[RS Sanjanaa is a third-year BA LLB (Hons.) student at Symbiosis Law School, Pune] A sponsor of a mutual fund refers to any bank, financial institution or a corporate who acts as the promoter of the mutual fund. The entity establishes the fund, obtains necessary approvals and funding, and incorporates an asset management company (“AMC”). On June 27, 2023, the Securities and Exchange Board of...
Identifying Senior Managers: Revisions to Listing Rules
[Pammy Jaiswal and Mahak Agarwal are with Vinod Kothari & Co] The concepts of senior management (‘SM’) and senior managerial person or personnel (‘SMP’ or ‘SMPs’) was not present under the regime established by the Companies Act, 1956, and it was first introduced in section 178 of the Companies Act, 2013 (the ‘Act, 2013’). The law requires the nomination and remuneration committee to...
Revival of Time-Barred Debts
[Mihir Modi is an Associate with PSL Advocates and Solicitors in Mumbai] According to the Limitation Act 1963 (‘the Limitation Act’), there is a set time limit for filing appeals and instituting lawsuits in various courts. The Limitation Act is based on the idea that there must be a strict time limit for bringing appropriate actions in the courts. In doing so, it protects only the diligent...
Corporate Climate Litigation: Comparing ClientEarth-Shell with the Indian Regulatory Framework
[Dhanshitha Ravi and Santosh S are third and final year law students respectively at Symbiosis Law School, Pune] The United Kingdom High Court (“UKHC”) on the 12 May 2023 delivered a landmark judgment in the realm of corporate jurisprudence in a first of its kind climate-change based derivative action in ClientEarth v. Shell plc. This action was brought by ClientEarth, a minority shareholder in...
Balancing Contractual Autonomy vis-à-vis Application of Section 74 of the Contract Act, 1872: Part II
[Lavanya Pathak and Pallavi Mishra are advocates practicing at the Delhi High Court. This is a continuation from Part I] Position Taken by High Courts at Bombay, Delhi and Madras The recent judgements rendered by High Courts at Bombay, Delhi and Madras (discussed below) are instructive when it comes to offering clarity on the SC’s understanding of the law on liquidated damages and penalties. In...
Balancing Contractual Autonomy vis-à-vis Application of Section 74 of the Contract Act, 1872: Part I
[Lavanya Pathak and Pallavi Mishra are advocates practicing at the Delhi High Court.] The concept of ‘liquidated damages’ and ‘penalty’ was originally intended to be omitted from the realm of the Indian law by careful usage of the phrase “sum named in the contract” under section 74 of the Contract Act, 1872 (“Contract Act”). However, following the amendment brought about in 1899, the scope of...
CCI’s Inconsistent Stance on Acquisition of Optionally Convertible Securities: Reconciling Control and Competition
[Arham Anwar and Ruby Agrawal are 4th year and 2nd year students of NLU Jodhpur and RGNUL Patiala] The scheme of arrangements contemplated under the Companies Act, 2013 generally requires the approval of the Competition Commission of India (hereinafter, “CCI”) in relation to asset size and turnover of the enterprise. This essentially underlines high level of dependability the company has on the...
Fine-Tuning the FLDG Framework: Sectoral Caps Reflecting Default Rate Variations
[Ritvij Ratn Tiwari is a 3rd-year B.A., LL.B. (Hons.) student at the National Law School of India University, Bangalore.] In June 2023, the Reserve Bank of India (“RBI”) issued guidelines regulating the arrangements for sharing the losses arising from defaulted loans, popularly called default loss guarantee (“DLG”), between regulated entities (“REs”) and lending service providers (“LSPs”). These...
Section 241 of the Companies Act, 2013: An Avenue for Derivative Actions
[Rakshit Agarwal is a 2nd Year Student at the National Law School of India University, Bangalore] The judgment of the Delhi High Court in ICP Investments v Uppal Housing Pvt Ltd has spurred the debate as to whether section 241 of the Companies Act 2013 (“Act”) is the appropriate provision under which derivative actions can be instituted. The decision in ICP Investments to include derivative...
SEBI’s Order on Spoofing – A Way Forward
[Shivangi Paliwal and Mahak Shinghal are final year B.A. LL.B. (IPR Hons.) and B.B.A. LL.B. (IPR Hons.) students at National Law University, Jodhpur] Section 12A of the Securities and Exchange Board of India Act, 1992 [“SEBI Act”] read along with Regulation 3 & 4 of SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 [“PFUTP...
Regulating the Regulator: A Prohibited Territory for the CCI
[Shourya Mitra is a penultimate year law student at Jindal Global Law School, Sonipat] On 2 June 2023, the Delhi High Court, in the case of Institute of Chartered Accountants of India (“ICAI”) v. CCI, held that the Competition Commission of India (“CCI”) lacks jurisdiction to assess grievances arising from a statutory regulator’s decisions. It held that the CCI could not compel or outsource...
Put Options: Putting Up with Foreign Exchange Regulation
[Ryan Joseph is a 3rd year B.B.A., LL.B. (Hons.) student at Jindal Global Law School] A decision of the Madras High Court in January this year in GPE (India) Limited v. Twarit Consultancy has added to the controversial debate over the enforcement of put options that guarantee assured returns. The High Court toed the line with other courts and upheld an arbitral award, notwithstanding the...
