In recent weeks, there has been an intense debate, including on this Blog, about whether promoters (particularly those broadly considered wilful defaulters) must be allowed to bid for assets being sold as part of the resolution plan for a debtor company under the Insolvency and Bankruptcy Code, 2016 (the “Code”). This debate was sparked partly by certain transparency norms introduced by the...
Survey on Succession Planning in Indian Companies
Historically, the issue of succession planning has received scant attention from a policy perspective in the corporate governance debates in India. More recently, however, succession planning has played a key role in corporate governance episodes such as Tata Sons and Infosys, thereby highlighting the importance of the concept. Regulators and policymakers have begun to place emphasis on...
The (Negligible) Role of Shareholders in Corporate Insolvency
The Ministry of Corporate Affairs (MCA) yesterday issued a clarification stating that no resolution or approval of the shareholders of a debtor company will be required in order to give effect to a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC). It appears that stakeholders sought the MCA clarification on account of section 30(2)(e) of the IBC, which requires the resolution...
SEBI: Rules on Profit Sharing Arrangements Apply to Unlisted Subsidiaries
The rules introduced earlier this year by the Securities and Exchange Board of India (“SEBI”) that impose restrictions on profit sharing arrangements in respect of listed companies have already provoked interpretational controversies. In an earlier informal guidance (relating to Accelya Kale Solutions Limited), SEBI clarified profit sharing arrangements that involved employees being provided...
FDI in the Aviation Sector
Jae Woon Lee and I have a working paper titled “Skies Half Open: Foreign Investment in India’s Airline Industry”, the abstract of which is as follows: The foreign investment regime governing the airline industry has been the subject matter of considerable debate. Our goal in this paper is to supplement the literature by embarking on an analysis of the foreign investment regime in India and...
Report of the SEBI-Appointed Committee on Corporate Governance
In June this year, the Securities and Exchange Board of India (SEBI) appointed a committee under the chairmanship of Mr. Uday Kotak to review corporate governance norms in India, and to make recommendations to enhance governance standards. The committee comprised members from diverse fields. It issued its report on 5 October 2017. The report contains several significant recommendations. SEBI has...
Restrictions on Layering of Subsidiaries Now Effective
In two earlier posts published in July (here and here), our guest contributors had voiced their trenchant criticism of the Government’s move to introduce restrictions of the ability of companies to create layers of subsidiaries. After a round of consultation, the Ministry of Corporate Affairs (MCA) has decided to implement the restrictions, which have now been brought into force. The MCA has...
NCLAT Ruling on Maintainability in the Tata Sons Case
Earlier this week, the National Company Law Tribunal (“NCLAT”) issued its ruling in Cyrus Investments Pvt Ltd v. Tata Sons Ltd on whether the Mistry group’s action for oppression and mismanagement in respect of Tata Sons is maintainable. Although the NCLAT ruled that the Mistry group’s petition did not meet the requirements of maintainability under section 244 of the Companies Act, 2013 (the...
Conversion of Tata Sons into a Private Limited Company: In Whose Interest?
The proposed conversion of Tata Sons Limited from a public limited company to a private limited company has reignited the corporate governance issues that the Tata Group has faced over the last year or so. Menaka Doshi has an interesting piece (and an accompanying interview with two corporate lawyers) in BloombergQuint that sets out some of the background to why Tata Sons proposes (and that too...
“Control” Untouched in the Takeover Regulations: A Case of Regulatory Inertia
Let’s just say, it is not at all surprising. After carrying out an extensive consultation that lasted more than a year with a view to defining the concept of “control” under the SEBI (Substantial Acquisition and Takeovers) Regulations, 2011 (the “Takeover Regulations”), the Securities and Exchange Board of India (“SEBI”) has come around a whole circle. It has, by retaining the current definition...
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