Tag: Company Law
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Nomination of Directors by Shareholders
Earlier this week, the U.S. Securities and Exchange Commission (SEC) adopted the much anticipated proxy access rule which allows shareholders to nominate candidates for directorship. The essence of the new rules is as follows: The new rules require companies to include the nominees of significant, long-term shareholders in their proxy materials, alongside the nominees of…
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Unlawful Distribution of Capital: The Question of Intent
Five judges of the United Kingdom Supreme Court are scheduled to hear an exceedingly interesting case on October 5 and 6, 2010, on what the Court of Appeal describes in the impugned judgment as a “short, but quite basic company law point”. The judgment of the Court of Appeal in the case – Progress Property…
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Some Thoughts on the Supreme Court’s Daiichi Opinion – The Significance of Paragraph 48
The Supreme Court’s judgment earlier this year on the SEBI Takeover Code is likely to prove extremely influential. A summary of the propositions that emerge from the judgment is available here, and comments on the SAT opinion are available here, and here. Two key issues deserve close scrutiny – the Supreme Court’s analysis of the…
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DEMAT Account for Religious Deities
An interesting issue recently fell for the consideration of the Bombay High Court- whether DEMAT accounts could be held in the name of deities. The Court answered this question in the negative, relying on largely practical and partially moralistic reasons in coming to its conclusions. The decision was pronounced by a Division Bench of the…
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The United States Supreme Court on the ‘Principal Place of Business’
Two earlier posts had discussed the issue and the oral arguments before the United States Supreme Court in Hertz Corp. v. Friend. Earlier this year, the Court delivered a unanimous verdict, holding that the ‘principal place of business’ of a corporation is its ‘nerve centre’, i.e. the headquarters of the corporation. As discussed earlier, the…
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Court of Appeal on the ‘True and Fair view’
In an earlier post, Shantanu had discussed the judgment of the England & Wales High Court in Macquarie Internationale Investments Ltd. v. Glencore UK Ltd. The decision of the High Court has been upheld on appeal by the Court of Appeal in a judgment available here. The Court of Appeal observes (paragraphs 51, 52 and 54) in…
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Ostensible Authority and Indoor Management: Possible Implications of MRF v. Parrikar
In MRF Ltd. v. Manohar Parrikar (Civil Appeals No. 4219 and 4220 of 2010, decided on May 3, 2010), the Supreme Court of India highlighted some aspects of the operation of the indoor management rule (or the rule in Turquand’s case). While the issue before the Court was a matter of public law and reference…
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Easy Exit for Defunct Companies
The inability to expeditiously close down businesses or companies in India often forms the subject matter of critical comment about doing business in India. In order to address this drawback, the Ministry of Corporate Affairs (MCA) has issued the Easy Exit Scheme, 2010 under which inoperative companies (“defunct companies” to use the technical expression) are…
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Interpretive Guidance: Differential Rights on Shares
Section 86(a)(ii) of the Companies Act, 1956 as well as the Companies (Issue of Share Capital and Differential Voting Rights) Rules, 2001 permit the issue of shares with differential rights as to voting and dividend (DVRs) by companies, subject to certain conditions. Such issue of shares with DVRs has also been implicitly blessed by the…
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The Corporate Veil and Arbitration Clauses
With the rapid growth of group companies in India over the past decade, it has become commonplace for a commercial transaction to be routed through several entities in one group. In cases where some of those entities have entered into agreements containing an arbitration clause, and others have not, the question arises as to whether…
