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Labour Law Amendment in Bangladesh Sparks Controversy: Unresolved Concerns Emerge

The recent passage of the Bangladesh Labour (Amendment) Bill-2023 on November 2 has left labour leaders voicing their reservations. While the amendment addresses certain issues, major concerns remain unattended, sparking discussions within the workforce.

Among the positive changes, the amendment includes workers in the agricultural sector and replaces ‘Mohila’ with ‘Nari’—a step towards gender inclusivity. However, significant issues like unionisation in Export Processing Zones (EPZs), hindrances to forming and registering trade unions in factories, the right to strike, and six months of maternity leave are yet to be tackled.

One contentious aspect is the provision obligating the consent of 20% of workers for forming unions in factories with fewer than 3,000 workers and 15% for factories with more than 3,000 workers. Critics argue that this threshold could restrict union formation.

The extension of maternity leave by eight days, from 112 to 120 days, has also sparked debate. Labour rights advocate Kalpona Akter, the founder and executive director of the Bangladesh Center for Workers Solidarity, emphasises the need to reduce obstacles in forming trade unions, following international labour standards.

Economist Dr. Sayema Haque Bidisha supports this sentiment, highlighting the importance of preserving workers’ rights to unionise and strike, even if it occasionally leads to disputes. She underlines the significance of adhering to International Labour Organization (ILO) standards in such cases.

The contentious issue of unionisation in EPZs remains a focal point, as labour leaders argue that there should be a uniform law for all workers, whether in EPZs or general sectors.

Chowdhury Ashikul Islam, a labour leader who was part of the tripartite labour law review committee, reveals that the committee’s discussions did not result in agreement on numerous issues, which were meant to be addressed in further meetings. However, the amendment was tabled in parliament before these discussions could take place.

The definition of a labourer, the inclusion of new employment sectors (like food delivery, tourism, and hospitality), and major demands from workers were left unaddressed. While some positives, such as changes in terminology and the inclusion of agricultural workers, were acknowledged, the core concerns of workers were seemingly ignored.

The extension of maternity leave, despite its increase by eight days, fell short of expectations. Advocates argue that factory workers should have six months of maternity leave, aligning with international norms. The provision allowing the auto-dismissal of workers after 10 consecutive days of absence has also come under fire. Critics call for a right to explanation before dismissal.

The ineffectiveness of anti-harassment committees in factories has been a recent concern. A study revealed their inadequate functioning, yet the latest bill failed to address this issue satisfactorily.

The Business Standard attempted to obtain opinions from several BGMEA directors and garment owners regarding the amendment, but none responded.

 Our experts analysed the Bangladesh labour law amendment, and stated that, ‘While the amendment reflects some progress, it falls short in addressing crucial labour issues. Workers deserve robust legal protection and a voice in their rights. It is crucial to ensure that the law aligns with international standards’.

Income Tax Landscape Shifts: More Taxpayers in Higher Slabs, Yet Compliance Challenges Loom

In a remarkable revelation, the Income Tax Department has just unveiled statistics for assessment years 2019-20 to 2021-22, painting a vivid picture of the evolving tax landscape in India. These figures not only depict wider compliance but also a fascinating shift in the income brackets of taxpayers, with more individuals transitioning from lower-income slabs to higher ones. Nevertheless, a lingering concern for policymakers is the substantial number of taxpayers who have been brought into the tax net but continue to abstain from filing their returns.

Staggering data from the latest assessment year, 2021-22 (covering the financial year 2020-21), showcases a substantial surge in tax return submissions. A whopping 6.75 crore taxpayers filed their income tax returns during this period, marking a significant increase of 5.6 percent from the previous year, where the figure stood at 6.39 crore taxpayers. However, what’s truly intriguing is that in addition to these diligent filers, an astounding 2.1 crore taxpayers chose to pay their taxes but refrained from filing returns.

These statistics have not gone unnoticed, with opposition leaders pointing out the widening gap between the ultra-rich and the middle class, as evident from the Income Tax Return (ITR) data. Responding to these concerns, the tax department issued a comprehensive statement on Thursday. They revealed that the returns filed by individual taxpayers had skyrocketed by a staggering 90 percent over a nine-year span, stretching from Assessment Year 2021-22 (financial year 2020-21) to AY 2013-14.

This remarkable growth is hailed as a direct consequence of various measures taken by the tax department. It indicates the progressive widening of the tax bracket, revealing a robust growth in the gross total income of individuals across various income groups. These revelations underscore the evolving dynamics of India’s tax landscape, with compliance increasing and taxpayers seemingly climbing the income ladder. However, the persistent issue of unfiled tax returns remains a cause for concern, and policymakers are undoubtedly keeping a close eye on this segment of the population. As the tax department continues to refine its measures, it’s a reminder that everyone must play their part in the nation’s fiscal ecosystem.

