Tag: Company Law
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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…
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Website About Company Liquidators
[Posted by Umakanth Varottil] 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…
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Squeezing Out the Minority: Is it a Viable Option?
[Posted by Umakanth Varottil] 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…
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Reforming Indian Company Law
[Posted by Umakanth Varottil] 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…
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Official Liquidator and Misfeasance Proceedings
[Posted by Umakanth Varottil] (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…
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Stock Options for Nominee Directors
[Posted by Umakanth Varottil] Nominee directors on Indian corporate boards are a unique category of directors. They are usually are nominated by a bank, financial institution or other large investor to be a director on companies in which such nominating entities have invested. Sometimes, nominee directors also find themselves in an unenviable position – in…
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Supreme Court on Winding-up Petition by a Contributory
[Posted by Umakanth Varottil] Usually, in a merger, the resulting company becomes entitled to all the rights (and subject to all the liabilities) of the merging company. This includes the exercise of rights in respect of shares in other companies (which we shall call target companies) held by the merging company, as the resulting company…