[The following post, the second in a series, is contributed by Rahul Sibal, a third year student of NALSAR Hyderabad. In the series, he analyzes possible liabilities that may arise with respect to compensation agreements from different perspectives. He can be contacted at [email protected]. In this second post, he attempts to ascertain the liability of directors that have entered into...
Ascertaining Legal Ramifications of Compensation Agreements – Part I (Common Law Approach)
[The following post, the first in a series, is contributed by Rahul Sibal, a third year student of NALSAR Hyderabad. He analyzes possible liabilities that may arise with respect to compensation agreements from different perspectives. He can be contacted at [email protected]. In the following post, he attempts to ascertain the liability of directors, who have entered into compensation...
Calls for Socially Responsible Investing
The concept of socially responsible investing (SRI) suggests that investors would invest in companies that are acting in socially and environmentally responsible ways, and that such investors would exit from investments in businesses that do not comport with environmental, social and governance (ESG) criteria. Such investors maintain a balance between financial sustainability and social impact...
Stewardship Code for Insurance Companies
Historically, the passivity of institutional investors in India has led to less than significant monitoring of managements and controlling shareholders of companies. However, as I had noted in an earlier paper, the Indian markets began witnessing greater levels of shareholder activism in more recent years. Among the regulatory efforts that have engendered activism, one relates to a 2010 circular...
Shareholding Thresholds for Oppression and Class Actions
The Tata-Mistry episode has brought into focus the minimum shareholding threshold required for a minority shareholder to bring an action for oppression and mismanagement under sections 241 to 244 of the Companies Act, 2013. In a piece in Bloomberg Quint titled Minority Shareholder Protection as a Numbers Game, I examine the implications of such shareholding thresholds that operate as a filter...
NCLT Rules on Maintainability in the Tata-Mistry Case
Background The action on the legal front in the Tata-Mistry episode has been playing out in the National Company Law Tribunal (NCLT) over the last few weeks. This is on account of an action for oppression and mismanagement initiated by two Mistry companies (the Mistry Group) that are shareholders of Tata Sons against the company as well as its directors and officers. The action was brought under...
Shareholder Primacy in India: So Near and Yet So Far!
[The following guest post is contributed by Professor Bala N. Balasubramanian, who is an Adjunct Professor at the Indian Institute of Management, Ahmedabad.][1] The scholarly debate on primacy among the shareholders, boards and the executive in corporate governance is intellectually as challenging as it is yet inconclusive, although more recent trends around the world would seem to suggest at...
Survey of Corporate Governance in Asia
The OECD has just published its OECD Survey of Corporate Governance Frameworks in Asia. Covering 14 different economies in Asia, the Survey covers various aspects of corporate governance from ownership structures, regulatory issues, board matters, shareholder rights, and the like that are prominent in relation to corporate governance of companies in those countries. The key is that in most of...
SEBI Order in the United Spirits Case
Over the last year or so, there has been considerable discussion in the press about the allegations of diversion of funds by the erstwhile management of United Spirits Limited (USL) to other companies within the United Breweries (UB) group, including Kingfisher Airlines Limited (KFA). This was also a result of investigations conducted by USL through certain audit firms. Subsequently, this became...
Delaware Supreme Court on Board Independence
Issues of board independence, and particularly the position and role of independent directors, have resurfaced to the fore in India in recent months. Given this scenario, it may be useful to consider developments relating to board independence occurring elsewhere. Here, a ruling last month from the Delaware Supreme Court on the determination of board independence would be of interest. In Thomas...
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