Vakilsearch’s financial expert, commented on the latest income tax statistics, saying, ‘The shift towards higher-income slabs is a promising sign for the economy, indicating improved earning capacity. However, the persistent challenge of non-filing among taxpayers demands attention. This could be attributed to a lack of awareness or misconceptions about tax compliance. It’s crucial for taxpayers to understand their obligations, and we at Vakilsearch are here to assist with expert guidance and legal services to ensure they stay on the right side of the law.’

Steady FMCG Ebitda Margins Amidst Sluggish Volume Growth

Fast-moving consumer goods (FMCG) companies are experiencing an interesting trend. Although the growth in product sales, particularly in rural areas, has been slow, the profitability measure known as EBITDA margins remains strong. This is due to a decrease in commodity prices and cost-control measures implemented by companies.

Despite claims by companies that they are investing in their brands to boost sales, the data tells a different story. In the past year, rural sales growth in the domestic FMCG market has improved from a decline of 3.6% in the September 2022 quarter to 7% in the September quarter of this year, according to Nielsen data.

FMCG companies, including Hindustan Unilever, Godrej Consumer, Dabur, Marico, and Britannia, say they are passing on the benefits of lower commodity prices to consumers. However, this doesn’t reflect in the rural sales growth numbers, which continue to be lower than urban sales growth.

Urban sales growth is reported at 10% in the September 2023 quarter, up from 1.7% a year ago. Companies argue that the positive impact of price cuts will take time to show.

Experts suggest that for the FMCG market to achieve strong double-digit sales growth, rural markets need to outperform urban markets. Traditionally, rural markets have led in growth, but there is now a trend where urban markets are ahead in terms of sales growth for several quarters.

Factors like inflation and weather uncertainty have affected rural demand, and companies need to focus on rural markets to boost sales growth. Over a third of FMCG sales come from rural areas, where the purchasing power of consumers is lower. To drive sales, companies need to focus on affordable products, a role currently played by small and regional FMCG manufacturers.

HUL, the largest FMCG company, acknowledges losing value market share to small players in certain categories. The company is addressing this through its ‘Winning in Many Indias’ strategy and will continue passing on commodity price gains to consumers.

Other companies like Dabur, ITC, Marico, and Godrej Consumer plan to focus on distribution and manufacturing expansion, along with digitisation initiatives, to counter competitive pressures.

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Direct Listing on Foreign Exchanges: Impact on Indian Companies

In a bid to broaden their financial horizons, Indian companies typically seek public listings to gain access to increased capital. This expansion allows for business growth, product launches, and debt reduction. While many businesses in India traditionally tap into the domestic equity markets, a recent change in regulations has opened the door for them to explore foreign stock exchanges, potentially unlocking even greater funding opportunities.

However, existing Indian laws prohibit companies incorporated in the country from directly listing on foreign stock exchanges. Some Indian companies, such as Infosys, Tata Motors, HDFC Bank, and MakeMyTrip, have managed to list overseas in the past through a method involving Depositary Receipts (DRs).

In simple terms, this involves an Indian company selling its shares to a local bank (like Stock Holding Corporation of India, HDFC Bank, or ICICI Bank), which then safeguards the shares. Simultaneously, a depositary bank overseas collaborates with the Indian bank to create Depositary Receipts (DRs). For every set number of shares held by the Indian bank, a corresponding number of DRs are issued. These DRs, representing the value of the underlying Indian shares, are then traded on foreign stock exchanges, allowing foreign investors to access the Indian company’s stock.

However, a recent amendment to the Companies Act in 2020 signals a potential shift. The government has allowed certain Indian companies to take a direct route and list on foreign stock exchanges, bypassing the need for DRs. This move eliminates the hard process of obtaining clearance to list on Indian exchanges before going through the additional steps of listing overseas.

While the government’s move simplifies the process, there are lingering uncertainties that need clarification. The decision to list directly on foreign exchanges could mark a significant departure from the previous method of using Global Depositary Receipts (GDRs) or American Depositary Receipts (ADRs). Foreign investors, who preferred direct investment due to currency fluctuation risks associated with DRs, may find this new approach more appealing.

The delay in implementing simpler rules for DRs, which were introduced in 2014, was partly due to concerns about potential misuse for money laundering. A past GDR manipulation scam worth over $150 million raised red flags, as individuals manipulated interrelated companies to artificially inflate stock prices, causing regulators to approach the new rules cautiously.

