ArchiveJuly 2018

Will SEBI Succeed in Creating a Vibrant Bond Market?

[Rajeev Jhawar is an Executive at Vinod Kothari Consultants Pvt Ltd] As part of the budget this year, India sought to expand its bond market beyond the traditional ambit of sovereign debt. Pursuant to this, Securities and Exchange Board of India (SEBI) has initiated efforts to diversify borrowings of Indian corporates by mandating them to raise at least a quarter of their incremental funds from...

Analysis of ‘Bulk Deal’ under the SEBI Takeover Code

[Tanmay Purohit and Mayank Sen are 4th year B.A., LL.B. (Hons.) students at School of Law, Raffles University, Neemrana (Rajasthan)] The Securities Appellate Tribunal (“SAT”) on 28 May 2018, while deciding on appeals against several orders of the Securities and Exchange Board of India (“SEBI”) in Tarun Jiwarajka v. Securities and Exchange Board of India, undertook a comprehensive interpretation...

Protecting the Interests of First Charge Holders under the Insolvency and Bankruptcy Code

[Shivam Ahuja is a Final year B.A.,LL.B. at Jindal Global Law School, Sonepat] Introduction A charge as defined in section 2(16) of the Companies Act, 2013 is created over an asset to secure the repayment of a debt. The terms and conditions of the charge are governed by the contract between the parties. Some contracts allow for creation of a subsequent charge while some do not, while some warrant...

Corporate Insolvency: Fraudulent Transactions and Look-Back Period

[Richa Saraf is a Legal Advisor at Vinod Kothari Consultants Pvt Ltd] A combination of sections 45, 49, 66 and 69 of the Insolvency and Bankruptcy Code, 2016 (the Code) requires and empowers the liquidator to apply to the National Company Law Tribunal (NCLT) for appropriate orders in case the Liquidator comes across any vulnerable transactions during the process of liquidation. Such transactions...

Section 29A of the Insolvency and Bankruptcy Code, 2016: The Ambit Narrows

[Rudresh Mandal is a 4thyear student at NALSAR University of Law and Mallika Sen is a 3rdyear student at National Law School] Section 29A of the Insolvency and Bankruptcy Code, 2016, (‘IBC’) has been heavily criticised for casting a net exceedingly wide for preventing maximisation of pay-outs to creditors merely because the bidder is the promoter of the corporate debtor, or for ignoring the...

Validity of Employment Bonds in India

[Apoorv Madan is a 4th year law student at Jindal Global Law School in Sonipat] Background Corporations often invest huge amounts of time and money in imparting training to their employees so as to gain competitive advantage. Regardless, the attrition rate continues to be significant. Several employees, after acquiring valuable skills, leave the organization for diverse reasons. Therefore, the...

NCLT Order Facilitates Cross-Breeding of Entities

[Pammy Jaiswal is a Partner at Vinod Kothari and Company] Background Earlier under the Companies Act, 1956 (the ‘Act, 1956’), sections 391 to 394 dealt with provisions relating to compromises, arrangements, amalgamation and reconstruction. The said provisions were re-cast under the Companies Act, 2013 (the ‘Act, 2013’) under sections 230 to 234. The statutory provisions under the Act, 2013 suffer...

Delhi High Court Circumscribes SEBI’s Power to Initiate Adjudication Proceedings

Independent regulators must demonstrate their independence and fairness in their actions in order to maintain credibility. For this, the process by which they carry out their actions must be robust. This applies equally to India’s securities regulator, SEBI, which is the earliest independent regulator in the post-liberalisation era and one that heralded the advent of an array of similar...

Subordination of Operational Creditors under IBC: Whether Equitable?

[Vinod Kothari and Sikha Bansal are at Vinod Kothari & Company and can be reached at [email protected]] Introduction Section 53 of the Insolvency and Bankruptcy Code, 2016 (IBC) puts unsecured financial creditors above the claims of the governments. These unsecured financial creditors may  actually be even related parties and, therefore, the underlying financial transaction may be...

A Tribunal Benched

The Securities Appellate Tribunal has yet again been rendered dysfunctional.  I wrote a piece in the Business Standard last week about how, yet again, the functioning of the tribunal for substantive final hearings has come to a halt.   As the appellate tribunal that is exclusively empowered to hear appeals against every order of the Securities and Exchange Board of India, the Insurance Regulatory...

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