I wrote the following in my column in Business Standard today:- It is always tempting to write a ‘year that was’ piece towards the end of December. This column will not do so. Instead, it seeks to look at three unrelated current events that would remind one of how another year may go by, but the poor quality of governance remains unresolved in India. At the political level, the Mint published a...
The Year That Was
A year ago, while ushering in 2008, there were strong signals that suggested challenging times were in the offing for the corporate sector. The global financial markets were reeling from the effects of the sub-prime crisis, and pundits had predicted the effect would be devastating. Those predictions, alas, turned out to be true – only the severity of the crisis was far greater than imagined at...
Pyramid Saimira: SEBI Investigation
A couple of days ago, the media carried reports of SEBI having directed one of the promoters to make an open offer to the shareholders of Pyramid Saimira Theatres Limited at a price that is at a substantial premium to current market price. However, just a day later, SEBI put out a clarification that it had issued no such letter, which appears to have been forged. Sensing some foul play, SEBI has...
FIPB Overrules Press Note 1 Objections
Press Note 1 of 2005 issued by the Department of Industrial Policy & Promotion (DIPP) requires foreign companies to obtain the prior permission of the Foreign Investment Promotion Board (and thereby making the automatic route for investment inapplicable) if they had a joint venture with another Indian partner in the same field. This condition is applicable for joint ventures existing in...
Analysis of Recent SAT Rulings on Insider Trading and FUTP Against Dilip Pendse
(The following post is contributed by Bhushan Shah, an Indian lawyer currently pursuing a dual degree LL.M from New York University School of Law and National University of Singapore) The Securities Appellate Tribunal (‘SAT’ or ‘Tribunal’ ) recently set aside two orders (collectively referred as ‘Impugned Orders’ ) passed by market regulator i.e. Securities Exchange Board of India (‘SEBI’)...
The “Madoff Scheme” and Failure of Regulation
The expression “Ponzi scheme” is not something we are terribly familiar with in India. To be honest, I heard of this concept only a couple of years ago. But now, these words are resonating in the media after the alleged fraud by Bernard Madoff came to light last week. New York Times’ City Room Blog has some background about Charles Ponzi: ““He had his nose pressed against the glass,” Mr. Zuckoff...
Companies Bill, 2008: No advisory services by auditors
One of the important measures taken in the Companies Bill, 2008 is to prevent Chartered Accountants from offering actuarial, advisory and management services to companies which have engaged them as statutory auditors. Section 127 of the Bill provides: An auditor appointed under this Act shall provide the company only such other services as are approved by the Board of Directors or the audit...
ARBITRAL PROCEEDINGS AND THE JURISDICTION OF COURTS
The case of Vijay Kumar Gupta v. Renu Malhotra, recently decided by the Delhi High Court, deals with the important issue of the definition of the word “Court” in the Arbitration and Conciliation Act, as well as the pecuniary jurisdiction of the High Court. In 1998, the decree-holder filed a petition before the Delhi High Court for appointment of an arbitrator under Section 11 of the Arbitration...
LLP Bill Passed in Parliament
Media reports (here and here) indicate that the Limited Liability Partnership Bill, 2008 has been passed by Parliament. It was passed in the Lok Sabha on December 12, 2008, while the Rajya Sabha had already approved the Bill on October 24, 2008. The Ministry of Company Affairs has also published on its website two sets of draft rules relating to LLP for comments from the public: 1. The Limited...
Shares and Stocks: India and Delaware
India has largely followed the scheme of the erstwhile British company law in enacting the Companies Act, 1956. This is true even in the case of share capital structures that companies can have, such as only two types of shares, preference shares and equity shares for public limited companies, and also restrictions on companies dealing with their shares, such as rules against trading by a company...
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