AuthorUmakanth Varottil

The Delisting Dilemma

When the financial markets are on a decline, company managements tend to utilize it as an opportunity to delist shares from stock exchanges. Not only is there a perception that the depressed market price is far from reflecting the true value of the company, but it also provides the promoters the ability to acquire the shares of the public shareholders at a relatively lesser cost. It is no wonder...

SEBI Circular on COVID-19 Disclosures

That the impact of the COVID-19 pandemic on a company’s business, operations and finances is “material” is undisputed. A question, however, arises whether listed companies ought to make clear and full disclosures of such impact and, if so, under what regime. One option would be to rely on existing securities regulation that requires listed companies to make episodic as well as periodic...

Corporate Governance in the Age of a Pandemic

Experience from past crises suggests that companies with robust corporate governance systems and practices are able to weather a storm better than others. Similarly, it is reasonable to hypothesize that, even amid the throes of a crisis such as the COVID-19 pandemic, referred to in corporate speak at an “unknown unknown” that has sparked a systemic risk, well governed companies can more optimally...

MCA Clarifies on Legal Actions against Outside Directors

Recognizing the specific roles that different directors of a company play, section 149(12) of the Companies Act, 2013 contains a safe harbour provision that protects certain types of directors against liability. It relates to three types of directors, who are, for the sake of convenience, referred to as “outside” directors: (i) an independent director; (ii) a non-executive director who is not a...

Enforcing a Pledge over an Insurance Company’s Shares

A transfer of shares of an insurance company requires the prior approval of the Insurance Development and Regulatory Authority of India (IRDAI) in certain circumstances. Section 6A(4)(b)(iii) of the Insurance Act, 1938 provides: “(4) A public company as aforesaid which carries on life insurance business- … (b) shall not register any transfer of shares … (ii) where, after the transfer, the total...

Supreme Court Rules on Preferential Transactions in Insolvency

In Anuj Jain v. Axis Bank Limited (26 February 2020), the Supreme Court was concerned with the validity of certain transactions that the corporate debtor carried out in the run up to its insolvency. Briefly, the corporate debtor, Jaypee Infratech Limited (JIL), mortgaged some of its assets in favour of certain and banks and financial institutions for loans they advanced to JIL’s parent company...

Paper on Shareholder Stewardship in India

I have uploaded on SSRN a paper titled “Shareholder Stewardship in India: The Desiderata”, whose abstract is as follows: The goal of this paper is to examine whether the stewardship code, which emanated in circumstances that are specific to the United Kingdom (UK), is capable of transposition to other jurisdictions that experience different corporate structures as well as legal and institutional...

MCA’s Proposals for Overhauling the Audit Industry

In corporate governance parlance, auditors are considered to be key “gatekeepers”. However, governance failures both in India and around the world have pointed fingers towards the role of auditors. This has led to a series of reforms that impose greater stringency on auditors and the audit process. For example, the audit provisions in the Companies Act, 2013 (the “Act”)  have been designed...

Takeover of Unlisted Companies: A New Route

Squeeze out of minority shareholders of companies has been a controversial area. As a co-author and I had discussed, there are a number of methods by which squeeze outs can be effected in Indian companies. By way of a recent set of notification and rule-making efforts, the Ministry of Corporate Affairs (MCA) has just added another method that would be applicable to unlisted companies. Among the...

A Book from the Blog: “The Reform Decade: Corporate and Commercial Law in India”

It has been nearly two years in the making, but a book to commemorate the tenth anniversary of the IndiaCorpLaw Blog is now out. Published by the Eastern Book Company, it is titled “The Reform Decade: Corporate and Commercial Law in India”. In this volume, we have curated and edited several blog posts in the form of articles, which we divide thematically into 11 parts. These are: Company Law...

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