The insider trading regime creates two types of offences in respect of insider trading, i.e., the “trading offence” whereby a person buys or sells securities while in possession of unpublished price sensitive information (UPSI) relating to such company and the “communication offence” which involves an inappropriate disclosure of UPSI on a selective basis. A vast number cases relating to insider...
The Resurgence of Schemes of Arrangement in Insolvency and Liquidation
Schemes of arrangement have historically been available under Indian company law as a means to carry out corporate debt restructuring. However, as I have found in this paper, schemes were hardly used for this purpose in India. The enactment of the Insolvency and Bankruptcy Code, 2016 (IBC) and the implementation of the corporate insolvency resolution process (CIRP) therein were expected to...
SEBI Consults on Shares with Differential Voting Rights
Dual class share (DCS) structures are becoming more popular around the world. While they have been existent in several companies in the United States (US) for some decades now, they were accompanied sometimes by a sense of unease among investors and regulators due to the disparity they create between economic rights (level of ownership) of shareholders and their control rights (voting). Since the...
Dissecting the L&T-Mindtree Takeover Battle
Hostile takeovers are rare in India; there have been only a handful of occurrences over the last few decades. Hence, the announcement by Larsen & Toubro (L&T) yesterday that it intends to launch a takeover of Mindtree set the Indian corporate scene abuzz because the promoters and management of Mindtree have sought to aggressively resist L&T’s attempts. It is billed as the first...
Buyback during Pendency of Amalgamation: SEBI Order in the Wipro Case
The SEBI (Buy-back of Securities) Regulations, 2018 states in regulation 24(ii) that a company shall not announce a buy-back when a scheme of amalgamation or compromise or arrangement pursuant to the provisions of the Companies Act, 2013 is pending. Such a proscription against buy-back operates because a scheme of amalgamation is a material transaction and could potentially alter the fundamental...
Actions against Independent Directors for Dishonour of Cheques
The question of liability of independent directors is a sensitive one given such directors carry substantial risk without having an influence in the day-to-day management of the company. Hence, the Companies Act, 2013 introduced a specific carve out in section 149(12) by which an independent director cannot be made liable for acts pertaining to the company except in limited circumstances “which...
Supreme Court Enhances Information Rights of Directors in Insolvency Process
In Vijay Kumar Jain v. Standard Chartered Bank (decided on 31 January 2019), the Supreme Court was concerned with the question whether under the Insolvency and Bankruptcy Code, 2016 the resolution professional is obligated to provide to members of the suspended board of directors all relevant documents pertaining to the corporate insolvency resolution process, including the resolution plan. The...
Supreme Court Upholds Constitutionality of the Insolvency and Bankruptcy Code
“The defaulter’s paradise is lost. In its place, the economy’s rightful position has been regained”[1] It is not at all surprising that those affected by debt recovery and insolvency legislation, being primarily debtors, would mount constitutional challenges to those legislation. Earlier examples include challenges to the Sick Industrial Companies (Special Provisions) Act, 1985 (D Ravikumar v...
ESG Reporting in India
The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Environmental and Social Reporting by Indian Companies”, which I have authored. The executive summary is as follows: Recent years have witnessed a strong focus on long-term sustainable value in companies rather than short-term profitability. The need for greater transparency on...
Corporate Governance and Sustainability
Professor Vikramaditya Khanna has authored the latest edition of the NSE Quarterly Briefing titled “Global Asset Managers and the Rise of Long Term Sustainable Value”. The executive summary is as follows: – The largest global asset managers (e.g., BlackRock, State Street) have stated that long term sustainable value (LTSV) is their key goal with respect to the firms in which they invest...
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