[The following post is contributed by Dhanush. M, a 4th year studnent at the Jindal Global law School] The rapid growth of non-performing assets (NPAs), especially with regard to public sector banks (PSBs) is a major hurdle to the sustenance of the banking system. This prompted the Reserve Bank of India (RBI) to issue a paper in early 2014 titled “Framework ForRevitalising Distressed Assets and...
Subordinated debentures – A Capital Supporting Instrument
[The following guest post is contributed by Vinita Nair of Vinod Kothari & Co. The author may be contacted at [email protected]] Non Banking Financial Companies (NBFCs) in India are always seeking sources of raising funds. Capital is costly and therefore NBFCs rely more on public funds. Public funds as defined under the Systemically Important Non-Banking Financial (Non-Deposit Accepting...
US Court Rules on the AIG Rescue
During the global financial crisis that was triggered by subprime mortgages, the US Government engaged in rescuing several banks and financial companies. Through nationalization, the Government even acquired ownership and control over several of them.[1] One such was AIG. In that case however, a large shareholder of AIG mounted a legal challenge to the terms of the Government bail out package...
Lenders Empowered to Take Control over Distressed Firms
The Reserve Bank of India (RBI) yesterday conferred a significant power to banks to acquire control of borrower companies which fail to achieve prescribed milestones as part of their restructuring. Under this arrangement, the Joint Lenders’ Forum (or JLF, formed for the purpose of addressing distressed assets) may “convert the whole or part of the loan and interest outstanding into equity shares...
SEBI Board Decisions
SEBI announced a slew of decisions taken at its board meeting yesterday, which are excpected to have an impact on the capital markets, both primary and secondary. International Financial Services Centres (IFSCs) SEBI’s board has approved the SEBI (International Financial Services Centres) Guidelines, 2015, which will help establish IFSCs such as the proposed Gujarat International Finance Tec-City...
Constitutionality of the Amended Definition of “Non-Performing Asset” Upheld
[The following post is contributed by Prachi Narayan of Vinod Kothari & Company. She can be contacted at [email protected].] The Supreme Court in its judgment dated January 28, 2015 in Keshavlal Khemchand & Sons Pvt Ltd & Ors v. Union of India disposed off seventy petitions challenging the validity of the amended definition of Non Performing Asset (“NPA”) provided under section...
Guest Post: The Changing Definition of Debentures
[The following post is contributed by Nidhi Bothra of Vinod Kothari & Co. She can be contacted at [email protected]] The new Companies Act, 2013 has changed the regulatory face of the corporate India; “raising the bar on Corporate Governance.” The new regulatory changes including need for CSR activities, increased investor protection, greater transparency in business and have been the...
Scope of a “Debenture”
The England and Wales Court of Appeal recently had occasion to consider the meaning and scope of the expression “debenture” in the context of a charge document. Consistent with some previous rulings of English Courts, the Court of Appeal provided a somewhat expansive definition of the expression “debenture” so as include within its fold a shareholder loan agreement. In Fons Hf v. Corporate Ltd...
Miscellaneous
1. Exemption from Takeover Regulations for Gift of Shares to Family Trust SEBI has granted an exemption to an acquirer from making an open offer under the SEBI Takeover Regulations in the case involving Gujarat Organics Limited (the company). In that case, the promoter Mr. Ashwin S. Dani, owns 71.15% shares in the company, and proposes to transfer...
Guarantees and Performance Bonds
Payment obligations under commercial contracts are often secured by means of guarantees issued by banks, which guarantee the performance of the payment obligation by the buyer. For instance, if A and B enter into a contract whereby A agrees to sell B a ship for the price of $50 million, B’s bank may issue to a payment guarantee to A to secure the payment of this amount from B. In the...
Recent Comments