Can Independent Directors Appoint Alternates? Despite closely following developments in the law relating to independent directors (IDs) in the recent past, this question took me by surprise. Considering the special position of an ID, it seemed to me that an individual occupying that position is incapable of being substituted, even if that were temporary in nature. However, a debate generated...
Independent Directors under the Companies Bill, 2009
The report of the Parliamentary Standing Committee on Finance (SCF) pays significant attention to the role of independent directors on Indian companies (particularly the listed ones). While it is not doubted that the existing system of independent directors requires further review and strengthening, the SCF’s recommendations seem to go the other extreme in advocating a process which amounts to...
Movement Towards Mandatory CSR
A few weeks ago, we discussed the Government’s proposal to introduce mandatory provisions regarding corporate social responsibility (CSR). A press release issued yesterday by the Ministry of Corporate Affairs suggests mandatory provisions for CSR will be included in the new company legislation. The release states: In response to the overwhelming concerns shown by the Standing Committee of...
Possible Relaxation for Foreign Investors with “Existing Ventures”
Since 1998, the Indian Government’s policy has required foreign investors to obtain approval of the Foreign Investment Promotion Board (FIPB) while investing in a field where they have or had a previous joint venture in India. In other words, such investors are ineligible from investing under the automatic route. In considering a foreign investor’s application, FIPB usually seeks no-objection...
Confidentiality = Non-compete?
In India, there is a fair amount of debate regarding the enforceability of non-compete agreements given Section 27 of the Contract Act that invalidates contracts in restraint of trade. Recent developments in California may throw some further light on the issue. Oracle’s appointment of former HP-CEO Mark Hurd has given rise to litigation by HP. This report in the Wall Street Journal notes that...
Parliamentary Standing Committee on Companies Bill, 2009
It has been reported that the Parliamentary Standing Committee on Finance has its made recommendations upon review of the provisions of the Companies Bill, 2009. Discussions reveal that in some areas the Standing Committee’s recommendations seek a reversal of the position stated in current version of the Companies Bill. On one hand, the standing committee calls for a more liberal regime by...
Nomination for LexisNexis Top 25 Business Law Blogs 2010
We are pleased to share with our readers the following communication received from LexisNexis: Each year, LexisNexis honors a select group of blogs that set the online standard for a given industry. I’m pleased to notify you that Indian Corporate Law Blog is one of the nominated candidates for the LexisNexis Top 25 Business Law Blogs of 2010, featured on the LexisNexis Corporate & Securities...
Barclays Order: ODI Restrictions Lifted by SEBI
In December 2009, we had discussed SEBI’s order whereby Barclays was found to have failed in complying with certain disclosure norms while issuing offshore derivative instruments (ODIs) under the SEBI (Foreign Institutional Investors) Regulations, 1995. For this, SEBI had prohibited Barclays from issuing, subscribing or otherwise transacting in any ODIs until reporting systems are put in place to...
Participatory Notes Fall in Popularity
After initially cracking down in 2007 on indirect investment routes such as those using participatory notes (P-notes), SEBI a year later reversed its decision and allowed foreign investors to participate in the Indian markets through P-notes. SEBI’s decision to allow P-notes was the subject-matter of critique on this Blog as it raises questions regarding transparency. As observed in that post:...
Cooperatives and Producer Companies
In this Mint column, Narayan Ramachandran calls for a shift in attention from the classic corporate model of limited liability companies to a cooperative model that involves “a voluntary agreement to share, for the mutual benefit of all parties”. Although India is no stranger to the cooperative model (as the author demonstrates), it is the co-operative societies legislation that is usually used...
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