Professors Dhammika Dharmapala and Vikramaditya Khanna have posted an interesting paper on SSRN that is titled “The Impact of Mandated Corporate Social Responsibility: Evidence from India’s Companies Act of 2013”, the abstract of which is as follows: Firms’ Corporate Social Responsibility (CSR) activity has become the subject of a large literature in recent years. This paper analyzes CSR activity...
Tata Group Companies: “Long-Term Interests” the Key Touchstone
The episode surrounding the Tata Group has taken further twists and turns. After several Tata Group companies expressed their support in favour of Mr. Mistry, who continues to be chairman of several of those companies, one company – Tata Global Beverages – adopted a different stance. In a board meeting held this week, the directors of Tata Global Beverages decided by a 7:3 majority to replace Mr...
The Tata Episode: Corporate Governance and the Continuing Influence of Promoters
It is generally understood that corporate governance norms ought to address agency problems between various actors in a company. Moreover, in companies with concentrated shareholding, the agency problems between controlling shareholders (referred to in India as “promoters”) and minority shareholders tend to be rampant, and hence corporate governance measures need to be targeted to address that...
Management Conflicts and Board Independence
In the ongoing saga involving the boardroom battle for the Tata Group, a new development may have significant implications for corporate governance practice in India. Yesterday, a Tata Group company, The Indian Hotels Company Limited (IHCL) notified the stock exchanges of a meeting held among the independent directors of the company. It stated: Taking into account Board assessments and...
The Tata Sons Imbroglio: Whither Corporate Governance?
Much ink has already been spilt over the last three days following the revelation that the chairman of the Tata Sons board, Mr. Cyrus Mistry, has been “replaced”, and that Mr. Ratan Tata has returned to helm the affairs as interim chairman for a period of four months until a successor can be found. This has not only sent the sprawling corporate group into crisis mode, but it has led to...
Companies Mediation and Conciliation Rules: An Update
[The following post is contributed by Bhushan Shah and Neha Lakshman from Mansukhlal Hiralal & Company. The views expressed are personal] Section 442 of the Companies Act, 2013 (‘Act’) empowers the Central Government to constitute a panel of experts to mediate and settle disputes pending before the National Company Law Tribunal (‘NCLT’), National Company Law Appellate Tribunal...
NCLT: Revolutionizing the Realm of Corporate Litigation
[The following post is contributed by Shruti Khetan, who is a student at the West Bengal National University of Juridical Sciences] After a decade-long wait, the National Company Law Tribunal (‘NCLT’) and its appellate body, the National Company Law Appellate Tribunal (‘NCLAT’) have finally been constituted under sections 408 and 410 of the Companies Act, 2013 (‘Act’) with effect from June 1...
Ruling on Shareholder Rights to Inspect Company Records
[The following guest post is contributed by Dheeraj Kumar Sharma, who is a Manager at Vinod Kothari & Company] Introduction The Mumbai Bench of the Company Law Board (‘CLB’), through its order dated April 16, 2015 in the case of Mr. Anil Kumar Poddar v. Bonanza Industries Limited, dismissed the application of a shareholder who demanded copies of records of a company and sought inspection of...
Paper on Directors’ Duties and Stakeholder Interests
Mihir Naniwadekar and I have a working paper on SSRN titled “The Stakeholder Approach Towards Directors’ Duties Under Indian Company Law: A Comparative Analysis”, the abstract of which is as follows: Recognizing that common law does not cast any general duty upon directors towards non-shareholder constituencies, legislatures have sought to formulate a tolerable solution to what they perceive as a...
Liberalized Regime for Issuance of Masala Bonds
An attractive option for Indian companies raising finances is to issue rupee-denominated bonds to persons residing outside India. Popularly known as “masala bonds”, some of these may even be listed on foreign stock exchanges. Naturally, the legal regime governing these bonds, particularly from the purview of corporate law, securities regulation and foreign exchange laws is of relevance. Over a...
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