ArchiveJune 2009

SEBI’s Recent Primary Market Reforms

SEBI last week announced a slew of reforms to the primary capital markets. The key reforms are as follows:Anchor InvestorsThe concept of “anchor investors” has been introduced in public issues whereby 30% of the institutional (QIB) portion will be allocated to anchor investors on a discretionary basis. This is to ensure minimum commitments from key investors that not only boosts the prospects of...

Lead Managers, Bond Issues and Taxes

Previous posts have examined the scope of Indian taxation of fees for technical services that are paid to non-residents. This is an increasingly common commercial practice, especially in the context of issuing shares or bonds abroad. An interesting issue that has arisen recently before the Bombay ITAT is whether Indian companies that make use of this service are liable to make provision for TDS...

The Practice of Corporate Governance in India

As far as corporate governance is concerned, although there are detailed norms on paper in the form of Clause 49 of the listing agreement, what matters is their implementation in practice. There are limits to legislating on corporate governance as a lot depends on the integrity and ethical values of various corporate players such as directors, managers, promoters and other stakeholders. There is...

Ranking of India’s Top Law Schools – 2009

India Today has just published its survey of top educational institutions in India. As far as law schools are concerned, there has been a shuffle at the very top compared to 2008. National Law School of India University, Bangalore has regained the top spot, while NALSAR, Hyderabad ranks second. They are followed by Faculty of Law, Delhi University (3rd), National Law Institute University, Bhopal...

Possible Delay in LLP Tax Clarification

Although the Limited Liability Partnership Act came into effect on April 1, 2009, it appears that only about 38 limited liability partnerships (LLPs) have registered themselves under this new legislation. One of the key shortcomings of the existing regime is the lack of clarity on taxation of LLPs as the Income Tax Act does not deal with such a business entity. Although it was earlier expected...

Duties of the Official Liquidator: Madras HC decision

A recent judgment of the Madras High Court throws some light on the role of an Official Liquidator. In TCI Distribution Centers v. Official Liquidator (C.A. 1953/2008 in C.P. 526/2000), the Official Liquidator had sold certain properties through an auction-sale. The auction-purchaser later found out that the properties were not exactly the same as described in the sale advertisement. The...

SEBI notifies Delisting Regulations 2009 – old but matured wine in a new bottle

SEBI has notified Regulations for delisting of equity shares (available here). While I will post a more detailed article over the weekend, some quick comments follow. Delisting of equity shares is without any doubt a sensitive and controversial issue. A listed company may have several valid reasons for delisting its equity shares. However, even a whisper of delisting is often found sufficient to...

Government’s ‘Independent’ Directors

With the U.S. Government controlling various companies now, it is in the process of revamping the boards of directors of such companies. The obvious question relates to the role that the Government would take in the management of the companies, and particularly in the selection of their directors. In an op-ed column in the New York Times (NYT), Professors Gilson and Kraakman suggest the idea of a...

Prospects for Recovery of Capital Markets

Now that green shoots are visible in the Indian markets with some encouragement from the formation of the new Government, there is an expectation that capital markets are poised for recovery. There seems to be a steady flow of foreign capital into the Indian markets, and Indian companies too seem to be raising capital, albeit from institutional sources. If the trend were to continue, there could...

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