapore.
connection- place
to pay) while in
of incorporation,
the territory of the
place of residence,
United States.
37
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
38
involves non-
discretionary
acts.160 Examples
of “routine
governmental
action” include
processing visas,
providing police
protection or
mail service, and
supplying utilities
like phone service,
power, and water.
Position On Gifts Can trigger the On Hospitality Public Prosecutor v Soh The Criminal Law
on Gifts/ Section 6 & 7 Cham Hong [2012] SGDC 42 Convention in European
Governed by the Conduct Rules The Department
Hospitality offence by a The Singapore courts have Union discusses Active
which set specific guidelines on the of Justice and
business if not held that questionable and Passive Bribery.
value of gifts that may be accepted Securities
reasonable and payments made pursuant to
in furtherance of local or religious Exchange
proportionate industry norms or business
customs Commission
to the norms of customs will not constitute a
Resource Guide to
The Central Vigilance Commission also the industry defence to any prosecution
the FCPA (“Guide”)
has its own gift policy brought under Singapore
Question states that the
POCA
Definition of gift provided under s.11 of fact and FCPA does not
and s.13 of Conduct Rules circumstance penalize providing
genuine hospitality
Under Conduct Rules, gifts may be Bona fide
if there is no
accepted by government servants hospitality and
corrupt intent.
from close ones with who the servant promotional
39
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
40
Position on Under FCRA Section 1(5) of the The FCPA also S.5 of Singapore POCA As regards the
Intermediaries* Bribery Act states prohibits the position in European
Section 3(2)(b) – For any Indian that the section payment of bribes Union , the Criminal
and third resident (or any Indian citizen outside
parties applies whether indirectly through Law Convention on
India) to deliver to any person any
the advantage is a third person. For Corruption contains
currency which has been accepted
offered, promised, these payments, the following provision
by a ‘foreign source’ if the resident/
or given directly or coverage arises pertaining to
overseas citizen has reasonable cause
via a third party where the payment intermediaries-
to believe/knows that such other
is made while
person intends to deliver the currency 22. The European
“knowing” that all
to a political party or Relevant Person. Union Convention
or a part of the
on the fight
Thus, third party intermediaries’ payment will be
against corruption
resident in India are explicitly passed on to a
involving officials
prohibited from giving or acting as foreign official.
of the European
intermediaries with respect to giving of
The Foley- MZM Communities or
such contributions.
Guide states that officials of Member
Under POCA use of third parties States of the
can present European Union
POCA prohibits other persons from: additional FCPA (Council Act of 26
taking undue advantage by corrupt risks, as bribes May 1997) defines
or illegal means to influence a public made by third active corruption
servant and parties in India as “the deliberate
(agents, brokers. action of whosoever
As a motive or reward for inducing, by Consultants, sales promises or gives,
exercise of personal influence, any
reps, etc.) can directly or through
public servant
cause the US an intermediary, an
Also, as stated above, the abetment of company to be held advantage of any
public servants is also an offence liable if they are for kind whatsoever
41
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
42
42. “Receiving” may
for example mean
the actual taking the
benefit, whether by the
public official himself
or by someone else
(spouse, colleague,
organisation, political
party, etc) for himself or
for someone else. The
latter case supposes
at least some kind of
acceptance by the
public official. Again,
intermediaries can
be involved: the fact
that an intermediary is
involved, which would
extend the scope
of passive bribery
to include indirect
action by the official,
necessarily entails
identifying the criminal
nature of the official’s
conduct, irrespective of
the good or bad faith
of the intermediary
annual returns.
records, and ensure consistent and
accounts, which, comparable financial
in reasonable reporting across the EU.
detail, accurately
Under EU rules, listed
and fairly reflect
companies (those
the transactions
whose securities are
and dispositions of
traded on a regulated
43
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
44
Financial statements
have to include – as a
minimum – the balance
sheet, the profit and
loss account and a
certain number of
notes to the financial
statements. Large
and medium-sized
companies also have
to publish management
reports.
