Tag: Debt Finance
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Constitutionality of the Amended Definition of “Non-Performing Asset” Upheld
[Posted by Umakanth Varottil] [The following post is contributed by Prachi Narayan of Vinod Kothari & Company. She can be contacted at prachi@vinodkothari.com.] 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…
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Guest Post: The Changing Definition of Debentures
[Posted by Umakanth Varottil] [The following post is contributed by Nidhi Bothra of Vinod Kothari & Co. She can be contacted at nidhi@vinodkothari.com] 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,…
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Scope of a “Debenture”
[Posted by Umakanth Varottil] 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…
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Miscellaneous
[Posted by Umakanth Varottil] 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…
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Guarantees and Performance Bonds
[Posted by Shantanu Naravane] 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…
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Legality of Sale of NPAs Between Banks
[Posted by Umakanth Varottil] Last week, the Supreme Court issued its ruling on whether non-performing assets/loans (NPAs) can be transferred between banks without the concurrence of the borrowers. The case involved a transfer of NPAs (relating to the borrower, APS Star Industries Ltd.) from ICICI Bank to Kotak Mahindra Bank. The borrower was in liquidation.…
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Security for External Commercial Borrowings: Liberalised Regime
[Posted by Umakanth Varottil] The Reserve Bank of India (RBI) has announced a series of measures to liberalise the regime for Indian borrowers to create security in favour of lenders in case of external commercial borrowings (ECBs). Now, borrowers are only required to obtain the ‘no-objection’ from the authorized dealers (AD) rather than to obtain…
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The Impending FCCB Conundrum
[Posted by Umakanth Varottil] Foreign currency convertible bonds (FCCBs) have been issued by Indian companies, whereby investors have the option to convert these debt instruments into equity. Such conversion would normally occur when the market price of equity shares at the time of conversion is higher than the conversion price. But, with the markets now…
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External Commercial Borrowings Liberalised
[Posted by Umakanth Varottil] In August 2007, the Government tightened its policies on external commercial borrowings (ECBs). However, subsequently, in view of the changed economic scenario in the country, it has decided to liberalise its policies on ECBs. In a circular issued yesterday, the Reserve Bank of India (RBI) now allows borrowers in the infrastructure…