[Shubham Sancheti is a 4th year B.A., LL.B. (Hons.) student at NALSAR University of Law in Hyderabad] The Securities and Exchange Board of India (“SEBI”) recently availed an opportunity to interpret regulation 37(6) of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”). It provided an interesting yet contestable interpretation of the regulation...
Revisiting Arbitrability of Claims of Oppression and Mismanagement: A Singapore Perspective
[Aishwarya Singh is a 4th year student at Jindal Global Law School] The Bombay High Court (HC) in the case of Rakesh Malhotra v. Rajinder Kumar Malhotra (2014) had held that oppression and mismanagement claims are not arbitrable because the arbitral tribunal does not have the power to grant all the statutory reliefs available in a minority oppression claim. On the other hand, the Singapore Court...
Announcement: LL.M in Law & Development 2018 – Azim Premji University
[Announcement from Azim Premji University] Admissions for Azim Premji University’s one-year master’s programme in Law & Development (LL.M. in Law & Development) for the academic year 2018-2019 are now open! The LL.M in Law & Development is a unique, inter-disciplinary programme taught by internationally trained, reputed faculty to a select group of highly talented students carefully...
Can a Company ‘Selectively’ Reduce its Capital?
[Shikha Rawal is an Associate at a law firm in Mumbai. The views in this post are personal.] Over the years, several companies have increasingly resorted to selective capital reduction as a means of share capital management. A reduction of capital often involves the reduction of the same proportion of the shares of the company on similar terms and conditions offered to each shareholder whose...
Compulsory Amalgamation: the Bombay High Court on the FTIL-NSEL case
In 63 Moons Technologies Ltd. v. Union of India (and connected petitions), the Bombay High Court considered important questions of law going to the heart of Indian corporate law. The case involved a challenge to an order of the Central Government under s. 396 of the Companies Act, 1956. Purporting to act under s. 396, the Central Government had amalgamated the National Spot Exchange Ltd. (“NSEL”)...
Our Tenth Anniversary
Today marks the tenth anniversary of the IndiaCorpLaw Blog. The first post appeared on December 26, 2007. The Blog was launched with very little, or almost no, expectations as to its future. Surprisingly though, it has survived this long. That can be attributed to a number of factors: we have been fortunate to be joined by a wonderful team of collaborators and guest contributors to keep up the...
Call for Papers: NLS Business Law Review
[Announcement from the NLS Business Law Review] The NLS Business Law Review is an initiative by the National Law School of India University to recognise and foster academic research and scholarship in corporate and commercial law. The law review intends to examine the interface between the myriad regulatory frameworks that impact doing business in India, particularly in light of comparative...
Arbitrability of Fraud in India – Is Ayyasamy only about “Seriousness”?
[Shubham Jain and Prakshal Jain are V Year B.A., LL.B. (Hons.) students at National Law School of India University, Bangalore] Introduction The question of arbitrability of fraud in case of domestic seated arbitration in India was addressed by the Supreme Court in A. Ayyasamy v. A. Paramasivam (“Ayyasamy”). Ayyasamy has been subjected to much discussion and criticism here, here, here and here...
Bombay High Court Upholds the Constitutional Validity of RERA
Bhushan Shah & Neha Laxman are with Mansukhlal Hiralal & Company. The Supreme Court of India had transferred a series of writ petitions filed by developers and builders challenging the constitutional validity of certain provisions of the Real Estate Regulation and Development Act, 2016 (RERA or Act) to the Bombay High Court. On 6 December 2017, a division bench of the Bombay High Court...
Insolvency Code: Beneficial Proceedings Relating to Corporate Debtor outside the Scope of Moratorium
[Aayush Mitruka is a lawyer based in Delhi] The Delhi High Court’s ruling in the case of Power Grid Corporation of India Limited Jyoti Structures Limited (11 December 2017) assumes importance because it is one of the very few decisions interpreting section 14 of the Insolvency and Bankruptcy Code, 2016 (Code) that deals with moratorium. In a significant outcome, the Court travelled beyond the...
Some Problems with Equalisation Levy
[Shantanu Lakhotia is a 4th year B.A., LL.B. (Hons.) student at Jindal Global Law School in Sonipat] A notification issued by the Government of India on 27 May 2016 provides for a 6% equalization levy to be withheld by Indian residents, as well as a foreign company having a permanent establishments in India, from business-to-business payments to a non-resident service provider for specified...
Fugitive Economic Offenders Bill: A Viable Project or a Doomed Battle?
[Malcolm Katrak is a Law Clerk to Justice (Retd.) S. N. Variava, Former Judge, Supreme Court of India] Recently, the Law Ministry affirmed the draft ‘Fugitive Economic Offenders Bill, 2017’, which gives powers to the Government to confiscate property of economic offenders and defaulters. This Bill flows from the Finance Minister’s budget speech promising legislative changes to confiscate the...
Supreme Court Removes “Two Threshold Bars” Under Insolvency Law
Over the last few months, creditors initiating corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (the Code) have encountered setbacks on procedural counts that have poured cold water on their efforts in resorting to the much sought-after insolvency process. This is attributable to a highly technical and narrow interpretation of certain provisions of the...
