ArchiveMarch 2011

Changes to FDI Policy – Part I: Convertible Securities

The Department of Industrial Policy and Promotion (DIPP), Government of India today released its new edition of the Consolidated FDI Policy, Circular 1 of 2011 that comes into effect April 1, 2011. This is part of the bi-annual review process that the DIPP commenced last year so as to ensure that the policy is in tune with dynamics in the economy and industry. The recent round of review has...

SEBI’s Call to Promote Market Transparency

In a circular issued this week, SEBI has advised market intermediaries to put in place a code of conduct and internal controls to prevent circulation of rumours and unverified information in blogs, chats and messenger sites. SEBI seeks to impose a check on circulation of such information, as “market rumours do considerable damage to the normal functioning and behaviour of the market and distort...

Res Judicata, Venture Global and s. 48 of the Arbitration Act

It was commonly believed until the well-known decision of the Supreme Court in Venture Global that s. 34 of the Arbitration and Conciliation Act, 1996 did not apply to foreign awards. We have discussed at length the subsequent development of the law on implied exclusion and a challenge to a foreign award. A single judge of the Delhi High Court, in Anita Garg v Glencore, recently considered a...

Cairo Regional Centre for International Commercial Arbitration Rules, 2011:

(The following post is contributed by Rohan Bagai) Notwithstanding the levitating political imbroglio in the Arab Republic of Egypt in the recent times, the Indian corporates (especially the fast moving consumer goods (FMCG) and the automakers) have enjoyed tempting tax breaks, favored trade treaties, and prompt approvals for operating businesses in the transcontinental nation of Africa. In this...

Nomination Committees of Corporate Boards

The recent episode relating to the nomination of directors for appointment on the board of Hewlett-Packard Co. brings to the fore the role of the nomination committee. Institutional Shareholder Services (ISS), a shareholder advisory group, recommended a vote against certain nominees on the ground that HP’s nomination committee was heavily influenced by the HP CEO, Leo Apotheker. While HP’s...

Pledge of Demat Shares: Implications Under Takeover Regulations

A somewhat peculiar situation came up for consideration of the Securities Appellate Tribunal (SAT) in Liquid Holdings Private Limited v. SEBI, on which SAT passed its order on March 11, 2011. Background Liquid Holdings Private Limited (Liquid) was one of the promoters of Blue Coast Hotels Limited (the Target). Morepen Laboratories Limited, a group company of Liquid, obtained loans from two banks...

Streamlined Procedure for Incorporation of Companies, etc.

(The following post has been contributed by Rohan Bagai) The Ministry of Corporate Affairs, Government of India (“MCA”) has recently notified a General Circular No. 6/2011 dated March 8, 2011 (the “Circular”) simplifying the procedure for incorporation of companies and establishment of principal place of business in India by foreign companies. In this regard, MCA has come up with certain key...

Actions Against Independent Directors

On March 11, 2011, SEBI passed an order in relation to Pyramid Saimara Theatre Limited (PSTL) restraining three of its independent directors (Mr. K.S. Kasiraman, Mr. K. Natarahjan and Mr. G. Ramakrishnan) from being independent directors or members of audit committees of any listed company for a period of two years from March 11, 2011. The order was passed on the ground that these independent...

Court of Appeal on Concurrent Liability

Earlier this year, the UK Court of Appeal was called on to consider an important question dealing with concurrent liability in contract and tort. The facts in Robinson v. Jones involved the defective construction of a house by a builder, which caused economic loss to the purchaser. However, the contractual remedy was barred by limitation. As a result, the purchaser sought to argue that he had a...

Waiver of a Loan – Capital or Revenue?

Recently, the Delhi High Court was called on to decide the interesting question of the tax treatment of loans and interest waived by financial institutions. In Logitronics v. CIT, the Court considered two cases which raised similar issues, and held that the treatment of the waived loan amount would depend on the purpose for which the loan was taken. In the first case, the assessee had taken loans...

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