Tag: Company Law
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Shares and Stocks: India and Delaware
[Posted by Umakanth Varottil] India has largely followed the scheme of the erstwhile British company law in enacting the Companies Act, 1956. This is true even in the case of share capital structures that companies can have, such as only two types of shares, preference shares and equity shares for public limited companies, and also…
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Ceiling on Executive Pay
[Posted by Umakanth Varottil] In previous posts, we had highlighted significant differences between the law on executive pay in the US and in India, and how the Indian regime may be more conducive to preventing excesses by corporate executives. In the US, the position is as follows: Excessive managerial influence also extends to fixing managers’…
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Lifting the Corporate Veil for Tort Claims
[Posted by Umakanth Varottil] As we have seen previously (here and here), the law relating to lifting of the corporate veil is not only ridden with several ambiguities, but also that courts are generally slow to lift the corporate veil. This holds true even in cases that involve mass torts against subsidiaries of large corporate…
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Supreme Court on ‘Allotment of Shares’ and ‘Issue of Bonus Shares’
[Posted by Mihir Naniwadekar] 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…
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Companies Bill: New Entities
[Posted by Umakanth Varottil] 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…
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The grounds for lifting the Corporate Veil
[Posted by Mihir Naniwadekar] 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…
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Companies Bill Introduced in Parliament
[Posted by Umakanth Varottil] 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…
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British decision on lifting the corporate veil: Clarity or more confusion?
[Posted by Mihir Naniwadekar] 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’…
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Cross-Border Mergers
[Posted by Umakanth Varottil] 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…