With the 2020 amendments and added measures to combat money laundering, the government aims to address these concerns and facilitate smoother overseas listings for Indian companies. While specific details are yet to be clarified, these recent changes represent a positive step towards making it easier for Indian businesses to raise funds on international platforms.

No Legal Identity for a Billion People Globally, Says UN Body

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In our increasingly interconnected world, a startling reality has come to the forefront: approximately one billion people worldwide lack a legal identity. The United Nations’ International Organisation for Migration (IOM) recently drew attention to this pressing issue, highlighting the challenges it poses for both these individuals and the nations they call home. To tackle this crisis head-on, the IOM hosted the Legal Identity and Rights-Based Return Management Conference at the UN City in Copenhagen, Denmark, from October 30-31, 2023.

The conference’s primary objective was to facilitate a meaningful dialogue between countries of origin and destination regarding the billion individuals living in the shadows without legal identities. The consequences of this identity void are severe, as it renders them invisible to their own states, depriving them of essential services and restricting their mobility. Lacking legal recognition, many are forced into longer, riskier, and irregular migration routes, exposing them to various dangers.

A significant outcome of the conference was the commitment of government officials from both origin and destination countries to promote cross-regional legal identity exchanges. This collaborative effort is viewed as a pivotal strategy to enhance migration safety, increase regularity, improve readmission rates, and stimulate socio-economic growth through international cooperation and enhanced border governance partnerships.

Jens Godtfredsen, Ambassador for Migration, Return, and Readmission at Denmark’s Ministry of Foreign Affairs, stressed the urgency of addressing the global identity gap. He emphasised that the absence of legal identification makes it extremely challenging for these individuals to access basic social services, pay taxes, participate in democratic processes, or even open a bank account. The lack of legal identity also significantly contributes to irregular migration, adding to the complexity of global migration challenges.

The conference underscored the importance of sharing best practices through cross-regional exchanges to enhance national policies and coordination mechanisms. By adopting a rights-based approach, it becomes possible to reduce the vulnerabilities of migrants and enhance their well-being. Representatives from various countries, including Somalia, Lebanon, Iraq, Cabo Verde, El Salvador, and Mozambique, affirmed the significance of international cooperation between countries of origin and destination. This collaboration can facilitate the digitisation of legal identity systems and national archives, further promoting a rights-based approach to return management.

This initiative was organised within the framework of IOM’s Global Programme Enhancing Readmission and Legal Identity Capacities (RELICA), launched in 2022. The conference shed light on the urgent need to address the legal identity crisis affecting a billion people worldwide, underlining the importance of a unified global effort to find concrete solutions and promote a more inclusive and secure world for all.

AI: Promise and Precautions on the Legal Tech Frontier

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Artificial Intelligence (AI) has become a global buzzword, captivating the legal field with the promise of revolutionising the way legal professionals work. However, beneath the hype lies a nuanced reality that deserves careful consideration. As explored in the recent book ‘The Legal Tech Ecosystem,’ AI isn’t a standalone revolution but a vital component of an integrated framework that, when thoughtfully leveraged, can expand the use of technology in legal teams.

In-house legal teams stand to gain significant advantages from AI when they approach its implementation in a pragmatic manner. Targeted AI applications offer tangible productivity benefits. For instance, AI algorithms can swiftly analyse extensive contracts, extracting key terms and risks in a matter of hours, a task that would take days manually. Legal research is expedited as AI tools synthesise relevant precedents.

AI’s true potential lies in enhancing legal team efficiencies. It enables smaller legal teams to tackle tasks that were once the domain of large firms with vast resources. Solo practitioners can now utilise AI applications to answer common legal questions and conduct research, levelling the playing field. Enterprise legal departments also reap newfound efficiencies by using AI and machine learning to extract insights from unstructured legal data, allowing professionals to focus on higher-value strategic tasks.

However, it’s essential to acknowledge that the path to realising AI’s potential isn’t as simple as purchasing a ‘robot lawyer.’ Quality data inputs and human guidance are fundamental. AI should be viewed as a tool that augments human legal expertise and judgement, not a replacement for them. To reap the benefits, legal teams must invest in training, education, and rigorous monitoring to avoid biases and ensure responsible usage.

In embracing AI, it’s crucial to be aware of its limitations. Biases in data can result in biased outputs, and AI’s capabilities remain narrow and unpredictable. Ongoing education, both in law schools and within legal firms, is paramount. This includes teaching critical thinking around AI’s applications and ethical implications, as well as continuous training to keep employees up-to-date as AI capabilities advance.

