In an earlier post, we had discussed the concept of multiple derivative actions, and the decision of the Hong Kong Court of Final Appeal in Waddington, which held that double derivative actions (shareholder of a holding company bringing a derivative action complaining of wrongs done to the subsidiary company) were maintainable. In the comments, it was pointed out that the Bombay High...
Special Circumstances for Exemption from Takeover Offers
In the last few days, SEBI issued two exemption orders and one informal guidance based on requests made by acquirers not to be obligated to make mandatory open offers under the SEBI Takeover Regulations due to the existence of special circumstances. This post briefly discusses each of these situations and the rationale for SEBI’s views. Forfeiture of Shares In an application in the case of Prima...
Arbitration Clauses in Trust Deeds
A learned Single Judge of the Bombay High Court in Jayesh Shah v. Kaydee Family Trust (Arbitration Application 278 of 2012, decided on March 6, 2013) has decided an interesting point of law in connection with arbitration of disputes arising out of trusts. An arbitration clause in a Trust Deed provided for arbitration of all disputes “regarding the interpretation of any of the clauses of...
Licensee’s rights and remedies against third parties
Earlier this week, the Court of Appeal revisited the very interesting issue of the rights of a licensee and the remedies available against third parties. Leaving aside the tax-context of the case, the two issues before the Court were (i) whether a licensee can enter into a contract with a third party in relation to a right not conferred on the licensee by the license; and (ii) whether a licensee...
Theorizing Companies and Shareholder Interests
The two previous issues of the Economist magazine cover different aspects of the functioning of companies and the impact they have on shareholder value and other aspects of society. One set of issues (discussed here and here) deals with the increase in activism among shareholders. While activist shareholders are making their impact felt in companies around the world, there is a question regarding...
Excluding the ‘Breach Date Rule’ in Damages for Breach of Contract
It is well-known that a claimant who establishes that the defendant is in breach of contract is entitled to recover, as damages, any loss that was caused and which the defendant knew or ought to have known was likely to be caused by breach. As Professor Burrows explains in Remedies for Tort and Breach of Contract, the two limbs of the remoteness test in section 73 of the Indian Contract Act, 1872...
The ‘Construction’ of Exclusion Clauses
Late last year, we discussed the interesting approach adopted by English courts to the application of exclusion clauses to deliberate repudiatory breaches of contract. A couple of weeks back, the Court of Appeal decided Kudos Catering v MCCC considering very similar issues and making some highly relevant observations. Kudos Catering involved a catering contract between the claimant caterer and...
Listing of Preference Shares and Perpetual Securities
In its board meeting yesterday, SEBI announced that it would issue a new set of regulations governing the listing of non-convertible redeemable preference shares and perpetual securities. More than a decade ago, companies used the issue of preference shares as a mode of raising capital from the public, particularly because that did not result in a dilution in equity shareholding (and consequently...
ECBs by Corporates under Investigation
Hitherto, companies that are under investigation by law enforcement agencies such as the Directorate of Enforcement are not entitled to taken on external commercial borrowings (ECBs) under the automatic route, and are required to approach the Reserve Bank of India (RBI) for approval. Through a recent circular, the RBI has relaxed such position. Now, such entities under investigation are eligible...
DGCA Guidelines for FDI in Civil Aviation Sector
The foreign direct investment (FDI) regime in the civil aviation sector has been progressively liberalized over a period of time. The latest round was effected in by the Department of Industrial Policy & Promotion, Government of India in September 2012 by which foreign airlines are now allowed to invest in the Indian civil aviation sector up to a limit of 49% under the Government approval...
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