Reimagining the Insolvency Process: A Case of Multiple Resolution Plans
[Piyush Kr. Choubey and Kaustubh Kumar are 4th year students at the National University of Study and Research in Law, Ranchi] The Ministry of Corporate Affairs (“MCA”) in January 2023 floated a discussion paper on possible changes to the Insolvency and Bankruptcy Code, 2016 (the “Code”). One of the topics in the discussion paper was “Reimagining the consideration of the resolution plan and the...
Securing Borrowers, Shielding Lenders: RBI’s Default Loss Guarantee Regulations
[RS Sanjanaa is a 3rd year BA LLB (Hons.) student at Symbiosis Law School, Pune] The Reserve Bank of India (RBI) has granted approval to and released guidelines (on June 8, 2023) on the much-contended topic of default loss guarantee (DLG). A DLG model according to this refers to the default loss cover provided to a bank or non-banking finance company (NBFC) by the fintech company that was the...
SEBI’s Reforms for REITs/InvITs: Assessing the Broader Corporate Governance Concerns
[Nikhil Javali is a 4th year B.B.A. LL.B. student at National Law University Odisha] As real estate investment trusts (‘REITs’) and infrastructure investment trusts (‘InvITs’) gain global recognition as a powerful investment vehicle, India is taking significant strides towards aligning its REIT/InvIT regulations with global best practices. Across the world, REITs have emerged as a dominant...
Stricter Framework for Sale, Lease or Disposal of Undertaking by a Listed Entity
[Nitu Poddar is a Partner at Vinod Kothari and Company, and can be reached at [email protected]] Disposal of an undertaking (whole or substantially the whole) can be carried out either as part of a scheme of arrangement or otherwise by way of slump sale or business transfer agreement (‘BTA’). Disposal, other than by way of scheme of arrangement, has so far been regulated according to...
Call for Submissions: Trade, Law and Development
[Announcement on behalf of Trade, Law and Development] Founded in 2009, the philosophy of Trade, Law and Development (TL&D) has been to generate and sustain a constructive and democratic debate on emergent issues in international economic law and to serve as a forum for the discussion and distribution of ideas. Towards these ends, the Journal has published works by noted scholars such as the...
Call for Papers: NLUJ Law Review
[Announcement on behalf of the NLUJ Law Review] NLUJ Law Review is the flagship journal of National Law University, Jodhpur, established with the objective of promoting academic research and fostering debate on contemporary legal issues. It is a bi-annual, double-blind student reviewed and edited journal, focusing on an inter-disciplinary approach towards legal writing. The remit of the Reviewis...
Private Equity Firms and the Liability Puzzle of their Subsidiaries
[Rupam Dubey is a 2nd year B.A.LLB student and Hrithik Merchant a 4th year B.A.LLB student, both at the National Law School of India University Bangalore] The traditional essence of private equity was rooted in the strategy of acquiring companies for the purpose of selling them, while remaining detached from the day-to-day operations of the portfolio company. However, the landscape of modern...
Call for Papers by RMLNLU Law Review Volume XIV
[Announcement on behalf of Dr. Ram Manohar Lohiya National Law University] Dr. Ram Manohar Lohiya National Law University (RMLNLU) is a public law school and a National Law University located in Lucknow, Uttar Pradesh, India. It was established as Dr. Ram Manohar Lohiya National Law Institute in 2005, and since then, has been providing undergraduate and post-graduate legal education. It ranks...
Analysis of SAT Order: Appointment of Independent Director Above 75 years
[Gaurav Pingle is a practising company secretary and can be reached at [email protected]] Considering the importance of independent directors on the boards of listed entities, the Securities and Exchange Board of India (“SEBI”) has been amending the provisions relating to their appointment, re-appointment, appointment process, remuneration, and the like under the SEBI (Listing Obligations and...
Karvy Demat Case: How has SEBI Responded?
[Anant Budhraja and Praneeta Tiwari are 5th year BA-LLB (Hons.) students at West Bengal National University of Juridical Sciences] The Securities and Exchange Board of India (“SEBI”) on April 28, 2023, passed a stringent final order against Karvy Stock Broking Limited (“KSBL”) and its promoter Comandur Parthasarthy, whereby it banned them from accessing the securities market for seven years...
PMLA Framework on Virtual Digital Assets: Two Key Issues
[Jaideep Reddy is Counsel and Krati Hashwani a Senior Associate, Trilegal] The virtual digital asset (also known as crypto-asset or cryptocurrency) (VDA) industry is accustomed to legal ambiguity in India. There has been little in the way of legislative clarity, barring the specific income-tax regime introduced in 2022, and piecemeal measures such as a mandatory disclosure of holdings for...
Empirical Analysis of Legal Fees Data for Indian Companies
[Srinivasan Sankaraguruswamy is an Associate Professor of Accounting at the NUS Business School, National University of Singapore and Umakanth Varottil is an Associate Professor at the Faculty of Law, National University of Singapore] A significant challenge confronts legal departments of companies. On the one hand, the demand for legal services from external counsel continues to skyrocket given...
Material Adverse Government Action (MAGA): Need for a PPP Framework in India
[Sri Janani S. is a 3rd year B.A., LL.B. (Hons.) student at National Law University, Jodhpur] In the recent years, public-private partnerships (“PPPs”) have been increasing manifold in India. The state is recognizing the private sector’s indispensable role in the infrastructure sector, urban water projects, healthcare and even in the development of electric vehicles. The Government is encouraging...
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