(The following post has been contributed by Rahul Singh, Assistant Professor of Law, National Law School, Bangalore (on leave) and Senior Associate, Trilegal) We live in interesting times where the Minister for Corporate Affairs (Indian competition authority’s administrative Ministry) speaks about helping Kingfisher Airlines and slaying the dragon of runaway inflation through the so-called second...
SAT on Disclosures Regarding “Promoters”
The Securities Appellate Tribunal (SAT) has issued its decision overturning an order of SEBI’s adjudicating officer that had found Enam Securities to have violated securities laws in connection with the IPO of Yes Bank. One of the key issues in contention was whether Rabobank ought to have been disclosed as a “promoter” of Yes Bank. On facts, while the application to the Reserve Bank of India...
Arbitrability of an Unfair Prejudice Claim (Part II)
(continued from earlier) The next argument was that any unfair prejudice claim under s.994 attracts a degree of state intervention and public interest such as to make it inappropriate for disposal by anything other than judicial process, independent of the nature of the claim or the company in this particular case. In response, the Court undertakes a historical analysis of the unfair prejudice...
Arbitrability of an Unfair Prejudice Claim (Part I)
A recent post considered the relation between arbitration and company law, in the context of the inability of arbitration to develop the body of corporate law jurisprudence. Another fascinating area of substantive overlap, is the arbitrability of company law disputes, which the UKCA in Fulham v David Richards was called on to consider in relation to claims of unfair prejudice. Given the fact...
Informal Guidance on Preferential Allotment
SEBI has issued an informal guidance to Strides Arcolabs in connection with the company’s eligibility to issue securities to its promoters on a preferential allotment basis. The information guidance essentially pertains to the interpretation of Reg. 72(2) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 (ICDR), which reads as follows: The issuer shall not make...
Calcutta High Court: Stamp Duty on Mergers/Demergers
We have earlier discussed the peculiar issues that have arisen on whether schemes of arrangement in the form of mergers and demergers are liable to stamp duty in states where the Indian Stamp Act applies or where there is no specific entry for levying stamp duty on such transactions. In relation to several states such as Delhi, Tamil Nadu and Uttar Pradesh, the relevant High Courts have held that...
Minority Shareholder Protection in M&A
The Economic Times examines a recent trend whereby companies have preferred asset sales or business sales (also known as “slump sales”, an expression that bears uniqueness to India, as I am yet to come across that expression elsewhere) over takeovers thereby shortchanging minority shareholders of the seller companies. The argument goes: by structuring the deal as a business sale, all that is...
Corporate Law and Arbitration
The virtues of arbitration as a method of resolving commercial disputes are well-known. The primary benefits of arbitration over the conventional court system are the reduction in costs and delays. However, during a recent conversation with a senior corporate counsel, I was given to understand one drawback in using arbitration as a method of resolving disputes in corporate law. And, that is its...
SAT on Scope of Insider Trading
In the past, the SEBI regulations against insider trading were attracted only if the insider traded “on the basis of” unpublished price sensitive information (UPSI). Since it became unduly onerous on SEBI to prove that the trading was “on the basis of UPSI”, regulation 3 was amended to provide that an insider trading offence would be committed if the trading was carried out merely “when in...
Facebook’s Capital Structure and Governance
In the wake of Facebook’s mega-IPO, the Deal Professor examines the capital structure of the company, whereby it has decided to follow suit from the earlier high-profile Internet IPO of Google and go with a dual-class share structure. He notes: … an investment in Facebook is really an investment in Mr. Zuckerberg: Facebook’s offering documents show he will retain control over Facebook even when...
Recent Comments