Last year, the Securities Laws (Amendment) Ordinance was promulgated (twice in sequence) to grant SEBI additional powers of enforcement on various matters and to expand its regime to regulate Ponzi schemes. After the second Ordinance lapsed, there was concern that the situation would result in disruption of SEBI’s enforcement process. After some dithering, the Securities Laws (Amendment)...
Rajat Gupta Insider Trading Case: Appellate Decision
Last week, the United States Court of Appeals for the Second Circuit issued its opinion in United States of America v. Rajat K. Gupta, in which it upheld all the findings of the district court convicting Rajat Gupta on various counts of securities fraud. Although several questions were raised in the appeal relating to the robustness of the evidence in support of the conviction, the appellate...
Scope of a “Debenture”
The England and Wales Court of Appeal recently had occasion to consider the meaning and scope of the expression “debenture” in the context of a charge document. Consistent with some previous rulings of English Courts, the Court of Appeal provided a somewhat expansive definition of the expression “debenture” so as include within its fold a shareholder loan agreement. In Fons Hf v. Corporate Ltd...
Guest Post: Regulations by SEBI under the Companies Act, 2013 for Promoter Acquisitions
[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] In terms of section 13(8) of the Companies Act, 2013 (Act), a company, which has raised money from public through prospectus and has any unutilised amount out of the money so raised, is not permitted to change its objects for which it...
Further Provisions of Companies Act, 2013 Notified
The Ministry of Corporate Affairs today issued a notification that brings into effect several provisions of the Companies Act, 2013 with effect from April 1, 2014. These include several substantive provisions that would affect the manner in which companies are managed. A quick review of the notification suggests that the key provisions yet to be brought into force involve the National Company Law...
Guest Post: Directorship in a Company: Cap of Thorns
[The following post is contributed by Nidhi Bothra and Abhirup Ghosh at Vinod Kothari & Co. They can be contacted at [email protected] and [email protected] respectively] The Companies Act, 2013 (CA, 2013) brings about a sea change in the way the charter guiding corporate India will look like. The existing Act of 1956 has been the guiding force for nearly 60 years now but the...
Does section 185 apply to holding-subsidiary transactions?
The following post is contributed by Vinod Kothari of Vinod Kothari & Co. He may be contacted at [email protected] This follows a previous post on this topic by Jayant Thakur] Does section 185 apply to transactions of loans, guarantees or provision of security, in holding-subsidiary financial transactions? This question is evidently one of the most significant questions facing the...
Withdrawal of a Takeover Offer
[The following post is contributed by Yogesh Chande, who is a Consultant with Economic Laws Practice, Advocates & Solicitors. Views of the author are personal] In an interesting order passed on February 20, 2014, the whole time member of the Securities and Exchange Board of India (SEBI) has refused the withdrawal of an open offer made by the acquirers under the erstwhile SEBI...
An Instance of Shareholder Activism
A lot has already been said about shareholder activism in India, and how the concept has acquired a strong footing more recently. Shareholder activism may take on different forms. Shareholders may simply dump the stock of companies they believe are not being governed in the desired manner to protect investors (a.k.a. the “Wall Street walk”). They may engage with managements to influence decision...
CSR Provisions Soon to be Effective
The provisions of the Companies Act, 2013 and the rules thereon pertaining to corporate social responsibility (CSR) have been notified yesterday. They will take effect from April 1, 2014. A copy of the rules as notified is available here. As for the specific CSR activities, Schedule VII of the Companies Act containing the list of permitted activities has been amended. While we will have occasion...
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