Background and Facts Last week, SEBI passed its order in the Jet-Etihad case relating to whether the investment by Etihad Airways in 24% shares of Jet Airways (India) Limited and the terms thereof amount to Etihad obtaining “control” in Jet so as to require Etihad to make a mandatory open offer under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the Takeover...
Guest Post: The Changing Definition of Debentures
[The following post is contributed by Nidhi Bothra of Vinod Kothari & Co. She can be contacted at [email protected]] The new Companies Act, 2013 has changed the regulatory face of the corporate India; “raising the bar on Corporate Governance.” The new regulatory changes including need for CSR activities, increased investor protection, greater transparency in business and have been the...
Court-Convened Meetings and Postal Ballot
Background In one of the first few cases interpreting the provisions of the Companies Act, 2013 (the 2013 Act), the Bombay High Court last week issued its judgment on the use of postal ballot facility at a court-convened meeting to consider a scheme of arrangement. In re Godrej Industries Limited, the court was concerned with a scheme of amalgamation of Wadala Commodities Limited into Godrej...
Supreme Court on the Sanctity of a Takeover Offer
Background and Facts Last month, the Supreme Court had the occasion in SEBI v. Akshya Infrastructure Pvt. Ltd. to consider the narrow question of the whether “an open offer voluntarily made through a Public Announcement for purchase of shares of the target company can be permitted to be withdrawn at a time when the voluntary open offer has become uneconomical to be performed”, which it answered...
Guest Post: State Consent vis-à-vis FDI in Multi-Brand Retail
[The following post is contributed by Sujoy Chatterjee who is an Advocate in New Delhi and an alumnus of the National Law University Jodhpur (’13)] In the aftermath of the December 2013 State Assembly elections, the newly elected Governments of Delhi and Rajasthan expressed their intention to withdraw their consent from allowing foreign direct investment (FDI) in multi-brand retail trading (MBRT)...
SEBI Announces the Specifics of Revised Corporate Governance Norms
It was nearly a decade ago in October 2004 that the Securities and Exchange Board of India (SEBI) announced substantial revisions to the corporate governance norms contained in clause 49 of the listing agreement that applies to all public companies listed on an Indian stock exchange. The revisions, however, took effect only from January 1, 2006. Since then, there have been some specific...
Further Tax Scrutiny of Mergers
In the last few years, mergers of companies (undertaken through schemes of arrangement that require the approval of the High Court) have been subject to greater scrutiny by the tax authorities. One example of a merger that was strongly objected to by the tax authorities is the case involving Vodafone Essar Gujarat Limited (discussed here), although the scheme was sanctioned on appeal to a...
A Study on Ownership Concentration in Indian Companies
The shareholding pattern of Indian companies has been the subject matter of academic studies, which have consistently shown that Indian companies are controlled substantially by controlling shareholders (or promoters) who hold a significant percentage of shares in public listed companies. The promoters range from business families to the state and to multinational corporations (MNCs). For a...
Companies Act, 2013: Directors’ Duties and Liabilities
The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Directors’ Duties and Liabilities in the New Era”. The executive summary is as follows: – Since directors and the board play a pivotal role in corporate governance, the law foists duties and liabilities on them; – The Companies Act, 2013 has brought about a paradigm shift...
Enhanced Disclosure of Mutual Fund Voting Policies
Generally, shareholders of a company may exercise their voting rights in any manner in which they deem fit. They are not even obliged to exercise their corporate franchise and may instead choose to abstain rom attending and voting at company meetings. This legal position may engender passivity and shareholder apathy, which have been prevalent in Indian companies for several decades. While law or...
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