A free and active press generally provides impetus for instilling enhanced corporate governance practices in any economy, as it does in India. However, conflicts of interest that the media faces may create distorted incentives that dilute these objectives. One such conflict is presented by the concept of “private treaties” whereby media enterprises take stakes in companies in return for agreeing...
New Framework for Foreign Investment Proposed
The Ministry of Finance recently published on its website a report of the Working Group on Foreign Investment in India. The report seeks to address the complexity and overlaps in the existing regime on foreign investment in India and to propose a more streamlined framework. It focuses largely on foreign portfolio investment and less on foreign direct investment, although some of the...
Nomination of Directors by Shareholders
Earlier this week, the U.S. Securities and Exchange Commission (SEC) adopted the much anticipated proxy access rule which allows shareholders to nominate candidates for directorship. The essence of the new rules is as follows: The new rules require companies to include the nominees of significant, long-term shareholders in their proxy materials, alongside the nominees of management. This...
SEBI’s Domain Over Auditors of Listed Companies
Earlier this month, the Bombay High Court issued its judgment in the case of Price Waterhouse & Co. v. Securities and Exchange Board of India. The court ruled that SEBI possesses necessary powers to initiate investigations against an auditor of a listed company for alleged wrongdoing. Facts: A writ petition was filed before the Bombay High Court by Price Waterhouse & Co. (PWC) and some of...
Bits of Interest
1. SEBI and Auditors: It was reported a few days ago that the Bombay High Court has allowed SEBI to proceed with its enquiry against the auditors in connection with the Satyam scam. The judgment is now available on the Bombay High Court website. 2. Satyam Saga: With all the accused persons now having been released on bail, questions are being raised regarding the investigative and prosecutorial...
Deal-making and a Changing Legal Regime
Vedanta’s takeover offer for Cairn Energy has raised some questions because it comes in the wake of impending changes to the SEBI Takeover Regulations that may make it potentially difficult for acquirers to structure transactions. Commentators have argued that the timing of the acquisition would help the acquirer take advantage of two beneficial provisions under the current regime (that may not...
Call for Submissions: Indian Journal of Law and Technology
(We have received the following Call for Submissions from the Indian Journal of Law and Technology) The Indian Journal of Law and Technology (IJLT) is an annual law journal published by the Law and Technology Committee of the Student Bar Association, at the National Law School of India University, Bangalore, India. IJLT is the first and only law journal in India specifically devoted to the field...
Governments as Issuers of Securities
As we have been constantly focusing on this Blog (here, here and here), public sector enterprises (PSEs) in India that are substantially owned by the Government often take advantage of relaxations and special dispensations from the applicability of securities laws and corporate governance norms that otherwise apply in their entirety to their private sector counterparts. Even where actions have...
Entry of New Private Sector Banks
The Reserve Bank of India (RBI) has released a discussion paper on “Entry of New Banks in the Private Sector”, which paves the way for granting new banking licences. The discussion paper compares India’s position with international experience and then suggests possible approaches (listing both pros and cons) for the way forward. This analysis has been carried out along the following: 1. Minimum...
Relaxation of Free Float Requirement
Earlier, on June 4, 2010, the Ministry of Finance introduced a requirement that all listed companies must have a public shareholding of 25%. This was to bring about uniformity and create a level playing field for all listed companies, and was the result of detailed deliberations that spanned several years. Although the rule was met with consternation by industry due to the ensuing possibility of...
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