One of the key considerations while drafting or negotiating a contract is how to deal with consequences of violation of the contract by one of the parties. There are two possibilities. One is a simple claim for breach of contract. The other is the inclusion of a specific clause for indemnification. Of the two, the use of the indemnification clause has gained popularity, especially in large...
SEBI’s Consent Order in the Reliance ADAG Case
On January 14, 2011, SEBI passed a consent order in the matter relating to shares of Reliance Communications Limited (RCL). SEBI had earlier initiated investigations into transactions entered into by two companies within the ADA group of companies, being Reliance Infrastructure Limited (RIL) and Reliance Natural Resources Limited (RNRL), and some of their officers on the ground that loans taken...
Dealing With the Anti-IPO Sentiment
We usually come across reports of companies preparing or filing for IPOs in order to take advantage of listings on stock exchanges. On the other hand, companies also often display resistance for undertaking IPOs as they are accompanied by costs such as full-blown regulatory oversight and public scrutiny. This is so even when the companies have grown to a significant size and there is a vibrant...
Supreme Court on the Sahara Case
While the earlier post analyzing the judgment of the Allahabad High Court generated an interesting debate, it has been reported today (here, here and here) that the Supreme Court refused to interfere with the High Court’s order.
Public Offering of Securities: Liability of Investment Bank
In order to ensure accuracy of disclosures in offering documents pertaining to public issue of securities, regulators tend to impose liabilities for misstatements on issuers as well as intermediaries. The intermediaries, referred to as “gatekeepers” perform an important role in the securities markets. In his book, Gatekeepers: The Professions and Corporate Governance, Professor John Coffee notes...
2011
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Shareholders Agreements: Clauses and Enforceability
Shareholders agreements are contracts among shareholders of a company (to which the company is also usually a party) that confer rights and impose obligations over and above those provided by company law. The agreements provide for matters such as restrictions on transfer of shares (right of first refusal, right of first offer), forced transfers of shares (tag-along rights, drag-along rights)...
Corporates and Lobbying
Issues surrounding lobbying by corporates have cornered media attention over the last few weeks. Broadly speaking there does not seem to be any legal provision that directly regulates lobbying, although the Government has announced that it is considering the enactment of a specific legislation that governs lobbying. For an analysis of the legal aspects governing corporate lobbying in India and...
CSR: Not Mandatory After All
A couple of months ago, the Ministry of Corporate Affairs (MCA) announced its intention to include a mandatory provision for corporate social responsibility (CSR) in the Companies Bill. The issue of regulating CSR using the stick of a mandatory provision was the subject-matter of critique, including on this Blog. The Government appears to have taken an about turn now doing away with the mandatory...
Regulatory Steps Towards Public Offerings and Transparency
The Economic Times reports that SEBI has issued a circular which requires companies with less than 25% public float to raise funds through public offering of securities rather than through private placement to institutions, or QIPs. This is with a view to increasing the public holding in listed companies and to contain stock price manipulation. SEBI’s move comes close at the heels of its order on...
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