Business Standard reports that the Government is considering investing in the “golden share” in infrastructure projects. The report states: “The “golden share”, which will be owned by the government, will ensure that it has a say in all major decisions taken by the private concessionaire. It will also obviate the need for the government to invest in the equity of the company. The proposal has...
SEBI decides to make disclosure of pledged shares by Promoters mandatory
SEBI has finally decided to make disclosure of shares held by Promoters in listed entities owned by them mandatory (see the press release). The relevant paragraph reads as under:- “To enhance the disclosure requirements, SEBI Board, in its meeting held today, decided to make it mandatory on the part of promoters (including promoter group) to disclose the details of pledge of shares held by...
FDI and Globalisation: Where Does India’s Policy Stand?
(This is a cross-post from the Law and Other Things Blog) The theme for the January 2009 issue of Halsbury’s Law Monthly is Foreign Direct Investment (FDI) and Globalisation. The issue carries two articles that generally deal with FDI and three that specifically discuss issues on Indian policy. The first, an article titled “Globalisation and Foreign Direct Investment: Topical Issues and...
SAT Sets Aside Orders Against NSDL and CDSL
In 2007, the Adjudicating Officer of SEBI had passed orders against National Securities Depository Ltd. (NSDL) and Central Depository Services India Ltd. (CDSL) imposing a penalty of Rs. 5 crores (Rs. 50 million) and Rs. 3 crores (Rs. 30 million) respectively. The adjudication arose out of the scam in connection with various initial public offerings (IPOs) during the period 2003-05 wherein...
Satyam Update 3 – is pledge of shares insider trading?
The Economic Times reports today (17th January 2009) that SEBI is examining whether, in law, pledge of shares amounts to Insider Trading. The SEBI Committee, as the report importantly adds, will also consider whether the law should be amended whereby pledge of Promoters’ shares would now be required to be disclosed. A crisis and major scandal such as Satyam often has the good effect of speeding...
Liberalisation of External Commercial Borrowings
While most attention was shifted over the last few days towards the developments in Satyam, there have been some policy announcements further liberalising the external commercial borrowings (ECBs) that merit consideration. On January 2, 2009, the Reserve Bank of India (RBI) announced policy changes to the ECB policy as follows: – all-in cost ceilings for both automatic and approval routes...
Satyam Update 2 – What are the wrongs?
This series was proposed by the first post to take the Satyam Episode as a case study to understand what laws apply and whether and how are they appropriate to punish wrong doings. For this purpose, let us consider what are the alleged wrongs? To start with, let us shortlist some of these wrongs and then see which of them are punishable and/or capable of being compensated by law. So, without...
Clifford Chance v. DCIT: Territorial nexus in international taxation
A recent decision of the Bombay High Court in Clifford Chance v. DCIT revisits interesting legal issues connected to the taxation of non-residents under Section 9 of the Income Tax Act, 1961. Section 9(1) deals with “income deemed to accrue or arise in India”. The relevant part of the Section read – prior to 2007 – as follows: Section 9(1). The following incomes shall be deemed to accrue or arise...
Satyam Update 1 – some quick points
Some quick thoughts and updates from my side, based on published data. Later, I propose to list a few of the legal provisions that would need to be examined. The idea is to see what the present law provides for dealing with the allegations in the alleged “Satyam Fraud”. 1. The Justice Kania Committee chaired by ex-Chief Justice of India, Mr. Justice M. H. Kania, opined as early as 2005 that...
Satyam Computers – “Admission” of mammoth “fraud” – discussion and some updates
Ramalinga Raju, Chairman, of Satyam Computers is reported to have “admitted fraud” of Rs. 5040 crores (see amongst numerous other reports, this report). Without intending to overstate, I think, for India, this episode may be bigger than what Enron was for US. So many fundamental questions are likely to arise that the preliminary and obvious issues of corporate governance and role of...
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