ArchiveFebruary 2016

Delhi High Court on Directors’ Duties and Derivative Actions

It is not very often that we witness cases in India relating to intrinsic company law issues such as breaches of directors’ duties and shareholder remedies through derivative actions. However, questions of directors’ duties have been brought to the fore following the Companies Act, 2013 as they have been codified in the legislation. Derivative action, however, still remains within the realm of...

Indian REITs – Story So Far, Challenges and Expectations from Budget 2016

[This guest post is contributed by Yashesh Ashar and Swati Adukia.  They are tax professionals and specialize in mergers and acquisition tax. Please note that the views are personal] I.          Introduction The Securities and Exchange Board of India (“SEBI”) notified the SEBI (Real Estate Investment Trusts) Regulations, 2014 (“REIT Regulations”)...

Understanding the Exit Rights Provided by Private Companies

[The following guest post is contributed by Ananya Banerjee, a 5th Year Student of University of Calcutta, Department of Law] Investing in companies (especially in startups) involves a huge risk. For this reason, financial investors look for exit rights which allow them to exit the company with a high return on the investment amount. While the aim of the strategic investors is not to...

Case-Study Evidence of Shareholder Activism

We have previously highlighted the rise of shareholder activism in India (here and here). Activism has been aided by regulatory reforms that have enlarged shareholder participation. In addition, market changes have resulted in previously passive institutional investors becoming more active in recent times. They have further been supported by the emergence of a growing and vibrant proxy advisory...

Exit Offer to Dissenting Shareholders

[The following guest post is contributed by Yogesh Chande, who is a Partner at Shardul Amarchand Mangaldas, Advocates & Solicitors. Views of the author are personal. Yogesh can be reached at yogesh.chande@amsshardul.com] Subsequent to my guest post dated 30 March 2014 in connection with section 13(8) and section...

MDs/WTDs crossing 70 years of age mid-tenure lose their jobs

The Bombay High Court has held that Managing/Whole-time Directors (“EDs”) will lose their jobs if they cross 70 years of age during their tenure of appointment. This is the new position of law under Section 196(3)(a) of the Companies Act, 2013, which came into effect from 1st April 2014, and which was not so under the corresponding Section 267 of the Companies Act, 1956. (Note:- It was...

Approval of Trade Facilitation Agreement in India – A Brief Overview

[The following guest post is contributed by Ananya Banerjee, a 5th Year Student of University of Calcutta, Department of Law] In another effort to promote the ease of doing business in India and to create a more business friendly environment in India, the Union Cabinet has, on February 17, 2016, approved the proposal for notification of commitments under the Trade Facilitation Agreement...

SEBI debars Auditor

SEBI has, for the first time to my recollection, debarred an Auditor (Chartered Accountant) from issuing certificates for a wide range of entities and purposes. The matter concerned a listed company (“the Company”) that was alleged to have carried out several accounting irregularities such as inflated revenues/profits, misclassification of assets, etc. The report of the Auditors did not point...

Supersession of Bond Terms by State Legislation Disallowed

In Kalyan Janta Sahakari Bank v. State of Gujarat, a division bench of the Gujarat High Court was concerned with whether a legislation passed by the Gujarat State Legislature can unilaterally alter the terms of an issue of bonds by the government company to the detriment of the bond investors. The Court answered in the negative by striking down the legislation on grounds of lack of legislative...

The Companies Law Committee on Section 117 and Appointment and Remuneration of Managerial Personnel

[The following guest post is contributed by Amitabh Robin Singh, who is an Associate at DSK Legal] In an earlier post, this author had discussed the proposed changes made by the Companies Law Committee (“Committee”) to Chapter 3 (Prospectus and Allotment of Securities) of the Companies Act, 2013 (“2013 Act”). In this post, a particular observation of the Committee, which stretches between...

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