Tag: Company Law
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“Consent in writing” and Standing for Oppression and Mismanagement: Section 399(3)
[Posted by Mihir Naniwadekar] Having discussed the apparent relaxation in standing requirements under Section 399(1), this post will now consider what the requirements under Section 399(3) are. In particular, the effect of the Justice Ruma Pal’s decision in J.P. Srivastava v. Gwalior Sugars will be considered. Section 399(3) states: 3) Where any members of a…
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Locus Standi for Oppression and Mismanagement: Dilution of Section 399(1)
[Posted by Mihir Naniwadekar] Remedies for oppression and mismanagement under Section 397 and 398 of the Companies Act, 1956 provide for some relief to shareholders. However, in order to invoke the provisions of Sections 397/398, the petitioners must demonstrate their standing under Section 399. Section 399, which deals with the right to apply under Sections…
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Derivative Actions – Part I
[Posted by Shantanu Naravane] The issue of shareholders making claims on behalf of a corporation has been a bone of contention ever since the decision in Foss v. Harbottle. However, in recent times, two particular aspects of this controversial area of corporate jurisprudence have received significant attention. These are the issues of multiple derivative claims,…
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The Debate over Multiple Classes of Shares
[Posted by Umakanth Varottil] Currently, the issue of shares with differential rights as to voting and dividend is in a state of flux. While the Companies Act, 1956 and the Rules issued pursuant to that allow shares with differential rights, SEBI has proscribed the issue of shares with “superior voting rights” in listed companies, implicitly…
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‘Principal place of business’ – Oral Arguments in Hertz v. Friend
[Posted by Shantanu Naravane] An earlier post had discussed the issue in Hertz v. Friend, which calls upon the United States Supreme Court to determine what is the ‘principal place of business’ of a corporation having operations in more than one State. The Court heard the matter on 10th November, and the transcript is available…
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E-Voting in Indian Companies
[Posted by Umakanth Varottil] Public (or retail) shareholders in a company usually exhibit traits that result in “collective action problems”. This refers to the difficulties that arise in achieving consensus among a diffused set of shareholders who do not play an active role in the company. These problems are exacerbated by the heterogeneity of interests…
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United States Supreme Court considers a corporation’s ‘principal place of business’
[Posted by Shantanu Naravane] An important question, with significant implications for contemporary corporate law theory will be heard by the United States Supreme Court on November 10. The matter in question is Hertz Corp. V. Friend (08-1107), which poses the question of which State can be considered to be a corporation’s ‘principal place of business’.…
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Accounting Standards under the New Companies Bill
[Posted by Shantanu Naravane] Recent posts have discussed the issue of ‘true and fair view’ and whether compliance with accounting standards necessary translated into meeting this standard laid down in the Companies Act. This makes it interesting to note that the new Companies Bill, apart from specifically stating that Accounting Standards are mandatory (proposed section…
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Compliance with Accounting Standards and the “True and Fair” View
[Posted by Mihir Naniwadekar] Can it be said that just because the Accounting Standards are not complied with, the accounts of a company do not present a true and fair picture of its financial position? Is compliance with the Accounting Standards mandatory, or are certain deviations justified? The Supreme Court’s observations in JK Industries v.…
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The Legal Aspects of Dual Listings
[Posted by Umakanth Varottil] There has recently been a fair amount of discussion regarding the ability of companies to carry out dual listings in India. This arises in the context of dual listing as a possible structure being considered in the Bharti-MTN transaction. Generally, dual listings occur when two or more companies (that otherwise intend…