It is believed that the treatment of corporate social responsibility (CSR) was one of the key sticking points that delayed the Companies Bill, 2011. Now that there is some clarity, it would be useful to examine the relevant provisions. Clause 135 read with Schedule VII of the Bill deal with the concept of CSR. A number of requirements emerge: 1.The Bill requires large companies (determined with...
Companies Bill, 2011
The Companies Bill, 2011 was introduced in the Lok Sabha today. A copy is available through the PRS Legislative Research website. A cursory review of the Bill suggests that there are a number of changes from the Companies Bill, 2009, which was expected considering the level of detailed examination undertaken by the Parliamentary Standing Committee last year. We will have the opportunity to...
IRDA Regulations on Insurance IPOs
Earlier this month, the Insurance Regulatory and Development Authority (IRDA) issued norms for IPOs by life insurance companies. Referred to as the IRDA (Issuance of Capital by Life Insurance Companies) Regulations, 2011, they set out certain preconditions for life insurance IPOs and also specify additional disclosure requirements. The following are some key points: 1. The regulations impose...
Bank Investments in Non-Financial Services Companies
The Reserve Bank of India (RBI) has tightened the control over investment by banks in other companies that do not operate in the financial services sector. The rationale has been set forth in a new set of guidelines issued yesterday: Banks’ investments in companies which are not subsidiaries are governed by Section 19(2) of the Banking Regulation Act, 1949 (B.R. Act). There is no requirement, at...
Shareholder Activism and Proxy-Advisory Firms
One constantly hears calls for greater activism among shareholders (particularly institutional investors) as one of the measures towards enhancing corporate governance in India. A method that has been utilized in other jurisdictions such as the U.S. is through proxy-advisory firms who advise investors on how to vote on resolutions proposed by companies. The concept of proxy-advisors seems to have...
The Proviso, Public Interest and Section 391
In Re Subhiksha Trading Services Ltd [161 CompCas 454], a single judge of the Madras High Court has considered a number of important questions relating to the role of the Company Court in sanctioning a scheme of arrangement or amalgamation under sections 391-4 of the Companies Act. Subhiksha Trading Services Ltd. [“STS”], the transferor company, was engaged in the business of trading in articles...
More on Mandatory CSR
While the introduction of the new Companies Bill in Parliament is eagerly awaited, one issue continues to hold a great amount of attention. Although the concept of corporate social responsibility is generally well-accepted and welcome, more voices are being heard against imposition of a mandatory requirement. Recent pieces by Pratap Bhanu Mehta and Ajay Shah and a Business Standard editorial...
Insider Trading: Role of the Compliance Officer
A few years ago, SEBI’s Insider Trading Regulations were amended to specifically introduce the concept of self-regulation as a mechanism to enforce prohibitions on insider trading in companies. This particularly applies to trading by company insiders (such as directors and employees) in shares of a company prior to significant announcements. In that set of amendments, SEBI prescribed a model code...
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