Tag: Company Law
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Supreme Court on ‘Allotment of Shares’ and ‘Issue of Bonus Shares’
In a recent judgment (Khoday Distilleries v. CIT, Civil Appeal 6654/2008, judgment of 14 November 2008), the Supreme Court explained some important corporate law concepts. The issues before the Supreme Court arose out of a matter under the Gift Tax Act, 1958; and the Supreme Court had to elaborate upon the nature of an allotment
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Companies Bill: New Entities
The Companies Bill, 2008, which has been introduced in the Lok Sabha, contains two entities that are fairly novel in the Indian corporate scenario, and it might be useful to briefly discuss these two types of entities. They are: (i) one person company (OPC); and (ii) “small” company. One Person Company Under the existing Companies
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The grounds for lifting the Corporate Veil
In an earlier post, I looked at a recent judgment of the England and Wales High Court by Justice Munby in Hashem v. Shayif. It appears from the judgment that the only case in which the corporate veil could be lifted was where the company was a façade. In order to support this conclusion, Justice
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Companies Bill Introduced in Parliament
Close on the heels of the Limited Liability Partnership Bill, the much anticipated Companies Bill, 2008 was introduced in Parliament on October 23, 2008. The Government’s press release carries the salient features of the Bill, which is set to usher in the most significant changes to company law since perhaps 1956 when the current Companies
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British decision on lifting the corporate veil: Clarity or more confusion?
Considerable difficulty arises in trying to find a coherent set of principles to govern issues related to ‘lifting the corporate veil’. Courts have relied upon several factors in deciding whether to ignore the existence of the corporate entity – ‘fraud’ or ‘sham’, ‘single economic entity’, ‘agency’, ‘tax evasion’, ‘determination of nationality’ etc. In the early
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Cross-Border Mergers
Under the present provisions of Sections 391-394 of the Companies Act, 1956 it is possible for a foreign company to merge with an Indian company, but an Indian company cannot be merged with a foreign company. This is intended to ensure that the company that continues after the merger is an Indian company over which
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Website About Company Liquidators
The Government of India has issued a Press Release on September 10, 2008 that states: “The Ministry of Corporate Affairs has launched a new website named www.companyliquidator.gov.in as a part of its initiative to bring greater efficiency in the functioning of the Official Liquidators placed at the disposal of various High Courts in the country.
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Squeezing Out the Minority: Is it a Viable Option?
Although most jurisdictions confer powers on controlling (or majority) shareholders to squeeze out minority shareholders, the position under Indian company law does not appear to be all that straightforward. There exists a powerful provision in the form of Section 395 of the Companies Act, 1956 that allows controlling shareholders, in certain circumstances, to compel minority
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Reforming Indian Company Law
After a prolonged wait, far-reaching reforms are finally underway in relation to the Companies Act, 1956. The Union Cabinet yesterday gave its approval to the Companies Bill, 2008 which is set to introduce a comprehensive revision of the Companies Act. Though the Companies Act (enacted in 1956) essentially tracked the then existing English company law,
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Official Liquidator and Misfeasance Proceedings
(The following post has been contributed by V. Niranjan) Under s. 457 of the Companies Act, a liquidator has wide powers to ensure fair and equitable distribution of its assets. These powers are general in nature, and their scope and extent are well known. In addition, the Official Liquidator also has the power to compel
