ArchiveJuly 2013

RBI makes 1000s of companies anxious by “Are you an unregistered NBFC?” notices

Over last week, Reserve Bank of India has sent notices to thousands – tens of thousands perhaps – of companies asking them whether they are NBFCs. And, if yes, why they have not registered. This is worrying because if a Company is an NBFC and has not registered, it entails serious consequences for the Company and its concerned directors/officers. For example, the law provides for minimum and...

Bombay High Court on Sovereign Immunity

Earlier this year, the Bombay High Court decided an interesting question relating to proceedings against foreign-state owned corporations. Section 86 of the CPC provides that “No foreign State may be sued in any Court otherwise competent to try the suit except with the consent of the Central Government certified in writing by a Secretary to that Government”. ‘Foreign...

Committee Report on Foreign Portfolio Investments

In mid-June, SEBI had announced the submission of a report by the Committee on Rationalization of Investment Routes and Monitoring of Foreign Portfolio Investments under the chairmanship of Mr. K.M. Chandrasekhar. The full report in now available online. The key recommendations of the committee are to combine the erstwhile portfolio investment categories of foreign institutional investors (FIIs)...

RBI Guidelines on Private Placement of Debentures by NBFCs – Part 2

[The following post is contributed by Nidhi Ladha and Vinita Nair of Vinod Kothari & Co. They can be contacted at [email protected] and [email protected] respectively. This is a continuation of a previous post accessible here] RBI Directions The present Guidelines From June 27, 2013 onwards, any issue of debentures- whether convertible or non convertible, by NBFCs – whether...

SAT Order on Minimum Public Shareholding Norms

The Securities Appellate Tribunal issued its order in the case involving compliance of the public shareholding norms in Gillette India Limited. Gillette had filed an appeal against an order of the Securities and Exchange Board of India (SEBI) rejecting Gilette’s proposal for compliance with the public shareholding norms. However, SAT dismissed Gillette’s appeal in an order that extensively...

Preparatory activities and the commencement of a partnership

Section 3 of the Partnership Act, 1932 defines a partnership as the relationship between “persons who have agreed to share the profit of a business carried on by all or any of them acting for all”. This formulation shows that mere agreement is not enough: there must be a business which is carried on. The English Act of 1890 defines a partnership as the relationship that subsists between persons...

Interpreting Reps and Warranties in M&A Deals

Although clauses such as representations and warranties have become quite ubiquitous in M&A transactions involving sale and purchase of assets, business or shares, there has hardly been any litigation in India involving the technicalities of such representations and warranties. The reps and warranties also constitute some of the major sticking points in negotiations that take up a substantial...

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