The rules companies
have to follow when
preparing financial
statements are laid
down in directive
2013/34/EU, known
as the ‘accounting
directive’. The aim
of this directive is to
harmonise national
requirements about
Presentation and
content of annual
or consolidated
financial statements
45
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
46
Tax treatment Payments with an illegal purpose cannot Although, the European
be deducted as expenses under Indian tax Union does not have
laws. Therefore, recording such payments a direct role in raising
as expenses, and recording fictitious taxes or setting tax
expenses, could be construed as tax rates. The amount of
evasion. tax you pay is decided
by your government, not
the EU.
The EU’s role is to over-
see national tax rules
– to ensure they are
consistent with certain
EU policies, such as:
Promoting economic
growth and job
creation
Ensuring the free
flow of goods,
services and capital
around the EU (in
the single market)
Making sure
businesses in one
country don’t have
an unfair advantage
over competitors in
47
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
service.
48
Landmark •
(Private citizen) Former The On-Going European
cases/ 2G Scam National University of Budget Fraud-EU
scandals •
Singapore (NUS) law budget fraud has
Coal Allocation Scam professor, Tey Tsun Hang historically taken
(Tey) was first charged in a wide range of
July 2012 with six counts forms, from farmers
of corruptly obtaining seeking payments for
gratifi cation from his climatically impossible
former student. These sugar cane cultivation
six charges consisted to the channelling of
of receiving sexual funds for immigration
favours and gifts, as projects to what some
an inducement for Tey have labelled terrorist
to show favour in his groups.
assessment of his
student’s academic All types of EU budget
grades. fraud probably stem
from inadequate
(Public officer) Peter Lim, budgetary control
the Chief of Singapore
measures. This partly
Civil Defence Force
comes from factors
favoured IT related
inherent in the EU’s
government tenders
structure, such as the
to certain companies
‘Own Resources’ system
in exchange for sexual
for funding the EU
favours.
and the decentralized
implementation system
which puts the bulk
49
A Legal, Regulatory, Tax and Strategic Perspective
Overview of Anti-Corruption Laws in India
50
He was jailed for three
years after being found
guilty of corruption by a
court in Vienna. It was
the second time he
had been convicted of
the same offence. An
earlier verdict had been
overturned on appeal.
Bills/ un Public Procurement Bill (lapsed)
notified Acts
Position in CPI Rank 81 Rank 10 Rank 16 7 (2015) & 6 (2017) Germany- 11 (2015) &
Index, 2017. 12 (2017)
About NDA
At Nishith Desai Associates, we have earned the reputation of being Asia’s most Innovative Law Firm
– and the go-to specialists for companies around the world, looking to conduct businesses in India
and for Indian companies considering business expansion abroad. In fact, we have conceptualized
and created a state-of-the-art Blue Sky Thinking and Research Campus, Imaginarium Aligunjan, an
international institution dedicated to designing a premeditated future with an embedded strategic
foresight capability.
We are a research and strategy driven international firm with offices in Mumbai, Palo Alto
(Silicon Valley), Bangalore, Singapore, New Delhi, Munich, and New York. Our team comprises
of specialists who provide strategic advice on legal, regulatory, and tax related matters in an
integrated manner basis key insights carefully culled from the allied industries.
As an active participant in shaping India’s regulatory environment, we at NDA, have the expertise
and more importantly – the VISION – to navigate its complexities. Our ongoing endeavors in
conducting and facilitating original research in emerging areas of law has helped us develop
unparalleled proficiency to anticipate legal obstacles, mitigate potential risks and identify new
opportunities for our clients on a global scale. Simply put, for conglomerates looking to conduct
business in the subcontinent, NDA takes the uncertainty out of new frontiers.
As a firm of doyens, we pride ourselves in working with select clients within select verticals on
complex matters. Our forte lies in providing innovative and strategic advice in futuristic areas of
law such as those relating to Blockchain and virtual currencies, Internet of Things (IOT), Aviation,
Artificial Intelligence, Privatization of Outer Space, Drones, Robotics, Virtual Reality, Ed-Tech,
Med-Tech & Medical Devices and Nanotechnology with our key clientele comprising of marquee
Fortune 500 corporations.
The firm has been consistently ranked as one of the Most Innovative Law Firms, across the globe.
In fact, NDA has been the proud recipient of the Financial Times – RSG award 4 times in a row,
(2014-2017) as the Most Innovative Indian Law Firm.
