Tag: Company Law
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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…
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Liquidation Preference: How Effective is it?
[Posted by Umakanth Varottil] In a column in the Economic Times, Amrita Singh and Siddharth Shah discuss the relevance of the concept of liquidation preference in Indian investment transactions: “The progressive liberalisation of the foreign investment regime has provided a major boost to private equity and venture capital investments in Indian companies. With the advent…
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Share Buyback: The Effect of Shareholders’ Resolution
[Posted by Umakanth Varottil] In a recent case decided last week, the Securities Appellate Tribunal (SAT) had the occasion to decide on the effect of a shareholders’ resolution in the context of a buyback of shares. The SAT decision is available here. The facts of the case are fairly straightforward. The company involved, D-Link India…
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Management Buyouts (MBOs): Possibilities and Challenges
[Posted by Umakanth Varottil] Earlier this week, The Hindu Business Line carried a detailed column on various business and financial aspects of management buyouts (MBOs), particularly as such deals are being witnessed (albeit infrequently) in India. Simply stated, management buyouts involve the acquisition of a division of a company or the shares in a company,…
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Differential Voting Rights: Some Further References
[Posted by Umakanth Varottil] In earlier posts (here and here), this Blog had covered the issue of differential voting rights by Indian companies. A recent column by Srikanth Srinivas in the Business World examines the business rationale for the issuance of shares with differential voting rights and also the pros and cons of such instruments.…