SEBI has issued a consultative paper that reviews corporate governance norms in India with a view to overhauling them considering developments in the Indian corporate sector over the last few years. The paper is quite detailed and is expected to generate a great amount of discussion, which would be considered by is SEBI before implementing any revised norms. Suggestions are due on the...
Royalty Payments and Corporate Governance
In the past, the corporate governance discourse pertaining to Indian companies has revolved substantially around family owned businesses and government-owned (public sector) companies. Another type of companies that is quite prevalent in the corporate scenario, but usually does not receive specific attention, is Indian listed subsidiaries of multinational companies (MNCs). A significant...
Short Sellers, Short-Termism and Corporate Governance
I have been following a corporate battle that erupted last month in Singapore. Muddy Waters, a financial research firm based in the US, released a 133-page report on Olam International, a Singapore-based company, alleging several accounting flaws in the company’s financial statements that did not represent the true state of its financial health. Upon this announcement, the price of Olam’s shares...
Indemnity clauses and criminal proceedings
Earlier this week, the Court of Appeal decided another interesting case involving contractual interpretation – this time interpreting and determining the scope of an indemnity clause. The case was one of the many fall-outs of the ongoing News of the World (“NOTW”) saga, and involved a claim brought by Mr Coulson, former editor of NOTW, against his former employers. On the termination of Mr...
Paper on Shareholder Activism
Two years ago, any talk of shareholder activism in India would be brushed aside or even ridiculed. But, since then, things seem to have changed rapidly. The last couple of years have witnessed shareholders in Indian companies becoming more active and assertive. This space has also seen the proliferation of proxy advisory firms and other corporate governance intermediaries that have aided such...
Executive Compensation and Corporate Governance
Although the issue of executive compensation has not been as dominant in the corporate governance discourse in India as it has been in other leading economies, it has begun to attract significant attention lately. While we have not had a chance on this Blog to touch upon the recent debates, it would be useful to refer our readers to a couple of posts (here and here) by Professor Balasubramanian...
Corporate Governance and Controlling Shareholders/Promoters
One of our pet peeves on this Blog has been the fact that the corporate governance regime in India does not adequately address the requirements of companies that have controlling shareholders (or promoters), which dominate the landscape in India. I have also advanced this argument in a couple of academic papers (here and here). While there does not seem to be much momentum in India to address...
Prohibition on Acquisition of Shares by Employee Trusts
One of the decisions taken at SEBI’s board meeting escaped attention until some recent discussion in the financial press (here and here). The relevant paragraph in SEBI’s press release is as follows: Listed entities shall frame employee benefit schemes only in accordance with SEBI (ESOS and ESPS) Guidelines, 1999. Entities whose schemes are not in conformity with the same would be given...
Miscellaneous
1. Online Shareholder Participation In a previous post, we discussed the recent introduction of mandatory e-voting for large listed companies with effect from October 1, 2012. The Harvard Law School Corporate Governance Forum has a post that sets out some principles and best practices that companies are encouraged to adopt while conducting...
E-voting in Top Listed Companies
As we have previously discussed, the participation of retail (or even institutional) shareholders in Indian companies’ decision-making is still far from desirable. The Government has, however, been taking steps to enhance participation. About a decade ago, the concept of postal ballot was introduced. However, that has not made significant inroads, due to which the next round of reforms have been...
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