We are a trust based, non-hierarchical, democratic organization that leverages research and knowledge
to deliver extraordinary value to our clients. Datum, our unique employer proposition has been
developed into a global case study, aptly titled ‘Management by Trust in a Democratic Enterprise,’
published by John Wiley & Sons, USA.
A brief chronicle our firm’s global acclaim for its achievements and prowess through the years –
Chambers and Partners Asia Pacific 2019: Band 1 for Employment, Lifesciences, Tax and TMT
IFLR1000 2019: Tier 1 for Private Equity and Project Development: Telecommunications Networks.
AsiaLaw 2019: Ranked ‘Outstanding’ for Technology, Labour & Employment, Private Equity,
Regulatory and Tax
Asia Mena Counsel’s In-House Community Firms Survey 2018- Only Indian Firm for Life Science
Practice Sector
Legal 500 (2011, 2012, 2013, 2014): No. 1 for International Tax, Investment Funds and TMT
IDEX Legal Awards 2015: Nishith Desai Associates won the “M&A Deal of the year”,
“Best Dispute Management lawyer”, “Best Use of Innovation and Technology in a law
firm” and “Best Dispute Management Firm”
Please see the last page of this paper for the most recent research papers by our experts.
Disclaimer
This report is a copy right of Nishith Desai Associates. No reader should act on the basis of any state-
ment contained herein without seeking professional advice. The authors and the firm expressly dis-
claim all and any liabilitytoanypersonwhohasreadthisreport,or otherwise, in respect of anything, and
of consequences of anything done, or omitted to be done by any such person in reliance upon the
contents of this report.
Contact
For any help or assistance please email us on ndaconnect@nishithdesai.com
or visit us at www.nishithdesai.com
The following research papers and much more are available on our Knowledge Site: www.nishithdesai.com
of the Indian
Investors Gaming Laws
The Curious Case
of the Indian
Gambling Laws
Legal Issues Demysitified
February 2018
Corporate Social
Social Business India India-Inc
Responsibility & Social
Business Models in India Models in India
A Legal & Tax Perspective
March 2018
September 2014
© Copyright 2018 Nishith Desai Associates www.nishithdesai.com
September 2018
January 2017 March 2018
NDA Insights
TITLE TYPE DATE
Blackstone’s Boldest Bet in India M&A Lab January 2017
Foreign Investment Into Indian Special Situation Assets M&A Lab November 2016
Recent Learnings from Deal Making in India M&A Lab June 2016
ING Vysya - Kotak Bank : Rising M&As in Banking Sector M&A Lab January 2016
Cairn – Vedanta : ‘Fair’ or Socializing Vedanta’s Debt? M&A Lab January 2016
Reliance – Pipavav : Anil Ambani scoops Pipavav Defence M&A Lab January 2016
Sun Pharma – Ranbaxy: A Panacea for Ranbaxy’s ills? M&A Lab January 2015
Reliance – Network18: Reliance tunes into Network18! M&A Lab January 2015
Thomas Cook – Sterling Holiday: Let’s Holiday Together! M&A Lab January 2015
Jet Etihad Jet Gets a Co-Pilot M&A Lab May 2014
Apollo’s Bumpy Ride in Pursuit of Cooper M&A Lab May 2014
Diageo-USL- ‘King of Good Times; Hands over Crown Jewel to Diageo M&A Lab May 2014
Copyright Amendment Bill 2012 receives Indian Parliament’s assent IP Lab September 2013
Public M&A’s in India: Takeover Code Dissected M&A Lab August 2013
File Foreign Application Prosecution History With Indian Patent
IP Lab April 2013
Office
Warburg - Future Capital - Deal Dissected M&A Lab January 2013
Real Financing - Onshore and Offshore Debt Funding Realty in India Realty Check May 2012
Research @ NDA
Research is the DNA of NDA. In early 1980s, our firm emerged from an extensive, and then pioneering,
research by Nishith M. Desai on the taxation of cross-border transactions. The research book written by him
provided the foundation for our international tax practice. Since then, we have relied upon research to be the
cornerstone of our practice development. Today, research is fully ingrained in the firm’s culture.
