[Priyadarsini T P is a 3rd year B.A LL.B (Hons) student at National University of Advanced Legal Studies, Kochi] Recently, Vedanta and JSW Steel received approval from the Competition Commission of India (“CCI”) for acquiring the insolvent entities Electrosteel Steels Ltd. and Monnet Ispat and Energy respectively. Although section 238 of Insolvency and Bankruptcy Code, 2016 contains a non...
Revisiting “Sham” as a Ground for Piercing the Corporate Veil
[Ashwin Murthy and Sathvik Chandrasekhar are 4th year students from NALSAR University of Law] The doctrine of piercing the corporate veil was clarified in India with the landmark case of Balwant Rai Saluja v Air India (2013), recognising that the veil should rarely be lifted. Balwant directly relied upon the UK case of Prest v Petrodel which similarly narrowed the scope of such piercing (read...
Demystifying ‘Board Inter-locks’ under SEBI’s Amended Listing Regulations
[Gaurav Pingle is a practising Company Secretary in Pune and can be reached at [email protected]] Introduction On June 2 2017, the Securities and Exchange Board of India (‘SEBI’) constituted a committee under the chairmanship of Mr. Uday Kotak for improving the standards of corporate governance of listed companies in India. On October 5, 2017, Kotak Committee submitted its report to SEBI. The...
SEBI Informal Guidance on Foreign Portfolio Investments in Unlisted Non-Convertible Debentures
[Kosha Thaker is a corporate lawyer with a law firm in Mumbai] Background Earlier, registered foreign portfolio investors (“FPIs”) were permitted to invest only in listed non-convertible debentures (“NCDs”) or to-be listed non-convertible debentures (i.e. if the NCDs were listed within a period of 15 days from such investment). There was, however, a special carve out for FPIs investing in...
Fallacy of the Inverse: CCI’s Application of Leniency Provisions
[Mrinali Komandur is a third year student at the National Law School of India University, Bangalore and is an editor of the National Law School Business Law Review] On April 19, 2018, the Competition Commission of India (“CCI”) granted, for the first time since the inception of the leniency provisions, a 100% reduction in penalty to Panasonic India in the Zinc-carbon dry cell manufacturers...
Adherence to Timelines in the Insolvency Resolution Process
[Medhashree Verma is a 2nd year B.B.A, LL.B. student at National Law University Odisha, Cuttack] One of the main objectives behind the enactment of the Insolvency and Bankruptcy Code, 2016 (the “Code”) was to provide for a speedy system for resolution of stressed companies. A healthy insolvency regime requires fast insolvency resolution for minimising creditors’ losses and maximising the asset...
Additional Payment for Work Done Outside the Scope of Construction Contracts
[Saksham Gahoi is a 4th Year Student of National Law Institute University, Bhopal] Introduction What can be constituted as a work within or outside the scope of work under a construction contract has been a point of dispute amongst parties resulting in numerous commercial arbitrations. This leads to another question whether such work which is outside the scope of contract entitles a party to...
SEBI Order in the USL Case: Lessons on Tunneling
In countries that are replete with corporate group structures (as in India), it is common to find transactions between a company on the one hand and a counterparty that has some relationship with it on the other. Referred to as a related party transaction (RPT), this could generate benefits if carried out on an arm’s length basis. At the same time, RPTs can be used to divert wealth from listed...
Status of Homebuyers in Corporate Insolvency: Will Ordinance Assure Relief and Returns?
[Swaha Sinha is a 3rd year B.A. LL.B. (Hons.) student at Symbiosis Law School, Pune] The Insolvency and Bankruptcy Code (the Code) has been subject to endless scrutiny and suggested changes, with some being implemented through recent amendments. Most strikingly, the Ministry of Corporate Affairs constituted an expert panel to recommend amendments to this ground-breaking statute, resulting in the...
Tying vs Bundling Arrangements: An Attempt at Resolving the Lacuna in Indian Law
[Karan Trehan and Prakhar Bhatnagar are II year B.A. LL.B. (Hons.) students at the NALSAR University of Law, Hyderabad] Various types of conditional arrangements exist in the commercial markets. They are conditional in that their conclusion is made subject to acceptance by other parties of additional obligations which, by their “nature or according to commercial usage”, may or may not have...
Cross Border Mergers in India: RBI Notification and Some Implications
[Roshni Menon is a 5th year B.A., LL.B (Hons.) student at School of Law, Christ University in Bangalore] Upon tracing the history of cross border mergers in India, one finds that the erstwhile Companies Act, (“1956 Act”) did contain provisions relating to the subject, however limited in its application. This law permitted a merger between a foreign company and an Indian company where the...
Section 29A of the Insolvency Code: A Critique of its Impact & Recent Developments
[Varun Khandelwal is a Third Year B.A., LL.B. (Hons.)student at The W. B. National University of Juridical Sciences (NUJS)] Introduction The insolvency regime in India is still in its nascent stage and it has not been too long since the Bankruptcy Law Reforms Committee submitted its report, which laid the foundation of the Insolvency and Bankruptcy Code, 2016(the “Code”). Initially, theCode...
