Background The action on the legal front in the Tata-Mistry episode has been playing out in the National Company Law Tribunal (NCLT) over the last few weeks. This is on account of an action for oppression and mismanagement initiated by two Mistry companies (the Mistry Group) that are shareholders of Tata Sons against the company as well as its directors and officers. The action was brought under...
Exemptions to companies operating from the IFSC
[The following guest post is contributed by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai.] Continuing with the Government’s efforts to promote the International Financial Services Centre (“IFSC“), the Ministry of Corporate Affairs (“MCA“) has issued notifications dated January 4, 2017, which provide an exemption from (or modify) certain...
NCLT Denies Itself the Power to Dispense With Meetings in an Amalgamation
Hitherto, schemes of arrangement were carried out under sections 391 to 394 of the Companies Act, 1956 and the jurisdiction for sanction of the schemes was exercised by the relevant High Court. At the initial stage, the role of the High Court was to call for the meetings of various classes of shareholders and creditors to seek their approval to the scheme. It had been common practice for High...
A Careless Concern for Workmen’s Dues: Insolvency Code of 2016
(The following guest post is contributed by Mridul Godha, a third-year student at the National Law University, Jodhpur) The Joint Committee on the Insolvency and Bankruptcy Code of the Lok Sabha was much concerned about the welfare of workmen. “Workers are the nerve centre of the company. In the event of any company becoming insolvent or bankrupt, the workmen to get affected adversely and...
Appointment and Removal of Independent Directors: Need for Reform?
The removal this week by three Tata group companies of Mr. Nusli Wadia as an independent director from each of them has reinvigorated some of the debate surrounding board independence from a conceptual standpoint. This has provided critics of board independence with more fodder. In the past, there was anecdotal evidence that whenever there were disagreements between managements or promoters on...
Bombay High Court Clarifies Rights of Nominees in Shares
An intricate legal question that has befuddled various courts relates to the conflicts between the rights of nominees and those of successors in the case of ownership of various financial instruments, including shares of a company. As regards shares, the issue came to the fore in 2010 in the case of Harsha Nitin Kokate v. The Saraswat Co-operative Bank Limited (“Kokate”) wherein, after...
Repeal of SICA
[The following guest post is contributed by Mani Gupta, who is a partner at Sarthak Advocates & Solicitors, New Delhi. Views expressed here are personal and do not reflect the firm’s views.] By way of two notifications dated November 25, 2016 (“Repeal Notification”), the Ministry of Finance has appointed December 1, 2016 as the date on which the provisions of Sick Industrial Companies...
Empirical Analysis of CSR Requirements in India
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...
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