Tag: Company Law
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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.…
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Differential Voting Rights: A Markets Perspective
[Posted by Umakanth Varottil] Economic Times carries the views and recommendations of various market participants about the feasibility and economics of issue of differential voting rights by Indian companies. One interviewee notes: “Differential voting rights can work every where in the world, and so also in India. These are ideally good instruments for passive investors,…
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Dispute Resolution under the New Company Law
[Posted by Umakanth Varottil] The establishment of the National Company Law Tribunal (NCLT) has been mired in controversy right from the start. Although the Companies Act was amended as early as 2002 to pave the way for the NCLT, the body is yet to be established (and the relevant provisions of the Amendment Act of…
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Regulating Companies: Whose Role is it Anyway?
[Posted by Umakanth Varottil] In the case of listed companies, when it comes to corporate governance, there is a classic dichotomy in regulation. On the one hand, it is the Ministry of Company Affairs that is largely responsible for the implementation of the Companies Act, 1956, while it is SEBI that is responsible for implementation…
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The “Par” Has Lost Its Value
[Posted by Umakanth Varottil] Indian company law includes several concepts that have become archaic. Efforts have been made to address this issue and to modernize company law – some the recent ones include a Concept Paper prepared by the Ministry of Company Affairs in 2004 and the JJ Irani Committee Report presented in 2005. However,…