Testing the Validity of a Type of Shareholders’ Agreements in India
[Priya Garg is a 4th year student at the West Bengal National University of Juridical Sciences (WBNUJS)] In the Indian context, shareholders’ agreements (SHAs) have been widely categorized into two types – one, that impose restrictions on the transferability of shares held by the shareholders who happen to be the parties to the SHA (type 1 SHA) and the other, which deal with the matters relating...
Jaypee Infratech Case: Discerning the Reach of Avoidance Proceedings
[Sikha Bansal is a Senior Associate at Vinod Kothari & Company, and can be reached at [email protected] or [email protected]] In IDBI Limited v. Jaypee Infratech Limited (order dated May 16, 2018), the National Company Law Tribunal, Allahabad Bench (NCLT), dealt with a crucial aspect of insolvency proceedings, namely vulnerable transactions. The resolution professional (RP) of...
Investment by FPIs in Securitised Debt Instruments
[Anita Baid is a Senior Manager at Vinod Kothari Consultants P. Ltd] Investments by foreign portfolio investors (FPIs) in unlisted debentures and securitised debt instruments (SDIs) issued by Indian companies was allowed pursuant to a notification dated 27 February, 2017 issued by the Securities and Exchange Board of India (SEBI). Earlier in November, 2016, the Reserve Bank of India (RBI) had...
CCI Order on the Scope of Section 3(3) and Confidentiality under Leniency Regulations: A Critique
[Amitav Singh is a lawyer based in Lucknow and a graduate of NUALS Kochi] Recently, the Competition Commission of India (CCI) passed an order in Nagrik Chetna Manch v Fortified Securities Solutions & Ors. wherein it found six out of seven parties before it guilty of bid rigging under section 3(3)(d) of the Competition Act, 2001 (the Act) and imposed a total fine of nearly Rs. 3.5 crore. In...
Financial Exposure of Secured Creditors and the Relevance of Vertical Comparison in Resolution
[Richa Saraf is a Legal Advisor at Vinod Kothari Consultants Pvt. Ltd.] An effective conduct of the corporate insolvency resolution process calls for an insight into the ranking of claims of various creditors. In most resolution plans, one finds that the financial creditors are paid a particular value as settlement of claims, and no specific provision exists as to how this amount is to be...
Resale Price Maintenance in the High Technology Market: A Competition Law Perspective
[Mudit Nigam is a 4th Year Student of National Law Institute University, Bhopal] The increased demand for products such as smart phones, ultra-HD televisions, LED lights, high-end laptops and computers, has promoted technological innovation and market growth, leading to the prominence of the high technology market in India. The country is emerging as a global digital lab with more than 20,000...
Taxability of Liquidated Damages from a MAT perspective: Tracing the Law
[Hardeep Singh Chawlais an Advocate practicing in the M&A & PE Tax Department of a Big4 in Gurgaon, Haryana. Views expressed are his own. The author may be reached at [email protected]] ***** “…… in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax...
Cross-Characterization of Share Capital
[Naren BS is an independent legal consultant and was previously a Senior Associate with a leading law firm] This post represents a brief discussion on the characteristics of equity and preference capital under the Companies Act, 2013 and the flexibility of cross-characterization between the two kinds of capital, i.e. imputing the characteristics of one kind of capital to the other. Background and...
SEBI Informal Guidance: Investment Banking for State-Owned Enterprises
In order to avoid potential conflicts of interest, the various regulations issued by the Securities and Exchange Board of India (“SEBI”) provide that merchant banks cannot act in transactions involving their “associates”. This is so in public offerings, takeovers, buybacks, delisting offers and similar transactions that mandate the requirement for a SEBI-registered merchant banker. In case the...
Arbitration: Supreme Court Allows Jurisdictional Challenge in Setting Aside Proceedings
[Ayush Chaturvedi and Chandni Bhatia are 4th Year B.A.LLB (Hons) students at Dr. Ram Manohar Lohiya National Law University, Lucknow] In Lion Engineering Consultants v. State of M.P., the Supreme Court allowed the plea of the State of Madhya Pradesh challenging the jurisdiction of the arbitral tribunal for the first time in a proceeding for setting aside of an arbitral award under section 34 of...
Liquidation Before Resolution?
[Richa Sarafis a Legal Advisor at Vinod Kothari Consultants Pvt. Ltd.] Historically, it has taken an unduly long period of time to wind up or liquidate a company in India as compared to other countries. Such lengthy time-frames are detrimental to the interest of all stakeholders. The process ought to be time-bound, aimed at maximizing the chances of preserving value for the stakeholders as well...
Analysis of “Externalisation” under Indian Law
[Deepansh Guwalani is a 4th Year Student at ILS Law College, Pune] Introduction “Externalisation” is a strategy of incorporating holding companies in offshore jurisdictions to enjoy certain benefits which the home country does not offer. The strategy is employed by companies to move their corporate structures away from the Indian tax and regulatory regimes. How it is done The process of...
A Giant Leap for Investors? – Analysing the Delhi High Court’s Verdict in Union of India v. Vodafone
[Sharanya Shivaraman is a IV year B.A., LL.B (Hons.) student at ILS Law College, Pune] Marking the dawn of a new era for investment arbitration in India, the High Court of Delhi pronounced its verdict last week in Union of India v. Vodafone Group plc dismissing the Government’s petition challenging the Vodafone Group’s move to initiate two international arbitrations against India. The judgment of...
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