ArchiveNovember 2009

Dissecting Indian Corporate Governance

India Knowledge@Wharton carries a discussion (or a mutual interview of sorts) between Wharton professors Jitendra Singh and Harbir Singh and former SEBI Chairman M. Damodaran on several issues pertaining to Indian corporate governance, including the role of independent directors. The discussion is rich in that it dissects several fundamental issues of Indian corporate governance, such as whether...

The SEBI-NSDL Controversy

The recent decision of the SEBI to set aside as ultra vires two orders passed by a Special Committee set up by it has led to a huge furore in commercial and legal circles. The origin of the controversy was the appointment of CB Bhave as the Chairperson of the SEBI at a time when SEBI was investigating the propriety of the actions of the National Securities Depositary Limited (“NSDL”), in relation...

Some Literature on Governance and Social Responsibility

Professor Balasubramanian of IIM Bangalore has posted two interesting papers. In the first paper, Addressing Some Inherent Challenges to Good Corporate Governance, he examines certain specific issues arising due to the concentrated ownership in Indian listed companies. Specifically, he notes: While the objectives of good governance, namely creation, protection and equitable distribution of...

‘Principal place of business’ – Oral Arguments in Hertz v. Friend

An earlier post had discussed the issue in Hertz v. Friend, which calls upon the United States Supreme Court to determine what is the ‘principal place of business’ of a corporation having operations in more than one State. The Court heard the matter on 10th November, and the transcript is available here. Unfortunately, while it makes interesting read, the potential the case seemed to have for a...

Bits of Interest

1. Siddharth Shah, et. al., offer suggestions for amendment of the SEBI Takeover Code in light of its review by the Takeover Regulations Advisory Committee (TRAC); 2. Shantanu Surpure and Rashi Saraf compare and contrast the regulations in the US and India regarding insider trading, and point to the difficulties in successful investigation and prosecution of violations; 3. Sandeep Parekh...

Yet Another Controversy over Section 14A

Earlier posts here had discussed the decision of a Special Bench of the Bombay ITAT in Daga Capital and the possible inequities that could result from its interpretation of section 14A. The most significant one was that expenditure could be disallowed even if no nexus was established between the expenditure and tax-free investment income. To quote from an earlier post explaining the inequity...

A Round-up on Recent SEBI Reforms

Earlier this week, SEBI announced a slew of capital market reforms. This comes in the wake of recovery in the markets as well as the Government’s intention to undertake disinvestments in public sector undertakings (PSU). The principal reforms and their impact are discussed below. Small and Medium Enterprises (SMEs)SEBI has established a separate regime for listings by SMEs. Companies listing on...

Auxiliary Activities and Permanent Establishments

We have discussed on several occasions the extent to which a liaison office of an MNC is taxed, and more generally, the concept of a “permanent establishment”. A series of decisions in 2009 has introduced some clarity in the analysis of what constitutes a permanent establishment and what does not. To briefly recapitulate, although s. 9(1) of the Income Tax Act, 1961, enumerates circumstances...

Law Firms and Joint Ventures

A few months ago, we had posted about a paper by Professor Jayanth Krishnan on issues that revolve around the opening up of the Indian legal sector to foreign law firms. He has now released the results of another interesting piece of research titled The Joint Law Venture: A Pilot Study that examines the rate of success or failure of joint ventures between law firms by looking closely at the...

E-Voting in Indian Companies

Public (or retail) shareholders in a company usually exhibit traits that result in “collective action problems”. This refers to the difficulties that arise in achieving consensus among a diffused set of shareholders who do not play an active role in the company. These problems are exacerbated by the heterogeneity of interests and differing levels of information available with these shareholders...

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