Despite developments in regulation of corporate entities around the world and India’s own share of scandals in recent years, corporate governance continues to be a matter of “check the box” or a set of compliance requirements, with only limited emphasis on the spirit of governance. This has been underscored in a recent corporate governance survey The India Board Report 2011 prepared jointly by...
Miscellaneous
1. Further Liberalization of ECB Policy Given the ailments afflicting the civil aviation sector in India, the Reserve Bank of India (RBI) has allowed external commercial borrowings (ECBs) in that sector even where the end-use of funds is for working capital requirements. This is permissible under the approval route, and is subject to several...
Announcement: NLSIR Symposium
(The following is an announcement from the National Law School of India Review) The National Law School of India Review (NLSIR) – the flagship journal of the National Law School of India University, Bangalore is pleased to announce the V NLSIR Symposium on “Corporate Mergers and Acquisitions in India: Recent Regulatory Changes” scheduled to be held on May 5 and 6...
Parent’s Duty to Employees of its Subsidiary: Chandler v. Cape affirmed
In an earlier post, we had discussed the judgment of the England & Wales High Court in Chandler v. Cape plc, [2011] EWHC 951. In that case, the Court had held that in certain circumstances, a parent company would owe a duty of care to the employees of the subsidiary even in situations where the tests for lifting the corporate veil are not satisfied. This judgment has been affirmed today by...
Call for Papers: Indian Journal of Arbitration Law
(The following is an announcement from the Indian Journal of Arbitration Law) The Indian Journal of Arbitration Law is a biannual, student reviewed e-journal launched by the Centre for Advanced Research and Training in Arbitration Law of National Law University, Jodhpur. National Law University, Jodhpur, one of the premier national law institutions in India, is taking successful initiatives for...
SEBI Reinforces the Sanctity of a Takeover Offer
In a recent order, SEBI refused permission for the withdrawal of a voluntary takeover offer by an acquirer. The details of the case involving an offer by Mr. Pramod Jain and Pranidhi Holdings Private Limited for shares in Golden Tobacco Limited are discussed at the Indian Legal Space Blog, as are reasons for SEBI’s decision. The following are some of the takeaways from SEBI’s order: 1. SEBI would...
Substance vs. Form Conflict in True Sale | Hong Kong Court Goes by the Language Used by the Parties
(The following post is contributed by Soma Bagaria, who is a Legal Advisor at Vinod Kothari & Company in Kolkata. She can be reached at [email protected]) In every assignment transaction, there has been a constant conflict of whether the substance or form shall dominate while determining the nature of a transaction. There are two schools of thought on this: one which gives dominance to...
Securities Regulation Redux
Over the last decade, there has been a continuous tightening of securities regulation and corporate governance norms in the US following the various corporate governance scandals (Enron, WorldCom, etc.) and the global financial crisis. This has appeared in the form of legislation such as the Sarbanes-Oxley Act and the Dodd-Frank Act. More recently, however, there has been a relaxation on some...
Takeover Regulations: Pledge of Shares to Trustee Company
The SEBI Takeover Regulations (both the erstwhile regulations of 1997 and the present ones of 2011) carve out specific exemptions from disclosure and open offer requirements in case of pledge of shares in favour of banks or (public) financial institutions even if such pledge were to exceed the prescribed threshold shareholding percentages. Given the limited nature of these exceptions, one of the...
OECD Report on Related-Party Transactions
One area that is yet to receive significant attention in terms of regulatory reforms pertains to related-party transactions (RPTs). This is despite the enormous potential for RPTs in India given the concentrated ownership structures of public listed companies. All of these provide less protection to minority shareholders. In the past, although several suggestions for reform have been made (see...
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