A longstanding misconception is finally sought to be rectified by the Bombay High Court in a Circular issued on 3 April 2017 (via LiveLaw), the extracts of which are as follows: IT IS OBSERVED by the Hon’ble Shri Justice G. S. Patel while hearing Chamber Summons No. 89 of 2017 in Execution Application (L) No. 198 of 2017 in Arbitration Case No. 1 of 2014, on 8th March, 2017, that for...
Debt Restructuring Through Scheme of Arrangement
I have posted a working paper titled “The Scheme of Arrangement as a Debt Restructuring Tool in India: Problems and Prospects” on SSRN, the abstract of which is as follows: The goal of this paper is to analyse the scheme of arrangement as a debt restructuring tool in India and the extent to which it has been utilised. It finds that the scheme has been used sparingly for debt restructuring in...
Shareholding Thresholds for Oppression and Class Actions
The Tata-Mistry episode has brought into focus the minimum shareholding threshold required for a minority shareholder to bring an action for oppression and mismanagement under sections 241 to 244 of the Companies Act, 2013. In a piece in Bloomberg Quint titled Minority Shareholder Protection as a Numbers Game, I examine the implications of such shareholding thresholds that operate as a filter...
Shareholder Primacy in India: So Near and Yet So Far!
[The following guest post is contributed by Professor Bala N. Balasubramanian, who is an Adjunct Professor at the Indian Institute of Management, Ahmedabad.][1] The scholarly debate on primacy among the shareholders, boards and the executive in corporate governance is intellectually as challenging as it is yet inconclusive, although more recent trends around the world would seem to suggest at...
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...
Is the Doctrine of Ultra Vires Applicable to LLPs?
[The following guest post is contributed by Saumya Kakkar, Associate and Govinda Toshniwal, Senior Associate, both with NovoJuris Legal. They can be contacted at [email protected]] The objects clause of the Memorandum of Association (“MOA”) of a company enlists and defines the main and the ancillary aims and objects for which the company is incorporated. Any activity or...
Corporate Insolvency Resolution Process under the Bankruptcy Code: Relevant Provisions Notified
[The following guest post is contributed by Shikha Bansal, under the aegis of Vinod Kothari & Company. She can be contacted at [email protected]] The Ministry of Corporate Affairs, by way of Notification no. S.O. 3594(E) dated 30 November 2016, has notified 1 December 2016 as the date for commencement and enforcement of certain core sections of the Insolvency and Bankruptcy Code...
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...
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...
Recent Comments