ArchiveMay 2014

Codification of Directors’ Duties: Is Common Law Excluded?

Background Hitherto, directors had negligible guidance under company law as regards their duties and liabilities. The preexisting Companies Act, 1956 (the 1956 Act) did not explicitly stipulate directors’ duties, which made it necessary to fall back on common law principles (to be articulated by courts while delivering specific decisions). The statutory uncertainty was compounded by the absence...

Proposal to Overhaul Delisting Regime

Delisting of companies from the stock exchange (also known as privatization) has become a common phenomenon around the world, as it has in India. The rationale for delisting a company is detailed below: A number of reasons are proffered as motivations for delisting. Where there is a perception that the market price of the company is not reflective of the true value of its businesses, share price...

Report on Governance of Banks

Historically, the governance of banks has received greater (and somewhat different) attention when compared to governance of companies carrying on other forms of business. This is because banks deal with depositors’ funds and their actions or misdeeds can cause a more severe strain on the economy as a whole. Hence, while banks that are established as companies (and listed on the stock exchanges)...

Guest Post: COMPAT upholds CCI order in DLF Belaire Owners Association Case

[The following post is contributed by Vaibhav Choukse, Senior Associate – Competition Law and Policy, Vaish Associates Advocates. Views are personal.] Introduction On May 19, 2014, in a landmark order, the Competition Appellate Tribunal (“COMPAT”) upheld the order of the Competition Commission of India (“CCI”) imposing a record penalty of INR 630 crores (USD 140 million) on DLF Limited...

The Meaning of ‘Plant and Machinery’ for the Purposes of Capital Gains

The National Gallery describes Sir Joshua Reynolds as the “leading English portraitist of the 18th century” and expert “in the work of Rembrandt, Rubens and van Dyck”. Improbably, the sale of one of his great paintings, the Omai of the Friendly Isles, recently gave rise to an interesting question of income tax law that has also troubled the Indian courts: what precisely does ‘plant and...

Regulatory Domain over M&A for NBFCs

The Reserve Bank of India (RBI) has issued a notification relating to mergers and acquisitions (M&A) involving non-banking finance companies (NBFCs). This now brings most M&As relating to NBFCs within the regulatory domain of the RBI thereby requiring its prior approval. The following types of transactions fall within the RBI approval requirement: 1...

Power of SEBI to Seek Call Data Records

In the past, we have discussed issues with the onerous evidentiary burden carried by the Securities Exchange Board of India (SEBI) in relation to various securities offences such as insider trading. Following from past experience, SEBI has been conferred additional powers to seek further information in the course of investigation of such offences. Much of these additional powers came by way of...

Announcement: Workshop on Comparative Business And Financial Law

[This announcement is posted on behalf of the Younger Comparatavists Committee of the American Society of Comparative Law] The Younger Comparativists Committee (YCC) of the American Society of Comparative Law (ASCL) is pleased to invite submissions for a workshop on comparative business and financial law to be held on November 7-8, 2014 at UC Davis School of Law in Davis, California. The purpose...

SEBI Order on “Control” Under Takeover Regulations

Background and Facts Last week, SEBI passed its order in the Jet-Etihad case relating to whether the investment by Etihad Airways in 24% shares of Jet Airways (India) Limited and the terms thereof amount to Etihad obtaining “control” in Jet so as to require Etihad to make a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the Takeover...

Guest Post: The Changing Definition of Debentures

[The following post is contributed by Nidhi Bothra of Vinod Kothari & Co. She can be contacted at [email protected]] The new Companies Act, 2013 has changed the regulatory face of the corporate India; “raising the bar on Corporate Governance.” The new regulatory changes including need for CSR activities, increased investor protection, greater transparency in business and have been the...

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