Understanding the Dichotomy between Materiality and Price Sensitivity: Where to Draw the Line?
[Anuj Bansal is a 5th year B.A. L.L.B. (Hons.) student at the Dr. Ram Manohar Lohiya National Law University, Lucknow] The approach of the securities law adjudicatory bodies, as observable through the orders on insider trading, has often given rise to an interesting issue of much academic relevance: what distinguishes ‘price sensitive information’ under SEBI (Prohibition of Insider Trading)...
Outsourcing Services and Permanent Establishment
[Akash Santosh Loya is a 4th year student of the B.A. LL.B.(Hons.) course at the National University of Advanced Legal Studies, Kochi, India] In the case of Assistant Director of Income Tax v. M/s E-Funds Solution Inc.,[1] the Supreme Court of India delivered an important decision regarding the Permanent Establishment status of outsourcing functions provided by various information technology (IT)...
Sharing of Unpublished Price Sensitive Information with Promoters
[Shikha Rawal is an Associate at a law firm in Mumbai. The views in this post are personal.] In June this year, the Securities and Exchange Board of India (“SEBI”) constituted a committee under the Chairmanship of Mr. Uday Kotak (“Kotak Committee”) to propose reforms to regulations governing listed companies. After careful deliberations, the Kotak Committee submitted a report on October 5, 2017...
Majority Requirement for Creditors’ Approval of Resolution Plan
Background and Legal Question Nearly all of the posts on this Blog that deal with the Insolvency and Bankruptcy Code, 2016 (the “Code”) begin with the quip that the Code is still undergoing a gestation period that has led to snags in its implementation. This one is no different. Two separate benches of the National Company Law Tribunal (“NCLT”) have adopted diametrically opposing views on the...
Interpreting the Restriction on Layering of Subsidiaries
[Mayank Labh is a 4th year student at NALSAR University of Law] The Ministry of Corporate Affairs recently notified the Companies (Restriction on Number of Layers) Rules, 2017 (the “Rules”) on 20 September 2017. Much has been debated (here, here and here) on how the Rules affect genuine business structuring of companies and the unnecessary burden and costs it imposes on companies. In this post, I...
Systemizing Fairplay – Key Issues in the Indian Competition Law Regime
[Vedika Mittal is a Research Fellow in the Corporate Law and Financial Regulation vertical at Vidhi Centre for Legal Policy] Since the enactment of the Competition Act, 2002 (“Competition Act“), the business milieu has changed considerably globally and in India. More and more businesses are now being run in the virtual world and newer models of business exist now which would have been...
SEBI Clarifies Scope of Embargo Against Share Issuances Following Delisting
Companies that are undertaking a delisting of equity shares must be prepared to endure an embargo that would prevent them from listing their shares for a further period of time (five or ten years, depending upon the circumstances). Such a restriction is contained in regulation 30(1) of the SEBI (Delisting of Equity Shares) Regulations, 2009. This is to prevent companies from retreating the...
Failure of a Creditor to Submit a Claim in an Insolvency Process
[Bhavin Gada is a Partner at Economic Laws Practice, Advocates and Solicitors (“ELP”), and Manendra Singh an Associate Manager at ELP. The authors would like to thank Akshata Limaye, Associate at ELP, for her inputs] The corporate insolvency resolution process (CIRP) for corporate persons under the Insolvency and Bankruptcy Code, 2016 (Code) was introduced with the primary objective of providing...
Recovery Proceedings against Guarantors during the Insolvency of the Principal Debtor
[Milind Gaur is a 5th Year BBA LLB student of Symbiosis Law School, Pune.] Introduction With the dawn of the Insolvency and Bankruptcy Code, 2016 (the Code), a crucial and much needed framework was set in place for tackling the insolvency and bankruptcy regime in India. At the same time, the Code has elicited clarifications and interpretation across various provisions. One such question which...
The Legality of Smart Contracts in India
[Rishi A is legal analyst at spotdraft.com] Introduction Earlier this year, the State Bank of India (‘SBI’) launched BankChain, a blockchain platform formed by a consortium of 27 banks, which was proposed to be used to share e-KYC information about customers within the consortium. This would help with the transmission of information directly to the banks without any leakages or delays. Last week...
Applicability of the Limitation Act to Insolvency Proceedings: A Critical Analysis
[Madhumitha Srinivasan is an Associate at Advaya Legal and practising in the Bombay High Court. The views expressed are personal. An earlier post on the topic is available here] In a decision passed by the National Company Law Appellate Tribunal (NCLAT) in Black Pearl Hotels Pvt. Ltd. vs. Planet M Retail Ltd. (judgment dated 17 October 2017), it has been observed that the right to apply under the...
Does Section 11B of the SEBI Act Envisage ‘Non-Compliance’ of Directions? – Part I
[Rahul Sibal is a 4th Year student and Deep Shah a 3rd Year student of NALSAR Hyderabad] Background In March this year, the Securities and Exchange Board of India (‘SEBI’) confirmed an interesting interim order that was passed last year. The interim order (the ‘Order’) impounded profits that Beejay Investments derived from trading in securities, with such profits being termed as ‘unlawful gains’...
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