ArchiveMarch 2012

Further Order by SEBI on Shareholding Disclosures

(The following post is contributed by Yogesh Chande, an advocate practising in Mumbai) SEBI’s whole time member in an order dated 26 March 2012 (Order), has revoked the directions which were issued by an interim order dated 8 March 2010 (which has been discussed earlier) against the entities mentioned in paragraph 4 of the Order. One of the issues which required to be examined...

The Debate over Staggered Boards

Staggered boards are found to be a form of anti-takeover defence. This concept, which is prevalent in several U.S. companies, ensures that only a third of the board can change each year. Hence, it would not be possible for shareholders to replace the board, except through a gradual process of changing a third of the board each year. There is an interesting battle brewing in the U.S...

Secondary Market Purchases by Foreign Venture Capital Investors

The Reserve Bank of India (RBI) has issued a circular that expands the scope of investments that foreign venture capital investors (FVCIs) can make in Indian companies. Hitherto, FVCI investments were permitted either through initial public offerings or through private placements. Under the new regime, FVCIs may acquire shares in the secondary markets from existing shareholders. The operative...

Of NGOs, FDI and Corporate Governance

My fortnightly column published in today’s edition of Business Standard draws a line across (i) the government’s attitude towards companies it owns and lists on stock exchanges to raise public money; (ii) how the government can choke non-governmental organisations that protest well; and (iii) parallels between activism against bad corporate governance by the government and activism...

The Direct Tax Proposals in Budget 2012

Unsurprisingly, the retrospective amendment proposed to be made to sections 2 and 9 of the Income Tax Act has dominated analysis of the direct tax proposals in the budget. There is no doubt that these amendments, and particularly the validation clause in cl 113 of the Finance Bill, may be vulnerable to a constitutional challenge, and this is a subject we will discuss in more detail. Budget 2012...

Budget 2012: Retrospective Amendments to Sections 2(14), 2(47) and 9

Copies of the Finance Bill, 2012 and the Explanatory Memorandum are now available. During the course of the day, we will highlight the important changes made and examine their implications. The purpose of this post, however, is to highlight that the Bill proposes a retrospective amendment to sections 2(14), 2(47) and 9 of the Income Tax Act, 1961, and this amendment purports to be clarificatory...

Bombay HC in the MCX Case: Partial Reprieve to “Options” in Securities

Apart from dealing with specific issues relating to the facts of MCX’s application to commence the business of a stock exchange, the Bombay High Court’s judgment introduces greater clarity regarding the enforceability of options in securities of Indian public unlisted companies. The court was concerned with two issues pertaining to buyback and option arrangements that were entered into between...

Bombay HC in the MCX Case: Summary of the Judgment

The following is a summary of the various issues decided by the court, as extracted from the conclusions in the judgment itself: (i) Though the MIMPS Regulations in terms apply to a stock exchange in respect of which a Scheme for demutualisation and corporatisation has been approved under Section 4B, the application of those regulations was extended to the Petitioner by SEBI as a condition for...

Bhopal Gas Tragedy: Revisiting Issues of Liability under Corporate Law

Over at Critical Twenties, Arghya Sengupta has initiated a debate “on the twin issues of the legal responsibility of a successor multi-national company for the liabilities of its predecessor as well as … thoughts on the appropriateness of the Olympics partnering with such a corporation would be most appreciated.” I have sought to step into the debate by addressing questions of legal liability...

Bombay HC Ruling on the MCX-SEBI Case

The Bombay High Court has pronounced its judgment today in the matter relating to the denial of a stock exchange licence to the MCX Exchange. The Court has set aside SEBI’s order of 23 September 2010 (which was discussed here) and directed SEBI to reconsider MCX’s application afresh in the light of the Court’s observations. The judgment has significant implications on various...

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