ArchiveAugust 2008

Simplifying Qualified Institutional Placements and Rights Issues

(In the following post, Shantanu Naravane examines recent changes to the SEBI DIP Guidelines made with a view to promoting qualified institutional placements and rights issues) The concept of Qualified Institutional Placements [“QIP”] was introduced in India, with effect from May 8, 2006, by virtue of an amendment to the SEBI (Disclosure & Investor Protection [“DIP”] Guidelines, 2000...

Official Liquidator and Misfeasance Proceedings

(The following post has been contributed by V. Niranjan) Under s. 457 of the Companies Act, a liquidator has wide powers to ensure fair and equitable distribution of its assets. These powers are general in nature, and their scope and extent are well known. In addition, the Official Liquidator also has the power to compel a director or an officer to restore any wrongful benefit arising out of...

Inconsistency in Accounting Norms

There have been news reports lately that bring to the fore the inconsistency between the accounting standards issued by the Institute of Chartered Accountants of India (ICAI) and the requirements in Schedule VI of the Companies Act, 1956 in relation to exchange losses incurred by companies on foreign currency-denominated transactions (see here and here). A Business Standard editorial goes beyond...

The Breakdown of the Doha Round

(The following post has been contributed by Mihir Naniwadekar) Trade talks at the WTO over the Doha Round (now in its seventh year) broke down late last month in Geneva after intense negotiations failed to resolve a deadlock between India and China on the one hand and the US and EU on the other. This short note will look at the differences which led to the breakdown, and the implications of the...

Trading in Currency Futures permitted on Indian Stock Exchanges

The RBI and SEBI have jointly published guidelines for trading in currency futures on Indian stock exchanges yesterday. This would help further widen the derivative markets in India – While currently only trading in INR-USD futures is permitted, it may be further expanded at a later stage. A currency future is a standardised foreign exchange derivative contract traded on a recognized stock...

Employment Restrictions on PSU Executives: How Valid Are They?

One of our regular readers points us to this news report: “Top level public sector executives, including directors and chief executives, will not be able to join private firms after retirement or resignation unless they get go-ahead from the government. If they decide to join, they may have to pay damages to the government for violation as per the bond or agreement signed with the department...

When Can Directors be Held Responsible for Offences Committed by Their Companies?

(The following post contributed by Gautam Bhatia, a III Year B.A., LL.B (Hons.) student at the National Law School of India University, Bangalore deals with an important, but often controversial, issue of whether directors should be held criminally liable for offences by companies) The case of Maksud Saiyed v. State of Gujarat, decided by a two judge bench of the Supreme Court in September 2007...

Miscellaneous: Commodities Trading; Venture Capital, etc.

1. Commodities Futures Trading A few papers and columns have recently appeared in this area. In a paper titled Futures Trading in Agricultural Commodities, Sandhya Srinivasan finds that the ban on futures trading on 4 agricultural commodities in May this year has not been effecting in bringing down the price of all these commodities. Here is the abstract: “On 7 May, 2008, the Indian Government...

Stock Options for Nominee Directors

Nominee directors on Indian corporate boards are a unique category of directors. They are usually are nominated by a bank, financial institution or other large investor to be a director on companies in which such nominating entities have invested. Sometimes, nominee directors also find themselves in an unenviable position – in case of a conflict between the interests of the nominating institution...

A Recent Pronouncement on Enforcement of Foreign Arbitral Awards

(Arbitration clauses have attained ubiquity in international commercial contracts, such as joint venture agreements, involving Indian companies. However, considering the short span of time that the Indian Arbitration and Conciliation Act, 1996 has been in existence, these provisions have not been fully tested in practice. In this following post, Venugopal Mahapatra, a III Year B.A., LL.B (Hons.)...

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