Lawyers should view AI as a tool to augment their abilities, not as an existential threat. By responsibly harnessing AI’s potential, legal professionals can thrive in an evolving landscape. Human creativity, judgement, and empathy remain irreplaceable in the legal field.

In conclusion, the future is bright for those who embrace AI’s potential deliberately and responsibly. AI is not a substitute for experienced legal counsel and wisdom but rather a valuable addition to the toolbox, enhancing the timeless story of human progress and ingenuity in the legal profession.

Crowell & Moring Launches New Podcast on Legal Issues in Transportation

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Crowell & Moring, a renowned international law firm, has ventured into the world of podcasting with the launch of &Motion. This engaging podcast is dedicated to exploring the intricate legal landscape within the transportation industry. Hosted by Paul Keller, an accomplished IP litigation partner based in Crowell & Moring’s New York office, &Motion sets out on a mission to shed light on the multifaceted aspects of the transportation sector.

Paul Keller, a prominent first-chair intellectual property trial lawyer, specialises in patent and trade secret matters, with a particular focus on the automotive and heavy machinery industries, as well as disruptive technology spaces. He’s renowned as a thought leader in the realm of autonomous vehicles, artificial intelligence (AI), and the cutting-edge technologies poised to shape the cities of the future.

The inaugural episode of &Motion is now available, featuring an insightful conversation between Paul Keller and Crowell partners Rebecca Baden Chaney and Scott Winkelman. Both Chaney and Winkelman serve as co-chairs of Crowell & Moring’s Transportation Group, bringing their wealth of knowledge and experience to the discussion.

Listeners can easily tune in and subscribe to &Motion on popular podcast platforms such as Apple Podcasts and Spotify.

About Crowell & Moring LLP:

Crowell & Moring LLP is an esteemed international law firm with a global presence, including operations in the United States, Europe, MENA, and Asia. Leveraging extensive government, business, industry, and legal expertise, the firm is dedicated to assisting clients in capitalising on opportunities and providing innovative solutions to intricate legal matters. Crowell & Moring is consistently recognised not only for its commitment to pro bono service but also for its proactive initiatives aimed at promoting diversity, equity, and inclusion.

Explore the legal dynamics of the transportation industry with &Motion, Crowell & Moring’s new podcast – your gateway to valuable insights from industry leaders, academics, policymakers, and legal experts. Subscribe today for a deeper understanding of the legal issues shaping the future of transportation.

The Tech-driven Inflection Point for the Global Legal Industry: Opinion

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In the ever-evolving world of law, technology is poised to become a defining force. The traditional image of the legal industry may suggest resistance to change, but in reality, the sector has been experimenting with technology for decades. The late 1980s saw the introduction of the Latent Damage Project, the world’s first commercial artificial intelligence (AI) system for lawyers. Subsequently, the ’90s witnessed the advent of online dispute resolution (ODR) projects at US universities.

The pivotal turning point came in 2020 when the COVID-19 pandemic compelled legal cases to go digital. This catapulted technology to the forefront of dispute resolution practices, emphasising the legal fraternity’s need to embrace technology to meet modern demands.

As technology continues to disrupt and create new industries, it is imperative for dispute resolution practitioners to stay ahead of the curve. The legal industry now grapples with transactions and agreements that exist solely in cyberspace, necessitating the adoption of technology to ensure efficient and effective dispute resolution.

Technology offers various advantages in modern dispute resolution. It streamlines administrative work, and many law firms employ internal online case management systems for better organisation and storage of case details. Additionally, e-platforms developed by arbitral institutions and courts simplify document filing and retention. Online communication platforms like Skype and Zoom facilitate cross-border dispute resolution, while digital signatures on legally binding documents have become commonplace.

Furthermore, AI-powered tools, including knowledge management solutions and electronic discovery (e-discovery) solutions, enhance the speed and accuracy of legal research and analysis. They reduce the man-hours needed for document analysis and organisation, leading to quicker and more effective negotiations.

To prevent disputes, technology can be harnessed to facilitate alternative dispute resolution (ADR) methods. Online dispute resolution (ODR) systems offer increased flexibility and convenience. In some instances, AI-powered ODR tools have been remarkably efficient in resolving disputes quickly and amicably.

However, while technology holds immense potential, there are challenges to overcome. Generative AI, such as the AI chatbot ChatGPT, offers significant capabilities but is not without issues. It can present erroneous or fictional findings as fact, raising concerns about its reliability in legal settings.

Ethical considerations also loom large, as AI systems like ChatGPT may perpetuate biases present in their training data. Questions about privacy and data manipulation add complexity to the use of AI in law.