Our dedication to research has been instrumental in creating thought leadership in various areas of law and
public policy. Through research, we develop intellectual capital and leverage it actively for both our clients and
the development of our associates. We use research to discover new thinking, approaches, skills and reflections
on jurisprudence, and ultimately deliver superior value to our clients. Over time, we have embedded a culture
and built processes of learning through research that give us a robust edge in providing best quality advices and
services to our clients, to our fraternity and to the community at large.
Every member of the firm is required to participate in research activities. The seeds of research are typically
sown in hour-long continuing education sessions conducted every day as the first thing in the morning. Free
interactions in these sessions help associates identify new legal, regulatory, technological and business trends
that require intellectual investigation from the legal and tax perspectives. Then, one or few associates take up
an emerging trend or issue under the guidance of seniors and put it through our “Anticipate-Prepare-Deliver”
research model.
As the first step, they would conduct a capsule research, which involves a quick analysis of readily available
secondary data. Often such basic research provides valuable insights and creates broader understanding of the
issue for the involved associates, who in turn would disseminate it to other associates through tacit and explicit
knowledge exchange processes. For us, knowledge sharing is as important an attribute as knowledge acquisition.
When the issue requires further investigation, we develop an extensive research paper. Often we collect our own
primary data when we feel the issue demands going deep to the root or when we find gaps in secondary data. In
some cases, we have even taken up multi-year research projects to investigate every aspect of the topic and build
unparallel mastery. Our TMT practice, IP practice, Pharma & Healthcare/Med-Tech and Medical Device, practice
and energy sector practice have emerged from such projects. Research in essence graduates to Knowledge, and
finally to Intellectual Property.
Over the years, we have produced some outstanding research papers, articles, webinars and talks. Almost on daily
basis, we analyze and offer our perspective on latest legal developments through our regular “Hotlines”, which go
out to our clients and fraternity. These Hotlines provide immediate awareness and quick reference, and have been
eagerly received. We also provide expanded commentary on issues through detailed articles for publication in
newspapers and periodicals for dissemination to wider audience. Our Lab Reports dissect and analyze a published,
distinctive legal transaction using multiple lenses and offer various perspectives, including some even overlooked
by the executors of the transaction. We regularly write extensive research articles and disseminate them through
our website. Our research has also contributed to public policy discourse, helped state and central governments
in drafting statutes, and provided regulators with much needed comparative research for rule making. Our
discourses on Taxation of eCommerce, Arbitration, and Direct Tax Code have been widely acknowledged.
Although we invest heavily in terms of time and expenses in our research activities, we are happy to provide
unlimited access to our research to our clients and the community for greater good.
As we continue to grow through our research-based approach, we now have established an exclusive four-acre,
state-of-the-art research center, just a 45-minute ferry ride from Mumbai but in the middle of verdant hills of
reclusive Alibaug-Raigadh district. Imaginarium AliGunjan is a platform for creative thinking; an apolitical eco-
system that connects multi-disciplinary threads of ideas, innovation and imagination. Designed to inspire ‘blue
sky’ thinking, research, exploration and synthesis, reflections and communication, it aims to bring in wholeness
– that leads to answers to the biggest challenges of our time and beyond. It seeks to be a bridge that connects the
futuristic advancements of diverse disciplines. It offers a space, both virtually and literally, for integration and
synthesis of knowhow and innovation from various streams and serves as a dais to internationally renowned
professionals to share their expertise and experience with our associates and select clients.
We would love to hear your suggestions on our research reports. Please feel free to contact us at
research@nishithdesai.com
93 B, Mittal Court, Nariman Point 220 California Avenue, Suite 201 Prestige Loka, G01, 7/1 Brunton Rd
Mumbai 400 021, India Palo Alto, CA 94306-1636, USA Bangalore 560 025, India
tel +91 22 6669 5000 tel +1 650 325 7100 tel +91 80 6693 5000
fax +91 22 6669 5001 fax +1 650 325 7300 fax +91 80 6693 5001
S I NG A P O RE M U M BA I B KC N E W DE L HI
Level 30, Six Battery Road 3, North Avenue, Maker Maxity C–5, Defence Colony
Singapore 049 909 Bandra–Kurla Complex New Delhi 110 024, India
Mumbai 400 051, India
tel +65 6550 9856 tel +91 11 4906 5000
tel +91 22 6159 5000 fax +91 11 4906 5001
fax +91 22 6159 5001
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