The PCAOB or Public Company Accounting Oversight Board is a body established in the aftermath of Enron and the enactment of Sarbanes-Oxley and reviews the intensity and the integrity of audits by auditors on a regular basis. Until recently, the requirements of review pertaining to foreign companies (such as Satyam) that are registered with the SEC were somewhat lenient compared to domestic U.S...
Imminent Developments in Competition Law
Guest contributor R.V. Anuradha points to a news report indicating that the long-awaited Competition Commission of India (CII) would be functional on April 1, 2009. This will replace the existing Monopolies and Restrictive Trade Practices Commission (MRTPC) signifying an important step in Indian competition law. As the news report states, that day will also mark another milestone, which is the...
A Way around Daga Capital?
An earlier post had discussed a decision of a Special Bench of the Mumbai Income Tax Appellate Tribunal (ITAT) in Daga Capital [26 SOT 603], highlighting its far-reaching implications on expenditures incurred ‘in relation to’ the earning of tax-free income under the Income Tax Act (Act). The Special Bench, following the Supreme Court decision in Doypack Systems [(1988) 2 SCC 299], held that the...
Direct and Indirect Foreign Investment: Is There Clarity Now?
Last week, we had blogged about new guidelines that were announced on indirect foreign investments, wherein some questions were raised regarding the scope of these guidelines. However, since then, the Government has issued two Press Notes on February 13, 2009 that contain detailed provisions for implementation of the new guidelines. Press Note 2 of 2009 deals with calculation of total foreign...
Proposal for Uniform Par Value on Shares
In a previous post, we discussed the difficulties posed by the current system of par value of shares whereby companies are free to determine the par value of their shares. Some of these difficulties will be addressed in SEBI’s proposal to create a uniform par value system for all listed companies. However, the current proposal falls short on two counts: (i) unlisted companies can still have...
SEBI amends Takeover Regulations – but on a narrow, Satyam-type cases, compass
SEBI has amended the Takeover Regulations today, Friday, 13th February 2009 (see here) and the subject is what we had all been expecting and that it is an enabling provision to exempt open offer requirements in Satyam-like cases. The amendment empowers SEBI to exempt from one or more provisiions of the Chapter III of the SEBI Act, mainly thus from the requirement of making an open offer and...
“Beyond Satyam: Analyzing Corporate Governance in India”
That was the theme for a panel discussion organized last week in New York by the Jindal Global Law School. The panel consisted of internationally renowned academics and practitioners of corporate governance: Mr. Roel Campos, former SEC Commissioner, Professor John Coffee of Columbia Law School, Professor Michael Useem of the Wharton Business School and Professor Vikramaditya Khanna of Michigan...
Enforceability of Options in Securities
The Mint carries an article by Archana Rajaram and Amrita Singh that discusses the current position on the enforceability of put and call options on securities of an Indian company. The Securities Contracts (Regulation) Act, 1956 (SCRA) and the notifications issued under that permit only ‘spot delivery’ contracts in securities transactions outside the exchange. A spot delivery contract is one...
FDI in Indian Investing Companies
Indirect investment into Indian operating companies that are the subject matter of sectoral percentage caps on foreign investment has always been a vexed question. For instance, if a foreign company invests directly into an Indian operating company, and also invests in another Indian company that in turn invests into the operating company, how should the investments be treated for the purpose of...
Lessons for Financial Sector Regulation
Lloyd Blankfein, the chief executive of Goldman Sachs, offers his explanation of the things that went wrong in the financial services sector which resulted in contagion and the global financial crisis. In his column in the Financial Times, Blankfein outlines the failings and the lessons from the crisis: – risk management should not be predicated on historic data;– outsourcing of risk...
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