SEBI has just placed a discussion paper on its website entitled “Proposed modifications to the existing framework for buy back through open market purchase” for public comments. Comments on the discussion paper have been solicited on or before January 31, 2013. Upon a review of the current regulations and studying the market dynamics, the key recommendations of the discussion paper are set out...
Prepayment fees in loan transactions
It is common practice for loan agreements to provide for a fee/ premium where a loan is repaid earlier than its contractual due date. The said fee is designed to compensate the lender/s for the loss of anticipated income from the transaction and is usually expressed as a percentage of the principal amount prepaid. While the loan agreement sets out the circumstances in which the prepayment fee...
Dormant NBFCs under RBI scanner
There are numerous NBFCs who have obtained registration from the RBI, parked their funds in fixed deposits with commercial banks but have not commenced NBFC activities for several years thereafter. In view of the recent difficulty in getting NBFC registrations as well as to get the benefit of lower net owned funds (NOF) requirements (in case the NBFC was registered pre-1999), acquiring such...
Amendments to Preferential Allotment Rules
(I would like to thank my colleague, Mr. Saiyam Chaturvedi for his invaluable research.) The Sahara case has led to certain amendments being made to the Unlisted Public Companies (Preferential Allotment) Rules, 2003 (the “Rules”). While the Sahara case itself has seen itself being argued and debated across various judicial fora over the last couple of years, the Government of India...
MCA grants exemption from attaching subsidiary accounts
Section 212 of the Companies Act, 1956 requires holding companies to attach with its balance sheet, a copy of the balance sheet, profit and loss account etc., of each of its subsidiaries. In recent years, with the globalization of the Indian economy, there has been a large increase in the number of holding companies and subsidiaries. Accounting policies and practices have also evolved, and...
UK Court of Appeal holds that legal professional privilege reserved for lawyers
In the matter of Prudential PLC and Prudential (Gibraltar) Limited v Special Commissioner of Income Tax and Philip Pandolfo (HM Inspector of Taxes), the UK Court of Appeal has unanimously confirmed that legal professional privilege (LPP) does not apply to any other professional except qualified lawyers – solicitors, barristers and “appropriately qualified” foreign lawyers...
A twist in the tale: Share transfer restrictions in a public limited company legal?
A Division Bench of the Bombay High Court has ruled in Messer Holdings Limited v. Shyam Madanmohan Ruia that a private arrangement between shareholders of a public limited company on a voluntary basis relating to share transfer restrictions (right of first refusal) is not violative of Section 111A of the Companies Act, 1956. The judgement also goes on to suggest that it is not mandatory for the...
Mobile number portability on the horizon
Mobile number portability (MNP) enables mobile telephone users to retain their mobile numbers when changing from one mobile network to another. Often, the only reason that keeps customers from changing operators is the lack of number portability. The inconvenience of having to change phone numbers on business cards and other documents, informing contacts of new numbers, has prevented customers...
Demystifying concepts and terms used in agreements
My colleague, Daksh Trivedi has recently written an interesting article in The Mint, where he has discussed the various legal concepts/ terms used in shareholders and share purchase agreements. He begins with: Typical documents used for capturing terms of equity investments, that is, share-purchase agreements or shareholders’ agreements, are now complex and ridden with industry terminology such...
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