[The following guest post is contributed by Nidhi Bothra and Vinita Nair, Vinod Kothari & Co, Corporate Law Services Group. The authors can be contacted at [email protected] and [email protected] respectively] Under the erstwhile system of holding general meetings, the resolutions were put to vote by way of show of hands or a poll could be demanded. Since only such members who were...
East India Company and Modern Corporations
William Dalrymple has an interesting piece in the Guardian that compares the East India Company (EIC) with modern corporations. He seeks to demonstrate that some of the factors that perpetuated the EIC’s dominance in the corporate and political world for several centuries are found in modern corporations as well, albeit in more measured terms. The kind of power that was wielded by the EIC is...
The State of Shareholder Activism
The latest issue of the Economist carries two pieces (here and here) arguing about the importance of shareholder activism as a means to enhance the management and governance of companies. The magazine appears to extol the virtues of activism in the current economic environment, although some might dispute whether activist investors have had as much of a positive role to play in corporate...
Briefing on Related Party Transactions
The NSE Centre for Excellence in Corporate Governance has published its quarterly briefing on “Related Party Transactions”, which has been authored by Professor Vikramaditya Khanna. The executive summary is as follows: – Related Party Transactions (RPTs) are a topic of increasing interest around the world, especially as some of them have been associated with quite well known frauds. –...
Disqualification of Directors: A Dichotomy in the Companies Act, 2013
[The following post is contributed by Nivedita Shankar, who is a Senior Associate at Vinod Kothari & Company. She can be contacted at [email protected]] In case a director were to incur disqualification under section 164(2) of the Companies Act, 2013 (the “Act, 2013”), then such director shall not be eligible to be re-appointed as a director of that company or be appointed in other...
Proposed Amendments to the Companies Act, 2013
It has been just a year since certain provisions of the Companies Act, 2013 (the 2013 Act) were brought into force, and the Government has already yielded to pressure from industry to address some concerns within the legislation. The Union Cabinet has approved the introduction of the Companies (Amendment) Bill, 2014 in Parliament. At the time of this writing, only a press release of the...
SEBI’s Proposal for a Dividend Policy
Last week, media reports indicated that SEBI is considering imposing a requirement on listed companies to come out with a dividend policy that will compel (or at least nudge) profitable cash-rich companies to distribute their profits to shareholders. The introduction of more stringent requirements on companies to state their dividend policies will introduce a great deal of transparency on this...
SEBI Reforms – Part 3: From Listing Agreement to Listing Regulations
In most jurisdictions, several aspects of corporate governance and disclosures for listed companies are regulated through stock exchange listing requirements. These apply only to listed companies, and they are enforced by the stock exchanges. Operating as conditions to continuous listing, one of the enforcement mechanisms used is the threat (sometimes carried out) of delisting the securities...
Disclosure of “Encumbrances” on Shares
Recently, the Securities Appellate Tribunal (SAT) had to deal with two separate situations pertaining to the disclosure of pledge or other encumbrance over shares. In an order discussed earlier today, the SAT found that the acquisition of shares by a public financial institution through the invocation of a pledge was required to be disclosed in accordance with SEBI’s Takeover Regulations...
Doing Business Report 2015: A Mixed Bag for India
The World Bank has released its report titled “Doing Business 2015: Going Beyond Efficiency”. It has also published a country report on India for the same year. At the overall level, India does not emerge in positive light, given that its ranking has fallen to 142 (out of a total of 189 countries) from 140 in last year’s rankings. India does not rank favourably among comparator economies either –...
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