The question of liability of independent directors is a sensitive one given such directors carry substantial risk without having an influence in the day-to-day management of the company. Hence, the Companies Act, 2013 introduced a specific carve out in section 149(12) by which an independent director cannot be made liable for acts pertaining to the company except in limited circumstances “which...
Age-limit Criteria for Non-Executive Directors under Amended SEBI Listing Regulations: Prospective or Retrospective?
[Gaurav Pingle is a practising Company Secretary in Pune and can be reached at [email protected]] Introduction On June 2 2017, the Securities and Exchange Board of India (‘SEBI’) constituted a committee under the chairmanship of Mr. Uday Kotak for improving the standards of corporate governance of listed companies in India. On October 5, 2017, Kotak Committee submitted its report to SEBI...
The Tata Corporate Governance Episode: The ‘India-Specific’ Issues and Concerns
[Guest post by Priya Garg, a 4th year law-student at West Bengal National University of Juridical Sciences (WBNUJS)] Introduction The recent turf battle within the Tata Group is likely to become a subject matter of study for various disciplines, including the subject of corporate law and governance.[1] The Tata-Mistry dispute giving rise to corporate governance issues needs to be considered...
Activism through Directors Elected by “Small Shareholders”
Recent news reports (here, here and here) have highlighted a shareholder proposal that has been initiated in preparation for the annual general meeting of Alembic Limited to be held on 28 July 2017. The shareholder in question is Unifi Capital Private Limited who is said (though not verified) to be holding 3% shares in Alembic. The proposal involves the election of a “small shareholder” director...
Minimizing the Liability of Directors: SEBI’s Order in the Zylog Case
[Guest post by Amitabh Robin Singh, who is a corporate lawyer practising in Mumbai] Liability of directors is a sensitive topic in India, particularly for foreign investors who propose to nominate directors to the boards of their Indian investee companies. That is why clauses are inserted in shareholders’ agreements to the effect that the investor’s nominee director will not be identified...
Shareholder Primacy in India: So Near and Yet So Far!
[The following guest post is contributed by Professor Bala N. Balasubramanian, who is an Adjunct Professor at the Indian Institute of Management, Ahmedabad.][1] The scholarly debate on primacy among the shareholders, boards and the executive in corporate governance is intellectually as challenging as it is yet inconclusive, although more recent trends around the world would seem to suggest at...
Delaware Supreme Court on Board Independence
Issues of board independence, and particularly the position and role of independent directors, have resurfaced to the fore in India in recent months. Given this scenario, it may be useful to consider developments relating to board independence occurring elsewhere. Here, a ruling last month from the Delaware Supreme Court on the determination of board independence would be of interest. In Thomas...
Et tu Tata!
[The following guest post is contributed by Professor Bala N. Balasubramanian, who is an Adjunct Professor at the Indian Institute of Management, Ahmedabad] Recent developments at the Tata Group in general and Tata Sons particularly have shaken corporate India in terms of standards of good governance in companies. The group had meticulously built a reputation over the years for ethical and...
Appointment and Removal of Independent Directors: Need for Reform?
The removal this week by three Tata group companies of Mr. Nusli Wadia as an independent director from each of them has reinvigorated some of the debate surrounding board independence from a conceptual standpoint. This has provided critics of board independence with more fodder. In the past, there was anecdotal evidence that whenever there were disagreements between managements or promoters on...
Tata Group Companies: “Long-Term Interests” the Key Touchstone
The episode surrounding the Tata Group has taken further twists and turns. After several Tata Group companies expressed their support in favour of Mr. Mistry, who continues to be chairman of several of those companies, one company – Tata Global Beverages – adopted a different stance. In a board meeting held this week, the directors of Tata Global Beverages decided by a 7:3 majority to replace Mr...
Recent Comments