The Surrogacy (Regulation) Bill, 2016 was introduced in Lok Sabha on November 21, 2016 and is listed for passage this week. The Bill regulates altruistic surrogacy and prohibits commercial surrogacy. We present a brief overview of the Bill and some issues that may need to be considered:
How is surrogacy regulated under the Bill?
The Bill defines surrogacy as a practice where a woman gives birth to a child for an eligible couple and agrees to hand over the child after the birth to them. The Bill allows altruistic surrogacy which involves a surrogacy arrangement where the monetary reward only involves medical expenses and insurance coverage for the surrogate mother. Commercial surrogacy is prohibited under the Bill. This type of surrogacy includes a monetary benefit or reward (in cash or kind) that exceeds basic medical expenses and insurance for the surrogate mother.
What is the eligibility criteria for couples intending to commission surrogacy?
In order to be eligible, the couple intending to commission a surrogacy arrangement must be a close relative of the surrogate mother. In addition, the couple has to prove that they fulfil all of the following conditions:
Additional eligibility conditions that the intending couple need to meet may be specified by regulations. It could be argued that the qualifying conditions for surrogacy should be specified in the Bill and not be delegated to regulations.
Who is a close relative under the Bill?
The Bill does not define the term close relative.
Who is eligible to be a surrogate mother?
The surrogate mother, apart from proving that she is a close relative of the couple intending the surrogacy, also has to prove all the following conditions:
What will be the legal status of a surrogate child?
The Bill states that any child born out of a surrogacy procedure shall be the biological child of the intending couple and will be entitled to all rights and privileges that are available to a natural child.
What is the process for commissioning a surrogacy?
The intending couple and the surrogate mother can undergo a surrogacy procedure only at surrogacy clinics that are registered with the government. To initiate the procedure, the couple and the surrogate mother need to possess certificates to prove that there are eligible. These certificates will be granted by a government authority if the couple and the surrogate mother fulfill all the conditions mentioned above. The Bill does not specify a time period within which the authority needs to grant the certificates. Further, the Bill does not specify a review or appeal procedure in case the application for the certificates is rejected.
What is the penalty for engaging in commercial surrogacy under the Bill?
The Bill specifies that any person who takes the aid of a doctor or a surrogacy clinic in order to conduct commercial surrogacy will be punishable with imprisonment for a minimum term of five years and a fine that may extend to five lakh rupees.
Offences such as (i) undertaking or advertising commercial surrogacy; (ii) exploiting or abandoning the surrogate mother or child; and (iii) selling or importing human embryo or gametes for surrogacy will attract a minimum penalty of 10 years and a fine up to 10 lakh rupees.
[This post has been co – authored by Nivedita Rao]
Recently, there have been instances of certain collective investment schemes (CISs) attempting to circumvent regulatory oversight. In addition, some market participants have not complied with Securities and Exchange Board of India's (SEBI) orders of payment of penalty and refund to investors. In August, the Securities Laws (Amendment) Bill, 2013 was introduced in the Lok Sabha to amend the Securities and Exchange Board of India Act, 1992 (the SEBI Act, 1992), the Securities Contract (Regulation) Act, 1956 (SCRA, 1956) and the Depositories Act, 1996. The Bill replaced the Securities Laws (Amendments) Ordinance, 2013. The Bill makes the following key amendments: a) Definition of Collective Investment Schemes The SEBI Act, 1992 defines CISs as schemes in which the funds of investors are pooled, yield profits or income and are managed on behalf of investors. It also exempts certain types of investments which are regulated by other authorities. The Bill introduces a proviso to the definition of CIS. This proviso deems any scheme or arrangement to be a CIS if it meets all three of the following conditions: (a) funds are pooled, (b) it is not registered with SEBI, or it is not exempted by SEBI Act, 1992, and (c) it has a corpus of Rs 100 crore or more. These provisions could potentially lead to some schemes not conventionally defined as CIS to fall under the definition. For instance, partnership firms operating in the investment business or real estate developers accepting customer advances could be termed as CISs. SEBI has been given the power to specify conditions under which any scheme or arrangement can be defined as a CIS. This raises the question of whether this is excessive delegation of legislative powers - usually the parent act defines the entities to be regulated and the details are entrusted to the regulator. b) Disgorgement (repayment) of unfair gains/ averted losses SEBI has in the past issued orders directing market participants to refund i) profits made or ii) losses averted, through unfair actions. The Bill deems SEBI to have always had the power to direct a market participant to disgorge unfair gains made/losses averted, without approaching a court. This power to order disgorgement without approaching a court is in contrast with the provisions of the recently passed Companies Bill, 2011 and the draft Indian Financial Code (IFC) which require an order from a court/tribunal for disgorgement of unfair gains. Further, the Bill specifies that the disgorged amount shall be credited to the Investor Education and Protection Fund (IEPF), and shall be used in accordance with SEBI regulations. The Bill does not explicitly provide the first right on the disgorged funds to those who suffered wrongful losses due to the unfair actions, unlike the draft IFC. c) Investigation and prosecution The Bill empowers the SEBI chairman to authorise search and seizure operations on a suspect’s premises. This does away with the current requirement of permission from a Judicial Magistrate. This provision removes the usual safeguards regarding search and seizure as seen in the Code of Criminal Procedure, 1973, the recently passed Companies Bill, 2011 and the draft Indian Financial Code. The Bill also empowers an authorised SEBI officer to, without approaching a court, attach a person’s bank accounts and property and even arrest and detain the person in prison for non-compliance of a disgorgement order or penalty order. Most regulators and authorities, with the exception of the Department of Income Tax, do not have powers to such an extent. d) Other Provisions of the Bill The Bill retrospectively validates consent guidelines issued by SEBI in 2007 under which SEBI can settle non-criminal cases through consent orders, i.e., parties can make out-of-court settlements through payment of fine/compensation. The United States Securities and Exchange Commission settles over 90% of non-criminal cases by consent orders. The Bill retrospectively validates the exchange of information between SEBI and foreign securities regulators through MoUs. The Bill sets up special courts to try cases relating to offences under the SEBI Act, 1992. For a PRS summary of the Bill, here.
