[The following post, the third in a series, has been contributed by Rahul Sibal, 4th year student of NALSAR Hyderabad. The first two posts in the series are available here and here.] In the previous post it was argued that section 166 of the Companies Act, 2013 (the ‘Act’), which partially codified the common law doctrines of no-conflict and no-profit, did not provide for consent-based...
NCLAT Ruling on Maintainability in the Tata Sons Case
Earlier this week, the National Company Law Tribunal (“NCLAT”) issued its ruling in Cyrus Investments Pvt Ltd v. Tata Sons Ltd on whether the Mistry group’s action for oppression and mismanagement in respect of Tata Sons is maintainable. Although the NCLAT ruled that the Mistry group’s petition did not meet the requirements of maintainability under section 244 of the Companies Act, 2013 (the...
Conversion of Tata Sons into a Private Limited Company: In Whose Interest?
The proposed conversion of Tata Sons Limited from a public limited company to a private limited company has reignited the corporate governance issues that the Tata Group has faced over the last year or so. Menaka Doshi has an interesting piece (and an accompanying interview with two corporate lawyers) in BloombergQuint that sets out some of the background to why Tata Sons proposes (and that too...
The Tata Corporate Governance Episode: The ‘India-Specific’ Issues and Concerns
[Guest post by Priya Garg, a 4th year law-student at West Bengal National University of Juridical Sciences (WBNUJS)] Introduction The recent turf battle within the Tata Group is likely to become a subject matter of study for various disciplines, including the subject of corporate law and governance.[1] The Tata-Mistry dispute giving rise to corporate governance issues needs to be considered...
SEBI Informal Guidance on Profit Sharing Arrangements
Last year, the Securities and Exchange Board of India (“SEBI”) clamped down on upside sharing arrangements between promoters or senior management of listed companies on the one hand and private equity investors on the other. Accordingly, the securities regulator amended the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the “LODR Regulations”) to introduce regulation...
SAT Rejects Appeals in the United Spirits Case
We had earlier this year discussed SEBI’s ad-interim ex parte order in the United Spirits Limited (USL) case by which several persons (including Mr. Vijay Mallya) were prohibited from buying, selling or otherwise dealing in any securities, with some of them being restrained from holding positions as directors or key managerial personnel of any listed company. Against this, some of the persons...
Activism through Directors Elected by “Small Shareholders”
Recent news reports (here, here and here) have highlighted a shareholder proposal that has been initiated in preparation for the annual general meeting of Alembic Limited to be held on 28 July 2017. The shareholder in question is Unifi Capital Private Limited who is said (though not verified) to be holding 3% shares in Alembic. The proposal involves the election of a “small shareholder” director...
Bombay High Court on the Permissibility of Shareholder Representative Suits
Bar & Bench yesterday reported that the Bombay High Court denied leave to certain shareholders of various Tata group companies to bring a representative suit that made certain legal claims in the aftermath of the ouster of Mr. Cyrus Mistry from the board of Tata Sons as well as other Tata group companies. The order of the court in Pramod Premchand Shah v. Rata Tata is now available. Facts and...
Minimizing the Liability of Directors: SEBI’s Order in the Zylog Case
[Guest post by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai] Liability of directors is a sensitive topic in India, particularly for foreign investors who propose to nominate directors to the boards of their Indian investee companies. That is why clauses are inserted in shareholders’ agreements to the effect that the investor’s nominee director will not be identified...
SAT Order in the Satyam Case
In July 2014, we had discussed the order of the Securities and Exchange Board of India (SEBI) then passed against several members of Satyam’s senior management for their role in perpetrating the colossal financial fraud involving the company. In its order, SEBI found several individuals guilty of violating various regulations issued by SEBI, and restrained them from accessing the capital markets...
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