The last few years have witnessed a dispute between two families that relate to the right to nominate directors to the board of Yes Bank. Earlier this week, the Bombay High Court issued its judgment in Madhu Kapur & Ors. v. Rana Kapoor & Ors., which seeks to resolve the dispute – at least temporarily – and in the process clarifies some areas of corporate law and contract law...
SEBI’s Revisions to Corporate Governance Norms
In April this year, SEBI had announced a revamped clause 49 of the listing agreement specifying the revised corporate governance norms to come into effect from October 1, 2014. This was to bring the SEBI norms in line with the Companies Act, 2013 (2013 Act). However, in certain material respects, the new clause 49 differed from the provisions of the 2013 Act, in that clause 49 imposed a more...
MCA Clarification on Independent Directors
Based on a request made by various stakeholders, the Ministry of Corporate Affairs (MCA) has issued a clarification explaining some of the provisions of the Companies Act, 2013 relating to independent directors. Some of the aspects clarified include the following: – For the purposes of the definition of an independent director, the concept of “pecuniary relationship” will not include...
SEBI Announces the Specifics of Revised Corporate Governance Norms
It was nearly a decade ago in October 2004 that the Securities and Exchange Board of India (SEBI) announced substantial revisions to the corporate governance norms contained in clause 49 of the listing agreement that applies to all public companies listed on an Indian stock exchange. The revisions, however, took effect only from January 1, 2006. Since then, there have been some specific...
Companies Act, 2013: Directors’ Duties and Liabilities
The NSE Centre for Excellence in Corporate Governance (CECG) has issued its most recent quarterly briefing titled “Directors’ Duties and Liabilities in the New Era”. The executive summary is as follows: – Since directors and the board play a pivotal role in corporate governance, the law foists duties and liabilities on them; – The Companies Act, 2013 has brought about a paradigm shift...
Guest Post: Corporate Governance Disputes & Liability of Professionals and Non-Executive Directors
[The following is a guest post from Vinod Kothari of Vinod Kothari & Co. He can be contacted at [email protected]] The trail of litigation in Newcastle International Airport Limited vs. Eversheds LLP [2013] EWCA Civ 1514 , decided by the Court of Appeal on 28 November 2013, may be interesting for more than reason. One is quite obvious – a litigation that might have cost the plaintiff...
Duties of Directors: a Recent Judgment
The judgment of the English High Court in Madoff Securities v. Stephen Raven [2013] EWHC 3147 (Comm) was delivered last week, and is now available on BAILII. There is plenty of interesting dicta on the duties of directors. In England, the duties are codified in s. 172 of the UK Companies Act. 2006. (The new Indian Act also has a partial codification: see for example, s. 166 of the Companies Act...
Delaware Court on Going Private Transactions
Transactions such as mergers between a company and its controlling shareholders are subject to close scrutiny by courts. Such transactions give rise to conflict of interest as they are carried out between related parties and therefore require close supervision. Moreover, mergers with controlling shareholders may also be utilised to force out minority shareholders of a company if the non...
Shareholder Activism Enters the Boardroom
Over the last month or so, an interesting debate has surfaced that takes shareholder activism to the next level. As the Deal Professor column notes, two hedge funds have initiated proposals whereby they have promised to pay their nominees, if elected to the board of the investee company, director compensation linked to the profitability of the company as if they were executives. The promised...
Dismissal of Suit Against Satyam Directors
Last week, there was coverage in the financial press about the dismissal of a securities law suit by a New York court against the independent directors of Satyam. Now, a copy of the order dated January 2, 2013 issued by Judge Barbara Jones of the Southern District of New York is available through D&O Diary, which also carries a detailed analysis of the opinion. The shareholder suits failed on...
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