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...
SEBI’s Deferral of the Chair-CEO Separation
Following the Kotak Committee recommendations, the Securities and Exchange Board of India (SEBI) in May 2018 announced that the top 500 Indian listed companies must mandatorily separate the roles of the chair and CEO (or managing director) to prevent a concentration of power in a company’s leadership structure. Moreover, SEBI stipulated that the chairperson should not be related to the CEO. These...
NCLT Finds Cross-Border Demergers Impermissible under the Companies Act
An important question arose before the National Company Law Tribunal (NLCT), Ahmedabad bench. Are only cross-border mergers and amalgamations permitted under section 234 of the Companies Act, 2013 (the “Act”), or does the provision also encompass cross-border demergers and other similar transactions? The NCLT answered that the scope of section 234 is narrow, and covers only cross-border mergers...
Some Comments on NCLAT’s Ruling in the Tata-Mistry Case
Last week, the National Company Law Appellate Tribunal (NCLAT) pronounced its ruling in the Tata-Mistry case. It held that the removal of Mr. Cyrus Mistry as executive chairman by the board of Tata Sons was illegal, and called for his reinstatement to that position. It also decided that consequential actions taken in the interim, including the appointment of a new executive chairman were illegal...
Indian Insolvency Proceeding Secures First Recognition under Chapter 15 of the US Bankruptcy Code
[Rahul Kanoujia and Tharun Chowdary are 3rd-year law students at Gujarat National Law University] Chapter 15 of the United States (US) Bankruptcy Code provides a framework through which bankruptcy courts recognize foreign insolvency proceedings. In 2005, the US adopted the Model Law on Cross-Border Insolvency introduced in 1997 by the UNCITRAL to encourage the treatment of multinational...
Recent Comments