[Roshan Cyriac is a 4th-year B.A., LL.B. (Hons.) student at NALSAR University of Law, Hyderabad] Foreign investors can invest in India directly through foreign direct investment (FDI) or through an entity owned and controlled by it (FOCC). An FOCC is a company incorporated in India but owned and controlled by a (non-resident) foreign company. When a non-resident transfers shares in Indian...
Arbitration Realities: Patterns of Challenges and Judicial Responses
[Madhav Goel, Karan Gulati, Sonam Patel, and Anjali Sharma are researchers at the TrustBridge Rule of Law Foundation] Arbitration has become a widely used mechanism to resolve contractual disputes in India. It offers greater flexibility and better alignment with parties’ incentives than courts. Since the parties voluntarily choose arbitration, they are generally expected to accept the outcomes...
Indian Shareholder Activism: Approaching a Turning Point?
[Karan Anand and Bhaskar Vishwajeet are students at Jindal Global Law School] The unsuccessful merger between Zee Entertainment Enterprises Limited (“ZEEL”) and Culver Max Entertainment Private Limited (“SPNI”) has reignited the debate on the status of shareholder activism in incomplete mergers in India. In the wake of the termination of the merger, some of SPNI’s institutional shareholders...
SEBI’s Right of Recovery: Limited to One’s Lifetime or Beyond?
[Urvashi Misra is a Counsel and Arnab Ray an Associate at AZB & Partners, New Delhi] Actio personalis moritur cum persona, i.e., personal actions die with the death of a person is a well-established legal principle, which is widely accepted by judicial and regulatory authorities, including the Securities and Exchange Board of India (“SEBI”). While SEBI has been implementing this principle in...
Demystifying Financial Debt: A Deep Dive into a Supreme Court Ruling
[Tanisha Gautam is a 4th year B.A., LL.B. (Hons.) student at the Institute of Law, Nirma University, Ahmedabad] The Insolvency and Bankruptcy Code, 2016 (IBC) established the boundaries between ‘financial debt’ and ‘operational debt’, which has been further clarified and expounded upon by the judiciary over time. The landmark judgment by the Supreme Court in Global Credit Capital Limited v. Sach...
Crowdsourcing Capital Faces Stiff Penal Actions
[Pammy Jaiswal is a Partner at Vinod Kothari and Company] Several well-known digital platforms have been showcasing the immense potential to raise funds for start-ups from private equity investors, reaching very often to retail investors too. However, one needs to note the provisions of section 42 (7) of the Companies Act, 2013 (‘CA 2013’), and several recent penalty orders which, with detailed...
Advancing the Objectives of IBC: Why Arbitration Should Persist During Moratorium Periods
[Arunoday Rai is a 3rd-year B.A., LL.B. (Hons.) student at the National Law School of India University, Bangalore] There has been sufficient literature arguing for reconciliation between insolvency and arbitration proceedings. This post argues for the continuation of arbitration proceedings as it furthers the objectives of insolvency and enhances its efficiency. It critiques the position taken by...
SEBI’s Proposed Price Discovery Framework: Balancing Market Protection
[Avinash Kotval and Aviral Bhardwaj are final and penultimate year BBA LL.B. (Hons.) students, respectively, at Jindal Global Law School, Sonipat] On April 19, 2024, the Securities and Exchanges Board of India (‘SEBI’) released a consultation paper on ‘Framework for Price Discovery of Shares of listed Investment Companies & listed Investment Holding Companies’. This consultation paper intends...
Deciphering the Incorporation of Arbitral Clauses and Contractual Intent
[Ria Bansal is a 3rd year B.A., LL.B. (Hons.) student at Rajiv Gandhi National University of Law, Punjab] Recently, the Supreme Court of India in NBCC (India) Ltd. vs. Zillion Infraprojects (P) Ltd. set aside the appointment of a sole arbitrator under section 11(6) of the Arbitration and Conciliation Act, 1996 (“the Act”) on the basis that the arbitration clause had not been incorporated within...
Navigating RBI’s Payment Aggregator Directives: A Merchant Perspective
[Pratishtha Shrivastava is a 3rd Year B.A.,LL.B student at Institute of Law, Nirma University] In a recent development, the Reserve Bank of India (RBI) proposed draft directions for the regulation of payment aggregators (PAs), specifically those handling physical point-of-sale (PoS) services. A PA is a third-party service provider that lets consumers pay retailers. Some significant PAs in India...
Foreign Direct Listing: Status of an Unlisted Public Company Post-Listing
[Sanyam Jha is a 4th year law student at West Bengal National University of Juridical Sciences, Kolkata] The transformation of India’s legal framework in terms of global fundraising opportunities for local enterprises represents a key step toward attracting foreign investment and boosting growth potential. Historically, Indian enterprises sought access to foreign cash through methods such...
The Broken Promise of ESG Investing
[Shuchi Agrawal is a Research Fellow in the Corporate Law and Financial Regulation team at Vidhi Centre for Legal Policy] The concept of environmental, social and governance (“ESG”) factors was first introduced into the mainstream in a 2004 United Nations report on sustainable finance. Since then, the idea has gained much popularity and has become increasingly important in the financial sphere...
Cartel Crackdown: India’s Leniency Program Odyssey
[Choudhury Paramjit Misra and Lavanya Bhargava are third year students at National Law University, Odisha] In India, competition regulations aim to protect consumers and ensure market freedom. They prevent monopolies, promote fair competition, and at the same time, safeguard consumer rights and contribute to economic welfare. This competition regime prevents anti-competitive agreements under...
