Blog Posts
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Partnerships and the Effects of Non-Registration: Section 69(2A) declared unconstitutional
[Posted by Mihir Naniwadekar] In a judgment delivered last week, V. Subramanium v. R. Rao (Civil Appeal 7438/2000; MANU/SC/0417/2009), the Supreme Court declared unconstitutional a significant state amendment to the Partnership Act, 1932. Section 69 of the Partnership Act reads: 69. Effect of non-registration. (1) No suit to enforce a right arising from a contract…
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FDI: Compulsorily Convertible Debentures
[Posted by Umakanth Varottil] It is quite common for foreign investors to take up convertible instruments in Indian companies. These instruments are issued as either preference shares or debentures to begin with and are convertible into equity shares of the Indian company at a later date. The conversion may occur in one of two ways:…
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National Law School of India Review: Symposium on Arbitration
[Posted by Mihir Naniwadekar] The National Law School of India Review will be holding its 2nd annual Symposium on 18th – 19th April, 2009. The theme of the Symposium is “Towards Unification: Perspectives on Investment and Commercial Arbitration”; and it is intended to cover international commercial arbitration as well as investment treaty arbitration. According to…
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The AIG Bonus Payments Controversy: Issues of Contract Law
[Posted by Umakanth Varottil] There has been a significant outrage since the controversy over bonus payments to some AIG employees began about a week ago. One of the justifications of the AIG management for pressing on with the payments is that the company is legally obligated to pay their employees failing which it could be…
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SEBI’s Proposal to Revitalise Rights Issues
[Posted by Umakanth Varottil] Rights issues offer an important avenue for companies to raise capital, especially when bank financing may be difficult owing to a credit crunch as we are currently witnessing. However, in the Indian context, the procedure for carrying out a rights issue has been as onerous as it is for a full-blown…
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Differential Voting Rights: Ruling by CLB
[Posted by Umakanth Varottil] Several months ago, we had mentioned that the validity of shares with differential voting rights (DVRs), particularly as a defence against takeovers, was challenged before the Company Law Board (CLB) in the Jagatjit Industries Case. Today’s Economic Times reports that the CLB has passed its order upholding the resolution to allot…
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Regulation of Stock Exchanges
[Posted by Umakanth Varottil] The proposed establishment of a new stock exchange in India has caused a revival of the debate pertaining to regulation of stock exchanges. There are unique issues: stock exchanges are not only profit-making institutions that are companies in form and substance, but they also carry out a regulatory role in respect…
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NCLT and NTT: Questions of “Intrinsic Judicial Functions”
[Posted by Mihir Naniwadekar] Recently, a Constitution Bench of the Supreme Court (headed by Balakrishnan C.J.) finished hearing arguments on the constitutionality of the proposed National Company Law Tribunal (NCLT), and judgment has been reserved. The matter arose out of an appeal against a Madras High Court decision in R. Gandhi v. Union of India.…
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Directors are persons in control; failure to disclose their shareholding violates Takeover Regulations
[Posted by Somasekhar Sundaresan] In a far-reaching decision, the Securities and Exchange Board of India has ruled in an adjudication order that members of the board of directors of a listed company (“Target Company”) would be persons having control of the Target Company. Consequently, directors of the Target Company ought to make disclosures of their…
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Securitisation and Debt Recovery – A Centre-States Conflict?
[Posted by V. Niranjan] The Constitution has devised an elaborate scheme of distribution of legislative powers, and the competence of a legislature to enact a law has normally been challenged by a private citizen to whom the law applies. The latest battleground looks to be the fairly recent structure of securitization, debt recovery and other…