[The following post is contributed by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai. For another perspective on the topic, please see an earlier post on the Blog.] The Securities and Exchange Board of India (“SEBI“) has released a discussion paper (“Paper“) to regulate certain arrangements between private equity investors and the promoters/top...
Compensation Arrangements between Private Equity and Company Management: Corporate Governance Issues
In its board meeting held on 23 October 2016, the Securities and Exchange Board of India (“SEBI”) highlighted the issue of compensation arrangements agreed to by private equity (“PE”) firms with the promoters, directors and key managerial personnel (collectively, the “management”) of investee companies that are listed on the stock exchange, and certain corporate governance issues that emerged...
Non-compete Fee: A Bane for Minority Shareholders
[The following post is contributed by Soham Roy & Akhil Nene, who are 5th year students at the National Law University Odisha] A non-compete fee is paid to exiting promoters or founders of a company to ensure that they do not compete for a certain period of time with the company they are exiting. Recently, there was considerable controversy surrounding the HDFC Life-Max merger as a result of...
The State in Business and the Business of Regulation
[The following post is contributed by Bhargavi Zaveri, who is with the National Institute of Public Finance and Policy, New Delhi. She can be contacted at [email protected].] The public shareholders of a listed public sector bank were reportedly denied e-voting facilities at an extra-ordinary general meeting held in January 2016. In 2008, a state assembly passed a law unilaterally...
Risk Management and Corporate Governance
The current edition of the NSE Quarterly Briefing is on “Risk Management and the Board of Directors in Indian Firms” and is drafted by Professor Afra Afsharipour. The executive summary is as follows: – Enterprise Risk Management (“ERM”) is a systematic and holistic approach for firms to address all their risks, whether operational, strategic or financial. – Although not involved in...
Gender Diversity and Government Companies
It has been more than a year since a provision in the Companies Act, 2013 came into effect that requires all listed companies to have at least one woman director. As we had previously discussed, companies scrambled to comply with the requirement as of April 1, 2015, the effective date. However, a recent news report in the Business Standard indicates that 57 companies listed on the NSE are yet to...
Recent Papers on Corporate Governance
The following papers on corporate governance in India are available on SSRN. Details, including abstracts, are set out below: 1. Corporate Governance and the Indian Private Equity Model by Afra Asharipour. Private Equity (PE) firms have long invested in Western firms using a leveraged buyout (LBO) model, whereby they acquire a company that they can...
Case-Study Evidence of Shareholder Activism
We have previously highlighted the rise of shareholder activism in India (here and here). Activism has been aided by regulatory reforms that have enlarged shareholder participation. In addition, market changes have resulted in previously passive institutional investors becoming more active in recent times. They have further been supported by the emergence of a growing and vibrant proxy advisory...
The Companies Law Committee on Section 117 and Appointment and Remuneration of Managerial Personnel
[The following guest post is contributed by Amitabh Robin Singh, who is an Associate at DSK Legal] In an earlier post, this author had discussed the proposed changes made by the Companies Law Committee (“Committee”) to Chapter 3 (Prospectus and Allotment of Securities) of the Companies Act, 2013 (“2013 Act”). In this post, a particular observation of the Committee, which stretches between...
Omnibus Approval of Related Party Transactions and Threshold for Fraud Reporting by Auditors
[The following guest post is contributed by Amitabh Robin Singh, who is an Associate at DSK Legal] With the notification bringing Sections 13 and 14 of the Companies (Amendment) Act, 2015 (“Amendment Act”) into force being published in the official gazette on December 15, 2015, we now have new provisions on the omnibus approval of related party transactions by companies. On a separate note, a...
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