The Reserve Bank of India (RBI) has issued a circular that expands the scope of investments that foreign venture capital investors (FVCIs) can make in Indian companies. Hitherto, FVCI investments were permitted either through initial public offerings or through private placements. Under the new regime, FVCIs may acquire shares in the secondary markets from existing shareholders. The operative...
Bombay HC in the MCX Case: Partial Reprieve to “Options” in Securities
Apart from dealing with specific issues relating to the facts of MCX’s application to commence the business of a stock exchange, the Bombay High Court’s judgment introduces greater clarity regarding the enforceability of options in securities of Indian public unlisted companies. The court was concerned with two issues pertaining to buyback and option arrangements that were entered into between...
Bombay HC in the MCX Case: Summary of the Judgment
The following is a summary of the various issues decided by the court, as extracted from the conclusions in the judgment itself: (i) Though the MIMPS Regulations in terms apply to a stock exchange in respect of which a Scheme for demutualisation and corporatisation has been approved under Section 4B, the application of those regulations was extended to the Petitioner by SEBI as a condition for...
Bhopal Gas Tragedy: Revisiting Issues of Liability under Corporate Law
Over at Critical Twenties, Arghya Sengupta has initiated a debate “on the twin issues of the legal responsibility of a successor multi-national company for the liabilities of its predecessor as well as … thoughts on the appropriateness of the Olympics partnering with such a corporation would be most appreciated.” I have sought to step into the debate by addressing questions of legal liability...
Bombay HC Ruling on the MCX-SEBI Case
The Bombay High Court has pronounced its judgment today in the matter relating to the denial of a stock exchange licence to the MCX Exchange. The Court has set aside SEBI’s order of 23 September 2010 (which was discussed here) and directed SEBI to reconsider MCX’s application afresh in the light of the Court’s observations. The judgment has significant implications on various...
Miscellaneous
1. Reactions to Vodafone The discussions on the Vodafone judgment of the Supreme Court continue to raise questions regarding tax avoidance, and also aspects of corporate law (distinguishing the sale of shares and sale of assets). While Prashant Bhushan has raised questions regarding the judgment on several counts (here and here), Arvind Datar...
Paper on Enforceability of Share Transfer Restrictions
Niranjan and I have posted a paper titled “The Enforceability of Contractual Restrictions on the Transfer of Shares” on SSRN. The abstract is as follows: This paper analyzes the judicial trends regarding the enforceability of clauses in shareholders’ agreements that restrict the transfer of shares in Indian companies. The authors argue that neither VB Rangaraj’s case nor section 111A(2) of the...
PIL in Kerala to axe the vexed Intermediary Rules
(The following post is contributed by Rohan Bagai) In the midst of the tempestuous brouhaha over internet censorship and filtering of online content while US corporations like Microsoft and Yahoo are being let off on account of scanty evidence of objectionable content in their court battles at Delhi, a public interest litigation (PIL) has been filed in the Kerala High Court contesting the...
The Socio-Legal Review: Essay Competition
The Socio-Legal Review, the student edited peer reviewed journal of the National Law School of India University, Bangalore is holding the 2nd Annual SLR Essay Competition. Students from law schools and other undergraduate courses in India and around the world can participate and submit their essays on the topics mentioned below. 1. Emergent Civil Society: Redefining or negating participative...
Outbound FDI and M&A
The Reserve Bank of India has published a paper/address titled “Outward Indian FDI – Recent Trends & Emerging Issues” that examines various regulatory aspects of outbound FDI by Indian companies. It considers various business aspects and comments upon regulatory issues and concerns. The latest issue of The Economist also looks at outbound M&A from India, and analyzes the level of success...
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