Supreme Court on Grant of Loss of Profits Sans Evidence
[Raghav Bhatia is an Advocate practising at the Supreme Court and Delhi High Court. He may be contacted at [email protected]] Recently, the Supreme Court, in Unibros v. All India Radio, has explained, inter alia, the requirements to succeed in a claim for loss of profits. This post argues that while the judgment is in the right direction, the Supreme Court may have missed an opportunity to...
Recourse to Section 34(4) of the Arbitration Act: An Unreasonably Constricted Approach
[Gautam Narayan and Asmita Singh are advocates practicing at the Supreme Court of India] In a departure from the principle that an arbitral tribunal becomes functus officio after having delivered the award, section 34(4) of the Indian Arbitration & Conciliation Act, 1996 (“Arbitration Act”) (which is based on article 34(4) of the UNCITRAL Model Law on International Commercial Arbitration...
Currency Derivatives Market in Transition: A Deep Dive into RBI’s Regulatory Intervention
[Palash Varyani is a 3rd-year B.A., LL.B. (Hons.) student at the Institute of Law, Nirma University, Ahmedabad] India’s currency derivatives market is undergoing a profound transformation following the Reserve Bank of India’s (RBI) recent directive, set to be enforced on May 3. Brokers are advising clients to square off rupee derivatives positions as the regulatory landscape undergoes a...
Addressing Regulatory Arbitrage: Foreign Investment Compliance Recommendations for AIFs
[Harit Gandhi and Mukund Arora are fourth-year law students at National Law School of India University, Bangalore and Symbiosis Law School, Pune, respectively] Recently, commitments in alternative investment funds (‘AIF’) crossed INR 10 trillion for the first time amid rising demand from high net-worth individuals. As of December 2023, the investment commitments amounted to INR 10.84 trillion...
SEBI and Brokers’ Industry Standards Forum: Charting a New Course in the Sector
[Vaishnavi Srinivasan and Philip Oommen are lawyers based in Mumbai, and graduates of the National Institute of Securities Markets] In a pioneering move, the Securities and Exchange Board of India (SEBI) has established the Brokers Industry Standards Forum (BISF). Initially proposed in July 2023, the formation of the Industry Standards Forum by SEBI aims to establish regulatory standards, drawing...
RBI Tweaks Norms on Investments in AIFs: A Breather to the Regulated Lenders
[Srishti Multani and Aryan Birewar are 4th year BBA LLB (Hons.) students at Symbiosis Law School, Pune] On 27 March 2024, the Reserve Bank of India (‘RBI’) released a notification (‘Revised Notification’) relaxing certain directions given to regulated entities (‘RE’) in the notification (‘Previous Notification’) dated 19 December 2023 after due consultation with the stakeholders and industry...
Extinguishment of Personal Guarantee in Resolution Plan under the IBC
[Karnika Singh Pasayat and Vignaraj Pasayat are advocates practising in the Supreme Court of India and the High Court of Delhi] The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, recently rendered a ruling in Puro Naturals JV v. Warana Sahakari Bank (Company Appeal (AT) (Insolvency) Nos.661-663 of 2023 dated November 24, 2023)on whether to approve a resolution plan that Puro...
Demystifying Overlap in Collective Investment Schemes and Joint Ownership Structures
[Mihir Vashishtha is a final year B.A., LL.B. (Hons.) student at National University of Study and Research in Law, Ranchi] With the rise of digitization in the capital market, there has been a notable surge in interaction between retail investors and the market, leading to increased investment activity. In turn, this increased digitization has incentivized market players to develop investment...
Distribution of Profits Accrued During CIRP: An Equitable Approach Towards Settlement of Claims
[Karthika S. Babu is a third-year B.A. LL.B. Student at Gujarat National Law University] The Insolvency and Bankruptcy Code, 2016 (“Code”) provides for a specialized mechanism, i.e., the corporate insolvency resolution process (“CIRP”) for the resolution of insolvency of financially distressed entities. The CIRP aims to mitigate the claims of the affected creditors against the distressed...
Navigating the Twilight Zone Conundrum: A Cautionary Tale for Restructured Preference Shareholders
[Snigdha and Subhasish Pamegam are 3rd year B.A., LL.B. students at Gujarat National Law University, Gandhinagar] The practice of companies issuing restructured preference shares (RPS) in exchange for operational debt during the ‘twilight zone’, a period wherein a company is susceptible to becoming insolvent, is now seen as a controversial strategy. The order of the National Company Law Tribunal...
Regulating Big Tech: India Joins the Club
[Vikas Kathuria is the Director of the ASCOLA-India Chapter and Professor at the School of Law, BML Munjal University, India. He is also an editor of the IndiaCorpLaw Blog] India is all set to join the growing number of countries that have crafted level-playing rules for Big Tech firms. The Committee on Digital Competition Law (CDCL), which was constituted by the Ministry of Corporate Affairs to...
Banking on Banks for Natural Justice
In a judgement pronounced earlier this month, the Bombay High Court re-emphasized the requirements of natural justice to be followed by banks when designating a borrower who has defaulted on debt as a ‘willful defaulter’. This judgement is in line with the jurisprudence laid down by the Supreme Court and multiple High Courts on banks declaring borrowers as ‘willful’ defaulters in exercise of the...
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