ArchiveJune 2013

Competition Act: Status of Director General’s Finding

[The following post is contributed by Akanksha Mehta, a student of Dr. R.M.L. National Law University, Lucknow, who has an interest in competition law] One of the major loopholes in the present Competition Act, 2002 seems to have found some judicial clarification through COMPAT’s (Competition Appellate Tribunal) order dated 18th April, 2013. Section 26 of the Act includes all the orders that the...

Petrodel v Prest: Lord Sumption’s Masterly Analysis of the Corporate Veil

When the history of the corporate veil is written, the year 2013 will perhaps be given as much prominence as the year 1897. Today, the UK Supreme Court allowed Mrs Prest’s appeal against the judgment of the Court of Appeal that seven properties in London owned by the Petrodel group of companies are not properties to which the sole controller of the group is ‘entitled, in possession or reversion’...

Arbitration of Shareholder Disputes

In an article in the Financial Express, my colleague Debashish Sankhari and I have looked at whether disputes of oppression and mismanagement in relation to the affairs of a company can be adjudicated through arbitration. This is an important practical question for many a financial investor (and even a long-term strategic investor) who has agreed to arbitration clauses in the investment/...

Conflicts between Shareholders Agreements and Articles of a Company

[The following post is contributed by Aditya Swarup, who is an advocate practising in the Bombay High Court. He has a B.A., LL.B (Hons.) degree from NALSAR, Hyderabad and B.C.L. and M.Phil degrees from Oxford] The issue of conflicting provisions in a Shareholders Agreement (SHA) and the articles of association (Articles) of a company is a never ending debate, and perhaps a rather confounding one...

SEBI Order on Public Shareholding Norms

The deadline for compliance by non-government entities of the public shareholding norms went by on June 3, 2013. Immediately thereafter, SEBI yesterday issued an order against 108 companies that have failed to comply with these norms. SEBI’s press release summarizing its order is available here. A couple of points are noteworthy. The first relates to the rapidity with which SEBI has acted. This...

SEBI order in Educomp matter

A recent SEBI order has granted an exemption to Educomp’s CMD, Mr. Shantanu Prakash from having to make an open offer in relation to an acquisition of 7.5% of the shareholding of Educomp. At the outset, we should look at the facts in this case which are quite peculiar – Educomp’s CMD, Mr. Shantanu Prakash had pledged 91.8 lakh shares (7.5% of the  share capital) of Educomp...

Delaware Court on Going Private Transactions

Transactions such as mergers between a company and its controlling shareholders are subject to close scrutiny by courts. Such transactions give rise to conflict of interest as they are carried out between related parties and therefore require close supervision. Moreover, mergers with controlling shareholders may also be utilised to force out minority shareholders of a company if the non...

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