Despite these challenges, it is clear that technology will continue to shape the legal landscape. For law firms to remain competitive, embracing technology as best practice is no longer an option but a necessity. As the digital era unfolds, the legal industry must adapt, innovate, and leverage technology to stay ahead in the ever-changing world of law. Just as laws evolve to respond to the world’s changes, legal practitioners must evolve as well to achieve ideal outcomes and represent their clients effectively in the digital age.

‘Elopement Certificate’ Gives Soldier’s Widow Legal Status of Wife and Pension

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A unique ‘elopement certificate’ has emerged as a legal solution to a complex situation, providing a widow with the legal status of a soldier’s wife and securing her family pension. The deceased soldier’s first wife had abandoned him shortly after their wedding, leaving the soldier to remarry and spend the remainder of his life with his second wife. However, Army records continued to list the long-estranged first wife as the legal heir, resulting in the second wife being denied her rightful pension for over a year.

Recognising this injustice, Army authorities at Nagpur’s Kamptee cantonment introduced the concept of an ‘elopement certificate.’ This certificate attests to the fact that the soldier’s first wife deserted him, making it impossible to initiate divorce proceedings. The soldier’s second marriage, performed in accordance with Hindu rites, is also acknowledged in the certificate.

Official approval of the elopement certificate was granted by the veterans’ branch of Uttar Maharashtra and Gujarat sub-area. This crucial document legalises the soldier’s second marriage, thus granting his second wife the status of a legal spouse. The certificate is currently with the Army’s pension office in Allahabad for further processing.

Service rules stipulate that family pension generally goes to the first wife unless the husband remarries after a legal separation or her death. In this case, the elopement certificate serves as a crucial document to rectify the discrepancy in the Army records, ensuring the second wife receives her deserved pension.

This unique approach underscores the importance of addressing complex legal matters with creative and empathetic solutions, ensuring that individuals receive their rightful entitlements, even in unconventional circumstances.

IndiaFirst Life Makes History as the First Indian Insurer to Unlock GIFT City’s Global Finance Hub

IndiaFirst Life Insurance Company Ltd (IndiaFirst Life) has achieved a historic milestone, cementing its status as one of the fastest-growing private life insurers in India. The company has proudly become the first Indian life insurance company to secure the coveted International Financial Services Centre (IFSC) Registration within Gujarat International Finance Tec (GIFT) City.

Rushabh Gandhi, Deputy CEO of IndiaFirst Life Insurance Company Ltd, expressed elation at this achievement, saying, ‘IndiaFirst Life is proud to be the first Indian life insurance company to receive the GIFT City IFSC registration. We aim to enhance our market presence and capitalise on the customer outreach opportunities at a global level. IndiaFirst Life’s entry into the high-tech and ultra-modern financial ecosystem of GIFT City IFSC empowers us to safeguard lives and create value for our international customers, particularly NRIs (non-resident Indians) banking with our partner banks – Bank of Baroda and Union Bank of India’.

This remarkable feat was made possible by obtaining registration from the International Financial Services Centre Authority (IFSCA) in September 2023, following approval from the Insurance Regulatory and Development Authority of India (IRDAI) in August of the same year. With this pivotal registration, IndiaFirst Life is now poised to reach a wider global audience, leveraging the expansive opportunities offered by GIFT City.

The company has taken a strategic step by reserving a dedicated office space in GIFT City, demonstrating its readiness to embark on this new chapter as soon as the necessary paperwork is finalised. GIFT City IFSC stands as the gateway to international finance in India, with a grand vision of becoming a global hub for technology and finance. Backed by the Indian government, it provides a conducive ecosystem for vital economic operations, boasting globally benchmarked laws, taxes, policies, and more.

IndiaFirst Life’s remarkable achievement aligns seamlessly with GIFT City’s vision for transforming India into a global financial epicentre. As they set their sights on serving a diverse, international clientele, this milestone heralds an exciting era of growth and innovation for the company.

Vakilsearch experts believe that IndiaFirst Life Is a strategic move to secure IFSC registration is a game-changer in the insurance industry. It not only reflects their commitment to innovation but also their determination to provide comprehensive coverage to their international customers, especially NRIs banking with partner banks, Bank of Baroda and Union Bank of India. This development aligns perfectly with GIFT City’s vision to transform India into a global financial hub.

IndiaFirst Life Insurance Company’s remarkable achievement in securing the GIFT City IFSC registration opens up a world of opportunities for the insurer. As they venture into this dynamic financial ecosystem, they are well-prepared to provide innovative insurance solutions to customers around the globe. For legal support and IRDAI registration contact our team today to explore how we can help you make your mark in the world of business and finance.